Speculators Stalk CU Conversion Candidates

NEW YORK – Three more speculators were charged today with a sophisticated fraud scheme to gain access to initial public offerings of 23 mutual savings banks–including five converted credit union offerings–earning them more than $3 million. The scheme involved gaining illegal membership in numerous credit unions rumored to be considering conversion to banks, an important first step to gaining preferential access to lucrative IPOs. The case follows the May conviction of four others who earned $12 million from speculating in mutual savings bank conversions, including eight credit union converts, and last year’s conviction of nine others in the 2004 IPO of New Haven Savings Bank. In the latest case, the Securities and Exchange Commission charged Mark Ristow, a 62-year-old Indianapolis real estate investor, his cousin Andrew Crabb, 41, and his sister-in-law Susan Gitlin, 49, with a scheme that obtained depositor status in 150 mutual savings banks targeted to go public, earning the group big windfalls when many of them did. Those included: First Pactrust Bancorp (Pacific First FCU), which went public in August 2002; Synergy Financial Group (Synergy FCU) which went public in September 2002; Rainier Pacific Financial Group (Rainier Pacific CU) October 2003; and Citizens Community Bancorp (Citizens Community FCU), which issued stock twice in a so-called two-step conversion (2004 and 2006). The civil suit illustrates the great lengths the speculators went to establish membership in credit unions before they converted, in hopes of getting the maximum allowable shares afforded to members/depositors after an IPO. The group created a phony business it tried to qualify as a member of Affinity FCU, a New Jersey credit union that never converted. They established a fake post office box address to obtain membership in a Miami credit union, believed to be Eastern Financial Florida CU, which was rumored to be considering a conversion to bank, but never did.