The FBI is probing allegations of possible financial improprieties at the six Philadelphia-based credit unions liquidated by the National Credit Union Administration (NCUA) earlier this week.
The six closed institutions—all of which had management contracts with Bensalem, Pa.-based Service Center for Credit Unions (SCCU)—were Cardozo Lodge FCU ($226,485 in assets; based in Bensalem, Pa.); Chester Upland School Employees FCU ($827,259; Chester, Pa.); Electrical Inspectors FCU ($65,894; Bensalem); O P S EMP FCU ($1.1-million; Bensalem); Servco FCU ($2.2-million; Bensalem); and Triangle Interests % Service Center FCU ($290,098; Bensalem).
Those six institutions were all headed by a woman named Joni Brown, who runs SCCU, which provided record-keeping, data processing, management services and other services for other small credit union, as well.
While neither NCUA nor SCCU would comment on the ongoing situation, the former president of one of the liquidated credit unions told Credit Union Journal that he was informed that the FBI’s Philadelphia division has begun an investigation of “missing money” at the affected credit unions.
“There’s apparently money missing from some of the CD accounts,” said Jim Wasylenko, the former president for O P S EMP FCU.
Wasylenko could not provide any further details, however he noted he told the former members of his credit union that their accounts were insured by the National Credit Union Share Insurance Fund, which is administered by NCUA.
According to SCCU’s website, the company also provides services to about two dozen other credit unions, mostly small institutions based in and around the Philadelphia area. Persons reached by phone at two of those credit unions would not comment either on SCCU or on the situation surrounding the liquidated credit unions. A survey of the credit unions listed as SCCU’s clients revealed that a number of these institutions were deemed “inactive” by NCUA.
According to the transcripts of a colloquium sponsored by the Filene Research Institute and the Center for Credit Union Research on “Outsourcing and Sharing Credit Union Management,” SCCU was originally incorporated by a total of four partners in 1982, although Jones eventually took whole ownership of the firm. She also noted that she had worked in the credit union movement “since the late sixties.”
“From 1971 to 1982 I performed recordkeeping services from my home,” she told the attendees, according to the colloquium transcript. “I planned to keep the books for credit unions as a part time job, and have a lot of spare time. Once I got into the credit union movement, I wanted to help small credit unions that needed help, and spent many hours doing books with treasurers in their basements or in the back room of the factory.”
She also emphasized how her company sought to help smaller credit unions survive.
“Our mission is to offer affordable services to smaller credit unions,” she told the colloquium. “We want to keep those smaller credit unions independent and effective in serving their members. Through our services, we hope to stem the tide of liquidations and mergers, and demonstrate to the credit union movement that there is a place for smaller credit unions.”
Also, according to a report from CUNA, in June 2013, Brown attended the Annual Conference of the National Federation of Community Development Credit Unions in Baltimore. At that meeting, Brown said: “There is a place for small credit unions. I don’t want to see mergers—I don’t like to see you go by the wayside.”
