The sudden closing of Central States Mortgage Co., a Wisconsin CUSO with 25 CUs and the Wisconsin Credit Union League as shareholders, set off a new round of charges Tuesday.
In a blistering four page statement, Milwaukee attorney Stephen Kravit accused the CU owners of mismanagement and creating a false "crisis" to suspend operations following what he said are libelous claims contained in so-called "racketeering" lawsuits blaming the former founder and CEO of Central States, Richard Jungen, of a $15 million fraud. The claim has been denied by Jungen, Kravit's client.
"Until last Thursday, CSMC reported positive cash flow to its clients and employees and a rosy plan for the future," Kravit wrote complaining that everything "changed Friday" when Members United Corporate Federal Credit Union of Warrenville, Ill., demanded payment of a defaulted $33 million loan. A spokeswoman for Members United in Albany, N.Y. ,where it also has offices, declined comment "on matters in litigation."
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