The federal regulators declined to tell the Overdrawn podcast why
IBEW Local Union 712 Federal Credit Union failed in 2020 due to its CEO’s embezzlement. Now, the Overdrawn podcast has uncovered that, for at least part of that time, the certifying official on its Call Reports was its examiner, and the National Credit Union Administration (NCUA) won’t say why.
NCUA has confirmed that the examiner it assigned to the credit union is listed as the Certifying Official on eight of its quarterly Call Reports from 2016 to 2019, a period that includes years when, according to court records, the CEO embezzled nearly $2.1 million from the tiny institution. A ninth report, for December 2019, lists NCUA as the certifying official. Asked why the examiner’s name appears in that field, the agency replied, “That is because he was the certifying official.”
“This episode isn’t a story about one examiner,” Overdrawn Executive Producer and Host Andy Janning said. “It’s about what a certification is worth when the regulator’s name is in the space meant for the credit union’s own officer, and the regulatory agency will not answer why.”
According to an analysis of NCUA’s public data by former NCUA examiner Joshua Herman on behalf of the Overdrawn podcast, the practice was not unique to one credit union. At least 280 Call Reports at more than 120 credit unions in the agency’s former Region II, from 2009 to 2019, have an examiner’s name, a reference to an examiner or exam, or NCUA in the Certifying Official field. NCUA didn’t respond to questions about whether the practice was particular to one examiner or one region.
NCUA’s Examiner’s Guide allows an examiner to upload a corrected report when a credit union is unable or unwilling to do so, and some of the data is consistent with corrections, Herman said. However, nothing NCUA has released identifies any of the credit union’s reports as corrections.
The episode also examines the NCUA Inspector General’s 2020 limited review of the credit union’s failure. Records released under the Freedom of Information Act show the deputy inspector general wrote that the case “might warrant a full scope” review because of “unusual circumstances.” The next morning, the inspector general wrote, “We have never looked at credit cards as an issue, so that is interesting.” Hours later, the office decided to end its review.
The examiner has not been accused of wrongdoing, and no record obtained for the episode shows he knew about or took part in the theft or knowingly provided any false information. The episode does not name him. NCUA has said he is not authorized to speak publicly about examination activities.
Overdrawn is an independent investigative podcast about the impact of the CEO’s embezzlement and the ultimate failure of IBEW Local Union 712 Federal Credit Union on the people and sleepy little town of Beaver, Pa. Episode 7, “Please Print,” is available Tuesday, Nov. 10, on all podcast platforms and at overdrawnpodcast.com, with a full transcript and source notes.