NEWARK, N.J. – A federal grand jury has been impaneled to investigate allegations that the owners of CU National Mortgage illegally transferred tens of millions of dollars of mortgages owned by the company’s credit union customers to Fannie Mae and siphoned off millions of dollars of the funds.
Criminal charges are expected to be filed in the case within the new few weeks by the U.S. Attorney for the District of New Jersey, which has impaneled the grand jury, several sources have told The Credit Union Journal.
CU National and its corporate parent U.S. Mortgage Corp., filed for bankruptcy last week amid claims by the credit unions, which allege the company fraudulently transferred more than $115 million of their loans to Fannie Mae. Among the allegations are that Michael McGrath, owner of the privately held company, signed documents transferring the mortgages alleging to be an officer of at least one of the credit unions.
Lawyers for McGrath did not return phone calls seeking comment.
The U.S. Treasury, Internal Revenue Service, U.S. Postal Service, NCUA and several state banking agencies are also participating in the probe, which culminated in a January 26 raid on the company’s Pine Brook, N.J., offices, when federal agents carted off dozens of boxes of CU National’s records.
Among the credit unions alleging wrongdoing are: Picatinny FCU, Suffolk FCU, Treasury Department FCU, Novartis FCU, Educational Systems FCU, County Educators FCU, Energy FCU, Rutgers FCU, Piedmont Aviation CU, Pinnacle FCU, Lassen County FCU, British Airways Employees FCU, Diablo Valley FCU, ADP FCU, United Financial Services FCU, Delaware First FCU, Jersey Trades FCU and Frontier Financial FCU.
