ALBUQUERQUE, N.M.-Two anonymous letters purportedly written by employees of the $353-million First Financial Credit Union here that allege wrongdoing by management have been sent to members of the local and national media, along with regulators.
No one person or group of people has stepped forward to identify themselves as author(s) of the letters. Instead, the author(s) claim they are "are writing since reports and pleas to the Board of Directors and Supervisory Committee are being ignored."
The credit union's CEO, Ben Heyward, however, dismissed many of the allegations and said a just-completed examination went very smoothly. As for why one or more people would write such a letter and distribute it publicly, Heyward said he doesn't know why, as during the five years he has been with the CU turnover has been reduced drastically and it was named a "Best Place to Work" by a local business magazine three of the last four years.
The letters allege "fraudulent activity" at the credit union, and are addressed to the board of directors and to NCUA Region V Director Elizabeth Whitehead. The CU's chairman, Cassie Kelley, and Whitehead were unavailable for comment
The letters also allege that at least six individuals who worked at FFCUand raised similar concerns were forced out for "being vocal." In an interview, Heyward addressed many of the allegations. As for the six former employees, Heyward stated, "Those people resigned, they were not fired."
The letter to NCUA's Whitehead goes into pages of details regarding what the author(s) alleges to be "fraudulent activity" related to a loan made to a local developer for a property known as "Copper Square." As previously reported by Credit Union Journal, in February 2008 First Financial made a $7-million construction loan to Vincent Garcia, an Albuquerque real estate developer. Garcia later defaulted on the loan, causing FFCU to foreclose on the Copper Square property in November 2009.
In June 2010, Garcia was indicted by the U.S. Attorney's Office for bank fraud and money laundering. A spokesperson for the U.S. Attorney confirmed that one defendant in the case, Derek Barnhill, entered into a plea agreement with the government. However, Garcia's attorney withdrew from the case Feb. 26, pushing back a possible resolution of the matter.
At issue in the letter is an allegation that the credit union has been notified by the FBI that an "investigation was in process on Garcia." A spokesman for the FBI's Albuquerque office said he "could not confirm or deny any details of an investigation."
When told of the allegation, Heyward responded, "I did not know about the FBI investigation. We would not have funded the loan if we knew. (Former employees) Greg Flowers and Brian got involved with the borrower, who got himself indicted for apparently embezzling money. Flowers and Vice had all the dealings."
The letter alleges Heyward filed a bond claim that was approved and that he then "handed over $250,000 to Garcia. Garcia then agreed to sign over the property to First Financial."
Heyward said there was no bond claim, and that any report of $250,000 being given to Garcia was "fantasy."
The letter to NCUA alleges "Our ratings have gone from a 2 to a 4 and we are under tight scrutiny by examiners for bad business deals." First Financial's call reports show it reported a net loss of $4.2-million in 2010, excluding NCUA assessments. It paid $397,279 to the NCUSIF and $439,619 to the corporate stabilization fund. Including those charges it lost $5.1 million.
First Financial's net worth as of Dec. 31 was 9.36%, making it "Well Capitalized." From December 2003 through 2009, the CU was listed at "Well Capitalized" each year, with its net worth varying from 12.89% to 9.95%.
"Our ratio of 9.36% is the lowest it has been, but our losses are half of what other credit unions' are. We had examiners here through last week and the exam went so well they did not require an outbrief meeting with the board."
