PHILADELPHIA – The president of a small community development credit union was charged this afternoon with embezzling $2.3 million from the institution, which led to last year’s failure.
Ignacio “Nacho” Morales, 40, was charged with conspiracy to defraud the government in a case that led to the closure of Borinquen FCU in July 2011.
Prosecutors charge that Morales used his position to “misuse and embezzle” more than $2.3 million from the CDCU, which was chartered in 1974 to serve low-income community in Philadelphia, through a variety of schemes. Among them was cashing fraudulent U.S. tax refund checks through at the credit union, keeping 20% of the checks for himself.
Between 2008 and 2009, prosecutors said Morales embezzled $600,000 from the $7 million credit union to purchase real estate, and during the period of September through December 2009, he allegedly took $560,000 from Borinquen to attempt to purchase 15 kilograms of cocaine.
Prosecutors added that in September 2008, he failed to deposit $700,000 into an account of a Borinquen member, and instead used the money for his own purposes. They claim that he intentionally altered credit union records and other reports provided to the NCUA and their auditors in order to conceal the various schemes.
Morales is charged with misapplication and embezzlement, false reports on federal credit institution entries, engaging in monetary transactions in property derived from specified unlawful activity, filing false federal income tax returns, and attempted possession with intent to distribute more than five kilograms of cocaine.