SIOUX CITY, Iowa (7/14/09)--Four credit unions are among the eight groups that have sued MetaBank over fraudulent certificates of deposit (CDs) they bought from a former bank employee between 1995 and 2008, according to MetaBank's filing with the Securities and Exchange Commission (SEC). The former employee, Charlene Marie Pickhinke, 48, of Sac City, Iowa, pleaded guilty Thursday in U.S. District Court in Sioux City, Iowa, to stealing $4.2 million from as many as 50 credit unions and banks through wire fraud, making a false statement in a bank's records, money laundering and aggravated identity theft (Des Moines Register
July 11). She faces up to 82 years in prison and a fine of $8 million Pickhinke worked for the bank from 1979 to May 18, 2007. In its SEC quarterly filing, MetaBank's parent company, Meta Financial Group based in Storm Lake, Iowa, disclosed the fraud. It said Pickhinke used the funds of new victims to pay off the previous victims in her scheme. The SEC filing named four credit unions among those suing to recover funds related to the phony CDs. They are:
* Guardian Angel CU, a $40 million asset credit union basedBerlin, N.H. It filed a class action complaint in the U.S. District Court in New Hampshire on July 14, 2008. The suit says the credit union deposited $99,000 in April 2005 with MetaBank in exchange for a CD. The credit union renewed the CD twice before being notified by the bank about the fraud. Its complaint estimates more than 50 institutions bought the CDs. * Coreplus FCU, a $188 million asset credit union based in Norwich, Conn. It filed a civil action in the Superior Court for New London County, Conn. on Nov. 18, 2008. The Des Moines Register said the case was dismissed by the two parties voluntarily in March. * Hamilton FCU, a $27 million asset credit union in Novato, Calif. It filed a class action suit in March in the U.S. District Court for the Northern District of California; * East Idaho CU, Idaho Falls, Idaho. The $206 million asset credit union filed its suit in District Court for the Seventh District of Idaho.
These and several cases filed by banks arose "after MetaBank was contacted by another institution but could find no record of the CD it had allegedly purchased, and commenced an investigation," said the SEC filing. The bank's parent company said that Pickhinke sold the CDs, using MetaBank's name, to the financial institutions via an independent broker. She instructed purchases to wire the purchase money into one of a number of false accounts she created at the bank.