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SEC Verifies Long-Held Fears of Investors Joining CUs in Hopes of Conversion Riches

The battle over whether and how credit unions should convert to mutual bank charters appeared to get a little bit hotter on May 16 when the Securities and Exchange Commission revealed its investigation of a scheme to defraud mutual bank depositors, including the former members of eight converted credit unions.

By David Morrison | Updated on May 29, 2007

WASHINGTON — The battle over whether and how credit unions should convert to mutual bank charters appeared to get a little bit hotter on May 16 when the Securities and Exchange Commission revealed its investigation of a scheme to defraud mutual bank depositors, including the former members of eight converted credit unions.

The Securities and Exchange Commission and the U.S. Attorney for New Jersey charged that Bert Fingerhut, his nephew Bruce Fingerhut, a childhood friend Robert Danetz and his brother Stephen embarked on a scheme through which they would fraudulently purchase stock made available to mutual bank depositors. Sixty-five banks overall, including former credit unions, were victims of the fraud.

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