The April Fools Edition

New Year, Same Issues

As we've done at the start of each new year, we took time away from the blog. During our absence we did observe that things seemed uncharacteristically quiet at Priority One Credit Union with nothing publicly said about the lawsuit filed by the credit union and its insurance carrier and bond company, CUMIS Insurance Society, against former external auditor, Turner, Warren, Hwang and Conrad nor was anything disclosed about the lawsuit filed by Turner, Warren, Hwang and Conrad against the credit union. The seeming quietude was completely out of character particularly when one consider that CUMIS' lawsuit and that of Turner, Warren, Hwang and Conrad, were scheduled to go to trial this past January.  As the last nine years 7 years have taught us, when things are unusually quiet at Priority One Credit Union it is because something is sorely awry. As it turned out, we were correct and at the start of 2016 it is apparent that this is a new year with the same issues plaguing a credit union that has been brought to the point of ruin by it's dishonest and incompetent President, Charles R. Wiggington, Sr., and the corrupt and useless Board of Directors. 

A "NEW" BUT TIRED FACADE

In November 2015, there were murmurings at the main branch in South Pasadena, California, that the Board of Directors had gown weary at the number of lawsuits filed against the credit union by former employees, members, by a formerly contracted automobile broker and by the credit union's former external auditor. In fact, the Board allegedly had become concerned by the immense amounts spent on "legal" since 2010. The amount spent on attorneys each year has quadrupled since Charles R. Wiggington, Sr. was appointed President on January 1, 2007. 

Another concern has been the incidences of internal thefts all occurring  at the Los Angeles branch and have included the theft of more than $60,000 by a former receptionist in 2009 and more recently, the theft of more than $1 million in cash discovered in February 2013 and allegedly embezzled by former AVP, Lynnette Fortson. 

In late 2015, the Board was also informed by the credit union's attorneys and consultants that over the past nine (9) years, the credit union's public image and reputation had suffered as a result of the illegal and unethical acts committed by the grossly incompetent President. Furthermore, he had been continually protected and allowed to escape retribution by corrupt Board Chair, Diedra Harris-Brooks. 

The Board was also informed that the Board's four Directors had historically proven they are subservient to Mrs. Harris-Brooks, allowing her to implement agendas that had proven harmful to the credit union, both as a business and employer. 

The Board and Supervisory Committee were also informed that the thefts occurring at the Los Angeles branch suggested that neither governing body was monitoring the credit union's security protocols and ensuring these are being implemented by all employees on a daily basis. 

Earlier this year, Mrs. Harris-Brooks and President Wiggington made a feeble effort to dispel the impression that the Board is comprised of ineffective and unethical Directors. And so, Mrs. Harris-Brooks allegedly amended the credit union's by-laws and added two new Directors which increases the number of Directors from five (5) to seven (7). Prior to January 1, 2007, the date the Board appointed Charles R. Wiggington, Sr. President, the Board consisted of seven (7) Directors but the President and Board Chair had in recent years reduced the number of Directors to five (5) because according to President Wiggington, he and the Board Chair needed to Directors who were willing to support the changes he and Board Chair hoped to make and that would serve to make Priority One a larger, more financially prosperous credit union. What he should have said is that he and the Board Chair needed Directors who are pliable to the whims of this dishonest duo. This year, two new Directors were added to the Board- Tyree Jackson and Art Now.  The Board now consists of 6 Black Directors and 1 Latin Director.  

In late January the NCUA published the credit union's Financial Performance Report showed that the credit union's asset size had increased slightly and President Charles R. Wiggington, Sr. was quick to point out that Priority One is experiencing, in his opinion, a resurgence in new business and growing. Of course, the credit union's asset size remains approximately $14 million less than what it was on January 1, 2007, the date Charles R. Wiggington, Sr. began his notorious appointment as President. Furthermore, since mid-October 2010, Priority One was forced to divest itself of six branches so it could remain solvent and in business. Less is sometimes more though in the case of Priority One, less always serves as a testament to the business failures of the chronically inept President. 

The Holiday Toy Drive

On December 8, 2015, the credit union and the South Pasadena Chamber co-hosted a Holiday Party/Toy Drive at the credit union's main branch in South Pasadena. The affair was certainly quieter than that conducted in 2014. There were less attendees, less carousing under the mistletoe and less alcohol consumption. Notably missing was the presence of children. Here are some photos of the event.  

Charles R. Wiggington., Sr. 

Rodger Smock, EVP

A photo of the rather spartan open bar

[Photos Courtesy of Pasadena Now]

The Mystery of the Vanishing Lawsuits

So who embezzled more than $1 million in cash? 

The credit union's quieter persona during the past four months is purely superficial. In February 2013, President Wiggington ordered the closure of the Los Angeles branch and posting of a notice on the branch's doors informing visitors to the location that the office was closed due to a "power failure." The closure was a not-so-clever ruse by the President to try to deter attention that the branch was closed during which the internal auditor, Diane Huffman, reviewed branch records. When the branch reopened, former Vice President, Yvonne Boutte, called the South Pasadena branch and violating the credit union's policy governing confidentiality, informed her friend and subordinate, Credit Resolutions Supervisor, Alex ("Alejandra") Suarez, that the auditor discovered that large amounts of money had been stolen from the Los Angeles branch's vault by AVP, Lynette Fortson. 

Ms. Boutte threatened the staff of the Los Angeles branch with immediate termination if it was discovered that they had communicated with Ms. Fortson during or after working hours. Yes, the threat was illegal, but Mrs. Boutte was known to be a totalitarian. 

Over the weeks which followed discovery of the thefts, the President would infrequently refer to the incident stating that the credit union knew who stole the money and that Ms. Fortson would be arrested, indicted, tried, and eventually prosecuted. 

In March 2015, the following article regarding the incident, was published by the CU Times:

$1M Vault Pinch Hits Priority One

By David Morrison

March 07, 2015  

A long-time employee of the $146 million Priority One Credit Union allegedly stole more than $1 million, according to a legal complaint filed by the CUMIS Insurance Society against the credit union’s former accounting firm.

The complaint alleged the credit union’s manager of its Los Angeles branch, Pearl Lynnette Fortson, began to remove cash from the branch’s vault in late 2010 and allegedly falsified daily reports to hide loss.

Fortson was hired by the credit union on Aug. 1, 1974, the complaint said, and Priority One fired her on Feb. 26, 2013.

The complaint said the credit union discovered the embezzlement in February 2013 and claimed that other people may have been involved.  CUMIS said it reported Fortson to law enforcement, but did not say how law enforcement had responded. The credit union had not yet responded to calls for information on the Fortson case and CUNA Mutual said it had no further information.

Priority One filed a dishonest employee loss claim with CUMIS, for which the insurer paid just a little more than $980,000 after the credit union’s deductible, and settled the claim. CUMIS then sued Turner, Warren, Hwang and Conrad Accountancy, the Burbank, Calif., firm that had audited Priority One’s books since 2008.

CUMIS charged the accounting firm with negligence in its auditing the credit union’s books and operations.

“Defendant TWHC knew or should have known that Fortson was employed at the Priority One Los Angeles County Branch and that one of her duties was to perform reconciliations for that branch,” CUMIS argued in its complaint.

“Defendant TWHC knew or should have known that Fortson maintained singular control over the vault and vault balancing sheets for Priority One’s  Los Angeles Branch,” CUMIS added.

“If defendants had ever opened the vault, counted the vault cash, reconciled the counted vault cash to the general ledger account or reviewed the balancing sheets prepared by Fortson during the course of their reconciliation of cash accounts, the fraud and embezzlement scheme would have been discovered by defendants,” CUMIS added.

Turner Warren referred calls about the case to its attorney, Randall Dean of the Los Angeles firm of Chapman, Glucksman, Dean, Roeb and Barger.

Dean declined to comment at length on the case but said the firm considered it entirely without merit, adding that Turner Warren planned to fight it at trial in June of this year.  He also noted that Priority One had not brought the suit and had not expressed any disappointment with the firm's actions.

Source: CU Times Article

In CUMIS lawsuit, the actual date when the series of thefts began is stated as occurring in "early or late 2010." Could CUMIS have been more uncertain? 

The following key points were made by the CUMIS to the CU Times reporter:

• The embezzlement was discovered in February 2013, approximately three years after the robberies began. 

• Ms. Fortson was reported to law enforcement which is not synonymous with being arrested. 

• Priority One filed a dishonest employee loss claim with CUMIS in the amount of approximately $1 million but after paying a deductible, CUMIS paid "a little more than $980,000." 

• CUMIS sued Priority One's external auditor, Turner, Warren, Hwang and Conrad, because of negligent auditing which did not meet state mandated auditing standards. 

• CUMIS insisted that Turner, Warren, Hwang and Conrad "should have known that" that Ms. Fortson was responsible for performing branch reconciliations.

• Turner, Warren, Hwang and Conrad "should have known that" Ms. Fortson maintained "singular control over the vault and vault balancing sheets" for the Los Angeles branch. 

• Turner, Warren, Hwang and Conrad never "opened the vault, counted vault cash, reconciled the counted vault cash to the general ledger account or reviewed the balancing sheets" for if they had, "the fraud and embezzlement scheme would have been discovered"by the external auditor. 

CUMIS was sufficiently confident that they apparently had no qualms providing some information to the CU Times reporter. And apparently, former Vice President, Yvonne Boutte, and President Wiggington were absolutely certain that Ms. Fortson had absconded with more than $1 million in cash and that Turner, Warren, Hwang and Conrad had failed to do their due diligence and as a result, breached its agreement entered into with the credit union. 

With the certainty that CUMIS and the credit union knew for a fact who was responsible for the thefts, it came as no small surprise that on December 16, 2015, CUMIS' attorney filed a Motion to Dismiss with prejudice, the lawsuit filed against the alleged embezzler, Lynnette Fortson. So what about CUMIS' statements to the CU Times or the disclosures verbalized by Mrs. Boutte and the President?  

So why would CUMIS file a motion to dismiss when it was they who revealed to the CU Times that Pearl Lynnette Fortson absconded with more than $1 million? 

Ms. Fortson proved to be more clever and even shrewder than the credit union's and CUMIS' attorneys. Following the filing of CUMIS' lawsuit against Ms. Fortson, responded and moving quickly, filed for bankruptcy. Clearly, she understood that if she were tried and found guilty, the court could order restitution. However, if she could be granted bankruptcy, then she could not be ordered to pay restitution.    

BANKRUPTCY REPORT

Pearl Lynnette Fortson

---

Case:

2:14-bk-24370-WB

CH:

7

Filed:

July 29, 2014

Discharged:

November 17, 2014

Address:

URL:

http://www.bankruptreport.com/ca/inglewood/fortson-pearl-lynnette

Bankruptcy:

Filed

What President Wiggington, the credit union's Board of Directors and Supervisory Committee and CUMIS have always avoided explaining is how more than $1 million in cash were embezzled over an approximate 24-month period without the President Wiggington, the Board of Directors, the Supervisory Committee, a COO, a CLO, a CFO, the Accounting Department, the internal and external auditor ever noticing any of several thefts. 

Furthermore, Turner, Warren, Hwang and Conrad were contracted to usually perform an end-of-year audit. Wasn't anyone other than Turner, Warren, Hwang and Conrad auditing credit union branch records? This is highly unlikely. 

What's more, CUMIS told the CU Times reporter that Ms. Fortson had "singular control" over vault cash and vault balance sheets. How is it possible that she possessed singular control? Credit Union dictates double-custody when branch vaults are entered. And how did she physically remove thousands of dollars in cash, each time she allegedly removed money from the vault without anyone in the branch ever noticing? Aren't their cameras located just outside the vault? 

CUMIS also told the reporter that Ms. Fortson may have had accomplices but to date, no verification of this has ever emerged.  

Additionally, there are no records any action being taken against Ms. Fortson, including a record that she was ever arrested. 

THE MOTION TO DISMISS

Here is a copy of the proof of service (delivery) submitted to the court by CUMIS' attorneys.

The December 16, 2015 Request for Entry of Dismissal was filed with prejudice for the all actions originally filed against Ms. Fortson. "With Prejudice" means the lawsuit filed against Ms. Fortson is permanently being closed and no other action can ever be filed against her on the same claim. According to the sate of California, three possible reasons for requesting dismissal of a case with prejudice are:

• The case was settled and the amount agreed upon was fully paid. 
• The defendant named in the case is not the right person or business. 
• The case has already been heard and decided upon before – for example, in another court.

Turner, Warren, Hwang and Conrad

“Defendant TWHC knew or should have known that Fortson maintained singular control over the vault and vault balancing sheets for Priority One’s  Los Angeles Branch,” - CUMIS, CU Times, $1M Vault Pinch Hits Priority One, David Morrison, March 7, 2015

In 2015, CUMIS showed no qualms in accusing Turner, Warren, Hwang and Conrad of negligence and of indirectly, allowing the thefts of more than $1 million in cash to go unnoticed. Despite their public statements denouncing the external auditor, on December 15, 2015, CUMIS" attorneys filed another Motion to Dismiss, this time withdrawing the lawsuit filed against external auditor, Turner, Warren, Hwang. The external auditor in turn, filed a motion to dismiss their lawsuit filed against Priority One Credit Union. However, unlike the motion filed to dismiss the lawsuit against Lynnette Fortson, the motions filed by CUMIS and Turner, Warren, Hwang and Conrad were filed with prejudice. What this means is that they may refile their lawsuits at anytime in the future suggesting the motions were not the result of entering into settlement agreements. 

So what happens next? Is there another suspect in this case who may have absconded with the $1 million? And will CUMIS continue its relationship with the credit union? After all, this is a credit union who under President Wiggington has been the subject of internal thefts and losses incurred as a result of its failure to adhere to its own security protocols. 

How Long is Enough?

Last year we reported that President Wiggington had put his home in Echo Park/Silverlake up for sale. This is the same residence that he boasted about in years past including declaring that the property had been appraised to be worth more than $1 million, that it housed an extensive and valuable art collection and a large and impressive "tuxedo collection." The home is 982 square feet in size prompting us to wonder, where does he store his amazing collections. 

His decision to sell his home followed an attempted robbery of his residence. A friend of his family informed us that he allegedly boasted to neighbors about the home's luxuriant trappings and it would seem, someone believed his far-fetched concoctions. 

As shown below, the home has now been on the market for more than 163 days which is a very long time for a home to remain unsold. Evidently, the President is experiencing as much difficulty in selling his home as he did trying to convince the court that the theft of $1 million at the credit union was the fault of shoddy auditing practices. If anyone is interested, give his real estate agent a call. Maybe he'll negotiate a reduced selling price.  

Photograph of the house and trash cans

Conclusion

In 2013, President Wiggington and now former AVP, Yvonne Boutte, disclosed that evidence gathered by the credit union's internal and external auditors revealed that a large amount of money had been embezzled from the Los Angeles branch by former AVP, Lynnette Fortson. 
In fact, these two paragons of leadership and professional acumen declared that the evidence against Ms. Fortson was so telling and condemning that it would eventually result in her conviction. 

In 2015, CUMIS Insurance Society told the CU Times that more than $1 million in cash had been embezzled from the vault of the Los Angeles branch's vault by Ms. Fortson. They also told the publication that the credit union's external auditor, Turner, Warren, Hwang, and Conrad failed to audit vault cash and vault balance sheets which impeded the discovery of disparities that would have revealed the thefts perpetrated by Ms. Fortson.

In spite of the allegedly vast horde of evidence gathered against Ms. Fortson and the fact that she allegedly stole more than $1 million in cash, last year, on December 16, 2015, CUMIS' attorney filed a motion seeking dismissal without prejudice of the lawsuit filed against Ms. Fortson. So what does the motion say about CUMIS' competency as an insurance and bond company or that of it's "specialists"?

What we also find peculiar is that even though she was publicly accused of stealing more than $1 million and terminated as a result of the theft, Ms. Fortson has never filed a lawsuit against Priority One Credit Union or CUMIS citing defamation or wrongful termination? 

It is also strange that CUMIS also filed a motion to dismiss their lawsuit filed against Turner, Warren, Hwang and Conrad when they clearly made statements to the CU Times that the accounting firm been grossly negligent in auditing Priority One's records. It doesn't appear that the dismissals were the result of settlements entered into by CUMIS and Turner, Warren, Hwang and Conrad as the dismissals were submitted without prejudice which means the lawsuits can be refiled at sometime in the future. 

And why was the evidence provided by CUMIS to the credit union and used to file a counter-lawsuit against Turner, Warren, Hwang and Conrad so imbued with issues that the court could not allow the lawsuit to proceed to trial? 

Lastly, why is it that neither the credit union or CUMIS have ever explained how a series of thefts could occur over an approximate 24-month period without being discovered by President Wiggington, the Board of Directors, the Supervisory Committee, a COO, a CLO, a CFO, the Accounting Department, the internal and the external auditors? On a related note, in the years before Charles R. Wiggington, Sr. was appointed President, the Supervisory Committee would periodically visit all branches and count vault cash. Why did was this practice stopped?  

Over the past 7 years we've reported about the incompetence and unethical proclivities of the President, the Board of Directors and the Supervisory Committee. Under Charles R. Wiggington, Sr. there has been a series of blunders all borne out of his refusal and those of the Board and Supervisory Committee to ensure security protocols are monitored and performed by all employees. It would seem that the the dull officers just don't comprehend that security measures were developed to ensure the protection of member and credit union assets. So how much has Priority One Credit Union spent on litigating the lawsuits involving the theft of more than $1 million in cash? And why would CUMIS pay the $1 million claim filed by the credit union knowing that Priority One has a well-documented history of security breaches all borne out of the President's refusal to abide to security measures?

Does Character Matter, Part 2 of 2

DEPLETION

Priority One Credit Union's Financial Performance Report for the quarter ending on September 30, 2015 is now available at www.ncua.gov and in spite of the President's insistence, business isn't improving.

Late last year President Charles R. Wiggington, Sr. somberly stated that "people don't understand the reason I closed branches is to make profit." He of course never took the time to explain how closing branches which eliminates convenience serves to generate profit. 

2008, 2009, and 2010 ended in the negative for the once prosperous credit union and in 2010, 2011, 2012, 2013 and in 2014, the President was forced to close branches to ensure net capital remained well above 6% so that the credit union could remain in open and in business. Despite the losses and it's continuing financial struggles, the President has been awarded annual raises all approved by the Board of Directors and it's Chair, Diedra Harris-Brooks. 

We know of no other credit union whose President has caused losses amounting in the millions of dollars, who has been found guilty of sexual harassment and who has provoked the filing of more than seven lawsuits since 2010, who remains employed and is granted annual wage increases. 

What's more, since 2009, the credit union has had a salary freeze in place that only affects the salaries of non-exempt personnel. As we've often reported, often brutal cut-backs implemented by President Wiggington specifically target employee salaries and benefits and never affect the salaries paid to the executive sector.  

REWARDING INCOMPETENCE

So much how much is the credit union industry's most embarrassing President being paid? As we've done every year since 2010, we are again publishing excerpts from the credit union's most recent Form 990 Form IRS filing. The latest form is for the year 2013 and provides insight into the practices of the Board of Directors who under it's Chair, Diedra Harris-Brooks, has evidently established a policy for rewarding incompetence and over the past eight years, used credit union funds like their own personal piggy bank. Here are the excerpts from the latest filing:   

Form 990 IRS Filing

In 2013, now former Vice President of Project Management, Yvonne Boutte, was paid $91,538. Mrs. Boutte was a polarizing presence and during her years of employment, was abusive to staff, was an instigator and vicious gossip, and frequently slandered employees and other officers. In 2012, she provoked a member who filed a lawsuit against the credit union accusing the credit union of publishing confidential information about her credit union automobile loan and her person. Because of the nature of the disclosures, the information could only have been published by either Mrs. Boutte or one of her staff in the Credit Resolutions Department. Evidently, her abhorrent behaviors and lackluster performance were inconsequential to the Board who authorized that she be paid in excess of $90,000 a year. Can anyone name one thing Mrs. Boutte did during her seven (7) year stay that resolved some of the problems created by the President and resulted in increased business? 

Charles R. Wiggington, Sr. was paid $164,484 in 2013 even though he has caused losses of net income in excess of $20 million since being appointed President on January 1, 2007. His horrendous personal behaviors including having been found guilty of sexually harassing a former employee speak as much to his character as they do to the egregious proclivities of the entire Board. 

AVP, Patricia Loiacano, was paid $91,565 in 2013. Though actually knowledgeable about real estate and consumer loan processes, she will go along with abuses perpetrated by the management sector. In 2007, she was informed by a Loan Processor that the DMV Specialist had obtained permission from the AVP of Lending, Aaron Cavazos, to forge member signatures on Power of Attorney forms where loan processors had failed to obtain signatures while funding automobile loans. At the time, Mrs. Loiacano replied, "There's nothing I can do because it came from Aaron." In 2010, she was appointed AVP of Compliance by Beatrice Walker.  

Saeid Raad, the former CFO, was terminated in 2013 but before leaving, was paid $150,451. It was while Mr. Raad was CFO that more than $1 million in cash were stolen from the Los Angeles branch. We wonder if his departure is related to the discovery of the theft? 

Executive Vice President, Rodger Smock, was paid $120,286 in 2013. It's nothing less than incredulous that the worst Director over Human Resources and the man who intentionally violated state and federal laws for several years and who refused to enforce credit union policies when violated by the President and his lackeys, would be paid what is an astronomical amount. Can anyone name anything Rodger Smock has contributed to the betterment of the credit union?  And the answer isn't that he used to cut out coupons and pass them out to staff. 

We would be very interested in reviewing the loan documents for some of the officers who obtained loans from the credit union. The board approves loan applications for officers of the credit union which may not be illegal but is a conflict of interest. We are particularly curious to know if each of the officers satisfied the same credit union's eligibility requirements non-employees are expected to comply to. 

As shown above., the credit union also provided the following responses to inquiries set in the form which we've retyped below: 

• "Members have rights to elect the members of the governing body. Members also received a share of the organization's profits in the form of cash dividends." 

• "Members have he right to elect one or more members of the organization's governing body, whether periodically as vacancies arise, or otherwise." 

• "Members have the right to approve the governing body's election and removal of members of the governing body, as well as other matters that are subject to the approval of members as they occur." 

The statements are superficially true but the fact is, in 2009 and again in 2010, Board Chair, Diedra Harris-Brooks and her accomplice, President Wiggington, disrupted the electoral process in an effort to keep new officers from being elected to the either the Board of Directors or Supervisory Committee. 

Under California state law, credit union's must inform members in good-standing of the impending election and extend an invitation that if they'd like, they can nominate themselves to vie for a seat on either the Board of Directors or Supervisory Committee. Mrs. Harris-Brooks and Mr. Wiggington intentionally only chose to publish the mandated notices in the Winter newsletter which was only mailed to members who have a checking account and excluding the large sector of members who only have a savings account. 

The two wanted to maker certain that none of the Directors or Supervisors were displaced because the two governing bodies are comprised of ineffective and ignorant officers who are subservient to Mrs. Harris-Brooks' every whim. 

They might have gotten away with their plot had we not exposed. Our exposure of what they had done forced the credit union to hold a "second" annual election which resulted in having to reprint ballots, letters, and the cost of postage to all active members in good standing. The financial impact their ploy had upon the credit union was inconsequential to the two corrupt officers who freely use credit union monies as if they were their own.  

Please note the credit union has new accounts- Richards and Associates. We certainly hope the credit union doesn't sue them at some point in the future as they've done with Turner, Warren, Hwang and Conrad. 

 SHRINKAGE

Though it now more than eight years since Priority One Credit Union began it's ascent towards failure, President Wiggington has avoided a complete shut down of the organization by closing branches, implementing what is now a five year wage freeze that only impacts non-exempt staff salaries, and reduced marketing and business development budgets.

His reductions have come at a heavy cost, compromising convenience, quality member service and ruination of the credit union's public reputation. But no other person has contributed more to financial losses than has the incompetent President's wasted spending.  

• In 2007, he refused to resolve issues affecting the conversion of Inland Counties Postal Credit Union member account records into Priority One's network. Though he could have responded immediately but enacting steps that would have immediately implemented remedial measures to all Inland Counties Postal Credit Union accounts, he instead ordered that the member service department only respond to members who actually took the time to call the credit union. His slothful response forced the credit union to spend $100,000 obtaining services from Experian' to monitor member credit reports for one-year, at no cost to members. 

• Later in 2007, he refusal to abide to security protocols resulted in the mailing of ballots in envelopes on whose exterior were printed member account and social security numbers. His error forced the credit union to spend more than $80,000 in remedial measures.

• In 2008, he spent credit union monies purchasing a $600,000 technically flawed phone system. 

• In 2008, the President was placed on paid suspension and during the six-weeks which followed, an investigation took place to determine if he had sexually harassed a former employee. The evidence which was eventually provided to the credit union by EXTTI, Inc. proved he had indeed violated federal law but Board Chair, Diedra Harris-Brooks, chose to reinstate the President and literally squash the evidence. 

• In mid-2008, he borrowed $20 million from the credit union's line-of-credit, forcing the credit union to pay between $30,000 to $50,000 per month in interest alone, over the next two years.

• In 2009, he hired his friend, Beatrice Walker, to serve as the credit union's first COO and to help him flush out the blogger, bloggers and confederates of the blogger who he said were trying to force the failure of the credit union. After paying her approximately $100,000 a year, in 2011, he fired Ms. Walker only 25-months after she had begun working for the credit union. 

• Also in 2009, the President and Board authorized the spending of more than $30,000 to procure the services of Lillestrand and Associates. Though the owner, Loren Lillestrand visited the South Pasadena several times during which he met with employees, none of the information he gathered that was to be used to improve how the operation was ever utilized. 

• Immediately after terminating Ms. Walker in July 2011, he hired Cindy Garvin to serve as Director of Lending. Her starting salary approximated $70,000 but within four months, he promoted her COO, increased her salary and gave her authority to manage the operations over the credit union's Airport, Burbank, Los Angeles, South Pasadena and Van Nuys Branches. Ms. Garvin was touted by AVP, Rodger Smock as an expert in loan development, business development and marketing but at the end of 2013, she too was fired. 

• Between the years of 2010 through 2014, Priority One spent more than $500,000 on legal expenses though majority of which was defending itself against lawsuits filed by four former employees and one member whose confidential account information was published on the Internet by an officer of the credit union. 

• In February of 2012, the President opened the Santa Clarita branch and on January 2014, closed its doors. 

 EVIDENCE

The credit union's Quarterly Financial Performance Report ("FPR") for the quarter ending September 31, 2015, reports the organization's net asset size as $153,072,823. On January 1, 2007, the date Charles R. Wiggington,Sr. began his appointment to President, Priority One's asset size was $172,250,649. and the credit union boasted seven branches versus the remaining three it operates. And though the amount of net assets lost since 2007 has often fluctuated, currently the credit union's net assets are -$19,177,826 less than they were on January 1, 2007. 

In 2014, the President complained that he is often criticized for closing branches but that what people don't understand is that the closures were intended to increase profits. No, the closures were intended to reduce spending and raise net capital. Of course, we invite President Wiggington to explain who reducing the credit union's presence in the communities it is chartered to serve, how compromised service and subpar marketing translate into profit. In December 2015, Priority One no longer has a presence in all of Riverside County, in all of the Santa Clarita Valley and in most of the San Fernando Valley. So how is it's physical absence within it's own territories intended to produce profit?

ANOTHER WIGGINGTON BLUNDER

In November 2011, the President gloated over the impending opening of the credit union's newest branch in the Santa Clarita Valley. The structure that would house the new branch was constructed at the request of then Post Master, Ralph Tapia but the President instead, spread rumors that he negotiated a deal in which the postal service agreed to pay for building the location. He also boasted that using his keen negotiating skills, the postal service agreed to only charge the credit union $1.00 per year to lease the space. It would have been an admirable accomplishment if any of it were true. 

The branch was built at the request of then Santa Clarita Post Master, Ralph Tapia. It was his way of showing his gratitude for a credit union he sincerely care about. What's more, in November 2011, the cocky and dull President stated that the branch would be opened quietly and without fanfare because in his words, "People are going to want to become members so we don't need to advertise." He was wrong. 

In 2013, the credit union was contacted by the office of the new Post Master of Santa Clarita who informed a review of their records revealed the credit union was only paying $1.00 per year to lease the structure built by the post office and that the amount would be increased to the market rate. The news was sufficient to prompt AVP, Rodger Smock, into ask, "What is the post office doing to us?" We don't understand why Mr. Smock was so upset. If the President was the amazing negotiator he declared he was, then why didn't he contact the office of the Post Master and renegotiate reducing the amount of the lease?

In January 2014, the credit union permanently closed the doors to the Santa Clarita branch. According to the President, "no one visits the place."  Maybe the location might have had succeeded if the President had chosen to advertise its location. Or maybe, if had chosen to open a location in downtown Valencia versus the unpopulated northern fringes of the Santa Clarita Valley. 

FINANCIAL PERFORMANCE REPORT

• The Financial Performance Report for the quarter ending September 31, 2015, also references losses under "other reserves" in the amount of` -$139,613 though no explanation what the "other reserves" pertains to.

• Under Allowance for Loan & Lease (Losses) the credit union reports a negative -$700,000. So did the credit union not set aside sufficient allowance to cover loan losses?

• Membership growth was below the industry average and reported at a negative -3.02%.  

President Wiggington has made a career of lying, including creating a fraudulent impressions of Priority One's real financial performance. If you visit the credit union's website, you'll find that he has hidden, to date, the 2014 Annual Report. Currently, the 2013 Annual Report continues to appear on the website. In 2009, he attempted a similar antic when he refused to post the credit union's Monthly Income Statements and finally conceded after two complaints were filed with the state's Department of Financial Institutions. In business, sometimes "less is more" but at Priority One, "less is always less." 

The credit union's FPR can be viewed at NCUA.gov using charter number, 60024. 

LEGAL WOES

Inarguably, since Charles R. Wiggington, Sr. became President of the once successful credit union, Priority One Credit Union has found itself inundated in lawsuits, a phenomena that didn't exist prior to his appointment to President. 

It would also be naive to deny or ignore the correlation between his appointment to President, the ineptitude and corruption of the Board of Directors and the ignorance of the Supervisory Committee; and the lawsuits filed by former employees, members, vendors and contracted consultants against the credit union. 

In late June, CUMIS Insurance Society provided Priority One findings compiled by one of its analysts, which allegedly found that the credit union's external auditor, Turner, Warren, Hwang and Conrad ("TWHC") performed annual audits which violated mandated auditing standards. The specific timeframe which audits took place were between "early" or "late" 2010 through 2012. TWHC's failure had the following two-fold effect upon the credit union:

• TWHC failed to detect any of the many thefts occurring during the years of 2010-2012; and
• The faulty audits created an opportunity for a former AVP to abscond with more than $1 million in cash from the vault of the Los Angeles branch. 

TWHC was first contracted by Priority One Credit Union in 2008. Apparently, any audits performed in 2008 and 2009 were completed compliant to mandated auditing standards. 

According to CUMIS' lawsuit, TWHC is solely responsible for the theft of more than $1 million yet for some inexplicable reason neither the President, the CFO, two COO's, the credit union's internal auditor, the Board of Directors, the Supervisory Committee, and the entire Account Department never realized money was being stolen from the credit union. 

It's one think to level allegations of wrong doing against another party, but can CUMIS prove it? Using the information provided to it by CUMIS, Priority One filed a cross-complaint accusing TWHC of negligence and contractual violations. The credit union's attorney, John C. Steele, filed a motion requesting the court allow that Priority One sue it's former auditor. 

Priority One had little choice but to file its lawsuit. CUMIS paid more than $980,000 against the $1 million claim filed by the credit union in 2014. CUMIS wants to recuperate it's money. Though CUMIS' has taken action against Pearl Lynnette Fortson, the AVP who allegedly embezzled the cash from the Los Angeles branch but Ms. Fortson has filed bankruptcy and if approved by the bankruptcy court, may escape having to pay restitution if she's found guilty of embezzlement. The credit union's lawsuit would serve to strengthen CUMIS's complaint. More importantly, CUMIS has to win to recuperate the money paid to the Priority One'. And Priority One needs to do everything it can to ensure CUMIS wins its lawsuits or their policy with their carrier could be canceled. If canceled and if the credit union is unable to contract the services of a new carrier, Priority One would be unable to continue it's operation. It's a catch 22 for Priority One and the potential ramifications to its business are nothing less than astounding.

LEGAL HURDLE

As reported over the last several months, Priority One Credit Union is currently involved in several lawsuits. And though the lawsuit filed by CUMIS against Turner, Warren, Hwang, and Conrad is scheduled to start on January 25, 2015, it hasn't been without having to scale large numbers of motions filed both by CUMIS, TWHC and the credit union. The motions are really nothing more than a costly means by which to obtain clarification, delineate perimeters, and determine what evidence and testimonies will and will not be allowed by the court. 

In the latest episode of the on going saga, CUMIS filed a lengthy motion which is hoping is attempting to block the admissibility of testimony by an alleged TWHC expert. CUMIS alleges the expert is unqualified to provide rebuttal testimony and the testimony was not submitted within the timeframe specified under law. 

On November 2, 2015, Turner, Warren, Hwang and Conrad responded to allegations filed CUMIS, asking the court disallow testimony by an expert who would testify on behalf of TWHC. 

Shown below is is TWHC's response to CUMIS' allegations which apparently asked the court to deny the external auditor to deny expert testimony of a "Mr. Sacher" because the report was: 

• Not submitted on time; and
• Mr. Sacher is unqualified to provide expert testimony on the matter. 

TWHC responded by contending that CUMIS' that "expert reports" are not required to be created within a legally specified time frame. 

TWHC is also requesting additional time to amend the motion to conform to Mr. Sacher's capacity as an expert so the report is deemed acceptable to the court. 

TWHC clarifies that the expert, Mr. Sacher, will be providing rebuttal testimony to CUMIS' allegations against TWHC and that CUMIS has been in possession of the expert's opinions since June 24, 2015, long before the court trial is scheduled to start on January 25, 2015. 

CUMIS' attorney contacted TWHC and informed them that the expert, Mr. Sacher's opinion were intended to rebut CUMIS' finding and was informed that the intent of Mr. Sacher's testimony was to rebut CUMIS' allegations. Furthermore, on June 24, 2015, TWHC provided CUMIS Mr. Sacher's opinion which mean that CUMIS knew the expert would be providing testimony rebutting CUMIS' allegations. 

TWHC concludes by asking the court to impose sanctions against CUMIS whose allegations were unfounded and unsupported by law. It appears CUMIS either didn't comprehend the facts or intentionally filed a motion possibly gambling on the hope the court would decide TWHC expert's testimony would not be allowed. TWHC in response asks for sanctions to be leveled against  CUMIS. 

On November 5, 2005, the court issued an order scheduling a Motion for Leave to Amend Expert Designation and Request for Sanctions which is scheduled to take place on December 7, 2015.  

iNsANitY

Over the years, two oft the most often asked questions are how has Charles R. Wiggington, Sr. remained President and why hasn't the Board of Directors been voted out by members? 

There is more than sufficient documentation,  i.e. employee complaints, investigative reports, lawsuits, etc., proving the President's ruination of the once thriving credit union. What the obtuse Board is to dense to comprehend is that the President's business decisions, personal immersion in outrageous scandals, and his disdain for maintaining relations with the membership have all adversely impacted the credit union's ability to obtain new business. Subsequently and to remain open, the credit union is now dependent upon expense reductions. These are unimportant factors that Board Chair, Diedra Harris-Brooks, has chosen to ignore. Her mandate is to ensure the inept President remains employed and she has freely utilized credit union resources to hire expensive attorneys who are paid to concoct defenses designed to help the President escape retribution for his egregious acts. In spite of the President's history of failures, Mrs. Harris-Brooks has deemed her abuses of authority prudent and necessary to ensure to President remains employed and paid a salary exceeding $160,000.  

The credit union's current legal troubles involving the theft of more $1 million in cash from the vault of the Los Angeles branch were all completely avoidable. The credit union is hoping CUMIS wins its case otherwise it could adversely impact its ability to retain the services of it's the bond company.  

And though CUMIS would like the court to believe that alleged subpar audits resulted in the thefts perpetrated at the Los Angeles branch, it is logically impossible to do so. CUMIS has to prove that audits conducted by Turner, Warren, Hwang and Conrad during the years of 2010 through 2012 failed to identify any of the cash thefts allegedly perpetrated by a now former AVP. However, from a  layman's point-of-view, there is something more than a little unreasonable about CUMIS' allegations. 

The embezzler had to walk out of the Los Angeles branch with tens of thousands of dollars each month, over what CUMIS identifies as a 24-month period. How did the thief do so without the President, a CFO, two COO's, the Board of Directors, the Supervisory Committee, the Accounting Department and employees of the Los Angeles ever noticing a single theft? How could one solitary employee enter the Los Angeles vault without being observed and leave with either hand, satchel or a box full of cash during each visit? It is just logistically impossible. 

The thefts allegedly committed by an AVP were discovered in February 2013 by Diane Huffman, the credit union's Internal Auditor. Shortly afterwards, Priority One hired Turner, Warren, Hwang and Conrad to confirm Ms. Huffman's findings. Not long after this, the credit union transferred Mrs. Loiacano from overseeing Compliance and transferred her back to overseeing the Consumer and Real Estate Loan Departments. Why was she transferred? Was it that while overseeing Compliance she failed to ensure policies governing security had been consistently enforced? 

Has anyone noticed that Priority One has refused, to date, to disclose how the thefts were perpetrated? What is the President and the Board hiding? We're certain every credit union would like to know how this could have been done so that they can instill measures to ensure this doesn't happen to them. We suspect that the reason Priority One's officers have remained unusually hushed about this matter is because the methods used to abscond with the money were so simplistic, so absurd and so phenomenally ludicrous that they are trying to avoid public ridicule. Either that or someone within the executive sector knew that the thefts were occurring or might even have been involved in the thefts. 

As for CUMIS, we hope they have prepared a hefty arsenal of indisputable evidence that will prove beyond a reasonable doubt, that Turner, Warren, Hwang and Conrad, an industry respected company, is responsible for the thefts perpetrated by one of the credit union's officers. And we can't wait to hear testimony from the Supervisory Committee and its Chair, Cornelia Simmons, the robotic officer who year by year assures members that her committee's reviews have proven that the credit union's security is in place and functioning at optimum. This will be a wonderful opportunity to witness the caliber of executives, Directors and Supervisors representing the credit union.