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 troubled 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 credit union. Court records indicate the outstanding balance on the loans was $701,000, exposing the credit union to a potential loss of $1.3 million. State law prohibits such conflicts of interests among board members.
The directors and the CEO were removed as a result of the conservatorship 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 credit union lost $37,000 in 2011 and $56,000 in the first quarter of 2012.
A hearing on the regulatory challenge is scheduled in state court for Tuesday. At an earlier hearing before the N.C. CU Commission the conservatorship was upheld.