Investigation into credit union nearly complete
Published: January 23, 2013
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ST. THOMAS - The V.I. Justice Department's investigation into Her Majesty's Credit Union is almost done, and soon the decision will be made whether to file criminal charges against the man who operated an unregulated credit union in the territory.
"The investigation is pretty much complete. We are very close to wrapping up, and we will be making a prosecutorial decision very, very soon," V.I. Attorney General Vincent Frazer said.
Justice and the V.I. Department of Licensing and Consumer Affairs launched an investigation into Her Majesty's Credit Union following a two-month investigative report published by The Daily News. The newspaper found that Her Majesty's Credit Union is operated by a man with a criminal record, multiple aliases and a history of failed business ventures.
The man, who uses the name Stan McDuffie, currently is facing civil charges filed by the U.S. Securities and Exchange Commission and has been jailed in the past for refusing to cooperate with state investigators in Colorado looking into possible fraud. The credit union, which is uninsured and largely unregulated by the V.I. government, abruptly closed its doors to the public almost one year ago.
In March, the SEC launched an investigation into possible securities fraud, and in November the federal agency filed a civil lawsuit against the company.
Frazer said the local government has been cooperating with the SEC in its investigation.
"We've been working with them on that," he said.
Frazer said the local investigation has taken so long because: "It requires a lot of assembling of a lot of documents."
Under the V.I. Code, credit unions not federally chartered and federally insured are governed by the Department of Licensing and Consumer Affairs. Her Majesty's Credit Union is the only one of six credit unions in the territory that is not regulated by the federal government.
Her Majesty's Credit Union is a subsidiary of a company called Jilapuhn, which is run by McDuffie, the credit union's chief executive officer Stan McDuffie, who also uses the aliases Stan Roberson, Stan Roberson-Battle and Stanley Battle. Jilapuhn is registered as a corporation with the Lt. Governor's Division of Corporations and Trademarks, but it is not in good standing.
Jilapuhn filed for a business license with DLCA in 2005, and in 2008, it received a DLCA license to operate a credit union in the territory. Under the name Her Majesty's Credit Union, it opened in a storefront inside the Tutu Park Mall on St. Thomas in 2009.
In January 2012, the credit union's members were told the computer system was inoperable, and while the credit union continued to accept deposits, it refused to allow members to make withdrawals.
In February 2012, Her Majesty's Credit Union shut its doors with no notice to members.
The business license for Her Majesty's Credit Union expired in August.
According to the SEC lawsuit filed in November in Colorado, McDuffie sold unregistered securities in the form of high-yield certificates of deposit that he sold online. According to the civil complaint, McDuffie was advertising 7.75 percent returns on the CDs, which were not registered with the SEC.
The suit said he raised about $532,000 through the sale of the CDs and misappropriated nearly all of those funds.
"Following the deposit of HMCU CD investors' funds in HMCU bank accounts, there was no apparent lending or re-investment of those funds, as would occur at a legitimate credit union or other financial institution," the lawsuit states.
Instead, the funds were used to pay for flight lessons and fuel, rent for apartments and office space, real-estate related expenses, credit union software, law firms and travel, according to the SEC.
McDuffie has not yet responded to the SEC lawsuit. He requested an extension of time to respond on Jan. 8, and it was granted the next day. He must respond by Tuesday.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.