CUDAHY, Wis. – A week after the break-up of the merger between Prime Financial CU and Guardian CU, state regulators took financially ailing Prime Financial under conservatorship on Friday.
In seizing the $190 million credit union, the first takeover of a state charter here in eight years, the Wisconsin Department of Financial Institutions said an investigation into the management of the credit union is under way.
Prime Financial, chartered in 1923, lost $8 million in 2008 and was forced by state regulators to remove its long-time CEO Richard Koenig and the board of directors. Christine Dawe, a consultant with expertise in helping troubled credit unions, now is in charge of the credit union.
The combination with Guardian CU, which itself lost $2.4 million last year, was to create the state’s 11th largest credit union with about $5 million in assets.
Prime Financial is one of the owners of mortgage CUSO Central States Mortgage Co. which is embroiled in a number of civil lawsuits, including one in which it claims its former owner and CEO Richard Jungen defrauded it of $15 million, and Koenig was chairman of the Central States board.
