RALEIGH, N.C.-Former directors of Greater Kinston CU are challenging the state's February conservatorship of their $17-million community development credit union amid allegations of impropriety by the board members.
The North Carolina CU Division took over the CDCU Feb. 5 after an investigation showed six of its seven board members-as well as CEO Jennifer Howard-also served on the boards of the Kinston Charter Academy and the Greater Kinston Community Development Center, which received hundreds of thousands in loans from the CU. Court records indicate the outstanding balance on the loans was $701,000, exposing the GKCU to a potential loss of $1.3 million.
The directors and the CEO were removed and a contract management team was brought in to continue to run the credit union, including an executive from Self-Help CU in Durham. The 60-year-old CU lost $5 million in 2011 and $562,000 in the first quarter of 2012, when its net worth ratio declined all the way to just 3%.
A hearing on the regulatory challenge was slated for last week.