<p>HARTFORD, Conn. – Richard Wellner, president of Corporate America Family Credit Union, Elgin, Illinois has one piece of advice he wants to pass on to any credit union – federal or state chartered – that is thinking of opening a branch or expanding its field-of-membership out-of-state: "Make sure you're aware of that's state's credit union laws. Each state is different, and credit unions need to find out first if they have to receive authorization from that state's credit union commissioner, as well as their own, before they take the strategic step." Wellner learned this lesson the hard way. It was recently served with a Notice of Intent to Issue order to Cease and Desist, Notice of Intent to Impose Civil Penalty, and Notice of Right to Hearing from Connecticut Commissioner of Banking John Burke who alleged that CAFCU illegally did business in Connecticut and expanded its FOM in the state without receiving the mandatory authorization from Burke first. "We admit we erred in not being complete in the process, it was our fault," Wellner told Credit Union Times. Wellner said CAFCU is in the process of completing the necessary paperwork and obtaining the required approval from Burke to do business in the state and to include in its field-of-membership Connecticut select employee groups. This remedial action may help avert CAFCU going before a hearing called by Burke to address the situation. "We are hoping in the next few weeks to have a resolution of the situation," said Wellner. The credit union is working closely with Sarah Vega, Director of the Illinois Department of Financial Institutions on the matter. Corporate America Family CU's action is overdue by five years. Originally chartered as a federal credit union, CAFCU converted to a state charter in 1997 and opened its first branch in Stamford, Conn. In October 1999, CAFCU merged with the former Bristol Group FCU and picked up BGFCU's 101 SEGs as a result of the merger. It also operated BGFCU's Bristol facility as a branch office. Since then, Corporate America has added 33 additional SEGs. The Stamford-branch has since been closed and its operations merged with the Bristol office. The problem was that while Corporate America Family CU received approval from the Illinois Credit Union Supervisor's Office to establish the Stamford branch and expand its field-of-membership, it never received prior written approval from the Connecticut Banking Commissioner, as mandated by Section 36a-472 of the Connecticut General Statutes. Commissioner of Banking spokesman Dave Tedeschi said the commissioner's office learned about Corporate America Family's violation of the Connecticut General Statute from another credit union in the state. Asserting his responsibility granted by Section 36a-17 of the Connecticut General Statutes, Burke through the Connecticut Credit Union Division issued on May 30 a Notice of Intent to Issue Order to Cease and Desist, Notice of Intent to Impose Civil Penalty, and Notice of Right to Hearing to Corporate America Family Credit Union. The commissioner's actions were taken in response, according to his office, to "allegations that on or after March 17, 1997, the Respondent established a branch in Stamford, Connecticut; and amended its articles of incorporation to add to its field of membership at least 33 select employee groups located in Connecticut, without applying for or obtaining prior written approval of the Commissioner." Tedeschi said Burke took the action after he attempted to have discussions with Corporate America Family CU and advised them of the ramifications of their alleged action. Since Corporate America Family did not respond to Burke's request, Tedeschi said the commissioner was obliged to issue the Notice of Intent to Issue Order to Cease and Desist. With more than $414 million in assets and 66,500 members, Corporate America Family CU is the fourth largest CU in Illinois. In addition to the branch it operates in Connecticut and its two in-state branches, CAFCU has one branch in Arizona, two in California, two in Georgia, one each in Kansas, North Carolina, Ohio, Pennsylvania, and Texas. It has two branches in Virginia as well. Wellner said he did not know what percentage of CAFCU's total membership its Connecticut members accounted for. According to Burke's issuance, his office received a request from Corporate America Family Credit Union on March 17, 1997 "which included several documents that are relevant to approval under Section 36a-472 of the Connecticut General Statutes for an out-of-state credit union to do business in Connecticut." He further wrote that "on or after March 17, 1997," Corporate America established a branch in Stamford, Conn., even though the credit union did not receive prior written approval from the commissioner's office to do so, as dictated by Section 36a-472 of the Connecticut General Statutes: "An out-of-state credit union may, with the prior written approval of the commissioner, do business as a credit union in this state if a Connecticut credit union is permitted to do business as a credit union in the state in which the out-of-state credit union is organized." Burke's Notice of Intent further stated that, "During the period October 1999 through October 2001, Respondent, on at least 14 occasions, sought and received the approval of the State of Illinois Department of Financial Institutions to add to its field of membership at least 33 select employee groups located in Connecticut," but that "at no time, has Respondent applied for or obtained pursuant to Section 36a-472 of the Connecticut General Statutes the prior written approval of the Commissioner to add the select employee groups." Under Notice of Intent to Impose Civil Penalty, Burke stated that Corporate America Family FCU committed at least 15 violations of Section 36a-472 of the Connecticut General Statutes , and that he "intends to impose a civil penalty" on the credit union "not to exceed Seven Thousand Five Hundred Dollars ($7,500) per violation." Corporate America Family CU was given the opportunity to request a hearing on the Order to Cease and Desist. The credit union had 14 days from the issuance of the Order to Cease and Desist to request the hearing, which would have taken place on July 18, 2002 at the Department of Banking. Although at press time Burke's office had not heard back from Corporate America Family CU, Tedeschi, said "the commissioner was involved in active discussions with Corporate America Family Credit Union and the Illinois State Regulator," and he was pleased to learn that CAFCU admitted its error and was taking steps to remedy the situation. Tedeschi said Commissioner Burke "made it very clear that we are not out any money because no fee is assessed on applications filed by a credit union to open a branch or expand its field-of-membership." As an Illinois-state chartered credit union, Corporate America Family CU is assessed an examination fee by the Illinois Credit Union Division. "Commissioner Burke is not only charged with overseeing the safety and soundness of state-chartered credit unions doing business in Connecticut, but also of protecting consumers from unauthorized entities that are providing financial services in the state. Connecticut banking law clearly addresses the steps the commissioner can take to remedy any violations of the law and the Connecticut General Statutes. Corporate America Family Credit Union has been illegally providing financial services in Connecticut," said Tedeschi. He added that Burke still has the option of imposing a penalty on CAFCU. There are 187 credit unions doing business in Connecticut. They include 50 state-chartered, 131 federal and seven out-of-state credit unions – all federally chartered. -</p> <p>[email protected]</p>