DETROIT – Three credit union victims in a $13 million investment fraud have agreed to disgorge more than $600,000 to a trustee overseeing the case for disbursement to victims of the scheme.
The credit unions have agreed to return the funds they were paid by MuniVest Financial Group because a bankruptcy trustee has concluded the funds paid to them amounted to fraudulent transfers, according to records filed with the U.S. Bankruptcy Court.
Iowa’s United Services CU has agreed to repay $500,000; Cornerstone CU of Illinois has agreed to repay $95,000; and Minnesota’s TopLine FCU, which acquired Como Northtown Community CU, another victim of the scheme, will repay $21,000. The Boilermakers Union, Local 85 out of Rossford, Ohio, has agreed to return $35,000
Once all the money the trustee can collect back from investors is received, it will be distributed on a pro rata basis to victims based on their losses in the scheme.
A criminal case that authorities described as a Ponzi scheme, ended with Dante DeMiro, president of MuniVest Financial, pleading guilty last year to fraud and sentenced to 10 years in prison for selling phony CDs.
Fifteen victims were identified who lost almost $13 million. The biggest victim was Mona Shores Public Schools District in Michigan, which lost $3.7 million. @Lantec Bank in Virginia, a one-time credit union that converted to savings bank, lost $2.75 million. DeMiro also sold the bogus CDs to Michigan’s Lapeer County, Comstock Township near Kalamazoo, and the Boilermakers Union
The three credit unions have all agreed to repay the funds to avoid a civil suit brought by the trustee, who has claimed that any payments made by the Ponzi scheme within 90 days of its Chapter 7 bankruptcy amounted to a fraudulent transfer.
In a classic Ponzi scheme, the funds from the later investors were used to pay interest to the earlier investors to make it appear the scheme was paying off. To further the scheme, DeMiro would fax or e-mail clients computer screen shots of investment summary reports that purportedly detailed their investments in CDs at various banks and credit unions, including Credit Union One, according to court records. But he never bought the CDs.
In addition to using investors’ money to pay off previous investors, DeMiro admitted to spending it on homes, vehicles, luxury items, loans to others and gambling. He agreed to forfeit his assets, including $1 million in cash, homes, vehicles, computers and loan notes, that will be used to pay back his victims.
