The FBI confirmed Wednesday that it is investigating the $1 billion Scott Credit Union in Edwardsville, Ill.
According to court documents, the FBI's office in Springfield, Ill. mailed a letter to the St. Clair County Circuit Clerk's office in Belleville requesting a copy of a civil lawsuit that was filed by David Butz and Eugene Schill. They accused the credit union of alleged consumer fraud and negligence involving millions of dollars.
"I can confirm there is an investigation," Brad Ware, a media spokesperson for the FBI's Springfield office, said. "Due to the fact that there is an investigation, the FBI does not comment on any matters because of an open investigation."
Adam J. Koishor, chief marketing officer for Scott CU, said the credit union "cannot comment regarding any ongoing investigation."
"We are aware of the investigation; however, since law enforcement is involved, I cannot comment further," NCUA Public Affairs Specialist John Fairbanks said.
Butz, a retired All-Pro defensive tackle for the Washington Redskins, who played in three Super Bowls in the 1980s, and Schill of St. Louis, Mo., filed a 136-page civil lawsuit in Illinois' St. Clair County Circuit Court on April 22 against Scott CU.
According to his website, Butz works as a business consultant and professional motivational speaker. He also was previously associated with Magna Bank in Memphis, Tenn. After training in the bank's executive program, he worked in correspondent banking where he helped build substantial, interest-free deposits, according to the website.
The lawsuit listed 14 counts of consumer fraud and 28 counts of negligence, and names as defendants Scott CU President/CEO Frank Padak and all of its board members, as well as the cooperative's chief executives and vice presidents.
Scott Credit Union allegedly opened unsecured lines of credit in Butz's name without his authorization and signature, according to the lawsuit. The cooperative was also accused of allegedly falsifying documents relating to a fictitious bank CD to fraudulently extend credit in Butz's name.
What's more, the credit union was accused of using Butz's name and credit to extend commercial lines of credit to multiple fictitious or "seemingly random" limited liability corporations that the ex-NFL standout has no relationship with, according to the lawsuit.
Schill also claimed that Scott CU allegedly opened unsecured lines of credit without his knowledge or authorization.
However, according to the lawsuit, Schill also accused the Illinois cooperative of taking money out of his checking account without his authorization. Once Schill brought this to the attention of the credit union, it issued him a Scott CU check that "promptly was returned for insufficient funds."
Butz (pictured at left) and Schill claimed in their lawsuit that because of "deceptive representations" allegedly made by Scott CU, they are now on the hook for millions of dollars in fraudulent lines of credit that were handed over by the credit union to debt collectors.
Additionally, Butz and Schill claimed their professional reputations have been damaged and are unable to borrow or enter into new business ventures.
During a court hearing last month, St. Clair County Judge Randall W. Kelly denied the credit union's argument in its motion to dismiss the case that the Butz and Schill complaint lacked sufficient facts as to damages.
However, Judge Kelly dismissed one count of negligence against Scott CU, and one count of consumer fraud and two counts of negligence against the board of directors.
Nonetheless, Judge Kelly did not dismiss the remaining 13 counts of consumer fraud and 25 counts of negligence against Scott CU President/CEO Frank Padak as well as the cooperative's chief executives and vice presidents.
"The judge agreed that my clients have been damaged by Scott Credit Union's actions," Grey Chatham Jr., a Belleville, Ill.-based attorney who is representing Butz and Schill, said. "The case is going forward."
Judge Kelly scheduled a status hearing for Nov. 5.
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