DENVER and WASHINGTON (5/13/10)--A credit union chartered in the U.S. Virgin Islands with a Denver back office is promoting 6%-7% certificates of deposit in an ad on Google. And that has caught the eye of state and federal regulators, who are trying to determine if the credit union is legitimate or if it is a fraud. The CD rate of Her Majesty's CU (HMCU) is much higher than the typical credit union range of 3% to 4%, according to the Credit Union National Association's (CUNA's) economics and statistics. "The credit union is domiciled in the U.S. Virgin Islands, with a corporate back office or processing center in Colorado," confirmed Commissioner Chris Myklebust of the Division of Financial Services, Denver Office of Regulatory Agencies (DORA). "It is not a legitimate Colorado credit union," he said. "Under Colorado law, to be state-chartered, the credit union must have insurance with the National Credit Union Administration['s National Credit Union Share Insurance Fund]." That means the credit union "cannot solicit Coloradoans. The attorney general's office here recognizes HMCU as a back office," because HMCU filed a "doing business as" form with the Secretary of State, he told News Now. Myklebust said he has had a number of calls from credit unions all over asking about its legitimacy because the credit union is seeking alliances with other credit union organizations. The credit union was formed by Stan Roberson, CEO of Jilapuhn Inc., of Denver, formerly of East Point, Ga. Roberson's company was the founding sponsor of another credit union--Jilapuhn Employees FCU in East Point, Ga., which was formed in January of 2005 but liquidated by the NCUA eight months later. NCUA liquidated that credit union on Aug. 26 after "determining the credit union had an impaired capital position and was experiencing irresolvable problems in the areas of capital adequacy, cash management, record keeping and management," NCUA said in a press release on Aug. 29, 2005. The credit union had less than $150,000 in assets and served fewer than 200 members, the agency said. In a decision related to an appeal of NCUA's liquidation actions, NCUA stated that the asset management and assistance staff members acting as its agents were "pursuing an investigation of the financial dealing and potential fraud involving federal credit union staff and owner/CEO Jilapuhn Inc., the federal credit union's sponsor organization." Roberson said that the new credit union is not chartered or insured by the NCUA. "We are chartered by the U.S. Virgin Islands and insured through Lloyds of London. We have membership with the New York Credit Union League," Roberson said in an e-mail obtained by News Now. However, the Credit Union Association of New York (the former New York Credit Union League)--which works with affiliated credit unions in the Virgin Island--said that is not the case. "We were approached in 2008 by people starting up the credit union, but all that has been filed is a d.b.a. notification," Bonnie Sklar, public relations coordinator at the New York association, said. "In 2009, we declined membership to the organization because it was not insured by the NCUSIF and because it is not a credit union chartered in the U.S.," Sklar told News Now. CUNA's statistics department contacted another credit union in the Virgin Islands, which verified that HMCU exists there but could not confirm whether it is a legitimate credit union there. When its staff tried to contact HMCU, no phone number was listed under HMCU's name. "They may be trading under a different trade name," the credit union said in an e-mail. The credit union also contacted Virgin Islands' Banking & Insurance office in the Lieutenant Governor's office to ask whether one can charter credit unions under the U.S. Virgin Islands (USVI) law. The individual who answered the phone at USVI did not know, but the supervisor was out of the office. Colorado's Myklebust said his office has been in contact with the USVI regulator and the state's securities office has been alerted. HMCU membership is open only to Virgin Island residents and military and defense department members, but its website indicates it will open a CD for anyone. Its application page is not a secure page for financial transactions. Jilapuhn's company website is still active and now provides a Colorado contact address. The company's site says it is a telecommunications reseller. No one has proved the credit union isn't legitimate. Due to a loophole, the state of Colorado has no legal standing to shut the credit union down. NCUA has no standing either. "This is a Virgin Island-licensed, uninsured entity," said John McKechnie, NCUA director of public and congressional affairs. "They call themselves a 'credit union' and Virgin Island authorities are apparently unable to do anything about this. They aren’t advertising as federally insured and [make] no references to NCUA so, we have no authority," he told News Now.