Pulaski Financial (PULB) in St. Louis said Monday that it had discovered a fraud scheme by a commercial borrower that wiped out the profit for its latest quarter and nearly a third of its annual profit.
The customer, who claimed to be in the equipment-leasing business, defrauded Pulaski of $7 million in loans, according to the company's press release. The customer prepared false financial documents to purchase nonexistent assets, according to Pulaski.
The $1.3 billion-asset Pulaski revised its results for the three months ended Sept. 30, taking a $942,000 loss. In late October it had reported a quarterly profit of $3 million and a fiscal-year profit of $12.2 million; it lowered its fiscal-year earnings to $8.3 million.
Pulaski has $631,000 in collateral from the customer and plans to pursue collection of the loans, according to the release. The company also plans to file for an insurance claim under its fidelity bond, which carries a maximum limit of $5 million.