The CU Journal Daily
Giant Ponzi Scheme Earns Jail Term
PHILADELPHIA-A former investment advisor who sold phony CDs to hundreds of financial institutions was sentenced to 55 months in jail and ordered to pay $24 million in restitution in one of the biggest Ponzi schemes ever.
Robert Bentley, head of the now defunct Bentley Investment Services, pleaded guilty to fraud in a scheme that bought and sold more than $4 billion of CDs that Bentley portrayed as FDIC-insured but were, in fact, just paper IOUs he wrote out to his customers. More than 100 credit unions bought into the scheme and have been left with as much as $50 million in losses, including lost principal and interest.
In a classic Ponzi scheme, investors were paid with funds from later sales to make it seem the investments were legitimate. One credit union manager told The CU Journal he never suspected the fraud because he received timely interest and principal payments over more than five years.
Prosecutors said Bentley's scheme was doomed to fail because he paid himself and employees salaries that far exceeded the value of his firm's income, including $78,000 used to illegally import Cuban cigars, $20,000 for high-priced prostitutes and other goods and services for a trip to Las Vegas.
Ind. CU Eyes Broad Expansion
INDIANAPOLIS-Indianapolis Members CU, the state's second largest credit union, is planning a big expansion. The $950-million CU, fresh off a merger with $30-million Capital Plus CU, announced plans last week to add six new branches throughout the Indianapolis suburbs by 2009.
The CU, chartered in 1956, now serves more than 1,000 select groups throughout the state of Indiana and as far away as Boulder, Colo., through its 22 branches and 64 ATMs.
BSCU Sets Its Future On The Stars
FT. LAUDERDALE, Fla.-Officials at Broward Schools CU know that many students still earn stars from their teachers. That's why the $285-million credit union will become BrightStar CU the first of next year.
The new name is aimed at de-emphasizing the credit union's original focus on school employees, as it now serves all residents of Broward, Boca Raton and Delray Beach.
Branch Offers Troops Convenience
JACKSONVILLE, N.C.-Soldiers at Camp Lejuene will have easy access to the new branch at Marine FCU, which will sit just outside the camp's gate.
Officials at the credit union, the only one authorized to serve the Marine camp, broke ground last week on the $1.5 million facility. The 4,500 square-foot branch will serve soldiers and their families who live in the surrounding community.
Three of the credit union's nine branches are located on base, at Camp Lejuene, New River Air Station and Camp Johnson.
Ringleader Jailed In Biggest Heist
COLUMBUS, Ohio-The head of a gang that kidnapped employees of CUs, banks and check cashers, then forced them to open their businesses so they could rob them, was sentenced to 30 years behind bars.
Eric Watkins, 43, of Columbus, was the last of five men sentenced for a string of kidnap-style robberies in the Columbus area between March 2002 and July 24-including the biggest credit union heist ever. The gang members were convicted of the kidnap-style robbery at Western CU in July 2003, in which they stole $643,000, the most ever taken during a CU robbery.
A team led by Watkins and his brother Gary Watkins broke into the house of a credit union employee the night before the heist and told her to cooperate or be killed. She and her daughters were tied up until 5 am the next morning when the men took her to the credit union, but she couldn't open the vault. So the robbers waited until the employee who could open the vault reported to work before robbing the credit union. Two other brothers involved in the crime spree, Frankie Lee Jones and Darryl Jones, cut a deal to testify against the Watkins in exchange for reduced jail time. The gang was also believed to be responsible for the May 2003 robbery of $145,000 from Whitehall CU, and several other heists with a total take of more than $1 million.