HARRISBURG, Pa. (12/26/07)--The former CEO of a defunct community development credit union in Harrisburg, Pa., pleaded guilty Thursday to making false statements to federal officials and conspiring to defraud the U.S. Department of Housing and Urban Development (HUD). Carl Payne, 66, who was CEO of the defunct Greater Harrisburg Community CU as well as the Harrisburg Housing Authority (HHA), pleaded guilty in U.S Middle District Court to two misdemeanor counts (PennLive.com Dec. 20). The other person involved in the conspiracy to defraud was not named in court records but is a person known to the U.S. Attorney's Office. Payne, who recently resigned as executive director of HHA, had faced as much as five years in prison on each count. His guilty plea changes that to a maximum two years' in prison and a $200,000 fine. As part of the plea bargain, Payne agreed not to have any involvement with procurement activities involving HUD or conduct any business with HHA for five years. He was charged with creating and backdating documents to obstruct the federal grand jury's investigation into how $500,000 of federal money was moved from the housing authority to the credit union. The diversion was discovered during an investigation by HUD and the Federal Bureau of Investigation. He also was charged with lying about receiving about $134,000 from the housing authority for his work with the credit union. The $1.7 million asset credit union lost more than $264,000 during the first three quarters of 2005 and in 2004 had a net profit of $3,737. It was declared insolvent on Feb. 3, 2006 (News Now Oct. 4, Feb. 14 and Nov. 26). Judge John E. Jones III set a March deadline for a presentence report. Payne was released after the hearing on his promise to appear for future proceedings.