Rogue Brokerage Case Brings CUSuit

BATON ROUGE, La. - (10/31/02) -- In the first civil case brought overrogue broker Bentley Financial Services, Ascension School EmployeesCU has charged its accounting firm with failure to detect the fraudauthorities believe was perpetrated by the Paoli, Pa., CD broker. The suit, filed in state court here, claims thatProvost, Salter, Harper & Alford LLC failed to confirm theexistence of financial institutions Bentley allegedly invested the$4 million of the credit union's fund with. Instead, the auditorssought confirmation of the investments with a front company Bentleycreated, the credit union claims. Bentley, which brokered CDs for120 credit unions, was taken over last April by federal regulatorswho allege the firm operated a massive 'Ponzi scheme' by sellingCDs to institutional investors claiming the CDs were bank issued,when in fact, the funds were used by Bentley to buy CDs in its ownname at higher rates than those advertised to its clients. Areceiver for Bentley told The Credit Union Journal he expectscredit unions and other investors to recover about 95% of theirinvestments.