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. 

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