"At this time, there continues to be considerable uncertainty regarding the final loss, if any, which may result in connection with this matter," Kundert said. "However, based on information available to us, and considering only the recovery efforts already underway, we have taken an investment loss contingency charge of $13.1 million against year-to-date earnings as of Sept. 30, 2014."

The purported loan scheme was allegedly concocted by Orlando businessman Nikesh Patel, CEO of FFF, and his wife, Trisha Patel, who had inside information on how to manipulate the USDA system, according to Pennant's lawsuit.

"Trisha was previously employed by Quadrant Financial, Inc., and her duties included working with the USDA-guaranteed Rural Development loan program," the complaint said. "In the course of that employment, she had the opportunity to gain a detailed understanding of the how the program worked and where its vulnerabilities might lie."

Nikesh Patel, who also owns numerous hotels and other businesses in Orlando, was arrested Sept. 30 by the FBI on criminal charges related to the case, according to national media reports.

Patel reportedly attempted to launch a credit union this summer. He filed an application on June 4 with Florida's Office of Financial Regulation's division of financial institutions to open Business Enterprise Credit Union in downtown Orlando, but the application was withdrawn on Aug. 26, according to the Orlando Business Journal.

The couple allegedly concocted the scheme to support an extravagant lifestyle filled with resort real estate, restaurant deals, Rolexes, Rolls Royces and a lavish personal residence in Windermere, Fla., according to court documents.

Despite the alleged fraud, UW Credit Union remains on solid financial ground, said Kundert, who recently became the new board chairman of Filene Research Institute.

"UW Credit Union maintains a diversified and strong balance sheet with ample liquidity," Kundert stated. "While we've recorded a significant loss contingency charge against year-to-date earnings, our net income for the year remains positive. As of Sept. 30, 2014, capital reserves stood at $166 million, which is 29% more than the amount required for the top well capitalized mark of financial strength."

Pennant claims it was scammed by First Farmers Financial, an Orlando, Fla. lending company, according to court documents obtained by CU Times and a statement released by the company.

In question are 26 loans, totaling approximately $180 million that Pennant purchased from FFF, the documents said.

"The scope of the fraud may be broader, but at least three loans with purportedly 'guaranteed' balances totaling $22.8 million, purchased by Pennant from FFF, have now been revealed to be shams," said a complaint filed Sept. 29 by Pennant.

"In the days immediately preceding Sept. 18, 2014, during a routine review of the documentation regarding the FFF Loans, inconsistencies came to light," the complaint said. "Those inconsistencies triggered a more thorough review. Pennant's review revealed that none of the three borrowers reflected in the FFF Loans appears to exist; any identifying information, including postal addresses, either did not exist at all, or have nothing to do with the purported borrower. Nor were Pennant employees able to find any such business entities in Georgia."

It is unsure at this time whether other credit unions are potential victims of the alleged scam.

UW Credit Union is reportedly the second financial institution in Wisconsin to have been victimized in the scam, according to national media reports.

Numerous financial institutions, retirement funds and municipal groups have also been hit hard by the alleged fraud, the reports said.

Other victims include Harvard Illinois Bancorp Inc., which invested $18.1 million in securities related to the loans, and the Illinois Metropolitan Investment Fund, which considers $50.4 million invested in the loans to be in default, according to national media reports.

In the civil case against Patel, Pennant said it discovered that the CPA who allegedly performed the most recent audit of FFF, and whose audited financial statement was provided to Pennant, does not exist, and that the web address for the e-mail address provided for the alleged CPA is associated with one of Patel's businesses, the complaint said.

Pennant recently extended its damage claim lawsuit against Patel to $537.5 million to cover the loss and punitive damages, according to an article in the Orlando Sentinel.

After learning about the alleged fraud from Pennant, UW Credit Union officials notified the NCUA and Wisconsin Department of Financial Institutions Office of Credit Unions that the cooperative holds investment positions with Pennant, the credit union said.

UW Credit Union has engaged legal counsel and intends to fully pursue the recovery of this investment, Kundert said.

UW Credit Union officials stated that they recognized the news may be concerning.

"The best way to respond to these developments is to be as transparent as possible within the context of the legal process." he said. "The credit union will provide updates as information is available."

Patel's attorney, Mark NeJame, recently told the Orlando Business Journal he's optimistic about his client's chances to win the case and predicts it will have little impact on Patel's business operations.

Patel reportedly hosted fundraisers at his home for Florida Gov. Rick Scott this spring and donated funds to the Republican Party of Florida, but both groups told the Orlando Sentinel last month that they plan to donate the funds to charity.

Pennant is represented by Paul Fox from the lawfirm Greenberg Traurig. He did not return a call requesting comment by press time.