AEA said inconsistencies were detected following Liddle's departure prompted an audit of business lending activities conducted by an executive committee appointed by AEA officials.

"The committee's research into certain specific borrower's loans revealed numerous infractions by Mr. Liddle of AEA's policies and procedures which substantially impaired AEA's business loan portfolio," the CU said. "It is believed that alleged actions of Mr. Liddle were structured to elude detection by both internal and external auditing entities."

Denise Sweet-McGregor, interim CEO of AEA, said, "While we cannot formally comment on Mr. Liddle's guilt or innocence at this time, we strongly believe the facts will bear themselves through the judicial process."

AEA business loan losses caused a drop in capital, prompting the NCUA to require preparation of a five-year net worth restoration plan, Sweet-McGregor said. The credit union also had to close one branch and reduce staff by more than 35%. According to NCUA Call Report data as of Sept. 30, AEA had $22 million in delinquent business and construction development loans and $45 million in delinquent member business loans excluding agricultural loans. Total outstanding loan balances subject to bankruptcy was $37.7 million. All loans charged off due to bankruptcy year to date were $6.89 million.

"Without the alleged fraudulent and reckless behavior which contributed to the majority of our business loan losses, AEA would have navigated this economic recession relatively unscathed," Sweet-McGregor said. "We now need to move beyond this unfortunate situation, using what we have learned to grow stronger for our members. The current strategies we have put in place are a positive first step."

Sweet-McGregor said while she knew members' money was backed by the NCUSIF, some were uncertain about the AEA's financial condition. As a result, some withdrew their money and closed their accounts.

"It has been heartbreaking to our board and to our staff to see this happen to us after so many years of strong growth and development," Sweet-McGregor said. "AEA has always been a strong community partner. It has been very difficult to scale back with our contributions to the community, without being able to comment as to the reasons for reducing the contributions."

Sweet-McGregor said the credit union had to stay quiet during the investigation as rumors ran rampant about the financial institution's future.

"However, now that the information about the alleged illegal actions of Mr. Liddle and others has been released by the FBI, the community can now understand why AEA has had to bear such severe financial losses this past year. The harm caused by these alleged actions to AEA's members and dedicated employees is unconscionable."

Chartered in 1942, AEA grew from an office in a teacher's home to a credit union that now serves more than 50,000 members through six offices in Yuma and La Paz counties by the end of 2009. Sweet-McGregor said that in the latter part of 2009, as the business loan portfolio began to show signs of distress, AEA quickly instigated strategies to cut expenses and downsize.

In a Dec. 2 statement, U.S. Attorney Dennis K. Burke said Liddle, his wife Rhonda, and Ruiz "have victimized not only a financial institution but an entire community and jeopardized that community's faith in this institution. We will make sure they are also held accountable for their disregard of the law and the consequences suffered by the credit union."

According to the attorney's office, fraud convictions in this case could carry a maximum penalty of 30 years in prison, a fine of $1 million or both. A district judge could adjust those guidelines.

"Financial institutions are not personal fun factories for its officers and their anointed business pals. The defendants' selfish scheme has come full circle and they are already paying a price for their greed," Burke said.