Lawyers for former America Samoa Government Employees FCU Manager Bernard Gurr claimed last week that the souring economy on the tiny South Pacific island, and not fraud, sunk the $6-million credit union in 1993, one of only two credit unions in the U.S. territory.
Gurr is charged ion a 22-count indictment with false entries in the books of a financial institution, false statements on loan applications, embezzlement and witness tampering in connection with the failure of ASGEFCU, which cost NCUA $4.5-million in losses to the insurance fund.
Gurr's Washington attorney, Joseph Conte, told the jury the tiny island's 46,000 residents were devastated during1989-1991, first by government layoffs and then by major tropical storms, Typhoon Ofa and Hurricane Val, which battered credit unions members as well as the 77-square mile island.
"It wasn't Bernard Gurr that caused the closing of this credit union in 1994. There were many other things. Indeed, it wasn't defalcation by Bernard Gurr," said Conte.
Among the charges against Gurr are that he made millions of dollars in faulty loans to cronies; he misused loan proceeds meant for a credit union member; he drew loans from the credit union under a nominee account; he changed loan documents to falsely show individual loans were under $50,000, the credit union limit; he ordered employees to change loan records when NCUA examiners were coming in, and he ordered employees to refinance delinquent loans.
"The defendant's friends and cronies became rich, while ordinary credit union members sat in the lobby waiting for hours and then lost their savings. They did not live happily ever after," said prosecuting attorney Anna Matheson.
Gurr, who ran the CU from 1989-1993 (NCUA ran it under conservatorship until 1994) was arrested in December of 1999 at Honolulu's airport with the credit union's records hidden in his luggage. He posted bond, and has been living in Hawaii since then. The trial began last week in Washington, half-a-world away from American Somoa, because Washington courts have jurisdiction.
Conte said they had the option of holding the trial in Hawaii, but chose Washington because they believe Gurr would stand a better chance of acquittal, due to the traditional animosity between Hawaiians and Samoans.
