Lovett apparently made false statements to Lockheed FCU on his application involving Bay Resorts. After he obtained the loan, he let the buildings go into foreclosure and kept approximately $1.3 million for himself, according to the indictment.

Lovett is now facing up to 30 years in prison and a $1 million fine. He is scheduled to be sentenced on May 29.

Despite the rash of frauds, the NCUA is optimistic that the health and stability of credit unions have improved so much that it is projecting a positive outlook for the National Credit Union Share Insurance Fund this year.

“While the demands on the share insurance fund in 2013 will be determined by many economic factors and by possible unforeseeable losses, the most likely scenario we project would result in an equity ratio for the share insurance fund at just under 1.30% of insured shares by the end of next year. That would mean there would be no need for a premium increase,” said NCUA Chairman Debbie Matz in a statement after the agency's board meeting last November.

For now, are credit unions beefing up their due diligence in light of the pocket of lending scams that have surfaced or is it business as usual?

“One of the biggest challenges for credit unions is they are informal. Unfortunately, there's no visibility on what's happening,” said Rohit Arora, co-founder and CEO of Biz2Credit, a New York firm that connects small businesses with financial institutions for their financing needs.

While fraud is as old as hand-operated cash registers, Arora believes what has evolved is the mode of checks and balances.

“There might be some C-level folks who want to fulfill a mission, which is great, but when you're handling someone else's money, you need to have the technology,” Arora said.

Even with the best technology in place, there is still no guarantee that an employee or member won't be tempted to raid a credit union's coffers. Internally, the NCUA continues to emphasize that credit unions officials are responsible for implementing a system of sound internal controls and for ensuring that the controls are regularly followed by management and staff.

“The purpose of internal controls is not to entrap employees; rather, good internal controls provide a working environment in which good employees are not tempted to do something they would not ordinarily do,” reads a NCUA letter to credit unions on fraud and embezzlement.

Outside of the credit union walls, most are likely aware that authority should never be given to one person–guidance the NCUA has also emphasized.

The $747 million Texas Trust Credit Union in Mansfield hasn't had any type of internal or external problems with its lending programs because it adheres to regulatory requirements and what are essentially good business practices, said Willy Kelsey, chief operating officer.

“No one person has the authority. We have all types of checks and balances in our systems. Yes, we do take losses on loans. Some do go bad, but we stay the course,” Kelsey said.

Texas Trust marked a banner 2012 with its lending services, which included auto and personal loans, home mortgages and commercial loans, growing nearly 24% last year, according to the credit union. Kelsey said mortgages led the way thanks in part to 120 internal referrals each month. Of the 13,231 members that joined Texas Trust in 2012, 35% of them took out a loan, he added.

But the quality of the loan applicant is still key, Kelsey noted.

“They're just not referring everyone and their brother.”

While the Great Recession led to many members nationwide struggling with unemployment, foreclosures and rising debt, Texas Trust still felt that it was important to meet members where they were. As a result, the credit union grew its auto loan portfolio to $145 million in 2012 and commercial loans increased from roughly $5 million to $12 million last year, Kelsey said. Keeping an eye on what's productive for both the credit union and the member continued to help Texas Trust stay true to its due diligence practices while expanding its reach.

“A lot of credit unions made revisions when the Great Recession happened in 2008. We maintained our core practices,” Kelsey said. “With the sequestration, it's a different chapter in the same book. We don't look at just their credit score, we look at their entire financial picture. We're going to continue on that path.”

Arora said at the end of the day, credit unions are businesses and must continue to operate in a way that protects them from fraud.

“You can have the best social mission but the only way to achieve that is having a lot of capital and managing it well. If not, the credit union ends up broke,” he offered. “If you don't help yourself, how can you help others?”