Patel and Fisher falsified information about First Farmers to become a non-traditional lender for the United States Department of Agriculture's guaranteed loan program. Pennant Management, a Milwaukee, Wis.-based registered investment advisor for more than 10 years, sought to obtain USDA guaranteed loans to hold in an investment-type pool for their clients, which included UW Credit Union, banks, fiduciaries such as ERISA-covered pension plans, municipalities and other political subdivisions that wanted a no-risk investment and liquidity.

According to court documents, Patel made false statements and supplied fake financial information to attract Pennant and their clients to invest in bogus USDA guarantee loans through First Farmers.

Between May 2013 and September 2014, Patel on behalf of First Farmers, submitted loan packages to Pennant seeking funding for 27 separate fictitious USDA loans. Pennant funded 26 of the loans that were then marketed and sold to its clients with a guarantee that in the event of a default by First Farmers or the borrowers, the USDA would pay investors.

Federal prosecutors said Patel completely fabricated every loan he sold to Pennant investors, by falsely representing that First Farmers had previously issued the underlying loans to borrowers in Georgia and Florida. In each case, there was no actual borrower, no pre-existing loan and no USDA guarantee. Patel forged the signatures of the purported borrowers and USDA officials and falsified multiple documents, including bogus certified audits by CPAs who did not exist.

The fake loans represented lending by First Farmers for $211,150,000 of which the purportedly guaranteed portion of $179,160.000 was sold to investors, according to court documents.

UW Credit Union's initial gross investment balance totaled $52.9 million, but its actual losses were reduced from recoveries made or recoveries that are expected to be made, said Kundert.

"As of 2017, the cumulative expected loss is $22.9 million," Kundert said. "Our call report for December 31, 2014 included an estimated loss from this investment of $35.2 million. We recorded a loss overall for 2014 of $15.2 million. Since that time, additional recoveries have occurred or are expected to occur, which have reduced the expected final loss estimated from $35.2 million to $22.9 million."

Because legal matters are pending from this fraud case, Kundert said he is unable to provide additional comments.

Court documents reveal that five other financial institutions were substantially affected by this massive fraud.

For example, the $141 million Harvard Savings Bank in Harvard, Ill., lost $18 million, which was the bank's entire short-term capital that forced the sale of its operations and performing assets to another bank and terminated the employee stock ownership plan. In addition, the $55 million Winfield Community Bank in Winfield, Ill., lost $2 million, which eliminated its entire capital reserve and placed it below capital regulatory requirement. The bank was later sold for $2 million less than book value, which under normal conditions, was below fair market value, according to court documents.

Additional banks that lost funds were the $395 million Encore Bank in Naples, Fla., ($4.8 million), the $723 million Citizens Bank of Mukwonago, Wis., ($15 million), and the $702 Blackhawk Bank of Beloit Wis., ($5.6 million).

Other organizations that lost millions included the Illinois Metropolitan Investment Fund ($50.4 million); US Fiduciary Services ($15 million); Salem Trust Company, ($15 million); US Fiduciary Services LDF Fund, ($2.6 million) and Waterfront Services Company, ($7.2 million).

Pennant Management, which served up to 200 clients, closed its doors and more than a dozen jobs were lost.

Federal prosecutors said Patel used the stolen investment funds to buy and renovate hotels and fund other business interests. He also spent lavishly on personal travel, personal expenses, homes, cars, a boat and gifting friends and family.