PHILADELPHIA – The CEO of a Borinquen FCU pleaded guilty in federal court this afternoon to a $2.3 million embezzlement that sunk the small community development credit union a year ago.

This afternoon’s guilty plea came after the original plea hearing for Ignacio “Nacho” Morales was postponed last week when the CDCU figure disappeared just prior to the hearing—only to resurface in county jail, where he was being held on an outstanding drunk driving charge.

Prosecutors said Morales used the CDCU’s funds to purchase real estate in his own name and took almost $600,000 to buy drugs.

The fraud scheme forced NCUA a year ago to take over the 38-year-old credit union, which served several hundred Hispanic families in a low-income neighborhood of Philadelphia. 

During today’s hearing in federal court, Morales acknowledged that what started as a scheme to cash refund checks from fraudulent IRS returns spiraled into broader crimes that ultimately toppled the CDCU.

Trying to cover his theft and keep regulators at bay, Morales diverted $500,000 in funds for a cocaine deal that never materialized. He also admitted letting an unidentified member of the credit union's board of directors plunder a half-million dollars from its coffers. 

Sentencing for Morales is scheduled for Dec. 7.

 

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