New Fraud Charges in Norlarco CU Case

FORT MYERS, Fla. – An investor in one of the speculative homes in Cape Coral filed a new suit against Norlarco CU Friday, alleging the Colorado credit union engaged in a sophisticated fraud scheme to inflate real estate appraisals in order to qualify ineligible borrowers for home loans there. The suit, filed in federal court here, claims Norlarco lent money to investors knowing the investors could not repay the loan, but used inflated appraisals to qualify them anyway. The suit also names as defendants First Home Builders of Florida and its affiliate, First Mortgage Lenders of Florida, both of which have been acquired by home building giant K. Hovnanian Enterprises. The suit is similar to, but adds new details to, similar claims filed in dozens of suits brought in state and federal courts naming Norlarco, as well as Huron River Area CU and New Horizons Community CU, all of which have been taken over by NCUA in recent months. The parties to the suits are scheduled to meet in a public hearing at the U.S. District Court for the Middle District of Florida on Monday. New Horizons Community CU of Denver was sold by NCUA in a purchase and assumption agreement last June to Security Service FCU in San Antonio. The three failed credit unions had more than $500 million in residential construction loans to Cape Coral and adjacent Lehigh Acres, many of which have been defaulted on.