PHILADELPHIA – The CEO of a small community development credit union was sentenced yesterday to 90 months in federal prison for embezzling more than $2.3 million, which led to the CDCU’s 2011 failure.

Ignazio “Nacho” Morales, 49, the president of Borinquen FCU, pleaded guilty in September to a scheme that involved cashing fraudulent tax refund checks, buying local real estate with credit union funds, and even financing the purchase of narcotics with credit union money.

NCUA shuttered the 38-year-old CDCU, which claimed $6 million in assets and 8,600 members in a low-income North Philadelphia Hispanic neighborhood, in July 2011.  Federal prosecutors said the crimes resulted in more than $11 million in losses to NCUA and the IRS.

Morales joined the credit union 18 years ago and was paid more than $100,000 a year as CEO. Still, he used the CDCU as "his personal piggy bank," said Assistant U.S. Attorney Arlene Fisk.

Morales confessed to laundering ill-gotten IRS refund checks and cooking the books to conceal the scheme. Morales became so indifferent that he once let a member deposit a $45 million check that was clearly fake.

During September plea hearing Morales acknowledged that what started as a scheme to cash refund checks spiraled into broader crimes that ultimately toppled the CDCU. Over five years, Morales agreed to launder more than 1,100 IRS refund checks from a New York fraud ring that filed phony tax returns. In return, he got a cut - often as much as $50,000 a month. He also let a member of the board of directors - who has not been publicly named or charged - overdraw more than $500,000.

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