CEO Kited Checks To Hide Illicit Loan Scheme

Register now

NORTON, Kan. –The former manager of United Northwest FCU was fired in 2009 after he tried to cover up a series of loans he made in violation of the credit union’s policies that ended up costing the $24 million a loss of more than $1 million, according to a new suit filed in connection with the case.

 

The allegations against Mark Keilig, who was fired in March 2009 after the credit union’s board discovered the scheme, according to the suit, filed by CUMIS Insurance, which is trying to recover $900,000 it paid the credit union as part of a bond claim.

 

The former credit union manager approved more than $1.2 million in loans to a couple of members in violation of the credit union’s policies that every loan over $100,000 be approved by the board, according to the suit. When the board found it, Keilig told them the troubled loan would soon be paid with the help of a U.S. Small Business Administration loan, though that loan was never applied for. later, he tried to make it appear the payments on the loans were current by kiting checks between the different accounts, the suit claims.

 

The loans were eventually discharged in bankruptcy, costing the credit union a loss of more than $1 million.

 

Keilig, who has since taken a job with a Nebraska bank, could not be reached for comment.

 

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER