In a new civil lawsuit, a Philadelphia man alleged three former board members of Borinquen Federal Credit Union either conspired to embezzle from the cooperative or failed to intervene to prevent its failure.
Miguel Roman, who filed the lawsuit in U.S. District Court in Philadelphia on April 21, also is suing the NCUA, the FDIC, 10 "Joe Does" and Ignacio Morales, the former CEO of the $7 million Borinquen Federal Credit Union.
Roman said he opened three accounts at Borinquen FCU worth approximately $95,000 each. The NCUA allegedly told him that his accounts were empty, and he had to repay more than $19,000. The NCUA, however, later told Roman he didn't need to repay that amount, according to the lawsuit.
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In January 2013, Morales was sentenced to more than seven years in federal prison for embezzling $2.3 million that led to the cooperative's 2011 collapse.
He was convicted of fraud, embezzlement, money laundering, filing false income tax returns and possession of cocaine with intent to distribute. Federal prosecutors said Morales used his position as the credit union's CEO to embezzle more than $2.3 million of BFCU funds through a variety of schemes from 2006 to 2011.
Roman claims Morales and the three board members, Miqueas Santana, Carmen Montalvo and Sandra Roman, "conspired to embezzle funds from Borinquen and cause the bank's collapse. In the alternative, to the extent these defendants are discovered to have not participated, they did not intervene to prevent the bank's failure," according to the lawsuit.
In February 2013, Santana was charged with embezzling and money laundering. With the former CEO's permission, he withdrew more than $500,000 from his BFCU accounts without depositing sufficient money into those accounts to cover the withdrawals. He used that money to buy real estate throughout Philadelphia, according to federal prosecutors.
Santana pleaded guilty, and on Oct. 31, 2013, a U.S. District Court Judge R. Barclay Surrick in Philadephia sentenced him to three years in federal prison and ordered Santana to pay more than $528,000 in restitution.
Unlike Santana, however, federal prosecutors have not charged Montalvo and Roman with any alleged crimes.
Court documents do not say whether Miguel Roman is related to Sandra Roman.
In his lawsuit, Roman claimed the NCUA sent a letter to him in July 2012 requesting reimbursement of a check made to an auto dealer in the amount of $19,125 to purchase an SUV. Later, Karen Miller-Brenner, an NCUA liquidation analyst in Austin, contacted Roman informing him all of his accounts at BFCU were empty and reiterated he needed to repay the $19,125, according to the lawsuit.
After Roman refused to repay the $19,125, Miller-Brenner apparently suggested to him that "everything would be erased and that Plaintiff not need repay anything," according to the lawsuit.
Roman is seeking a judgement of more than $75,000, plus punitive damages, attorney's fees and costs.
It has not been made clear why Roman is also suing the FDIC. His lawyer, Matthew B. Weisberg of Morton, Pa., did not return a phone call seeking comment.
John Fairbanks, a spokesperson for the NCUA, declined to make a statement because the federal agency does not comment on litigation.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
