Fraud alleged at failed IN newspaper credit union, NCUA report shows

Allegations of fraud at the failed Indianapolis Newspaper Federal Credit Union, conserved in January and closed March 31, are noted in a report that says the National Credit Union Administration (NCUA) Office of Inspector General (OIG) plans to conduct a material loss review of the case.

The NCUA initially said it liquidated Indianapolis Newspaper FCU with a purchase-and-assumption (P&A) because of the credit union’s financial condition and risk to the NCUSIF. In the OIG report, however, the agency said also that the CEO and manager were alleged to have committed fraud relating to the credit union’s loan portfolio.

The report notes that, in the P&A, Elements Financial FCU assumed the corporate cash account and all insured regular shares and share draft deposits “except for those involved in the alleged fraud scheme, or those accounts with six dollars or less in their account.”

The agency says the failure of this credit union is estimated to have cost the National Credit Union Share Insurance Fund (NCUSIF) $2.29 million. Material loss reviews are typically not done when the fund loss is less than $25 million; the agency notes this instance involves an unusual circumstance that warrants an in-depth review.

The NCUA has reported that Indianapolis Newspaper FCU was chartered in 1961 and primarily served current and past employees of the Indianapolis Star and a few other select employee groups in Indianapolis. Its last call report as of liquidation showed it had $6.4 million in assets and 1,143 members.

NCUA OIG Semiannual Report to Congress (Oct. 1, 2020 – March 31, 2021)

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