SAN DIEGO-San Diego County Credit Union has been targeted in a blog allegedly posted by bankers who make a number of allegations against the $5.7-billion CU and which features SDCCU's CEO "talking" if she had taken "a dose of truth serum."

The CEO, Teresa Halleck, said the site is an "unfortunate" collection of "false claims."

At the top of the blog (found at www.sdccu.blogspot.com) is the statement, "This site was inspired by bankers fed up with the advertising antics of SDCCU whose leadership believes that satire is an acceptable way to foment hostilities against its tax-paying counterparts for whom many of its own members rely on" (sic).

The first of several allegations made on the site, which uses the headline "Pirates of the Pacific," is near the top, under the headline, "Attempted Mortgage Fraud at SDCCU?" The first paragraph reads, "Was San Diego County Credit Union attempting to perpetrate a mortgage fraud scheme against its commercial real estate loan borrowers until they (sic) got caught? Here's what we've discovered from several of thei borrowers and you be the judge."

The next 11 paragraphs go into detail about computation of variable interest rates on five- and seven-year commercial real estate loans, including an alleged photo of a promissory note. The blog posters state SDCCU "decided not to honor what its Promissory Notes called for because the resulting rate change did not favor SDCCU when the high interest rate environment it expected did not materialize." The posters later allege, "This looks like an attempt at flat out fraud."

The site also proides a link to a patent infringement lawsuit filed July 30, 2012 by Content Extraction and Transmission LLC against the credit union, claiming it is "one example" of "various violations of copyright and patent infringement."

The blog concludes with allegations regarding terminations at SDCCU, including members of its commercial lending department, and an allegation that for two years prior to May 2012 SDCCU was "unaware that potions of its banking platform was (sic) out of sync with" the Fed.

Readers of the blog are asked to submit info on the allegations to Keith Leggett at the American Bankers Association, with the annotation that "Mr. Leggett is not affiliated with this site in any way whatsoever."

 

CEO Responds

In a telephone interview with Credit Union Journal, and later via a lengthy, written, point-by-point response, CEO Teresa Halleck defended SDCCU against all of the allegations. Halleck said she was aware of the blog prior to Credit Union Journal's contact, adding, "We won't speculate on the motivations of those behind the site, except to say the allegations of wrongdoing in the site are false and we do not believe whoever wrote the content has the best interests of SDCCU members at heart."

"It is unfortunate that whoever is behind the site chose to make a collection of false claims in an effort to overshadow SDCCU's many achievements in financial strength, growth and member service," she said.

In response to the various allegations, Halleck said:

* "SDCCU has not engaged, and does not engage, in fraud." She said the clause in question, which is in commercial real estate ARM loan documents, relates to how new interest rates are calculated following reset.She said it has been "resolved in favor of the affected borrowers," she said.

* That the patent infringement claim, which relates to envelope-free ATMs and mobile deposit services, relates to a solution purchased from third-party vendors.

* That changes in its commercial lending department were a "minor organizational change" reflective of the change in management.

*That five backoffice positions were eliminated and the resources reallocated to seven positions related to member service.

* That the claim its Fed account was "out of sync" for "two years is not credible and the claim that this resulted in millions being written off is a pure fabrication."

Halleck said management "continues to focus on member service and strong financial performance," as evidenced by member growth of approximately 14%, asset growth in excess of 17%, a strong net capital ratio that exceeds 12%, and a 2012 year-to-date ROA of 1.47% through Nov. 30.

Halleck added SDCCU has also been rolling out numerous new products.

Subscribe Now

Authoritative analysis and perspective for every segment of the credit union industry

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.