Ignacio Morales, former CEO of the $7 million Borinquen Federal Credit Union, pleaded guilty Sept. 4 to embezzling $2.3 million and causing the institution's 2011 collapse. And, according to court documents, a former board member may also be guilty of defrauding the community development credit union.

Morales admitted to fraud, embezzlement, money laundering, failing false income tax returns and possession of cocaine with intent to distribute. He faces 10 years in prison at his Dec. 7 sentencing, but that time could be reduced in exchange for cooperating with investigators, local Philadelphia media reported.

His primary fraud scheme was cashing fake IRS refund checks, collecting 20% of the face value. Prosecuting Attorney Arlene Fisk told the court that at one time, Morales was earning $50,000 a month in kickbacks from just one person who cashed nearly a dozen fake checks per week.