YUMA, Ariz. NCUA filed a civil suit yesterday against one of the borrowers in the AEA FCU member business loan fraud, seeking more than $9 million on unpaid loans.
The suit claims QD Custom Builders and its owner Robert Schaffer were approved for fraudulent MBLs by William Liddle, the credit union business loan manager convicted in a $58 million fraud a year ago. The MBL fraud nearly bankrupted the one-time $410 million credit union, which has been run under NCUA conservatorship since 2010.
In the suit, filed in U.S. District Court for the District of Arizona, NCUA alleges that MBL borrowers used Schaffer and his company as a conduit to extract excessive loans from the credit union. QD and Schaffer would request loan proceeds from the borrowers for amounts far exceeding the work actually performed on the projects, according to the suit. In turn, the borrowers would submit inflated loan requests to AEA in order to obtain excess loan funds. The borrowers, the suit claims, would then divert the excessive loan funds to themselves for their personal use. QD and Schaffer would receive a portion of the excess loan funds as compensation for their role in the scheme.
NCUA claims Schaffer, because he signed a personal guarantee on the MBLs, owes it $9.1 million in principal and interest overdue on three loans.
William Liddle was convicted in February 2012 on charges of bank fraud, conspiracy and money laundering for approving loans in exchange for bribes of one kind or another. One developer confessed to giving Liddle more than $1 million worth of bribes, including $565,000 to buy a home, a membership at the Yuma Country Club, $40,000 to buy a Toyota Sequoia, $9,600 to buy a Corvette and $246,200 in cash. Liddle’s wife Rhonda was convicted of lying to help hide the bribes.
One of the borrowers, Frank Ruiz, was sentenced to two years in prison and ordered to pay $6.3 million on MBLs he defaulted on. Schaffer has not been charged with a crime.
AEA FCU is the one-time credit union for the Arizona Education Association.
