Cash Prizes Raise Red Flags On CUConversion
NORTHVILLE TOWNSHIP, Mich. - (02/01/06) -- The Michigan CU League is taking apublic stance questioning the attempt by credit union giant DFCUFinancial to convert to a mutual savings bank charter. The league,echoing questions raised by NCUA, said it has concerns over thecash prizes being offered to encourage members to vote; what thebenefits of the conversion would be to the membership; andpotential board enrichment. But representatives of the $1.8 billioncredit union, which plans to give out 10 cash prizes of up to$5,000 for members who vote on the conversion, said such lotteriesare commonplace for credit unions and are frequently used to boostvoter turnout. "The reality of the lottery is this is a way for theboard to involve the silent majority, those members who don'tusually vote," said Alan Theriault, president of CU FinancialServices, which is advising DFCU on the charter switch. In a letterto DFCU, obtained by The Credit Union Journal under the Freedom ofInformation Act, NCUA said the ballots proposed by DFCU imply thata member must vote in favor of the conversion in order to beeligible for the cash prizes. "They're looking for a fold,"Theriault, referring to last summer's objections by NCUA to the wayCommunity CU and OmniAmerican CU presented their ballots to membersvoting to convert the two Texas credit union giants. Both creditunions gave out $15,000 in cash prizes to members voting on theconversion.