Another CU Flunks Out of ‘Millionaire U’

FT. MYERS, Fla. – A third failed credit union was charged with fraud and securities violations in a civil suit filed in federal court here last week in relation to an expanding Florida land bust. The suit alleges that Denver-based New Horizons Community FCU, which was taken over by NCUA last year, then sold off in June, was party to speculative real estate scheme that also sunk Norlarco CU in Colorado and Huron River Area FCU in Michigan. The suit alleges that New Horizons was part of a program called Millionaire University that purportedly taught low- and middle-income people how to become rich speculating in two developments near the Gulf of Mexico, called Cape Coral and Lehigh Acres. Kinnith and Deborah Norris claim they made a downpayment of just $4,000 to borrow $835,000 in construction loans for four ‘pre-leased’ homes through First Homes Builders, which were then converted to permanent financing by New Horizons Community FCU. For a $1,000 downpayment. the Norrises were provided a $210,000 loan to build a three-bedroom house that would be occupied for a year, then sold for a guaranteed 14% return. Like thousands of other investors in Cape Coral and Lehigh Acres, the Norrisses are in default on their loans because all of the properties lie vacant. NCUA, acting as liquidating agent for New Horizons Community FCU, filed a motion with the court electronically yesterday to dismiss the case, arguing that the investors failed to exhaust their administrative remedies by appealing their case to NCUA before the courts. The exposure for credit unions is enormous, with the three credit unions have more than $500 million in loans out to the two developments, and dozens more holding loan participations.