Money is No Object

RESOLUTIONS 

Over the past two weeks, Priority One Credit Union's President, Charles R. Wiggington, Sr. has disclosed that he is aggressively implementing corrective actions needed to taper and eventually stop the credit union's ongoing financial losses. He describes three areas where he is targeting his efforts. These are:

• Identifying key causes for financial loss
• Resolving issues plaguing employee morale
• Reducing account closures

During May's annual meeting, he attributed the cause for the credit union's financial losses to the state of the national economy and California's high unemployment rate, both factors which he not only identified but if true, he doesn't possess the ability to resolve.

He is the single-most contributor to the decay of employee morale at the credit union. Unless he's gong to undergo a dramatic change in conduct, his alleged efforts to resolve this will fail.

On January 4, 2007, he announced that he would be implementing a retention program which would  reduce account closures. He described a plan which would appoint one or two employees who would intercede and speak to members who request closing their accounts and offer them incentives to retain their membership. To date, his retention program had yet to be implemented and based on his history of procrastination, don't expect it be realized at anytime in the near future. 

DISCORD

It's not only non-exempt staff who have grown tired of the President's failing business decisions and abhorrent personal behaviors. There has been growing dissension within the managerial sector, with some managers becoming more vocal about the President's leadership style and some have expressed a reluctance to comply with his directives. 

The President is a man who knows nothing about creating effective strategies, almost always relying on what he believes to be true. Three weeks ago he ordered that the Real Estate Manager be issued a written warning for disagreeing with his plan to depart from standard real estate loan procedures;

He has also increasingly criticized CFO, Manny Gaitmaitan, for refusing to manipulate financial reporting to create the impression of reduced losses and increased profits. And though President Wiggington has frequently expressed his disdain for gossip, he continues to be the credit union's biggest gossiper and adversary to business and morale.  

BABBLE

On August 18th, Priority One Credit Union's President, Charles R. Wiggington, Sr., issued yet another statement, assuring members that he is doing everything to resolve the problems that have caused Priority One's dramatic decline and in particular, a drop of its Net Income, Net Capital and what appears to be growing disinterest in its financial products and services. Excerpts from his statements are shown below:

"The past months, including July brought many challenges for the credit union. Our net capital decreased 0.61% to 6.35%, due to computations made on our mortgage loan modifications."

 "Every effort is being made to control delinquencies. However, we currently have $,338,509.26 in delinquent mortgages which represents 78% of our total delinquency. Loans decreased by $419,259.67 and shares decreased by $1,211,480.69. Our total membership decreased for the first time since the inception of shared branching by 35." 

"The decrease in membership is mainly due to dormant account closures. The total amount approved for loan modifications were $1,252,786.30, which includes three first mortgages totaling $1,133,623.63." 

"We will also continue to aggressively control operating expenses in all areas. Our focus is to control dividend expense and generate greater income." 

NET CAPITAL

The simplest explanation for the credit union's decline in Net Capital is a lack of new business and over-spending by President Wiggington. 

The President has failed to create strategies that produce the amount of profits needed to offset overhead. He often blames the national economy and claims "all credit unions are losing money." His statement is of course untrue and is a gross generalization. A search of the Financial Performance Reports ("FPR's") on the NCUA's website for other credit unions reveals that in spite of the national economy, some credit unions have grown and are thriving. Of course, the leaders of those organizations quickly responded to the challenges which arose when the national economy suffered and found through their diligence, ways of re-inventing how their organizations do business. Not so at Priority One where the President is lazy, incompetent, and more immersed in gossip and creating internal discord than he is in developing business. 

DELINQUENCIES

President Wiggington's most frequent complaint is that real estate loans don't have a quick turn around time, forcing Priority One to wait for years, sometimes decades, before a real estate loan is paid-off. Though his statement is true, it is rather conspicuous that this only became an issue after he became President on January 1, 2007. 

Prior to his appointment, his predecessor developed and offered seasonal loans which created a reliable stream of income, but in January 2007, Charles R. Wiggington, Sr. ended all seasonal loans because in his words, "I don't want anything my predecessor developed." Not only is his statement inane, it is psychologically disturbing and suggests that the root of the credit union's financial troubles are rooted in the President's emotional state. 

ACCOUNT CLOSURES

The President is again, not being forthright. The decrease in membership is due to increased account closures. The most frequent reason provided by members closing their accounts is "poor service." That has absolutely nothing to do with the subject of dormant accounts. 

However, the procedure of closing dormant accounts was in place long before Charles R. Wiggington. Sr. was appointed President but when he became President in 2007, he intentionally neglected closing long-standing dormant accounts. His excuse: "[Dorman accounts] make it look like we've got more members." Yes, it does create the false impression the credit union has a large sector of members but Dormant accounts belong to members who are actively participating in what the credit union has to offer, thus making them inconsequential to new business. The problem with President Wiggington is he has never developed a single strategy that tries to convert dormant account holders into active participants of the credit union. 

CONTROLLING OPERATING EXPENSES

President Wiggington has had more than 2 years in which to implement aggressive controls over operating expenses and he's done absolutely nothing about doing so. However, the reason operating expenses are a problem is because of his failure to implement methodologies that develop business, generate profit and increase membership. Every business has operating expenses and every business should control unnecessary business but why is it that his predecessor had no issues with operating expenses while under President Wiggington, these have become a critical problem? 

President Wiggington talks and talks and talks, continually repeating the same empty assurances and never achieving his supposed goals for the credit union. So is the problem the national economy, operating expenses or President Wiggington? You know the answer. 

THEFTS

The following paragraph appeared in our last post. 

"Recently, Mr. Wiggington, Sr. confided that a member of the LAPDC reported that her CD had been closed and reopened in a lesser amount. This prompted an audit which verified this to be true and which has shown that approximately $6000 were embezzled by the employee transacting opening, closure, and reopening of the CD." 

The audit was conducted by Turner, Warner, Hwang, and Conrad, Priority One's contracted external auditors. The investigation took place over a three-week period  and has now been completed and found that tens of thousands of dollars were embezzled by a former receptionist assigned to that location. 

YEAR-TO-DATE NET INCOME

Prior to January 1, 2007, the date Charles R. Wiggington, Sr. began his appointment to President, Priority One's Net Income approximated $172 million. 

As reported in our last post, from January 1st to July 31st, 2009, Priority One's Net Income decreased by $4,003,555.89. 

In a it's financial statement to the Board of Directors, the President provides the following actuarials:

WesCorp write-down of Capital Permanent Capital Shares:

$1,598,590.47

Increase in Allowance for Loan Loss account:

$1,598,590.47

Increase in Allowance for Loan Loss account:

$1,500,000.00

NCUSIF Initial Adjustment 1% to 1.3% of Insured Shares:

$224,669.07

Year-to-Date Net Operating Loss:

$680,296.35

Other information contained in the report, cites that:

• Delinquency Ratio increased from 4.18% to 4.86%
• Delinquencies increased from $4,789,226.74 to $5,544.909.06
• Net Charge-Off ratio improved slightly, reducing from 2.64% to 2.68%
• Return on Average Assests (ROA) declined from -2.62% to -2.65%
• The Net Capital Ratio decreased from 6.96% to 6.35%*

*Undivided earnings of $7,575.844.62 plus Regular Reserve of $5,128,606.33 plus Allowance for Loan Losses -$2,600,000.00 minus Classified Loans of $3,737,003.00 divided by Total Net Income in the amount of $182,201,537.08.

The President also states that the unpaid balance of "$10 million" from the loan obtained in mid-2008 from the credit union's line-of-credit, will be paid in full sometime in September. Payment of the loan will reduce "Net Income by $10 million and will increase Net Capital from 6.35% to 6.72%.

Based on the President's statement to the Board, the loan of $20 million may have increased the amount of Net Income on paper but it contributed to the decline in Net Capital while burdening the credit union with an exorbitant and completely, unnecessary expense. 

THE BOARD

Earlier today, President Wiggington met with the Board of Directors to discuss the credit union's present financial standing but his spiel that paying off the remaining $10 million balance of the loan he borrowed in 2008, may soon improve the credit union's lagging performance, was not met with the enthusiasm he had expected. 

Despite his assurances that business is about to undergo a dramatic improvement, even the ignorant Directors seemed unable that this is the same sales pitch he's used since 2007 and each month, the credit union seems more and more immersed in financial issues. 

Though apparently not entirely persuaded by the Board, its Chair, Diedra Harris-Brooks not to hold the President entirely accountable for the credit union's problems and took a moment to  point fingers at long-time CFO, Manny Gaimaitan, who they labeled "uncooperative" and who the President accused of not possessing the ability to understand the President's "vision" for the credit union.

Following years of employment, the CFO has suddenly lost his comprehension skills. What's more, he lacks the ability to comprehend the President's "vision." What the CFO may not understand are President Wiggington's "hallucinations." 

SCAPEGOATS

Historically, Charles R. Wiggington, Sr. finds scapegoats.who he promptly victimizes and blames for his many inept business decisions. The CFO has officially become his latest victims. The CFO, who loyally served former President, William E. Harris, and whose abilities were never scrutinized or berated, has now become the latest target of the highly flawed President's aspersions. 

In 2007, after refusing to carryout security procedures which resulted in the mailing of ballots in envelopes on whose exterior were printed member credit union account and social security numbers, President Wiggington quickly placed the blame on the then IT Supervisor though the supervisor had absolutely no involvement in the security breach. 

Since 2007, President Wiggington has refused to market business in Riverside County resulting in rampant account closures at the Redlands and Riverside branches. The President has typically leveled all blame on his predecessor, accusing the retired President of orchestrating a bad merger which he says has created a "mess" for him. 

Though prior to the date of his appointment to President, the Marketing Department was the recipient of annual industry awards, in 2008, the President blamed the department's former Director stating that she somehow and inexplicably created problems that have caused the credit union to lose the ability to generate new business. The President, of course, fails to cite anything that proves that she is the cause of business problems that coincidentally started on the day he became President. Who would the President blame if he were the only living survivor on planet Earth? 

SHOPPING SPREE

And though President Wiggington has been insisting he is reducing spending, "streamling" and "working smarter", so many of his cost cutting decisions are constantly being offset by spending- spending orchestrated by him.

His implemented wage freeze has had its most profound effect upon employee salaries, while he and his executive staff have been exempted from receiving annual raises and bonuses.

The President with the help of AVP, Rodger Smock, who is also the Director of Human Resources, has again  violated law and has ordered that many employees work outside their job classifications. This is illegal under California labor laws.

He also has ordered that many part-time employees work 40-hours per week without receiving benefits allotted to full-time staff.

The President's campaign to reduce spending was recently counteracted by his decision to hire t he consulting firm of Lillestrand and Associtates http://www.lillestrand.com/.  The firm was highly recommended by COO, Beatrice Walker, who describes them as reputable and as a firm she worked with previously while employed at another credit union. According to their website, the firm promises to  "squeeze every drop of performance improvement possible from the [effects of the] current [economic] "catastrophe."  

The firm touts itself as staff development specialists and according to their website,  "In the new information economy, people are the new capital. You can select from a wide menu of over two dozen insightful and effective developmental workshops to help enhance your team’s job satisfaction and work effectiveness."

On August 18th, owner and consultant, Loren Lillestrand, visited the South Pasadena branch and over the next 2 days, met with groups of employees who were administered tests to determine their personality types. 

When testing was completed, Mr. Lillestrand informed employees that the tests would be used to determine the "likes" and "dislikes" of each person. These would be used to place them in positions where they would most benefit the credit union while allowing them to enjoy their work. So was Mr. Lillestrand hired to assess employee strengths and preferences or was he hired to help President Wiggington identify which employees were dissatisfied with the President's mode of administration so that they could be targeted, branded, and driven out of the credit union?  

After each meeting, Mr. Lillestrand met with individual employees whose names were provided by President Wiggington and AVP, Rodger Smock. So why would the President in the midst of expense reductions, hire Mr.Lillestrand's firm? Not only did the President approve the hiring of Lillestrand and Associates but also contacted Jeff Call of Focus, a company whose services include employee coaching, management development and specialists in helping forge strategies that create effective marketing. Their website is located at http://www.focusandexecute.com .

So where has the President found the financial resources needed to hire expensive consultants? Based on the areas where he's introduced expense reductions, the source may be money saved as a result of the wage freeze implemented over non-exempt staff salaries. 

During what the President boasted as a strategizing two-day session, the President ordered catered food service, again bringing into scrutiny his so-called cut-backs in spending. It of course never occurred to the obnoxious President that a positive affirmations to his efforts to reduce spending would have been set if Directors, Supervisors and other officers had purchased their own food and beverages. 

BACK TO THE DRAWING BOARD

Contrary to the President's 2008 assurances that his then new phone system would resolve all service issues and avoid creation of a Call Center, COO, Beatrice Walker, recently convinced the Board that what Priority One most needs is a Call Center. Ms. Walker has disclosed that the Call Center will serve as an "all-stop center" and will enhance service by providing nothing less than stellar member service. Does this mean that Charles R. Wiggington, Sr. wasted $600,000 on a telephone system that may prove obsolete if and when the Call Center is created? 

The failed telephone system was purchased and implemented without the President first conducting a careful study to show its feasibility to meet the credit union's needs. Its technical issues further intensified the credit union's member service issues which heightened Priority One's already debilitated relationship to its membership.

So how much will the credit union now spend to build a Call Center? Ms. Walker has disclosed that the credit union will have to purchase equipment and software needed to carryout the center's functions along with purchasing new furniture and telephones. The credit union will also have to hire a staff for the center and procedures and policies will have to be written for the new addition. The credit union will also have to implement and emergency back-up plan and create a schematic to ensure everything functions as planned.   

A NEW WORLD 

Net Income and Net Capital have declined. In response, President Wiggington has implemented drastic expense reductions. At the same time, he's now committed the credit union into entering some highly expensive enterprises. All the while, the biggest impact of spending cut-backs is the effect the President's wage freeze is having upon non-exempt staff, the same people who do the work of the credit union. The President has also found a new scapegoat in CFO, Manny Gaitmaitan, who according Charles R. Wiggington, Sr. is difficult, uncooperative, and unable to understand the President's vision which we think is a reference to his special brand of delusions that drive his abysmal business decisions and abhorrent personal behaviors. So what the future hold for the formerly prospering credit union? Well, we don't foresee success in Priority One's future and we think its safe to say, this is one organization that isn't going to experience future growth. 

Half Empty or Half Full?

The July 2009 Financial Report

This post focuses on Priority One Credit Union's financials for the month of July 2009. The amount of Net Income for the month of July and the amount of year-to-date net income are shown below.  

Net Income (Loss)

Month-to-Date

-$87,774.10

Year-to-Date:

-$4,033,555.89

As reported in our last post, President Charles. R. Wiggington, Sr. has recently been vocal and declaring that business is in his words, "great", "growing", and "improving." If business is in fact improving, it isn't apparent by the credit union's reports which inarguably show a negative balance in net income. 

The amount of net income reported for the month of June was -$92,677.61 which is undoubtedly higher the -$87,774.10 reported for the month of July. In that sense, business has improved though it doesn't change the fact that Priority One remains in a financial hole. July 2009 marks almost one year that the credit union has not generated profit. Of course, President Wiggington might insist that the amount of losses reported for the month of  July are less than the amount of losses reported for the month of June and he would be right, but then again a loss is a loss which also means, Priority One is not generating profits. 

Several months ago, due to the credit union's inability to acquire new business at levels that would offset overhead and generate profits. President Wiggington implemented expense reductions, including a wage freeze on the salaries of non-exempt personnel and what he describes as a temporary suspension of all promotions. However, his reductions have not been applied to raises and promotion of management personnel. 

The President's so-called reductions have also not brought a cessation to his undisciplined spending. A few months ago, he approved the purchase of a teller cash machine for the new Airport branch. The cost of the machine exceeded $45,000.  However, the President chose not to purchase the software needed to bring the teller cash machine online and so the expensive machine remains unused, lying in a storeroom at the main branch. 

A few months ago, Board Chair, Diedra Harris-Brooks experienced problems using her VISA Check Card and called the main branch, complaining that the President should have purchased a card embosser that would have provided the credit union with the ability to print check cards. An embosser was ordered and delivered to South Pasadena but like the teller cash machine, the embosser remains unused, lying in the brnach vault, collecting dust. 

During May's annual meeting, President Wiggington stated to attendees that he is now
working smarter." Is spending money on expensive equipment that is not be used an example of his improved intellect? 

The credit union's net capital has failed to 6.35% while delinquencies continues to increase as a result of delinquent mortgages. The credit union has reported losses due to delinquencies in excess of $4 million. 

And though the President promised throughout 2007 that he was going to implement a retention program that would reduce account closures, to date there is no indication of when or if his alleged retention program will ever be realized. 

In July 2009, the credit union reported charge-offs in the amount of $118,154.84. At the time, the credit union had only budgeted $60,000 to cover charge-offs. 

In an effort to reduce losses, the credit union has sold a large number of its real estate loans to Fannie Mae, an agreement which will be finalized later this month. The President plans to generate income from the sale of the loans and decrease, the interest rate risk on 30-year mortgage loans. The President has recently said he intends to use the proceeds from the sale of loans to enter into a business relationship with America's Christian Credit Union. He says that funding church loans for a period of 5-years will reap higher yields than are being gotten through Priority One's current home loans. 

Due to the length of the credit union's July Income Statement, we've decided to provide excerpts of the report. 

ASSETS

LOANS

$114,032,903.98

LESS ALLOWANCE FOR LOSSES

$2,600,000.00  

NET LOANS

$111,432,903.98

ACCOUNTS PAYABLE

$3,034.565.77

CASH

$2,899,352.03

INVESTMENTS

$58,570.858.94

INVESTMENTS IN COOP

$40,000.00

INVESTMENT IN FSCC

$24,000.00

NCUA DEPOSIT

$1,284,522.90

B. LIABILITIES AND EQUITY

Accounts Payable

-$464,571.77

Notes Payable

$20,000,000 

(the above reference is for the 2008 loan borrowed from the credit union's line-of-credit)

Accrued Expenses

$486,721.02

Dividends Payable

$14,156.00

Suspense Accounts

$0.00

Other Liabilities

$15,979.68

Shares

$149,544.801.20

Total Liabilities

$169,497.086.13

C. EQUITY

Regular Reserve

$5,128,606.33

Undivided Income

$7,575.844.62

Total Equity

$12,704,450.95

Total Liabilities and Equity

$182,201.537.08

D. OPERATING INCOME

Interest on Loans

Month-to-Date

$585,661.74

Year-to-Date

$3,883,228.10

Income from Investments

Month-to-Date

$159,454.07

Year-to-Date

$992,625.31

Fees and Charges

Month-to-Date

$232,799.17

Year-to-Date

$1,472,193.80 

E. OPERATING EXPENSES

Employee Salaries/Bonus

Month-to-Date

$332,276.31

Year-to-Date

$2,163.265.05

Employees have not gotten bonuses in years, so a part of this amount must be for bonuses awarded to the President 

Telephone Expenses

Month-to-Date

$27,700.67

Year-to-Date

$193,299.97

Does this include the amount be paid each month for the $600,000 telephone system purchased by the President in 2008? 

Equipment Maintenance

Month-to-Date

$35,573.32

Year-to-Date

$232,082.41

What equipment are the above amounts referring to?

 Education Expense: Staff

Month-to-Date

$1379.51

Year-t0-Date

$10,541.05

What education is this referring to? The credit union provides no materials during periodic classes taught by Robert West. 

Education Expense: Senior Mgmt

Month-to-Date

$0.00

Year-t0-Date

$3834.15

Senior Management has not been enrolled in classes. So what is the above education expense for? 

Education: Supervisory Committee

Month-to-Date

$1224.62

Year-t0-Date

$9227.26

Does the $9227.26 constitute money spend sending the supervisors to Hawaii and Las Vegas?

Education: Board of Directors

Month-to-Date

$0.00

Year-t0-Date

$960.00

What exactly was $960.00 spent on? We know it wasn't related to education.

Training Expense

Month-to-Date

$1788.79

Year-to-Date

$11,213.82

Training expense? How so? We think this is an example of "cooking the books" and the President may have posted monies spent sending the Directors and Supervisors to Hawaii and Las Vegas under this heading.

 Member Research

Month-to-Date

$0.00

Year-to-Date

$0.00

No money spent on "member research." Enough said. 

Real Estate Expense

Month-to-Date

$0.00

Year-t0-Date

$0.00

Elimination of all real estate loan funding except HELOCS. 

Legal Expenses

Month-to-Date

-$1399.92

Year-to-Date

$77,302.54

Why has so much been spent on legal? When Mr. Harris was President, legal spending approximated $20,000 to $22,000 per year. It is only August and  the credit union has already spent more than $77,000 on legal. Why?

Consultancy Fees

Month-to-Date

$3750.00

Year-to-Date

$33,185.04

An outrageous amount spent on consultants and yet, there is nothing to show for it. 

Shared Branching Expense

Month-to-Date

$4936.24

Year-to-Date

$32,443.17

So how much return is the credit union getting in return for spending more than $4000.00 each month to participate in Shared Branching?

Provision for Loan Losses

Month-to-Date

$118,154.84

Year-t0-Date

$2,005,960.86

NCUSIF Stabilization Expense

Month-to-Date

$0.00

Year-to-Date

$1,111,125.73

 Interest on Borrowed Money

Month-to-Date

$60,569.05

Year-to-Date

$413,885.55

This is the interest being paid out against the $20 million loan borrowed by the President. Is this an example of what he has said is "thinking smarter"?

Annual Meeting Expenses

Month-to-Date

$97.09

Year-to-Date

$51,522.40

There is no way, the credit union spent more than $50,000 on the annual meeting. The frugally put together affair could never have cost this amount. So what was did the credit union spend that cost more than $50,000?

Board of Directors/Supervisors

Month-to-Date

$1077.71

Year-t0-Date

$8201.96 

Why was this much money spent?

Branch Expenses

Month-to-Date

$0.00

Year-to-Date

$0.00

Other Losses

Month-to-Date

$6931.10

Year-to-Date

$47,403.94

Ballot Incident Expense

Month-to-Date

$0.00

Year-to-Date

$0.00

Why has the President not posted how much money was spent on reprinting and re mailing of ballots after he and Board Chair, Diedra Harris Brooks, violated state law and tried to limit how many members were receive notification of the election? 

Total Operating Expenses

Month-to-Date

$942,446.10

Year-t0-Date

$8,802,343.28

Income (Loss) from Operations

Month-to-Date

$46,767.74

Year-to-Date

-$2,300,169.75

Dividends Paid

Month-to-Date

$0.00

Year-t0-Date

$0.00

Loss (Gain) on Disp of Assets

Month-to-Date

$0.00

Year-t0-Date

$0.00

Loss (Gain) on Disp of Investment

Month-to-Date

$0.00

Year-t0-Date

$712, 133.81 

Total Dividends & Other Income

Month-to-Date

$134,541.84

Year-t0-Date

$1,703,386.14

NET (LOSS) INCOME

Month-to-Date

-$87,774.10

Year-to-Date

-$4,003,555.89

There are numerous questionable entires which we've noted. We don't believe this President has provided an accurate or actual record of Priority One's financials. 

We're uncertain if the President's recent stories alleging improvements to business are just more of his obsessive exaggerations or does he really believe business is improving when the credit union's actuarials prove business is in decline. For the moment and contradictory to the President's far-fetched stories, Priority One lies mired in the red. And no one knows when the President and his ignorant cronies will find a way of extricating the company from where it lies trapped. 

Internal Thefts and Cover-Ups

BRAINSTORMING

Last week, Priority One Credit Union conducted a two-day strategic meeting at its main branch located in South Pasadena, California. 

President Charles R. Wiggington, Sr. presented his plan to the Board of Directors which he promises will dredge the credit union out of its financial slump which has left it impaled in the RED. We can't understand how the man who caused the credit union's decline is going to, after three years, implement corrective measures that will reverse the causes of the credit union's decline. 

On another front, auditors from Turner, Warren, Hwang and Conrad have been working out of the Los Angeles branch, examining transactions processed by a former receptionist who resigned from the credit union after departing on maternity leave. 

The President has also informed staff members in the South Pasadena branch that business improved during the month of July. So do we accept his statements at face value or do should we ask Charles R. Wiggington. Sr. to provide evidence supporting his claims?

A MEETING OF THE MINDS

On Wednesday, August 5, 2009, and Thursday, August 6, 2009, Charles R. Wiggington, Sr. met with members of the Board of Directors. During what he has referred to as "a brainstorming session", the President disclosed his plan on how to jump start business, reduce delinquencies, increase membership, and increase loan development. 

The only barrier we see to the President's plans is the President, himself. President Wiggington has consistently failed since 2007, to create strategies that achieve their intended goals. Under his leadership, the credit union has lost millions of dollars of net income. In 2008, he purchased a telephone system that he insisted would bring an end to member service complaints and that would replace the need for a call center. Less than one year later, he is planning the installation of a call center because his $600,000 phone system which he selected without the assistance of any of his executives, has failed. So are we to believe that the same person who is most pivotal for the credit union's decline, is also the same person who will restore business and repair its decrepit public reputation? By the way, Priority One remains well embedded in the RED. 

Following his two day brain storming session, the President emerged more confidant, more jovial and more arrogant. Unfortunately, for President Wiggington, lip service is no substitution for actual results. Well, maybe to most people except the ignorant Board of Directors. 

The Board of Directors, under leadership of its Chair, Diedra Harris-Brooks, is made up of a body of wholly ignorant and ineffective officers. Each month, they require that the President interpret the credit union's financial performance reports. Its a clear conflict of interest, but something the Board is incapable of comprehending.  

The meeting was also attended by the AVP of Lending, Patricia Loiacano; the Director of Credit Resolutions, Yvonne Boutte; and so-called Training and Education Manager, Robert West. Noticeably absent, AVP, Rodger Smock. 

Though the President has asserted he is reducing spending, "streamling" and "working smarter", he had the two-day meeting catered proving again that the President has no inhibitions of splurging money that isn't his own.   

FINANCIAL FACTS

The Credit Union's Monthly Income Statement for the month of June 2009, discloses that delinquencies exceed 4%. At no time, in recent years, have delinquencies been so high. The report also reveals that during the month of June, the credit union paid $58,000 in interest against the $20 million loan borrowed by the President in mid-2008.  Priority One's capital also declined to 7%, nearing the dreaded 6% which all credit union wish to avoid. 

INTERNAL THIEVERY

No bank or credit union can avoid the incidence of internal thefts, though procedures and polices are created to ensure that occurence of these is reduced or all together stopped. Over the years, Priority One's Los Angeles Branch, former known as the LAPDC, has been the site of internal thievery. 

2000

Priority One used to sell Travelers Cheques. In the year 2000, an audit discovered that a large number of these had been stolen and cashed. The Supervisory Committee initiated an investigation but the stolen monies were never recuperated nor did the committee ever discover who perpetrated the theft. At the time, Charles R. Wiggington was the credit union's, Vice President of Operations.  

2002

In 2002, Henry Justice, the owner of Justice Auto Sales and close friend of Charles R. Wiggington, Sr., accepted $85,863.63 cents from the credit union covering the costs of vehicles purchased from the dealer by four employees of the credit union. Mr. Justice refused to surrender the pink slips for each vehicle and absconded with the money paid to him in good faith. 

As a result of the incident, the four members- S. Alexander, L. Aranda, I. Shell and J. Crawford could not obtain their Registration Cards. Over the next few years, the credit union's DMV Specialists were forced to visit the Department of Motor Vehicles each month to obtain temporary stickers that would serve in lieu of Registration Cards.

The credit union sued Mr. Justice, but the dealer filed for bankruptcy (11 U.S.C. §§523(A) (2), (4) AND (6)) and court discharged Mr. Justice's debt allowing him to escape have to repay the credit union the monies he had stolen. 

2008

In 2008, Mr. Wiggington, Sr. met with Mr. Justice on two separate occasions. During each meeting, employees could hear loud laughter coming from the President's office. Apparently, the two were reminiscing over the good old days. After their meeting ended, the President visited AVP, Patricia Loiacano and informed her that he was reinstating a business relationship with Mr. Justice and his son's dealership. 

The President told Mrs. Loiacano that he would be printing fliers promoting the dealership and that in a few days, business cards for the new Justice Auto and Sales, would be distributed to every employee of the Loan Department. He also said that once fliers and business cards were distributed, loan department personnel would be ordered to only recommend Mr. Justice's dealership which meant the President was severing the credit union's long standing relationship with Universal Leasing and Sales. 

So why would President Wiggington resurrect a business relationship with a man who absconded with more than $83,000 of credit union monies? We have to conclude that Charles R. Wiggington, Sr. doesn't care about the credit union , its members or its employees and as is typical with the horrendous President, he constantly rewards wrong. It's just who he is. 

Fliers were printed and a few days later, Mr. Justice visited the South Pasadena branch, delivering a box of his business cards.  The President's plan seemed unstoppable, at least to the President. Here is information obtained from Mr. Justice's business card:

LONG'S AUTO SALES

Henry Justice/Dealer

800.863.KARS (5277)

Office: 310.768.3506

Fax: 310.768.4111

Cell: 310.739.7206

451 E. Carson Plaza Drive, Suite 204, Carson, CA 90746

Always pay less than retail

All vehicles CARFAX certified

Warranties available in all makes and models

Unfortunately, the President;'s hurried efforts to reinstate Mr. Justice were disrupted. The first impediment occurred when Mrs. Loiacano reminded him that Mr. Justice had absconded with more than $83,000 of credit union monies. She insisted that Mr. Justice be asked to pay back a portion of what he had taken. The President contacted Mr. Justice who agreed to repay $1300.00. 

Unknown to the President, the Loan Department staff decided they would not recommend Mr. Justice and would continue promoting Universal Leasing and Sales. 

The third blow to the President's plan was this blog. We exposed his efforts to reinstate Mr. Justice. On the day we published our post reporting the return of Mr. Justice, President Wiggington rushed into the Loan Department and asked every loan processor and officer to return the business cards he had passed out a few days earlier. When Board Chair, Diedra Harris-Brooks called to ask if what she read was true, he denied our report and said it was an attempt to slander his character. After ending his call with Mrs. Harris-Brooks, he called Mr. Justice and told him, that should anyone call and ask if he entered into an agreement with the credit union, that he should say it wasn't true. 

2009

Under President Wiggington and with the assistance of AVP, Rodger Smock, credit union policies are enforced inconsistently, with disciplinary actions strictly enforced against employees President Wiggington doesn't like and all together circumvented for employees who the President favors. In fact, some of the worst violators of policy have been promoted by the corrupt President. 

On June 1, 2009, the credit union hired its first COO, Beatrice Walker. As we've reported in previous posts, her arrival was understated and without fanfare and though she was introduced by name while AVP, Rodger Smock, led her through the South Pasadena branch, he never alluded to her title nor did he disclose what her role would be at the credit union. 

Recently, Ms. Walker stood before employees of all offices during one of the credit union's quarterly, all-staff meetings and for some inexplicable reason said that she responded to an ad in an unnamed newspaper, seeking a COO, She was called by the Board, who interviewed her and offered her the post. And she concluded by stating that she'd never met President Wiggington prior to her arrival at the credit union. There was just a little too much effort made by Ms. Walker to ensure everyone understood she never met President Wiggington prior to her June 2009 arrival at the South Pasadena branch. We don't intend any disrespect, but we don't believe her story. 

Following conclusion of the all-staff meeting, the South Pasadena Branch Manager, Gema Pleitez; the lead Consumer Loan Officer, Georgina Duenas; and FSR, Jennifer Preciado, told employees that one year earlier, the three women were walking towards Appleby's restaurant in the city of Alhambra. While crossing the parking lot, they noticed President Wiggington leaving the restaurant with Ms. Walker. For some reason, the three employees ran and hid behind an automobile, and watched as the President and Ms. Walker walked passed them without ever noticing the three crouching females. They told employees that the President and Ms. Walker were laughing and apparently joking with one another. 

Evidently, Ms. Walker lied when she placed tremendous emphasis on her statement that she never met President Wiggington prior to being hired by the Board. So why lie? Apparently, the President and Ms. Walker have some thing to hide. 

We were recently provided information about a case presided over the the NCUA in the case of Kennae Rakee Jeffries. Mr. Jeffries is a former temporary employee of Honda Federal Credit Union in Torrance, California, and at the time worked under supervision of Beatrice Walker. We've copied excerpts of the document which has since been removed by the NCUA from their website.  . 

III. Findings of Fact, page 2

“Respondent Kennae Rakeem Jeffries was employed by Honda Federal Credit Union from February 2002 Until October 2003. In May and June, 2002, using his access to FCU account systems, Respondent opened FCU accounts and obtained FCU VISA credit cards for his grandparents, Leroy and Joyce Douglas. Neither Respondent nor his grandparents were eligible to open such accounts. Respondent initially obtained supervisory approval to raise the credit limits on the two VISA cards, and then unilaterally increased the limits on each VISA card to $25,000, the maximum allowed. Respondent did not have the authority to do so. Respondent charged both of the VISA credit cards to their $25,000 maximum to pay his own personal expenses. Respondent caused the FCU to suffer an aggregate financial loss of $61,541.75, consisting an aggregate past due balance of $48,229.06 and accrued interest of $13,312.69. In order to avoid showing delinquencies in the two VISA card accounts, Respondent kited funds between the two VISA accounts and his own account. He also twice altered the FCU’s general ledger diverting the FCU’s retained earnings in order to bring the VISA card accounts current and to avoid showing a delinquency on the VISA accounts.” 

Under “Recommended Decision and Order”, Discussion, Paragraph 4, Page 2:

“Enforcement Counsel’s motion is supported by the sworn declaration of Steven L. Brandon, the chief operating officer of the credit union, and Beatrice Walker, manager of the credit union branch at which Respondent was employed as a member service representative. The Brandon declaration and credit union records attached thereto as exhibits detail how Respondent, using a former Honda employee’s membership number, created VISA credit card accounts for his grandparents, who were neither credit union members nor eligible for membership, and then increased their credit card limits, all without authority or proper authorization.”

Paragraph 2, page 5, continues:

“Walker, in her sworn declaration attests that she did not give Respondent permission or approval to open an account for any one who was not a credit union member, nor assist him by filling in an applicant’s employee identification number or mailing account application forms to anyone on his behalf. Walker further attests that she understands records indicate that she approved a request to increase the credit limit on one of the Respondent’s grandparents accounts and that she would not have approved such a request had she known the person ineligible to be a credit union member, was a relative of Respondent or that Respondent opened or controlled the account.”

Paragraph 1, page 4 further states:

“Respondent admits creating the VISA credit card accounts but asserts his manager approved them and increased the intial limits on them from $5000 to $10,000, apparently without reviewing the Douglas’ credit which would have shown their undischarged bankruptcy filing ( 6 – 8). Respondent identifies his supervisor as Bea Arthur rather than Beatrice Walker ( 6 – 8).

ACTUAL FINDINGS AND CONCLUSIONS OF THE LAW, Article 5, states: 

Without revealing his relationship to the account holders or that they had filed for bankruptcy, he obtained supervisory approval to increase the credit limit on one VISA credit card account from $5000 to $10,000.

The docket discloses that Beatrice Walker approved the increase of one of the cards without properly reviewing the application and the account holder's history. If she had, she might have realized that the account holder did not qualify for a $25,000 credit card. She also might have noticed that the signature was forged by the temporary employee who was under her supervision. 

Ms. Walker did not authorize opening of either of the accounts which were opened in the names of the Defendant's grandparents. She also did not approve an increase of the credit limit on one of the cards. The NCUA determined that the former employee must pay restitution in the amount of $61,541.75 plus interest. Despite her apparent negligence, Ms. Walker found a high paid position at Priority One Credit. And though while at Honda Federal Credit Union, she inadvertently violated credit union policy, she now oversees compliance at Priority One Credit Union.

August 2009

The President recently disclosed that a member who often banks at the LAPDC branch reported that her CD, opened in the amount of about $6000 had been closed and later reopened in the amount of $3000. According to the President, the culprit is a former receptionist who while employed by the credit union, pillaged member accounts, including CD's and IRA's. The President said "someone is going to pay for this." 

AVP, Lynnette Fortson, who oversees the Los Angeles branch has disclosed that her office's records are being audited by Turner, Warren, Hwang and Conrad and according to the AVP, the crime was reported to the FBI, though rather conspicuously, no one from the FBI has visited the branch. 

The entire incident is unfortunate but brings into question the effectiveness of Priority One's security protocols. And what happened to the credit union's tagline which tells members, "You Are Our First Priority." We of course, disagree. A few weeks ago, the President revealed the credit union's mission statement is being rewriting by Training and Education Manager, Robert West. The new statement describes Priority One as a "Fitness Center" possessing the ability to help members "win with money." We again have to disagree. 

So why did a year go by without Priority One ever noticing that monies had been embezzled from member accounts? The thefts were discovered because a member lodged a complaint, asserting someone had stolen from from her CD. Priority One is either not doing its due diligence to ensure all employees perform security measures or its procedures are in dire need of a make-over. However, it is important to realize that one of the worst perpetrators who chronically circumvents polices and procedures is President Wiggington. 

A HISTORY OF BREACHES

We're uncertain how the President will deal with this latest internal theft. When one considers that he hired a COO who while serving as supervisor of Honda Federal Credit Union's call center, failed to adhere to procedure and created the opportunity for one of her employees to abscond with $61,541.75. Not conducting a proper background check of Ms. Walker is but one of many breaches of security committed by President Wiggington. 

In 2007, he promoted Liz Campos even when knowing she incurred more than 24 individual NSF incidents to her Priority One checking account. An investigation revealed she had kited using checking accounts from three different financial institutions. The President denied all knowledge of the abuses and quickly blamed the Member Services Department for failing to advise him of the violations, however, an investigation also revealed that he had authorized the reversal of every NSF incurred by Mrs. Campos. 

In 2008, President Wiggington tried to reinstate a working relationship with Henry Justice, the owner of Justice Auto Sales. A few years earlier, Mr. Justice absconded with more than $80,000 of credit union paid to him for automobiles purchased from his dealership by four members. Mr. Justice filed for bankruptcy which was approved by the court and allowed him to escape having to repay any of the monies stolen years earlier. Despite Mr. Justice's egregious act, President Wiggington thought it prudent to re-enter into a working relationship with his friend, Henry Justice. 

Earlier this year, he lied to the DFI, denying that he had refused to post the credit union's Monthly Income Statements at any of the credit union's branches. A few weeks ago, having grown weary of what he described as the DFI's prying, the President finally conceded the resuming posting of the statements. 

He also purchased without consulting his executive staff, a $600,000 telephone system that has proven to be a technical fiasco and has forced the credit union to spend hundreds of dollars each month for the services of telephone technicians who have yet to resolve the system's widespread issues. 

It was also President who eliminated the Marketing Department because according to him, it didn't fit his "vision" for the marketing. If his vision was reducing new business, then his plan was phenomenally successful. 

The last Assistant Branch Manager of the Los Angeles office discovered that the book containing instructions for opening the branch's ATM was kept in unlocked desk drawer and not inside the vault as stipulated by policy. Anyone in the branch could have taken the book and used it's information  to remove money from the ATM.