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Conficker worm has been reprogrammed

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NEW YORK (4/13/09)--The Conficker worm, which infected three million to 12 million computers worldwide, has been reprogrammed to make it stronger while it seeks to control more computers, reported Computerworld Thursday. The worm, dubbed the Internet's No. 1 threat, takes advantage of a vulnerability in Microsoft software that permits it to infect computers forming a huge "botnet" or suite of machines to send spam and attacks against websites. However, the worm needs to receive new instructions to continue attacking. It does this by picking up instructions on a website or by receiving a file over a peer-to-peer network (P2P). The security community had succeeded in hampering Conficker in getting directions via a website, but late last week, researchers at two organizations noted some computers infected with Conficker received a P2P binary file. The new file tells Conficker to contact,,,, and The P2P function indicates more sophistication. The new update, which is programmed to stop running May 3, tells Conficker to contact a domain affiliated with another botnet, called Waledec, which was used to send spam and grew similarly to the Storm worm. Security experts said that indicates the same group is linked to all three botnets. So far, the worm hasn't been used for malicious purposes. The two organizations that discovered the reprogrammed binary update said their findings are preliminary because they're still analyzing the update. Perimeter, a CUNA Strategic Services provider, has a blog about the latest Conficker update. Use the link to read the latest.

Fake CU also prompts alerts in Pennsylvania

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HARRISBURG, Pa. (4/13/09)--The Pennsylvania Department of Banking has issued a consumer scam alert about an entity calling itself "First Star Lending Services" and "First Star Credit Union," believed to be the same entity that received a cease-and-desist order from a Michigan regulator last week. The Pennsylvania department warned about an apparent advance fee loan scam using the names at (Life is a Highway April 10). Two consumers said they applied to the company for loans ranging from $7,000 to $10,000. When they were asked to pay several hundred dollars in upfront fees to receive their loans, they became suspicious and did not send any funds. The companies claim to be located at 1800 Loucks Rd., Suite 850, York, Pa. However, no such address exists there. First Star Lending Services claims to offer first and second mortgages, consumer loans and other financial products, but it is not licensed by the Pennsylvania Department of Banking. There is no First Star CU chartered by state or federal regulators said the department. Friday News Now reported that the Michigan Office of Financial and Insurance Regulation issued a cease-and-desist order against a fake credit union, "Firststar CU," claiming to be a Pennsylvania-based credit union. OFIR said the institution is a fraudulent financial institution (News Now April 10).

Frisco area Internet cell outage closes FIs

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SAN FRANCISCO, Calif. (4/13/09)--Silicon Valley took a hit Thursday when someone severed eight fiber-optic cables, knocking out cell phone, landline and Internet service in a number of areas around San Jose and San Carlos, Calif., and the South County region. The outage affected ATMs, card transactions, police and hospital databases and 911 lines, and brought credit unions and banks operations to a standstill. The outage, which occurred at about 1 a.m. Thursday, affected six AT&T cables, one Sprint Nextel Corp. cable, and Verizon Communications. It was a reminder of how dependent society is on telecommunications. The cables wiped out telecom service to tens of thousands of homes and businesses, hospitals and police stations. Bank and credit union officials said they had to shut down on the advice of police because of a potential difficulty of reaching law enforcement in the event of a robbery. Commonwealth Central CU, based in San Jose, said its Morgan Hill branch was closed. It posted a sign on the door directing members to other branches in San Jose, according to the San Francisco Chronicle (April 10). President/CEO Craig Weber told the newspaper that the credit union has procedures to be able to operate without communication with its host system. "Really, the situation was security for both employees and members," he said. Because of safety concerns, police doubled their number of officers patrolling the streets and set up mobile stations throughout the city of Gilroy and Morgan Hill. Officers personally went into every financial institution in Gilroy (Gilroy Dispatch April 9). South Valley National Bank on First Street had long as security concerns heightened. Because of security system glitches, an inability to call 911 in case of emergency, and inoperable ATMs, bank employees only let one or two people into the building at a time. The event also reduced retailers to cash only transactions, forced students to go without texting, and put the kibosh on online classes. AT&T posted a $100,000 reward for information leading to an arrest but upped the amount to $250,000 when the extent of the problem became evident.

CSMC ex-CEOs CU Fleet files bankruptcy

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MILWAUKEE, Wis. (4/13/09)--CU Fleet, a Wisconsin auto dealership partly owned by the former CEO of Central States Mortgage Co., filed for a Chapter 11 bankruptcy last week, allegedly owing three Wisconsin credit unions at least $2.8 million. The West Allis, Wis.-based dealership was purchased last summer by Richard Jungen, Central States' founder and former CEO, and Thomas Burns. CU Fleet's major secured creditors listed in court filings are Guardian CU, based in West Allis; Prime Financial CU, Cudahy; and Landmark CU, New Berlin. Prime and Guardian are owed at least $800,000, and Landmark is owed at least $2 million, according to court records (Milwaukee Journal Sentinel April 9). The creditors are questioning transactions involving CU Fleet and another dealership, Donald Driver Motors in Campbellsport. Jungen and Green Bay Packers receiver Donald Driver are co-owners of the Driver dealership. Burns is general manager of the Driver dealership, said the Journal Sentinel. CU Fleet's bankruptcy filing is the latest court saga involving Jungen and Central States Mortgage Co., a mortgage company that was 70% owned by credit unions. Last week Central States went into receivership and attorney Michael Polsky was appointed receiver to oversee the mortgage company's liquidation (News Now April 10). Also last week, Central States' parent company, CSMC, dropped a $15 million lawsuit against Jungen and several former CSMC executives over losses the company said it experienced while Jungen was CEO. The suit was dropped "without prejudice," which means it can be brought up again. Last week Bankruptcy Court Judge Pamela Pepper ordered CU Fleet to provide detailed records about its inventory and its more than $200,000 in cash and receivables, said the Journal Sentinel.

Follow ACUC on Twitter during conference

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MADISON, Wis. (4/13/09)--The Credit Union National Association (CUNA) launched a Twitter page for America’s Credit Union Conference and Expo (ACUC) and is offering registrants $200 off if they “tweet” a rule for credit union success. This year’s ACUC will be held in Boston June 21-24 with the theme of “Revolution.” In order to receive the credit, registrants need to tweet their No. 1 rule for revolutionary credit union success. It can be a specific policy or an idea to aspire to, CUNA said. Twitter is a social networking tool where users can provide links and other information through status updates, or “tweets.” Users can “follow” other Twitterers to see their status updates and information. For more information about the ACUC Twitter page, or the ACUC in general, use the links.

Fee-sweep suit settled Illinois CUs get 6.2 million

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SPRINGFIELD, Ill. (4/13/09)--Illinois credit unions will receive a collective $6.2 million in cash and reduced regulatory fees after Illinois Gov. Patrick Quinn signed a bill April 6 that settled a lawsuit the Illinois Credit Union League and other financial industry groups had filed against the former Illinois governor and his administration. The lawsuit involved escalated regulatory fees that credit unions, banks and thrifts in Illinois paid to cover supervisory fees, according to Steve Olson, general counsel for the league. In 2003, former state Gov. Rod Blagojevich raised the fees by 50% for credit unions and 27% for banks in an effort to generate state revenue. He also amended a state law so that it would permit the money generated from the fees to be placed into the state’s revenue funds and used for expenses other than supervision. Credit unions and other state-chartered financial institutions were outraged, Olson said. The regulatory fee arrangement that credit unions and banks had with the state was that they would pay fees to cover supervision--nothing more and nothing less. “Credit unions didn’t want to be used by the state to pay for things not related to credit unions,” Olson told News Now. The Illinois state government also began “sweeping” the money collected from the fees and transferring it into the general revenue fund. The league worked to get credit unions’ escalated fee dropped to 27%, which was what banks were paying, but the institutions were still unhappy. After almost a year of trying to negotiate a compromise, the Illinois league, the Illinois Bankers Association, Community Bankers Association of Illinois and Illinois League of Financial Institutions filed suit against Blagojevich and his administration in December 2004. The plaintiffs argued that the escalated costs breached a pre-existing arrangement the institutions had for supervision fees. In March 2005, the league and its co-plaintiffs were granted an injunction against the state to prohibit further sweeps while the case was being prosecuted. The injunction restricted transfers from the dedicated funds to ordinary and contingent expenses of regulatory supervision. Because credit unions and banks were still paying higher rates, money began to accumulate in the dedicated funds. But the state couldn’t get at the funds due to the injunction--so the state pursued a settlement with the league and co-plaintiffs. A resolution was reached in March 2008. However, the settlement was contingent on legislation because credit union regulatory fees are set by statute. S.B. 2513 was introduced and eventually enacted April 6. The bill, sponsored by Sen. Terry Link and Rep. Joseph Lyons, implements the reduction of regulatory fees going forward. The group is still working on administrative details for how the money will be paid back. The state doesn’t have a protocol in place yet for the payment. About 1,000 entities will receive money, Olson said. Once the payment process is complete, the injunction will be resolved. “We’re 95% there,” Olson said. The process could be done in the next three weeks, he said. “We want to make sure credit unions get their money as quickly as possible,” he said. The largest credit unions could receive up to $260,000 each in a check from the state, and $45,000 a year in reduced fees going forward. The fees are based on asset size. Credit unions are excited about the reduced rate. “It’s not going [determine] the success or fail of the credit union, but it helps,” Olson said. “It’s a fair and reasonable compromise.” Illinois’ current governor, Quinn, understands credit unions, Olson said. Quinn is an active credit union member and has spoken at many Illinois league events. “He is very much a consumer advocate,” Olson said. For that reason, Olson said the league expects the reduced fees to remain in place. The regulatory fees case is unique because it enabled credit unions, banks and thrifts to work together instead of working against each other. “We were able to come together to work in a unified way and that helped us,” Olson said. The cooperation sent a message to the state, Olson said. He noted that the bill enacting the reduced fees passed unanimously. “This has been a long journey,” concluded Illinois league President/CEO Dan Plauda. “The credits paid to credit unions couldn’t come at a better time in light of current economic conditions.”

CU System briefs (04/10/2009)

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* OREM, Utah (4/13/09)--A computer consultant hired to help Family First FCU with computer upgrades has been indicted on one count of bank fraud for stealing $1 million in deposits from the Orem, Utah-based credit union. Zeldon Thomas Morris, 42, was arrested Wednesday. The Federal Bureau of Investigation says he worked with the credit union from June 13, 2008, through mid-January and allegedly used the passwords to create accounts and transfer money to himself. Morris is co-owner of Lee & Morris Enterprises LLC. He was arrested after a business partner became suspicious. Morris faces a potential maximum sentence of 30 years in prison and a $1 million fine ( April 10) … * SACRAMENTO and SALINAS, Calif. (4/13/09)--The Golden 1 CU, based in Sacramento, has received approval from the California Department of Financial Institutions (DFI) to merge Steinbeck CU, a $50 million asset credit union in Salinas, into its operations. The merger proposal now goes to Steinbeck's members for a vote later this month. It needs a majority vote before the merger can proceed (Sacramento Business Journal April 8). Steinbeck management sought the merger to expand the products and services offered to members at affordable prices. DFI said The Golden 1 filed for the merger March 18 and received approval on March 25. Its CEO, Teresa Halleck told the newspaper that Steinbeck's two branches will be retained … * RALEIGH, N.C. (4/13/09)--State Employees' CU (SECU) has donated a tract of land to the city of Brevard, N.C., to aid in the development of the Davidson River Trail, which connects the local community to the Pisgah National Forest. The trail, designed to join Davidson River Campground and the forest, provides an opportunity for the credit union to give back and help educate others on the amenities in their local state forests, SECU said. Pictured is a sketch of the proposed trail located in front of SECU's Brevard branch. (Photo provided by State Employees' CU) … * NEWPORT NEWS, Va. (4/13/09)--BayPort CU of Newport News, Va., hosted the local community Shred-It Day March 28 at its Hampton and
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Chesapeake branches to raise awareness of identity theft and to assist local foodbanks. The credit union teamed with Wavy TV, Shred-It and ARMA International to sponsor the free service while appealing to participants to donate non-perishable foods to area foodbanks. More than 30,000 pounds of paper was shredded, and regional foodbanks received almost 4,500 pounds of canned goods, plus $350 in donations. The fofbank estimates the event will provide 5,300 meals for local residents in need. (Photo provided by BayPort CU and the Virginia Credit Union League) … * ST. LOUIS (4/13/09)--Five St. Louis credit unions have teamed up to sponsor a cooperative shred day to raise awareness of identity theft. The event is organized by the St. Louis Chapter of Credit Unions. Hosting shred trucks on April 25 with eight drop-off locations will be at Vantage CU, First Community CU, lst Financial FCU, St. Louis Community CU and West Community CU … * BURNSVILLE, Minn. (4/13/09)--USFCU raised $11,222 plus 7,115 pounds of food during its MN FoodShare campaign held throughout
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March. This year's 2009 FoodShare theme emulated the Parker Brothers game, Monopoly. Throughout the month the credit union's 200 employees traveled around the game board as they raised money and collected food. Bill Raker, president/CEO, noted that "even in times of financial difficulty," employees and members "still seek to make a positive impact in our community." In the photo, USFCU employees are shown helping to deliver food donations to the local food shelf. (Photo provided by US FCU) …

IChicago TribuneI Call CU if need cash

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CHICAGO (4/13/09)--The Chicago Tribune advised in an article published Friday that cash-strapped consumers may want to check with their local credit unions to refinance their mortgages and take out cash. The article, “Tips for tapping home equity,” quoted Eric Tyson, personal financial expert and co-author of “Mortgages for Dummies.” He suggested that credit unions may be a good place to find loans. If consumers don’t have access to a credit union through their employee, they are likely to find one in their geographical area. The Tribune suggested visiting the Credit Union National Association’s website, at, for more information. To read the full article, use the link.

SECU works ahead of curve on reverse mortgages

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RALEIGH, N.C. (4/13/09)--State Employees’ CU (SECU), Raleigh, N.C. is working to provide its members with reverse mortgages that are different from and better than the industry standard. Reverse mortgages are loans against a residence to provide cash to help a homeowner with living expenses--usually in the form of a lump sum or monthly disbursement. Applicants must be 62, use the home as their primary residence, and receive consumer education from a mortgage counselor to quality. SECU’s loan is different than a typical reverse mortgage because it has a fixed interest rate, an origination fee of 1%, no mortgage insurance and no monthly service fees, SECU said. “While this type of loan will not benefit all members, the ones who need this option can rest assured they are getting a product that will not be detrimental to their financial well-being,” said Phil Greer, SECU senior vice president of loan administration. SECU has closed 50 reverse mortgage loans totaling $5 million since August, when the program was introduced. The loan can help with bills, freeing up needed money, said SECU member Oma McKee. “We’ve worked hard all our lives and we have this house, so we might as well let is work for us now,” she said.

CUNA HRTD Council announces exec committee

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MADISON, Wis. (4/13/09)--The CUNA HR/TD Council announced its executive committee and officers during the council’s 15th annual conference April 6-9 in Las Vegas. Jennifer Morse, vice president of human resources, training and development for Empower FCU in Syracuse, N.Y., moved from vice chair to chair. She replaces Kent Streuling, vice president of human resources for America First FCU in Riverdale, Utah, who reached the council’s term limit. Suzanne Oliver, senior vice president of educational services and chief learning officer for Mountain America FCU in West Jordan, Utah, was named the new vice chair. Diana Wozniak, human resource manager for Tampa Bay FCU in Tampa, Fla., is the new secretary/treasurer. One incumbent and one new face were elected to the executive committee. Oliver and newcomer Kathy Spahr, human resources, training and development director for EECU in Jackson, Mich., will both fill three-year terms. Rounding out the board are:
* Jennifer Godel, assistant vice president of human resources and training for Desert Schools FCU, Phoenix; * Michelle Greear, assistant vice president of training and career development for Technology CU, San Jose, Calif.; * Jeffrey Duke, leadership development consultant for BECU, Seattle; * Michael Nicholas, vice president of human resources for United FCU, Buchanan, Mich.; * Robert Davis, senior vice president of human resources for Vystar CU, Jacksonville, Fla.; and * Danielle Brown, senior vice president of operations for the Credit Union Association of Oregon, who serves as the board’s league representative.

Ethical operations critical conference told

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ST. GEORGE’S, Grenada (4/13/09)--Ethical operations are critical to the success of organizations of all sizes and especially credit unions, said Dr. Anthony Emerson, president/CEO of the Credit Union League of Connecticut (CULCT), during a recent leadership conference in Grenada.
Click to view larger image Tillman Thomas, (center) prime minister of Grenada, attended the Co-Operative Credit Union League of Trinidad and Tobago’s annual leadership conference with Connecticut credit union representatives. From left are: Kathy Chartier, Keith Weimert, Carol Bayreuther and Anthony Emerson. (Photo provided by the World Council of Credit Unions)
Firms that don't operate ethically are soon found out and may soon find themselves out of business. “Better to start small than to not start at all. Ethics are a scalable solution that can and should be used by organizations of all sizes,” Emerson said. Emerson and representatives from three Connecticut credit unions participated in the four-day conference as part of CULCT's role as the Credit Union League of Trinidad and Tobago (CCULTT) partner through World Council of Credit Unions' (WOCCU) International Partnerships Program. In addition to Trinidad & Tobago, the conference drew attendees from credit union movements and government offices in Barbados, Grenada, Jamaica, St. Lucia and St. Vincent, including Tillman Thomas, prime minister of Grenada. The April conference came at a crucial time for Caribbean credit unions because they are finding an increasing need to develop new strategies and find new tools to tackle growing economic challenges, Emerson said. “Caribbean credit unions are watching from afar,” Emerson said. “They have seen an uptick in unemployment and delinquencies as the result of declining economies. They are looking for new ideas for growth.” Kathy Chartier, president/CEO of Members CU, Stamford, Conn., also led a session on the importance of engaging the youth market during tough economic times. Prior to the conference, Carol Bayreuther, president/CEO of Hartford (Conn.) Healthcare CU, and representatives from new partner San Fernando Community Credit Co-operative Union Society Ltd., Tobago, met face-to-face for the first time. Keith Weimert, president/CEO of Seasons FCU, Middletown, Conn., attended a branch opening of partner COPOS CU Cooperative Society Ltd., Tobago. Janet Brooks-Duncan, the island's administrator of enterprises and business development, also attended the opening. CULCT and CCULTT have been partnering participants in the WOCCU program since 2001.