Defining What's Normal, Part 1 of 3

Nowadays at Priority One Credit Union, headquartered in South Pasadena, California, "business as normal" has been displaced by fending off lawsuits. Its important to note that this dynamic did not exist at anytime during the 81 years preceding January 1, 2007, the date Charles R. Wiggington, Sr.  began serving as President and CEO of what was then a successful and growing Credit Union. 

Three lawsuits Priority One is currently litigating differ dramatically from those filed and voluntarily settled by the Credit Union during the years of 2010 through 2013. Those cases filed by four former employees and one Member, alleged violations of the Privacy Act, sexual harassment, same-sex sexual harassment, age discrimination, race discrimination, retaliation, and creation of a hostile work environment. The Credit Union paid out monies to avoid costly and potentially embarrassing court trials that would have produced documented records of abuses committed by the Credit Union's highest officers.

Two of the current batch of lawsuits, all filed in 2014, accuse the Credit Union and its President of various contractual related breaches while a third, filed by CUMIS, the Credit Union's insurance carrier, accuses the Credit Union's external auditors, Turner, Warren, Hwang, and Conrad of acting negligibly and failing to perform audits in compliance to established auditing standards. CUMIS also asserts that Turner, Warren, Hwang, and Conrad provided the Supervisory Committee erroneous information which in turn, compromised the integrity of the committee's annual performance assessments. CUMIS insists that the failures perpetrated by Turner, Warren, Hwang, and Conrad included not identifying thefts, perpetrated by Pearl Lynnette Fortson, a former AVP assigned to the Los Angeles branch, resulting in the theft of more than $1 million in cash from that branch's vault. 

As might be expected, CUMIS' allegations circumvent all reference to the Credit Union's and more specifically, the Supervisory Committee's responsibility to safeguard Credit Union and Member assets. Superficially, CUMIS' accusations seem absurd, eliciting questions about the actual theft and why so much responsibility is being placed on Turner, Warren, Hwang, and Conrad. Some of our questions are:  

• How could Turner, Warren, Hwang, and Conrad be held accountable for the physical removal of $1 million in cash from the Los Angeles Branch's safe when the Credit Union's Accounting Department, the Chief Operations Officer, and the Supervisory Committee are responsible for all records documenting money sent to and received from the Credit Union's branches. ?

• Why is CUMIS holding Turner, Warren, Hwang and Conrad responsible for thefts which occurred prior to their audit of the Los Angeles branch's ledgers? 

• Turner, Warren, Hwang an Conrad were hired by the Credit Union to perform audits. The Supervisory Committee and President, delegated instructions to the firm as what records were to be audited. Did the instructions they provided include a request to audit vault cash and general ledgers located at the Los Angeles branch? 

In a few weeks, the Credit Union will serve as a witness in CUMIS' lawsuit. The Credit Union will also be a defendant in a lawsuit filed Turner, Warren, Hwang, and Conrad and in another lawsuit filed by Auto Alliance, one of Priority One's contracted automobile brokers. . Because the President is named a defendant, he will finally have to appear in court and provide testimony concerning the Credit Union's internal controls and answer questions which will almost certainly scrutinize his abilities as President and CEO and possibly even touch upon his ethics. However, we wouldn't be surprised if he stages excuses to try and avoid or prolong, having to, participate in litigation. In the past the wily but cowardly President took refuge behind Board Chair, Diedra Harris-Brooks, who freely approved spending Credit Union monies to hire overpaid and unscrupulous attorneys and useless consultants to create bogus defenses concoct fictitious facades that tried in earnest to depict the President as a victim, incapable of the atrocities described in lawsuits.  

A TREK DOWN MEMORY LANE

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In 2013, a lawsuit was filed by a former Branch Manager, which cited egregious acts committed by and under President Wiggington, former COO, Beatrice Walker, and the entire Human Resources Department. President Wiggington was named a defendant but his attorney at the time, Paul F. Schimley, of Richardson, Harmon and Ober contacted the plaintiff's attorney and told her that if she didn't remove President Wiggington's name as a defendant in the lawsuit, he would have to file a motion with the court informing them that the President was suffering from cancer and undergoing medical treatments that he said would force postponement of the lawsuit for months and possibly years. . 

CUMIS VS TWHC

We;'re intrigued by CUMIS' lawsuit. Though Turner, Warren, Hwang, and Conrad did not perpetrate the actual theft of $1 million in cash from the Los Angeles branch's safe, it is their competency, expertise and reputation will will be dissected in court and which ultimately is a threat to their reputation. 

CUMIS' investigation concluded that Turner, Warren, Hwang, and Conrad are responsible for failing to detect any of the individual thefts during audits conducted in 2010, 2011, and 2012. Due to their gross oversight, eventually the thefts would amount to more than $1 million in cash. In their lawsuit, CUMIS alleges malpractice, a type of violation most often associated with lawsuits filed against attorneys and physicians. Oddly, CUMIS fails to cite an exact date when the thefts started, merely stating that they began in "early" or "late" 2010 and continued through the end of 2012. Why couldn't they provide a more specific date when the thefts occurred? Shouldn't they have merely stated that "the thefts began sometime in 2010?" 

Who is Turner, Warren,Hwang and Conrad? 

We visited Turner, Warren, Hwang and Conrad's webpage and discovered that in 2013, a peer review was performed by Caldwell, Becker, Dervin, Petrick and Company, LLP. and In a letter dated June 30, 2013, and written to shareholders, Caldwell Becker, Dervin, Petrick and Company concluded: 

"In our opinion, the system of quality control for accounting and auditing practice.... for the year ending June 30, 2013, has been suitably designed and completed to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professional standards in all material respects" and concluding, Turner Warren Hwang an Conrad ACE has received a peer review rating of pass."

Please note that the letter is dated only four months after the theft of $1 million was discovered by the Credit Union. Turner, Warren, Hwang and Conrad's website also contains the following overview of services they offer clients: 

TWHC's financial institutions practice provides a complete suite of services to credit unions of all sizes. Our credit union clients range from over $10 million to over $10 billion in assets. Our staff knows credit unions well. While the national firms we compete with call themselves specialists and the partner may have five or six credit union clients, our partners have in excess of 25 to 30 credit union clients each. 

We have a strong foundation built on our credit union practice. Our partners have worked for or with credit unions for over 20 years. We did not stumble onto credit unions or use them as filler time. We are dedicated to credit unions and have been from he beginning which is why we are ranked among the top five services providers to credit unions in the U.S. and are number one collectively in the states west of Arizona. 

:Source: https://www.twhc.com/about-twhc/peer-review/

Due to the length of CUMIS' lawsuit, we have decided to publish excerpts of only those allegations and statements we deem most important.  

As "subrogee", CUMIS has assumed the legal right to try and collect the monies paid out against the claim filed by the Credit Union. 

Former AVP, Pearl Lynnett Fortson, allegedly embezzled "at least $1,000,000" in cash, to wit, the amount was more than $1 million. She accomplished the thefts by allegedly "falsifying 'Daily Recaps", but how could the AVP, with or without accomplices, embezzle more than $1 million without detection by the Credit Union? Why did Priority One's internal controls designed to protect Credit Union assets fail to detect the thefts?

During the years of 2010 through 2012, Ms. Fortson's direct supervisors were COO, Beatrice Walker and later, CLO, Cindy Garvin, and finally, current Vice President of Operations, Yvonne Boutte. Over an approximate twenty-four period, why didn't any of the three overpaid and evidently, unqualified executives ever notice any of the several incidents during which money was embezzled? 

Turner, Warren, Hwang and Conrad's attorney may have told a reporter of the CU Times that Priority One never "expressed" disappointment with the services and decisions made by his client but the Credit Union's Supervisory Committee and CUMIS found sufficient evidence to conclude that Turner, Warren, Hwang and Conrad violated laws and provided fraudulent data that in turn caused the Supervisory Committee to derive erroneous conclusions about the Credit Union's actual performance. Since the Supervisory Committee is a governing body of Priority One Credit Union and because CUMIS' is the subrogee of the Credit Union, it appears Priority One was indeed, extremely disappointed with Turner, Warren, Hwang and Conrad's "actions." 

 

Under #19, CUMIS states that Priority One's Supervisory Committee is appointed by the Credit Union's Board of Directors and "tasked with the responsibility of obtaining an audit of the Credit Union's financials using an independent external auditor. But is the report provided from an "independent audit" the only source used by the Supervisory Committee to assess the Credit Union's performance and to gauge its ability to protect Member and Credit Union assets. 

Under #29, above, CUMIS states that during the years of 2011-2012, the Supervisory Committee was the recipient of Turner, Warren, Hwang, and Conrad's reports which provided findings obtained from audits; and similarly, Turner, Warren, Hwang and Conrad "expected" the Supervisory Committee to "rely on the thoroughness, accuracy, integrity, independence and overall professional caliber of audits it performed. Wouldn't it seem reasonable that a firm providing services to numerous Credit Union's and whose peer review cites an adherence to industry standards, make every effort to ensure the information provided to the Supervisory Committee was accurate and obtained from a thorough review of Priority One's records? 

Many past employees of the Credit Union can testify that documentation presented to auditors was always first reviewed by Executive Vice President, Rodger Smock, who was seen pulling out documents he did not wish presented to auditors. His censorship was intended to obstruct the disclosure of any information which could reveal breaches in procedure. 

CUMIS has chosen to accuse Turner, Warren, Hwang and Conrad of violating professional auditing and ethical standards and alleges the firm failed to properly examine Credit Union "books, records, and general ledgers." We expect the accounting firm to provide more than statements from the Credit Union that supports their accusations including providing lists of what documents the President and Supervisory Committee ordered to be included in any number of audits. Because as CUMIS asserts, Turner, Warren, Hwang and Conrad were hired by the Credit Union and paid to perform a service, was the accounting and auditing firm ever instructed not to audit certain credit union records?  Ultimately, it was the Credit Union who retained full control over what should and what should not be audited.  

It's seems more than a tad hypocritical that since Charles R. Wiggington, Sr. was appointed President on January 1, 2007, that the Credit Union has been sued several times and accused of egregious violations of state and federal laws, yet CUMIS and the Credit Union have no problem leveling accusations impugning the accounting and auditing firm and accusing them of violating "their professional auditing and ethical standards by failing to ever review or test the cash accounts at" the Los Angeles Branch.

In December 2009, then CFO, Manny Gaitmaitan, resigned but before leaving, confided to some members of his staff that he had been ostracized by President Wiggington; COO, Beatrice Walker; and then Senior Vice President, Rodger Smock, for his refusal to manipulate financial reporting." We hope that CUMIS is prepared to address questions regarding the Credit Union's reporting practices. 

 

In late 2009, TWHC conducted a three-week audit at the Los Angeles Branch and found that more than $60,000 had been stolen by a former receptionist. During the entire three-week audit conducted in a back office at the branch, AVP, Lynnette Fortson sat alongside auditor, Terry Nabors, while he examined Member and branch records. At the time, we found her inclusion in the audit both a conflict of interest and inappropriate but President Wiggington took absolutely no issue with her involvement. Could it be she sat alongside the auditor because she was concerned that he might uncover incidents that would reveal she was involved in the thefts of money? 

CUMIS accuses Turner, Warren, Hwang and Conrad of failing to count vault cash. Had they counted vault cash and reconciled those amounts with what was recorded in the vault's general ledger or reviewed the balancing sheets prepared by AVP, Fortson, they would have discovered the "fraud and embezzlement" committed by the AVP. Priority One has an internal auditor- Diane Huffman who should have been sent to each of the Credit Union's three remaining branches to audit records and count vault cash. Why wan't this done? And what about the responsibility the President, the COO, and the Accounting Department have to reconcile ledgers, balance sheets and cash records? 

CUMIS chose to pay out more than $980,000 against the $1 million claim filed by the Credit Union in 2013. We assume they agreed to pay the claim because their investigation proved that the Credit Union following all security protocols, yet this was the second large theft to occur at the Los Angeles Branch within a three-year period.  

• How did the Credit Union respond following the discovery in 2009, that a former receptionist absconded with more than $60,000 from the Los Angeles branch?

• What changes did Priority One introduce to its security procedures following discovery that more than $60,000 had been stolen by a former receptionist? 

We have to question CUMIS' wisdom. Why didn't the insurance company provide a more exact date when the theft of $1 million in cash began? According to their complaint, the thefts started either in "early" or "late 2010". Why not just state that the thefts began sometime in 2010?  We hope Turner, Warren, Hwang and Conrad have retained records showing what they were asked to audit. 

CUMIS requests the courts order Turner, Warren, Hwang, and Conrad to pay damages and all costs spent to file and litigate the lawsuit and any additional monetary relief deemed just and proper by the court.  

In his article, Strong Internal Controls Reduce Employee Dishonesty, dated August 20, 2014, Theran Colwell writes:

 "When a credit union catches an employee embezzling funds or committing other fraud, it must investigate and implement procedures to close the security breach."

Again, what changes did the Credit Union introduce following the discovery that more than $60,000 had been stolen by a former receptionist sometime in early 2009?

More importantly, why did the changes the Credit Union should have introduced fail to deter the series of thefts that started in "early" or "late" 2010 and continued, unnoticed, through late 2012?

In his article, Mr. Colwell also states: 

• Lead from the top with a written policy
• Create a system of checks and balances, including a clear segregation of duties
• Review cash-handling procedures and refresh staff training

Source: http://news.cuna.org/articles/39429-strong-internal-controls-reduce-employee-dishonesty

REVISITING THE 2013
SUPERVISORY COMMITTEE'S ADDRESS 

We are once again revisiting the Supervisory Committee's address which appeared int he 2013 Annual Report. The report was first distributed to attendees of the Annual Meeting which took place at Priority One's main branch in South Pasadena, California on May 27, 2014. 

The Supervisory Committee's Chair composed her address in 2014, approximately one year after Priority One discovered the theft of $1 million from the Los Angeles branch's vault. And though the series of thefts took place during the years of 2010 through 2012, the Supervisory Chair included the name of Turner, Warren, Hwang, and Conrad in her address published in the 2013 Annual Report which was first distributed on May 27, 2014. 

Why would Ms. Simmons make reference to the firm if she knew that CUMIS had concluded that Turner, Warren, Hwang, and Conrad had been remiss in their audits and allegedly caused the Credit Union to lose $1 million in cash? 

In her address, Ms. Simmons states, "The Supervisory Committee has the responsibility of overseeing the internal and external auditors of the Credit Union", adding, "The external audit firm of Turner, Warren, Hwang & Conrad Certified Public Accountants and Consultants conducts a comprehensive annual financial audit with verification of member accounts each year." 

Three conspicuous facts standout:

#1: In February 2013, Priority One's Internal Auditor discovered that $1 million had been embezzled from the Los Angeles Branch's vault. 

#2: CUMIS filed its lawsuit against Turner, Warren, Hwang and Conrad in April 2014. 

#3: Ms. Simmons address to Members was published in the annual report first distributed in May 2014, one month after CUMIS filed its lawsuit.  

We've also reviewed several of the Credit Union's annual reports for the years preceding 2013 and failed to locate a single address signed by Ms. Simmons and which alludes to Turner, Warren, Hwang and Conrad or any other external auditing firm hired by Priority One. 

So why did Ms. Simmons reference Turner, Warren, Hwang and Conrad's name in the 2013 Annual Report? Ms. Simmons is clearly stating that her Committee relies on whatever findings are provided by Turner, Warren, Hwang and Conrad. Is her disclosure a feeble and all too transparent attempt to free the Supervisory Committee of all culpability in the theft of $1 million?

Priority One may be a state-chartered Credit Union but its assets are federally insured by the NCUA. We obtained the following excerpt Cornell University Law School's Legal Information Institute, describing the role of a credit union's Supervisory Committee. 

12 CFR 715.3- General Responsibilities of the Supervisory Committee

§ 715.3 General Responsibilities of the Supervisory Committee

(a) Basic. The Supervisory Committee is responsible for ensuring that the Board of Directors and management of the Credit Union-

(1) Meet required reporting objectives; and 

(2) Establish practices and procedures sufficient to safeguard member assets.

(b) Specific. To carry the responsibilities set forth in paragraph of this section, the Supervisory Committee must determine whether:

(1) Internal controls are established and and effectively maintained to achieve the credit union's financial reporting objectives which must be sufficient to satisfy the requirements of the Supervisory audit, verification of Member accounts and additional responsiblities. 

(2) The Credit Union's accounting records and financial reports are promptly prepared and accurately reflect operations and results: 

(3) The relevant plans, policies, and control procedures are established by the Board of Directors are properly administered; and

(4) Polices and control procedures are sufficient to safeguard against error, conflict of interest, selfing dealing and fraud. 

CUMIS' lawsuit places responsibility for the theft of $1 million on Turner, Warren, Hwang and Conrad even though it is the Supervisory Committee who is ultimately responsible for the implementation of internal controls that effectively protect Credit Union and Member assets. 

• So what corrective measures did the Supervisory Committee implement in response to the 2009 theft of more than $60,000 perpetrated at the Los Angeles branch by a former receptionist? 

• Why did the Credit Union's internal controls fail to identify any of several thefts perpetrated over the years of 2010 through 2012? 

• And how often does the Supervisory Committee convene and what records can they provide of the topics discussed during each meeting and the actions taken to improve Priority One's internal controls? 

On a side note, it's important to note in 2008, Cornelia Simmons along with Board Directors, Diedra Harris-Brooks; O. Glen Saffold; and Thomas Gathers, voted and won reinstatement of President Wiggington despite overwhelming evidence that he sexually harassed a former employee and following urging by the investigator that the President be terminated. .These attest to her ethics and ability to hone decisions based on a fair and impartial assessment of evidence. 

The Supervisors like the Directors, are ignorant and unable to carryout their state-mandated duties. They and the Directors depend on the President to interpret financial data contained in the Credit Union's financial reports. Does this at all seem like a conflict of interest and immensely inappropriate? It's time the Supervisors and Directors were administered tests to gauge their competency. And one has to wonder, why procedures developed and/or approved by the Supervisory Committee have continually failed to protect assets administered by the Los Angeles branch.

CONCLUSION

It doesn't take an expert or even an in depth study of Priority One's monthly, quarterly, and annual reports to realize that this Credit Union's issues run deep and are terribly awry. What should be seen as perplexing is that the President, his executive and managerial staff, the Board of Directors and the Supervisory Committee are all apparently so out of touch that they can't understand the relationship that exists between internal conflicts, security breaches, abuses of authority, dishonest business practices, and the Credit Union's struggle to acquire new business and membership.

CUMIS Insurance is hoping to that their accusations against Turner, Warren, Hwang and Conrad will possess sufficient merit and be so compelling that a a jury (which they've requested) will issue a judgment in their favor. 

However, CUMIS will have to contend with questions about the Credit Union's subpar security procedures which failed to stop the theft of $60,000 in 2009 and the theft of $1 million in cash during the years of 2010 through 2012. The looming question we have is how could the Credit Union's allegedly well-developed security procedures fail so miserably? 

Here is a record of some lawsuits filed against or involving Priority One since October 2010? 

1. Lawsuits filed by four former employees during the years of 2010 through 2013, alleged sexual harassment, same-sex sexual harassment, retaliation, age discrimination, and creation of a hostile working environment. 

2. The filing of a lawsuit in 2012 by a former Member which accused the Credit Union of violating the Privacy Act.

3. The 2014 filing of a lawsuit by Alliance Auto, one of Priority One's contracted automobile brokers, alleging a breach in contract. 

4. The 2014 lawsuit filed by CUMIS against Turner, Warren, Hwang, and Conrad and alleging it is the accounting firm's satisfactorily perform its duties compliant to established standards resulted in the loss of $1 million in cash stolen by a former AVP. 

5. The 2014 filing of a lawsuit by Turner, Warren, Hwang and Conrad against Priority One Credit Union.

The lawsuits are all symptoms of a bigger, more serious problem afflicting Priority One and indicative of why the once successful Credit Union is nowadays a smaller, no longer competitive, and disliked Credit Union. The internal turmoil saturating the Credit Union explains in part, why Priority One was forced to close 6 of 9 branches during the period of 2010 through 2014. The Credit Union has spent years, desperately raising its net capital all for the mere purpose of retaining their operation. In 2008, its net capital dropped down to almost 6% and at the time, both the DFI an NCUA informed the President that he had better find an immediate means by which to reduce expenses and raise capital. His closures, however, could not stave-off the continued decline in net income which dropped by approximately $22 million since January 1, 2007.

President Wiggington's business failures are exacerbated by his personal conduct which has been appalling and embarrassing. In 2008, an investigation proved he sexually harassed a former employee though fortunately for the President, his ally, Board Chair, Diedra Harris-Brooks, ignored and suppressed the evidence and led two other Directors and Supervisory Committee Chair, Cornelia Simmons, to vote for his reinstatement despite the fact the investigator urged his termination. 

In the end, a victory in court will be gotten by the attorney who presents the most convincing argument. For CUMIS, this isn't a slam dunk as they have chosen to continue a business relationship with an organization led by a notorious President and corrupt Board of Directors and evidently, ineffective Supervisory Committee. On the other hand, Turner, Warren, Hwang, and Conrad chose to enter into and maintain a business relationship with the infamous Credit Union and as of May 2015, their well-earned reputation in the industry is at stake.  

l

Oops, They Did It Again

Out of Their Control

2015 may prove to be the most embarrassing year experienced by Priority One Credit Union in South Pasadena, California since January 1, 2007, the date when Charles R. Wiggington, Sr. was appointed President and CEO of the once successful Credit Union.

We've been away for a few weeks, though during our absence, one astute reader of this blog, posted the following comment::

Chief Jay Strongbow said...

John, Did you see the article on Priority One in the on-line edition of Credit Union Times today about the $1 million theft and accompanying lawsuit? Any more insight on it?

March 9, 2015 at 11:32 AM

The article the reader alludes to was written by David Morrison and appears in the March 7, 2015 edition of the CU Times. Mr. Morrison wrote that a former, long-time employee of Priority One Credit Union, embezzled more than $1 million from the Los Angeles branch. 

In March 2013, we reported that then AVP, Lynnette Fortson ("Pearl Lynnette Fortson") left the Credit Union abruptly, after more than forty (40) years of service. Her sudden departure surprised many employees, resulting in myriad of rumors alleging she resigned, she was terminated, and she was laid off Her departure also prompted complaints from many employees of the Los Angeles Postal Distribution Center ["LAPDC"], the facility where the Credit Union's Los Angeles branch is located. 

Within a few days following Ms. Fortson's departure, Vice President of Operations, Yvonne Boutte, revealed to some staff members in South Pasadena and at the Los Angeles branches, that Ms. Fortson had been terminated for stealing money. 

In January 2013 and prior to Ms. Fortson's termination, Mrs. Boutte told some of her staff at the South Pasadena branch that she would be temporarily relocating to the Los Angeles branch during which she would conduct an investigation in response to mounting Member complaints alleging abusive treatment by the staff in the Los Angeles branch. 

In February 2013, Mrs. Boutte revealed that Ms. Fortson left the Credit Union on a personal leave of absence because she allegedly did not wish to be present during Mrs. Boutte's investigation.

However, at the end of February, in-house auditor, Diane Huffman, arrived at the Los Angeles branch where she conducted a three day investigation of that office's records. At the time, the President and Board Chair, Diedra Harris-Brooks perpetrated a hoax to try and hide the fact an audit was being conducted. On the day Ms. Huffman arrived, Mrs. Boutte posted a notice on the Los Angeles branch's doors, informing Members and visitors that the Branch was closed due to a power outage. The Credit Union posted the same message on their Facebook and webpages. As usual, the lie perpetrated by the President and Board Chair, was exposed. Members began reporting that though the Branch was closed due to a power outage, the lights in the branch remained on and employees could be seen working at their desks. At the time, we contacted the LAPDC to inquire about the outage, but we were told there were no reported outages for any part of the vast postal complex which includes the Los Angeles Branch. 

The President and Board Chair's simplistic and juvenile lie was also proven to be a lie when Mrs. Boutte warned the staff at the Los Angeles Branch that they were prohibited from ever speaking to Ms. Fortson. 

In reading comments posted in response to our previous blog publication, that a few supporters of the President seem ignorant about the latest predicament the Credit Union finds itself embroiled in. What's more, the theft of $1 million is not the first internal theft to occur at the Los Angeles Branch. In late 2009 and early 2010,  Turner, Hwang, and Conrad AC conducted an audit and discovered that more than $60,000 had been embezzled by a former receptionist assigned to the Los Angeles branch. This latest incident serves to again bring into question the ability of the Credit Union and its deficient Board of Directors, to protect Credit Union and Member assets. All indicators suggest that Priority One's security protocols are either outdated, ineffective, or not being practiced by executive and non-executive personnel. 

Since Charles R. Wiggington, Sr. was appointed President on January 1, 2007, the Credit Union has often found itself immersed in embarrassing scandals. Not only have many of the President's actions proven detrimental to the Credit Union but his immense ineptitude and illegal activities have been well protected by the Board of Directors. Since 2007, the Board has done everything in its power to ensure evidence of the President's abuses and illegal acts is suppressed. To ensure the President escapes retribution, the Board Chair and President have used Priority One's monies as their own personal piggy bank, hiring attorneys who fabricated defenses impugning the character of former employees and one Member victimized by President Wiggington and the Credit Union's unethical Human Resources Department. The evidence proves that under Mrs. Harris-Brooks, the Board has failed to:

• Set policies that ensure growth, development and the protection of Credit Union and Member Assets. 
• Made certain the Credit Union maintains a sound financial condition.
• Established and maintained channels of communication that inform Members about services and products the Credit Union offers that will enhance and improve a person’s financial well-being.
• Ensured executive officers achieve goals and objectives
• Provided truthful and undistorted information to Members during the Credit Union's annual meeting concerning the credit union's actual financial state.

And though internal thefts have been a problem plaguing the Los Angeles branch, they represent a betrayal of the confidence Members should have in the Credit Union's ability to protect their assets. Other illegal and unethical acts committed by the President include:

• Ordering repossession of an automobile that was subject to collection proceedings, though the Member had signed a repayment plan which would have allowed him to retain his BMW and become current. The President who only buys BMW’s, ordered the vehicle repossessed. He transferred ownership to himself and documented fictitious documents to create the appearance the vehicle had been sold at auction. 
• In 2008, President Wiggington was found to have committed sexual harassment yet the Board spent thousands of dollars squashing the evidence.
• In 2009 through 2011, former COO, Beatrice Walker, made numerous personal purchases which she was reimbursed for including buying a $5000 laptop. She also had workman hired to install new carpeting at the South Pasadena branch, deliver and install left over carpeting at her home in the Santa Clarita Valley. 
• From 2010 through 2013, the Credit Union was sued by four (4) former employees and one now former Member, all who alleged violations of Federal law committed by President Wiggington, by former COO, Beatrice Walker, and by Human Resources which is under management of Executive Vice President, Rodger Smock. The cases were settled by the Credit Union  in an effort to avoid what would have been nasty and embarrassing court trials.

Here is the article authored by David Morrison which appeared in CU Times on March 7, 2015:

$1M Vault Pinch Hits Priority One

By David Morrison, March 7, 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 Lynette 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: CUTimes Article

Turner, Warren, Hwang and Conrad's attorney concedes that Priority One didn't file a lawsuit against his client nor ever expressed dissatisfaction with any work performed by its auditors. Clearly, President Wiggington's defenders, have ignorantly declared that the Credit Union filed the lawsuit against Turner, Warren, Hwang and Conrad when it is CUMIS who filed the lawsuit. . 

Following the filing of CUMIS' complaint, Turner Warren Hwang and Conrad AC  responded and on December 5, 2014, filed a lawsuit against Priority One Credit Union. 

In their complaint, CUMIS accuses the auditing firm of failing to identify thefts occurring at the Los Angeles branch, during their 2009/2010 audit. We hope that CUMIS has sufficient evidence needed to prove their allegations. The audit of Los Angeles Branch's records specifically reviewed documentation handed to the auditors by AVP, Pearl Lynette Fortson. Did she provide all documentation including those records that might have proven her duplicity in embezzlement of Credit Union funds? There is also the matter about the President's responsibility to ensure all security protocols are in place and being practiced by all staff Members. And aren't the Board of Directors and the Supervisory Committee responsible for ensuring all policies are being adhered to by every employee of the Credit Union? Couple this with the fact that prior to the 2009/2010 audit, a former receptionist absconded with more than $60,000 suggesting that neither the President or the two governing bodies performed their due diligence. We believe CUMIS is placing its hope and focus on the alleged failure by the auditing firm to identify the theft of $1 million by the then AVP of the Los Angeles branch though ultimately and as CUMIS knows, the responsibility to police its own records is the Credit Union.

In 2010, the Board, the President and then COO, Beatrice Walker, agreed they would not report the former receptionist to authorities in an effort to avoid public disclosure of the theft. Of course, within weeks following our expose' of the theft, the Board was forced to contact police authorities and the former receptionist was indicted and eventually convicted though she only received probation for the theft she perpetrated. 

CUMIS has leveled accusations against Turner, Warren, Hwang and Conrad which means they have the burden of proving their assertions. Can CUMIS prove beyond a reasonable doubt that at the time of their 2009/2010 audit, Turner, Warren, Hwang and Conrad were presented with a real general ledger and real balance sheets that contained evidence the AVP had absconded with $1 million?  During that audit, Ms. Fortson provided auditors the documents they eventually reviewed. Does this at all seem like a conflict of interest? We also have to believe that if Ms. Fortson perpetrated a crime that she would have done everything in her power to cover up the evidence. We certainly hope CUMIS won't try to deter attention away from the President, the Board, and the Supervisory Committee and from the fact that it was Ms. Fortson who had complete control over vault cash, general ledgers and balance sheets belonging to the Los Angeles branch.

Another fact is that CUMIS is well aware of every lawsuit filed against the Credit Union by four former employees during the years of 2010 through 2013 and they are also aware that President Wiggington was found guilty of sexual harassment in 2008. Despite these well recorded incidents it was CUMIS who decided to maintain relations with the Credit Union. 

What's more, in 2010, an auditor from CUMIS discovered that the Credit Union had at times failed to close checking accounts belonging to Members who were granted HELOC's. In 2010, a couple withdrew the money for the HELOC after the date the account should have been closed and CUMIS, paid the claim filed by the Credit Union. At some point one has to ask why knowing what they do about President Wiggington and the Credit Union's abuses and negligible acts, would they continue a working relationship with what is probably the industry's biggest pariah? Here is the summary of the lawsuit filed by Turner Warren Hwang and Conrad AC: 

Case #EC063303

Plaintiff: Turner Warrne Hwang and Conrad Account VS Priority One CU

Filing Date: 12/05/14

Case Type: Other Contract (General Jurisdiction)

Status: Pending

Future Hearings

05/04/2015 at 08:30 am in department B at 300 East Olive, Burbank,  CA 91502

Conference-Case Management

Parties

Chapman, Gluckman and Dean- Attorney for the Plaintiff

John C. Steele- Attorney for the Defendant

Priority One Credit Union- Defendent

Turner, Warren, Hwang and Conrad- Plaintiff

Documents Filed (Filing dates listed in Descending Order)

02/02/215 Answer (to Complaint)

Filed by Attorney for Defendent

01/09/2015 Proof of Service (of Summons, Complaint, Civil Case Cover Sheet, Civil Case Cover Sheet Addendum and Statement of Location. Notice of Order to Show Cause Re: Failure to Complay with Trial Court Delay Reduction Act filed by Attorney for the Plaintiff

12/24/2014 Proof of Service of Summons and CO/Ptn

Filed by Attorney for Plaintiff

12/24/2014 Notice (of Related Case (BC541935)

Filed by Attorney for Plaintiff

12/05/2014 Notice- Case management Conference

Filed by Clerk

12/05/2014 Complaint filed- Summons issued

12/05/2014 Summons Filed

12/05/2014 OSC- Failure to File Proof of Service Filed by Clerk

During the month of December 2014, Ms. Fortson called former employees of the Credit Union and stated she hired an attorney who she explained, was conducting an investigation to acquire evidence that her reputation had been slandered by the Credit Union. Though we do believe her reputation was slandered by Vice President, Yvonne Boutte, who in March 2013 revealed the reasons why Ms. Fortson was termimated, we believe her obtainment of an attorney is to defend her against the police report filed by CUMIS which accuses Ms. Fortson of perpetrating fraud. 

On March 15, 2015, comments were posted in response to our previous past congratulating the President and Board for suing Turner, Warren, Hwang and Conrad. Unfortunately, the President's supporters are either ignorant of the fact or intentionally trying to distort what actually transpired. What we wonder is if the comments are being posted at the request of the President or based on disclosures made by the President. Is Charles R. Wiggington, Sr. telling people that Turner, Warren, Hwang, and Conrad are guilty of negligence for not having identified the thefts allegedly perpetrated by the former AVP during audits of the Los Angeles branch's records? If true, then he has slandered Turner, Warren, Hwang, and Conrad and may be placing Priority One in yet another legally precarious position. 

Inarguably, Priority One never had any intent of reporting the AVP to police authorities but they and Board Chair, Diedra Harris-Brooks, may not have thought that following their investigation of the incident, CUMIS would contact police authorities and file a lawsuit against the accounting/auditing firm. 

There is no doubt that this latest legal entanglement will force the Board to again dig deep into the Credit Union's coffers to pay for expensive attorneys and litigation. Since Charles R. Wiggington, Sr. became President, the Board has made it a habit of pillaging the Credit Union's monies to cover-up negligible and illegal acts that only occurred due to the Board's inability to fulfill its appointed responsibilities which includes ensuring the well-being of the Credit Union. This latest scandal to rock the Credit Union again reveals that this Board is unconcerned with the safety and well-being of Credit Union and Member assets. 

Lie with Dogs, Get Up with Fleas

We could probably devote several posts to the subject of Turner, Warren, Hwang, and Conrad's and CUMIS' decision to enter into and maintain relations with Priority One and its notorious President. Most ethically managed companies might avoid establishing any relationship with a company whose recent history is marred by abuses of authority, violations of state and federal laws, and saturated by acts of overt negligence.

We actually hope the auditing firm wins despite our belief they compromised ethics when choosing to do business with the Credit Union. For CUMIS to win their lawsuit requires they prove the auditing firm failed to identify the theft of $1 million during its 2009/2010 audit and possibly any audits of the Los Angeles branch's records that may have been conducted by the accouting firm in 2011 and 2012. We can't imagine how CUMIS intends to explain how during the 2009/2010 audit of the Los Angeles offices records discovered more than $60,000 embezzled by a former receptionist but missed evidence proving the theft of $1 million. 

CUMIS may also have to prove that at the time of their audit(s), Turner, Warrne, Hwang, and Conrad were provided genuine records by Ms. Fortson. As stated previously, it seems a conflict of interest that when thefts were being investigated, Ms. Fortson was present while auditors perused records. Furthermore, it was she who provided them the documentation they audited.What's more, how was the auditing firm able to find evidence $60,000 were stolen by a former receptionist but missed all together, evidence of a theft of $1 million allegedly perpetrated by Ms. Fortson? Something seems awry and we believe CUMIS needs to provide something substantial that doesn't leave the impression they are trying to aid the Credit Union to escape accountability for its failure to ensure security measures were in place and being performed on a daily basis. At the moment, it appears that CUMIS' lawsuit is using Turner, Warren, Hwang and Conrad as a scapegoat in their effort to recuperate the $980,000 paid against the claim filed by the Credit Union.

It is important to note that the Credit Union only became aware of thefts perpetrated at the Los Angeles branch, AFTER Members complained money was missing from their accounts. 

Finally, where is the Supervisory Committee? They are responsible for ensuring Credit Union and Member assets remain safe and protected. Since we began publishing in 2009, the committee comprised of Board Chair, Cornelia Simmons; Anna Smith the Secretary; Hazel-Brown-Harvey; Lorenzo Ford; and I.D. Williams has remained invisible though each year, attendees of the Annual Meeting are subjected to Cornelia Simmons' scripted and boring assurances that everything is running well at Priority One Credit Union and never alluding to the thefts plaguing the Los Angeles branch. Its about time the supervisors were ousted and replaced with people who actually understand the purpose of their role on the committee. . 

In the meantime, we can all be assured that the destructive dynamic which has left Member accounts vulnerable to theft, remains soundly in place at Priority One Credit Union.