During the month of July, Priority One Credit Union's attorney filed yet another motion, this time contesting the reasons filed by Turner, Warren, Hwang, and Conrad seeking the dismissal of the credit union's counter-lawsuit.
The trial of the lawsuit filed by CUMIS, accusing Turner, Warren, Hwang, and Conrad of breaching its agreements with Priority One Credit Union during the years of 2008, 2009, 2010, 2011, 2012, and 2013, has not yet begun. Presently, Turner, Warren, Hwang, and Conrad and Priority One Credit Union remain locked in litigation as Turner, Warren, Hwang and Conrad seeks dismissal of the counter-complaint filed by Priority One this past.
Additionally, the court has not yet made a decision regarding the motion filed by Priority One's attorney, John C. Steele, requesting consolidation of the lawsuits filed by CUMIS; Turner, Warren, Hwang and Conrad; and the cross-complaint filed by the credit union. In the meantime, the bankruptcy filing by former AVP, Lynnette Fortson, who is accused of stealing $1 million in cash from the vault of the Los Angeles branch, remains in review.
If litigation seems chaotic, it's because it is. Nowadays, Priority One is characterized more by its legal entanglements than for business. This change in standing began in the years following January 1, 2007, the date Charles R. Wiggington, Sr. began his appointment as President.
Despite the onslaught of lawsuits filed by and against the credit union, this past May, President Wiggington entered into yet another of his verbally and completely fictitious campaigns declaring that business is good and improving. The problem with the President's periodic proclamations is that they're never true and constitute pure conjecture. He could lend tremendous credibility to his statements if he would support them with actual documentation but he doesn't because these sporadic efforts to save face are untrue. Unfortunately, for the disastrous President, the credit union's quarterly Financial Performance Report ("FPR") and monthly income statements/Balance Sheets all omit anything that could be interpreted as a resurgence in business. What's more, as members and readers of this blog may have discovered, President Wiggington has yet to release copies of the 2014 annual report which for years, was distributed to attendees of the annual meeting conducted each May 27th at the South Pasadena branch. What's more, if you'll visit the credit union's website, you'll note that the President has not allowed publication of the report. HIs censorship and control of the credit union's reports suggest that President Wiggington has much to hide.
The President's efforts to paint a rosy picture of Priority One's financial standing and performance was aided during the month of May, when Robert West, the Director of Employee Services composed an online review praising HigherUp's, Rocket Solution. Rocket Solution is an analytical program. According to Mr. West, Rocket Solution has helped the Human Resources Department's refine its processes and extrapolates employee data which is analyzed and used to improve the credit union's bottom line. It is hardly coincidence that Mr. West's review comes at a time when the credit union is in desperate need for positive publicity though the Director's efforts are typically feeble, obvious and fail to deter attention away from the credit union's all too public reputation.
Before presenting excerpts from Mr. West's review, we'd like to revisit some past incidents involving Mr. West which attest to his character and validate whether or not Mr. West has ever contributed to improving the credit union's bottom line, promoted employee morale, or served to impel growth and development of new business.
The trial of the lawsuit filed by CUMIS, accusing Turner, Warren, Hwang, and Conrad of breaching its agreements with Priority One Credit Union during the years of 2008, 2009, 2010, 2011, 2012, and 2013, has not yet begun. Presently, Turner, Warren, Hwang, and Conrad and Priority One Credit Union remain locked in litigation as Turner, Warren, Hwang and Conrad seeks dismissal of the counter-complaint filed by Priority One this past.
Additionally, the court has not yet made a decision regarding the motion filed by Priority One's attorney, John C. Steele, requesting consolidation of the lawsuits filed by CUMIS; Turner, Warren, Hwang and Conrad; and the cross-complaint filed by the credit union. In the meantime, the bankruptcy filing by former AVP, Lynnette Fortson, who is accused of stealing $1 million in cash from the vault of the Los Angeles branch, remains in review.
If litigation seems chaotic, it's because it is. Nowadays, Priority One is characterized more by its legal entanglements than for business. This change in standing began in the years following January 1, 2007, the date Charles R. Wiggington, Sr. began his appointment as President.
Despite the onslaught of lawsuits filed by and against the credit union, this past May, President Wiggington entered into yet another of his verbally and completely fictitious campaigns declaring that business is good and improving. The problem with the President's periodic proclamations is that they're never true and constitute pure conjecture. He could lend tremendous credibility to his statements if he would support them with actual documentation but he doesn't because these sporadic efforts to save face are untrue. Unfortunately, for the disastrous President, the credit union's quarterly Financial Performance Report ("FPR") and monthly income statements/Balance Sheets all omit anything that could be interpreted as a resurgence in business. What's more, as members and readers of this blog may have discovered, President Wiggington has yet to release copies of the 2014 annual report which for years, was distributed to attendees of the annual meeting conducted each May 27th at the South Pasadena branch. What's more, if you'll visit the credit union's website, you'll note that the President has not allowed publication of the report. HIs censorship and control of the credit union's reports suggest that President Wiggington has much to hide.
The President's efforts to paint a rosy picture of Priority One's financial standing and performance was aided during the month of May, when Robert West, the Director of Employee Services composed an online review praising HigherUp's, Rocket Solution. Rocket Solution is an analytical program. According to Mr. West, Rocket Solution has helped the Human Resources Department's refine its processes and extrapolates employee data which is analyzed and used to improve the credit union's bottom line. It is hardly coincidence that Mr. West's review comes at a time when the credit union is in desperate need for positive publicity though the Director's efforts are typically feeble, obvious and fail to deter attention away from the credit union's all too public reputation.
Before presenting excerpts from Mr. West's review, we'd like to revisit some past incidents involving Mr. West which attest to his character and validate whether or not Mr. West has ever contributed to improving the credit union's bottom line, promoted employee morale, or served to impel growth and development of new business.
Over the years, some of our posts have elicited negative comments about Robert West. The Director of Employee Services has been a staple of the credit union for several years though his greatest promotions came via his friend, President Wiggington. In the years before January 1, 2007, the date Charles R. Wiggington, Sr. was appointed President, Mr. West served as the credit union's sole Trainer and later, under President Wiggington, as Manager of Training and Education. Prior to 2007, he would periodically describe Priority One as a place where "the devil lives." A rather harsh and judgmental declaration by an officer of the credit union.
In 2006, he spent months writing a self-help book which was not related in anyway to his position as Trainer though he worked on the book during business hours. In 2006 and again in 2007, he was periodically seen by employees and officers, sleeping at his desk. You can read more about some of Mr. West's other antics at Robert West.
In 2006, he spent months writing a self-help book which was not related in anyway to his position as Trainer though he worked on the book during business hours. In 2006 and again in 2007, he was periodically seen by employees and officers, sleeping at his desk. You can read more about some of Mr. West's other antics at Robert West.
In 2009, President Wiggington asked that Mr. West rewrite the credit union's mission statement. The President stated that the statement composed under his predecessor failed to express his vision for the credit union and its relationship to its members. In 2009, Mr. West's revamped statement was unveiled during the May 2009 Annual Meeting conducted in Pasadena, California. The statement, shown below, was copied from the credit union's Facebook page.
Our mission: "To help our member-owners and employees achieve financial fitness. We are committed to providing quality products and services that help you win with money."
Source: Priority One Facebook
We must point out that the Mission Statement published in 2009, differed slightly from the its current version and included language which promised to show members and employees how to "win with money." Branch closures, a decline in the amount of net income, and a 5-year wage freeze prompted President Wiggington to amend the statement in early 2014.
FOOT IN MOUTH
Though President Wiggington's failures, abuses and violations of state and federal laws are well documented, he has always found an avid and unwavering supporter in Mr. West. As we've reported in 2010, during all-staff meeting conducted at Almansor Court in Alhambra, California, Mr. West stood before a room full of employees and chastised the President's critics, labeling them "haters". During his chastisement, he attempted to elicit pangs of guilt from targeted employees by reading the following verse:
Not surprisingly, his manipulation of Biblical scripture back-fired and served to increase dissension between staff and management. Though he had hoped to subjugate employees using amateur manipulative tactics, following the meeting, most of his audience exclaimed that they did not know what the verse he read meant while others admitted to listening to his spiel.
2008
In 2008, a member visited the credit union, leaving a baby she was taking care of, locked in her car in the visitor parking lot located at the South Pasadena branch. Though she was advised by employees that the baby was crying the member replied that she would return to her car in a few minutes. Because President Wiggington was away from the branch for the day and because Rodger Smock could not be located, an employee informed Mr. West that a baby had been left locked in a car. He immediately ordered that the police be called. Police arrived and arrested the member while firemen extricated the baby from the automobile.
The following day, upon being advised of the incident. President Wiggington exploded demanding the names of the employees who called the police. When told that they obtained from Mr. West to call the police, the President threatened each employee with termination should they ever choose to report a member to the police. Mr. West denied ever having instructed the employees to call the police.
2010
In August 2010, then COO, Beatrice Walker, took control over Human Resources. At the time, she revealed she intended to force aged Executive Vice President, Rodger Smock, into retirement because in her opinion, he was "lazy" and "overpaid". She also disclosed she intended to terminate Robert West who she described both "unnecessary", "overpaid" and ineffective as a trainer.
Because much of his power had been transferred to Ms. Walker by Board Chair, Diedra Harris-Brooks, President Wiggington panicked because he knew he would be unable to retain the employment of either Mr. Smock or Mr. West who were the only two ethically pliable supporters of his regime. However, Ms. Walker's plans were derailed when the then Valencia Branch Manager visited the South Pasadena branch and filed a verbal complaint with Esmeralda Sandoval, alleging that Ms. Walker had:
- Estranged the Branch Manager from her staff and other Branch Managers
- Sexually harassed and stalked her
- Created a hostile working environment; and
- Subjected the Branch Managers to different standards than those set for other managers
In September 2010, the President and Mr. Smock drove to the Valencia branch to inform the Manager that her branch was scheduled to close at the end of October 2010. After advising her of the impending closure, he asked her to elaborate on her complaint against Ms. Walker. At the end of the meeting, he turned to Mr. Smock and said he was going to remove Ms. Walker from oversight of the Human Resources Department. President Wiggington also informed the Branch Manager that he would offer her a post as Assistant Branch Manager at the Burbank office though her salary would be reduced "slightly."
Three days later, the president issued a notice on the credit union's Intranet announcing that Robert West would not serve as Director over Human Resources despite the conspicuous fact Mr. West was wholly unqualified to head the department. The reason why Mr. West was placed over Human Resources is quite absurd. At the time, Rodger Smock, the Director informed the President that he did not want any involvement in the Valencia Branch Manager's complaint. He felt that his involvement could provoke Ms. Walker who he knew was planning to terminate him.
Mr. West was appointed Director and given the responsibility to handle the complaint against Ms. Walker. Mr. West's ineptitude was quickly revealed because he continually had to confer with Mr. Smock to learn how to proceed with the complaint.
At the end of September 2010, the Branch Manager was called on her credit union cell phone by then Human Resources "clerk", Esmeralda Sandoval and advised that she had eight (8) hours in which to either accept the credit union's offer to work in the Burbank office in the capacity of Assistant Branch Manager or accept the credit union's severance package. At the end of the day, the Branch Manger called Ms. Sandoval and told her she would accept the severance package. Ms. Sandoval informed the Branch Manager that the credit union would require a letter stating her decision. The Manager submitted a letter to Ms. Sandoval, via email. The letter disclosed that she would accept the severance package and that her final date of employment would be October 31, 2010.
Several days later, Ms. Sandoval called the Branch Manager and informed her that she would have to work until November 15, 2010, to be eligible for the severance package. The Branch Manager reminded Ms. Sandoval that she had never stated that her final day of work would be November 15, 2015. Ms. Sandoval at first lied and said she had provided the Branch Manager with the date, however, Ms. Sandoval's dishonesty was proven when the emails sent to the Branch Manager regarding the matter all omitted a required last day of employment. The Branch Manager was afterwards contacted by Robert West who told her she must either work until November 15, 2010 or forfeit her severance package. The Branch Manager responded by sending Mr. West the following letter:
Mr. West conferred with the President and Ms. Walker, who in turn contacted Board Chair, Diedra Harris-Brooks. Mrs. Brooks contacted the credit union attorney and it was decided that credit union due to its own negligence, must provide the Branch Manager with the severance package that had been offered by the careless, Esmeralda Sandoval. Following the decision to reinstate the offer, Mr. West returned to his role as trainer and Mr. Smock resumed his capacity as Director over Human Resources.
Mr. West Writes a Review
Clearly Priority One is not providing member's convenience, efficiency or financial services that are so affordable that they did not entice approximately 4,000 members to retain membership.
Now as you read Mr. West's review, not that he fails to draw a correlation of how HigherUp's Rocket Solution will provide Priority One's Human Resources Department "new business insights. The fact that Human Resources is now allegedly "working faster and more strategically to improve the company's bottom line" is unaccompanied by actual evidence, like the credit union's own reports proving that Priority One's bottom line has been improved.
Mr. West's review is permeated by a whining tone, describing his personal frustrations as he tried to juggle the use of three different programs with each requiring the use of its own password. We certainly feel for Mr. West and the terrible plight he must have undergone. We'd like to address some of the statements contained in his review.
- On January 1, 2007, Priority One's membership approximated 30,000. Eight years after Charles R. Wiggington, Sr. was appointed President, membership has dropped to approximately 26,000. That's a loss of 4,000 members over an 8 year period.
- Prior to January 1, 2007, the date Charles R. Wiggington, Sr. became President, the credit union employed more than 150 full-time employees and only periodically hired temporary staff.
- Prior to January 1, 2007, Priority One the following branches:
Los Angeles
Van Nuys Branch
Valencia Branch
South Pasadena Branch
Redlands Branch
Riverside Branch
On the day Charles R. Wiggington began serving as President, the Marina Del Rey branch had already closed because the postal service intended to use the space occupied by that office. Other branch closures and openings, ordered by President Wiggington include:
Valencia Branch closes October 2010
Riverside Branch closes April 2011
Santa Clarita Branch opens February 2012
Airport Branch closes December 2013
Santa Clarita branch closes January 2014.
From an economic and budgetary point-of-view, Priority One's opening and closing of branches over the last eight years constitutes poor, actually, horrendous planning and was both fiscally irresponsible and detrimental to the credit union's bottom line.
If the implementation of HigherUp's analytical program is intended to improve Priority One's bottom-line than one has to ask why was Priority One's net income increasing annually under President Wiggington's predecessor and why has it dropped by more than $18 million since January 1, 2007, the date Charles R. Wiggington, Sr. began serving as President?
We extracted the following information from NCUA.org:
We extracted the following information from NCUA.org:
The current Board of Directors along with President Wiggington have proven they possess an undisciplined proclivity for spending and wasting credit union funds. This is partially attested to by the fact that currently, Human Resources employs three officers when prior to January 1, 2007, the department was wholly under management of then Vice President of Human Resources, Rodger Smock. Nowadays, the small and insignificant credit union is staffed by Mr. Smock, Mr. West and Employee Services Manager, Esmeralda Sandoval.
According to Mr. West, he was "frustrated with our old systems, which were time-consuming and difficult to manage. To get to even the most basic employee information, I had to access three different vendors’ systems with multiple passwords and complex authentication. And none of the systems could talk to each other. If I wanted to access and combine data from our different payroll, benefits, applicant tracking, and time and attendance systems – I was out of luck.”
Of course Mr. West was frustrated. . He holds a position which he is ill qualified to serve in. In 2011, he was appointed to serve as Director of Human Resources without possessing any experience, an education, or skills in anything related to Human Resources. His appointment was not motivated by either his qualifications or need. Mr. West was appointed as a result of cronyism. It is his "friendship" and blind loyalty to the President that has secured his continued employment. He is clearly dispensable and wholly unnecessary to the credit union's deteriorating infrastructure.
Apparently, the "Director" of Employee Services is easily frustrated. It is not uncommon for employees of many companies to use more than one program to process their work and certainly having to use more than one password is neither challenging or frustrating unless of course, you're Mr. West. We also don't understand how Human Resources, a department staffed by three officers, can't seem to handle managing Priority One's three remaining branches and a staff which Mr. West wrote, employs 50 full-time employees and 14 part-time employees What would Mr. West have done had he worked in the department prior to January 1, 2007, when the credit union had many branches and employed more than 150 full-time employees. Maybe the problem is that Robert West doesn't possess the skills needed to multi-task or he lacks the ability to expertly prioritize.
THE TRIAL THAT WOULDN'T START
During the month of June, Priority One's attorney, John C. Steele, filed a motion refuting Turner, Warren, Hwang, and Conrad's reasons asking the court to dismiss Priority One's counter-lawsuit against their former external auditor.
The long list of pre-trial conferences clearly indicates that Priority One's legal expenses in 2015, must be astronomical adding to the more than $500,000 spent on litigation during the years of 2010-2013. Nowadays, Priority One is defined by its unending legal problems.
We're recently wondered about the abilities of CUMIS' officers to make sound decisions as their alliance to Priority One Credit Union is not only illogical, it seems a horrendous business decision and gamble. That said, last month one of our readers posted the following comment which aptly and in great detail, describes the reason why CUMIS may be suing Turner, Warren, Hwang, and Conrad and what may occur should CUMIS lose its lawsuit:
June 24, 2005
Look ... I don't see Wiggington lasting 12 months.
Some points & issues to clarify. CUMIS (the insurance & bonding company) paid the claim for dishonesty... that's the insurance they provide. For paying the claim, the CU gives the bonding company the 'right of subrogation' .... this means it gives the insurance company the right to go after the individual(s) that were responsible for the loss.
By extension, the insurance company is trying to minimize its losses by looking at other potential sources for getting their money back. Assuming the responsible person(s) do not have $1,000,000 anymore they will simultaneously look elsewhere.
So, they are looking for 'Big Pockets'....one of which is TWHC CPA firm. The Board & Wiggington were pointing their fingers at TWHC for not discovering the defalcation and the 'embezzler'for dishonesty.
In reality they should being pointing at themselves in the mirror. They are the problem.
It's going to get real messy when public filings start coming through.
In addition, it is very possible that Wiggington will then be placed on CUMIS' "BLACK LIST" of non-insurable risks. Each employee or official of a federally insured financial institution has to be "bondable". Wiggington's record will become more public and other policyholders (credit unions) will see the risk that the insurance company is continuing to insure.....they are the ones paying Wiggington's claims.... they will want that to cease.
Wiggington will get the dreaded letter & phone call in the next year, for sure & he's gone. A week or two before official notification to Wiggy, the Feds and State Examiners will all converge on the credit union ..... don't you think they will count every penny?
CUMIS provided a report in which their "expert" asserts that Turner, Warren, Hwang and Conrad have failed to adhere to established auditing practices in the years 2008, 2009, 2010, 2011, 2012 and 2013. It appears, CUMIS is attempting to strengthen its position buy inducting the participation of the credit union whose counter-lawsuit will serve to further impugn Turner, Warren, Hwang, and Conrad's public reputation and abilities. What is interesting is that without the findings of CUMIS' expert, Priority One may never have realized that their former external auditor had allegedly violated auditing practices. As usual, the bad folks at Priority One Credit Union seemed oblivious of the integrity of work being performed by their external auditor. It's this same lackadaisical problem that may have resulted in the theft of more than $60,000 in 2009, perpetrated by a former receptionist; and the 2010-2012 thefts totaling more than $1 million in cash, allegedly absconded by a now former AVP. Something is sorely amiss at Priority One. Its Supervisory Committee have proven themselves incapable of protecting credit union assets. The President and the people who oversaw operations* during the years of 2009 through 2012 have evidently failed to ensure the protection of Priority One's assets and have proven quite incapable of protecting Member funds.
*2007-June 2009: Operations was managed by EVP, Rodger Smock
June 2009-July 2011: Operations was overseen by COO, Beatrice Walker
July 2011-December 2012: Operations was overseen by CLO, Cindy Garvin
January 2013-Present: Yvonne Boutte currently serves as VP of Operations
In David Morrison's article, "$1M Vault Pinch Hits Priority One" which appeared in the March 07, 2015 publication of the CU Times, the author states that in their lawsuit, CUMIS accuses Turner, Warren, Hwang and Conrad of negligence in auditing the credit union's financial records and that they "should have known that [Lynette] Fortson [the AVP] was employed at the Los Angeles County Branch and that one of her duties was to perform reconciliation for that branch." CUMIS also told the reporter that Turner, Warren, Hwang and Conrad "had never 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" and if they had, Turner, Warren, Hwang and Conrad would have discovered the "fraud and embezzlement scheme."
We recently spoke to a former officer of the credit union who informed us that in the years before Charles R. Wiggington, Sr. was appointed President, the Supervisory Committee regularly visited branches to count vault cash. The end of this practice by the Supervisory Committee seems part of a common phenomena occurring at the credit union. In 2007, Charles R. Wiggington, Sr., refused to review a batch of sample ballots which if he had, he might have noticed that member social security and account numbers were printed on the front exterior side of the the envelopes. At the time, he refused to review these because in his words, "I'm President, I don't do that!" The fact that in 2009, the credit union employed an internal auditor and COO proved insufficient to discover that a receptionist was pillaging funds from member accounts.
Due to the length of Attorney John C. Steele's response, we are only publishing the more relevant points of his rebuttal.
This is the first reference in the long record of documents filed with Superior Court that finally provide more specific detail about the thefts which occurred at the Los Angeles branch during the years of 2010 through 2012. As we've disclosed in previous posts, CUMIS has stated in its initial filing that the thefts began either in "early" or "late" 2010. We find it odd that following an extensive investigation by its "experts" that they could not pin point a more specific or actual date when the internal robberies began prompting us to wonder if the amount of thefts exceed the $1,005,000 CUMIS concludes was stolen. More importantly, did the robberies begin prior to 2010 and possibly on a date before Turner, Warren, Hwang and Conrad were hired.
In 2009, Turner, Warren, Hwang and Conrad were hired to conduct an extensive audit of the Los Angeles branch's records. At the time, the audit was reported after a member complained that money had been taken from her more than $11,000 IRA leaving a balance of less than $5,000. The audit proved that more than $60,000 were embezzled by a former receptionist who pillaged member accounts and with the assistance of friends and family, withdrew embezzled funds from an ATM located in the city of Long Beach, California. During the audit, then AVP, Lynnette Fortson sat alongside Terry Nabors, the auditor from Turner, Warren, Hwang and Conrad. She remained in the office with him for the three weeks during which he audited her office's records. President Wiggington was well aware that she forced her inclusion in the audit but was apparently unconcerned by its inappropriateness. Why would the AVP deem it necessary to sit alongside the auditor if she, herself, was not auditing records? We are suspicious of her motivation for remaining in the office with Mr. Nabors during the three weeks in which he reviewed records.
Attorney Steele states that on December 5, 2014, Turner, Warren, Hwang and Conrad sued Priority One's refusal to pay the outstanding balance of $68,299.79 due for the report created by Turner, Warren, Hwang and Conrad from their March 2013 investigation of the Los Angeles branch's records.
The cross-complaint filed by Priority One Credit Union not only contests payment of the unpaid balance which Attorney Steele has described as "ridiculous" but sues Turner, Warren, Hwang and Conrad for providing inaccurate reports to the credit union for the years of 2008 through 2013. It should be deemed nothing less than outstanding and in Mr. Steele's words, "ridiculous", that Priority One Credit Union never realized that the reports provided to it by Turner, Warren, Hwang, and Conrad were inaccurate and produced out-of-compliance with established auditing protocols.
Furthermore, Attorney Steele states that Priority One was unaware of the alleged negligence committed by Turner, Warren, Hwang and Conrad until April 24, 2015, when they received a report produced by CUMIS' "expert" and which asserted numerous alleged violations committed by the credit union's external auditor.
Again, Turner, Warren, Hwang and Conrad are innocent until proven guilty. Subsequently, Mr. Steele's statement that the external auditor "failed to comply with the terms of its contracts for years" constitutes a mere allegation.
Attorney Steele, declares that Turner, Warren, Hwang, and Conrad's lawsuit against Priority One for its failure to pay $68,299.76 due the external auditor failed to "acknowledge" or mention, that it served as Priority One's external auditor from 2008 through 2013, during which it provided year-end audits. If Attorney Steele is inferring that Turner., Warren, Hwang and Conrad purposely avoided disclosing this fact, it seems irrelevant since they are demanding payment from the credit union for services rendered in March 2013 and no other year.
Attorney Steele continues, stating that The $168,299.79 initially charged by Turner, Warren, Hwang and Conrad is nothing less than "ridiculous"? Is there any documented evidence showing that Priority One contested the charge in 2013, 2014 or at the start of 2015? Evidently, Priority One did not find the charge ridiculous, otherwise why did they pay $100,000 of the total amount due to Turner, Warren, Hwang and Conrad.
Attorney Steele admits in his filing that Priority One was ignorant of the alleged violations committed by Turner, Warren, Hwang and Conrad until on or about April 24, 2015 when they received a report provided to them by CUMIS' "expert" whose investigation showed that the report produced from the external auditor's February 2013, investigation was so poorly written that it had to be rewritten by attorneys so it could be submitted to CUMIS along with Priority One's claim for $1 million.
What seems odd is that during the 26 months which transpired between February 2013, the month when Turner, Warren, Hwang and Conrad conducted its audit; and April 24, 2015, the date when the credit union received CUMIS' report documenting the allegations against the external auditor, that Priority One's President, its Board of Directors, and its Supervisory Committee never realized that Turner, Warren, Hwang, and Conrad allegedly provided inaccurate end-of-year reports for 2008, 2009, 2010, 2011, 2012, and for the report provided in 2013. So when is Priority One held responsible to ensuring that information they receive is verified to be correct? And why didn't Priority One ever realize that any of the numerous reports provided to them by their external auditor contained erroneous information?
And why did Priority One refuse to pay the outstanding balance due to Turner, Warren, Hwang, and Conrad in 2013, 2014, and part of 2015 if they didn't know about the external auditor's alleged violations until April 24, 2015? Could it be that Priority One refused to pay the bill because they are unable to? In 2010, now former CFO, Saed Raad, instructed his staff in the Accounting Department not to pay vendor bills for at least 3 to 4 weeks after these are received. Priority One is a credit union whose coffers have been heavily taxed by expenditures that are unrelated to business including more than $500,000 spent on legal fees during the years of 2010 through 2014.
Mr. Steele places entire blame on the external auditor because of their failure to perform audits compliant to its contracted obligations but the fact remains that no one at the credit union- not the self-proclaimed financially savvy President, the Board of Directors or the Supervisory Committee ever took note that any of the end-of-year reports provided to them contained egregious violations of the agreements ratified between the external auditor and the credit union. So when is Priority One deemed responsible for the years of failures committed by its President and two governing bodies?
Attorney Steele's argument is that Turner, Warren, Hwang and Conrad's did not perform annual audits commensurate with the terms of the agreements entered into with the credit union. He alleges that as a result of this, Priority One was forced to rehire Turner, Warren, Hwang, and Conrad who conducted an investigation of the Los Angeles branch's records in March of 2013.
Attorney Steele's key points in his conclusion are:
- Turner, Warren, Hwang and Conrad failed to adhere to the terms of their agreement entered into with Priority One Credit Union
- He accuses Turner, Warren, Hwang and Conrad of filing a motion whose focus is the date when the embezzlement took place
- Turner, Warren, Hwang and Conrad allegedly breached their agreements and provided inaccurate reports to the credit union in the years 2008, 2009, 2010, 2011, 2012 and 2013.
- Turner, Warren, Hwang and Conrad "actively concealed its breach of contract"; and
- As a result of their alleged concealment, Priority One could not have known prior to April 2015, that Turner, Warren, Hwang and Conrad had violated its agreements with the credit union
Attorney Steele will have to prove that Turner, Warren, Hwang and Conrad purposely concealed the breaches they are how accused of committing. He is accusing the external auditor of knowingly if not intentionally, violating its agreements entered into with Priority One in 2008, 2009, 2010, 2011, 2012, and 2013. Are we then to believe that Turner, Warren, Hwang and Conrad, a company with an impressive portfolio of credit union industry clients. would single out Priority One, a credit union with a horrendous public reputation and led by a President whose horrendous performance is marred by numerous failures, abuses of authority, egregious violations of state and federal laws, and last but not least, a well documented record of numerous security breaches of which the $1 million theft is but one?
The fact is, under Charles R. Wiggington, Sr., internal thievery on a massive scale has become common place at Priority One Credit Union. So how did one AVP enter the Los Angeles branch vault, unaccompanied and in defiance
to double-custody and in violation of the credit union’s security protocols and
over a 24-month period, steal more than $1 million? It’s mind-boggling.
CONCLUSION
There isn't any evidence presented by either side that might allow us to guess who could potentially win their lawsuit. CUMIS hopes the court will find Turner, Warren, Hwang, and Conrad guilty of violating it's agreements with Priority One and of conducting audits that proved subpar and out of compliance with standard auditing procedures. They are also requesting the court order Turner, Warren, Hwang and Conrad to pay $1 million plus any other fees the court deems appropriate.
What CUMIS and the credit union are not alluding to in their complaints is that during the thefts occurred, Priority One had a President, a Board of Directors, a Supervisory Committee, an Accounting Department and three different offices who oversaw operations, yet inexplicably all failed to realize cash was being taken from the vault of the Los Angeles branch.
CUMIS and Priority One make reference to Lynnette Fortson, the former AVP accused of embezzling $1 million in cash but we've yet to discover how she was able to enter a branch vault by herself and in defiance of credit union banking policy which stipulates double-custody when entering the vault; and how she was able to walk out with $1 million in cash over an approximate 24-month period. The fact she succeeded in perpetrating embezzlement on such a grand scale points to failure on the part of the credit union and its alleged security protocols designed to protect credit union assets. No matter how much CUMIS may wish to hold Turner, Warren, Hwang and Conrad accountable for the theft of $1 million, the fact is, the external auditor had no involvement in the physical removal of cash.
Priority One should be held accountable for failing to detect any of the thefts. Based on their attorney's disclosures, Priority One relied solely on a single year-end report provided by Turner, Warren, Hwang and Conrad to assess the effectiveness of its own security. Apparently, Priority One never verified the evidence used by the external auditor to arrive at the conclusions contained in their reports for the years 2008 through 2012.
Over the past 8-years, the credit union's Supervisory Committee has remained unusually quiet though each year, Supervisory Committee Chair, Cornelia Simmons signs a mundane address written by Rodger Smock and published in the annual report, which repetitiously assures readers that the committee has determined that Priority One is in compliance to all applicable laws and that in her committee's opinion, all is well. In retrospect, since 2009 Ms. Simmons' statements have been proven to be untrue. Ms. Simmons' 2009 address assured readers that the credit union was operating safely yet in that same year, a receptionist absconded with more than $60,000 from the Los Angeles branch. The credit union's current defense indicates that the Supervisory Committee is trying to divert attention away from themselves and placing the entire records of thefts during the period of 2010 through 2012, on Turner, Warren, Hwang and Conrad.
In another matter, in 2014 President Wiggington ordered omission of all references to legal expenses from the credit union's monthly income statement. In 2015, he's ordered that the credit union's 2014 Annual Report not be distributed. His actions suggest he is trying to hide those records that serve to prove Priority One's actual performance versus the tales he loves to tell that allude to non-existent success. Periodically, officers like Robert West try and deter attention away from the credit union's awful public reputation, legal problems, and chronic internal issues. Mr. West's efforts always fail to allay attention from the well-documented fact that since Charles R. Wiggington, Sr. became President, business remains in decline and that lawsuits have been filed each year since 2010, against the once respected credit union.
In the meantime, we will have to await the results of a trial which will hopefully and finally bring to light the gross incompetence of Priority One's worst and most embarrassing President. For those who are interested, the trial between CUMIS and Turner, Warren, Hwang, and Conrad; and if approved, Priority One's cross-complaint, is slated to take place at Superior Court in Los Angeles on August 24, 2015.
