ORLANDO, Fla. — A group of borrowers from all over the country filed suit in federal court last week claiming a massive membership fraud at Huron River Area CU, the Michigan credit union that financed speculative real estate deals in south Florida that helped cause the failure of that and two other CUs.
The suit comes as NCUA, which is liquidating the one-time $360-million credit union, is trying to collect on millions of dollars of loans made by Huron River Area in two south Florida areas, known as Cape Coral and Lehigh Acres.
The borrowers, from California, Maryland, Massachusetts, Tennessee, Florida, Illinois, Texas and Michigan, claim that they were fraudulently allowed membership in the Ann Arbor, Mich., credit union in order to qualify them for construction loans.
"Plaintiffs were never legal members of Huron River Area CU because they are not within the field of membership of Huron River Area Credit Union, their membership applications were fraudulently altered and changed by Huron and/or an agent of Huron, and therefore the assignment of the construction loans and mortgages are void as illegal," reads the suit.
As proof, the borrowers cite a report issued this summer by NCUA that concludes Huron River Area violated several regulations, including the one on membership eligibility, in the financing of the south Florida real estate loans.
Among the defendants named in the suit are NCUA, and Whitney Education Group, which sold the get-rich-quick real estate speculative scheme to investors across the country through its "Millionaire University" program. Under the program, enrollees were sold undeveloped plots in the two developments just east of Naples, Fla., that were purported to be pre-leased, and promised a return of more than 14% in a year's time. The scheme also contributed to the failures of Norlarco FCU and New Horizons Community FCU.
