PHOENIX – The former member business loan chief at AEA FCU and his wife will pay $25 million restitution to the one-time $410 million credit union that was almost sunk by a major loan fraud he engineered, under a deal agreed to by all parties.
The restitution, the biggest ever for credit union thievery, will obligate William Liddle to begin making payments to the Yuma-based credit union once he completes a 15-year prison sentence. CUNA Mutual Group’s CUMIS Insurance Society unit, which paid out a $5 million bond claim to AEA, will also be entitled to that amount of restitution.
But it is doubtful that AEA, the one-time credit union for the Arizona Education Association, or CUMIS will see any money since Liddle, 52, and his wife filed for Chapter 11 bankruptcy in 2010.
In an unusual twist, Frank Ruiz, the real estate developer who paid Liddle more than $1 million in bribes to obtain $58 million of risky MBLs, was ordered to pay 25% of the restitution of the Liddles' total amount, or $6.3 million.
Liddle wife, Rhonda Liddle, who is appealing her conviction on charges she laundered the proceeds of the bribes, has been sentenced to a year home confinement so she can care for the couple’s young daughters, ages 9 and 15.
William Liddle was convicted in February on charges of bank fraud, conspiracy and money laundering for approving MBLs to Ruiz and at least one other Yuma developer in exchange for bribes of one kind or another. Ruiz confessed to giving Liddle more than $1 million worth of bribes, including $565,000 to buy a home, a membership at the Yuma Country Club, $40,000 to buy a Toyota Sequoia, $9,600 to buy a Corvette and $246,200 in cash.
The companies Ruiz used to obtain the loans were financially unstable and unqualified for the loans, and the few legitimate projects that were funded by the loans ended in failure. A portion of the loan funds were used to develop the Kress Building in downtown Yuma and the Yuma Fun Factory, both of which went into foreclosure.
Ruiz pleaded guilty to felony offenses as a result of his participation in the fraud, cooperated in the prosecution of the Liddles, and was recently sentenced to a year in prison.
The fraud erased all of the credit union net worth and prompted NCUA to take it under conservatorship in December 2010. The credit union is only operating because of an emergency $20 million loan provided by NCUA.