License to steal


Font size: [A] [A] [A]

The Virgin Islands Government’s lax oversight and loose laws put Virgin Islands residents at risk of losing their life savings.

Trusting the government to have rules and regulations for financial institutions, a number of people deposited their money into a new credit union — but when they go to make a withdrawal, they get excuses, evasions and lies.

What they don’t get is their money.

Her Majesty’s Credit Union, a newcomer among financial operations in the territory, identified itself on its website as a reputable business headquartered in Denver.

Neither claim was true.

HMCU’s home office is beside a rural Colorado airstrip in the middle of nowhere.

It is operated by a man with a criminal record, multiple aliases and a history of failed business ventures.

He currently is under investigation 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.

A two-month investigation by The Daily News has focused on the ways the V.I. government fails to prevent the plundering of local depositors’ savings.

The newspaper’s search for information extended to three states and ultimately produced a clear picture of how inadequately the V.I. government serves or protects the people of the territory.

For two years, V.I. government officials have known they are not doing a good enough job regulating HMCU credit union — yet they have done little to change that.

Now the credit union’s St. Thomas office is dark, the door is locked and the credit union members have no access to their money.

Her Majesty’s Credit Union is a subsidiary of a company called Jilapuhn, which in 2005 registered as a corporation in the V.I. Lt. Governor’s Office Division of Corporations and Trademarks.

That corporation is not in good standing.

Jilapuhn filed a certificate of trade name for Her Majesty’s Credit Union in 2007 but did not file articles of incorporation papers for HMCU until Sept. 28, 2010.

The V.I. Lt. Governor’s Office found the filing to be deficient and did not approve the corporation.

Lies and loopholes

The V.I. Code puts the Department of Licensing and Consumer Affairs in charge of regulating credit unions’ activity in the territory — yet the DLCA has no rules governing credit unions.

In contrast, V.I. law puts the Lt. Governor’s Office Division of Banking and Insurance in charge of regulating all banks and other financial institutions in the territory. The division has extensive rules and enforcement apparatus.

The credit union loophole originated In 1969, when the 8th V.I. Legislature added a new chapter to the V.I. Code to govern incorporation, regulation, management and control of co-operative corporations, which are ones owned and run by their members.

In 1971, the V.I. Legislature amended the law to make the director of the Consumer Services Administration — which later became the DLCA — responsible for regulating co-operatives and, specifically, credit unions. The amendment gave the director the authority to create rules and regulations for that purpose.

Now, 41 years later, the government has no credit union rules and regulations and has never drafted any.

Hiding behind Jesus

Jilapuhn stands for “Jesus is Lord all praise unto his name,” and its use as a business name by a financial institution could inspire confidence among religious customers. Jilapuhn’s website spells out the name and quotes scripture.

Jilapuhn filed for a business license with DLCA in 2005 and in 2008 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.

Since then, HMCU has made numerous false claims in order to appear legitimate.

At first, the credit union claimed that it was insured by Lloyd’s of London.

It was not.

HMCU plastered its bank statements and website with the America’s Credit Unions logo, implying it was a member of the Credit Union National Association.

It was not.

HMCU advertised on its website that it was regulated by the V.I. Department of Licensing and Consumer Affairs.

DLCA does nothing to regulate the credit union.

In the meantime, people were trusting their money to a con man who was operating without scrutiny in the Virgin Islands.

One man, many names

Stan McDuffie is the Chief Executive Officer of Jilapuhn and HMCU. He replaced Stan Roberson, who was jailed in 2010 for failing to comply with a federal investigation into the credit union.

They are the same person.

He also goes by the names Stanley Roberson-Battle and Stanley Battle.

He changes his name every time he gets into trouble.

Stanley Bernard Battle was born March 7, 1966, in Washington, D.C. He graduated from M.D. Collins High School in College Park, Ga., in 1984.

In July 1992, he filed for bankruptcy in Montgomery, Ala,. under the name Stanley Bernard Roberson-Battle.

In 1994, under the name Stanley B. Battle, he pleaded guilty in federal court in Atlanta to one misdemeanor count of embezzling.

He was sentenced to two years probation, a $500 fine and ordered to pay $4,279.97 in restitution to the U.S. Postal Service.

Also in 1994, under the name Stan Roberson-Battle, he received a bachelor’s degree in political science from Auburn University at Montgomery, Ala.; in 1995, he received a master’s degree in human resource management from Troy State University in Montgomery.

Despite his prior embezzlement conviction and bankruptcy, in 1997 he applied for a job with BellSouth Telecommunications in Atlanta and claims to have worked there until 2000.

He did something else in 1997. He created what would become his most ambitious venture: Jilapuhn.

Credit union failure No. 1

Using the name Stan Roberson, in 2005 he opened Jilapuhn Federal Credit Union in East Point, Ga. As a federal credit union, it was backed by the full faith and credit of the federal government, and therefore it was regulated by the National Credit Union Administration.

The NCUA is the independent agency that charters and supervises federal credit unions. NCUA operates the National Credit Union Share Insurance Fund, which insures the savings of federal credit union members.

Jilapuhn Federal Credit Union was in operation less than a year before the NCUA seized control and liquidated it, and on Aug. 12, 2006, Stan Roberson-Battle was arrested by the East Point Police Department and charged with deposit account fraud.

According to the Fulton County Sheriff’s Department, he listed his occupation as “computer tech,” and he said he was a resident of Hampton, Ga. After serving three days, he was released from the Fulton County Jail on Aug. 15, 2006, on a $250 cash bond. The Fulton County Superior Court said it could not provide information about the disposition of the case in time for this report.

“NCUA assumed control of Jilapuhn FCU’s operations on August 26, 2005, after determining the credit union had an impaired capital position and was experiencing irresolvable problems in the areas of capital adequacy, cash management, record keeping and management,” the NCUA announced in a 2005 news release.

According to the NCUA, Jilapuhn Federal Credit Union had less than 200 members and assets of less than $150,000.

Because that credit union in Georgia was insured by the federal government — up to $100,000 per account — depositors were able to recover their funds after the shutdown.

Virgin Islands depositors have not been so lucky.

Her Majesty’s Credit Union

The failure of Jilapuhn Federal Credit Union in Georgia did not stop Stan Roberson from trying again. He set his sights on the Virgin Islands, where he discovered that a lax government would allow him to take people’s money without any oversight.

In 2005, he applied for a V.I. business license, but he said it was for a communications company, not a credit union. That application was for Jilapuhn Inc., doing business as Jita Communications. Yet instead of a license for that company, he received a license for Jilapuhn, doing business as Her Majesty’s Credit Union. That business license was issued in 2008, DLCA Director of Licensing Knolah Nicholls-Thomas said.

The Daily News requested a copy of the complete business license file and application — which under V.I. Law is public information — but DLCA was slow to respond and would not disclose everything in the file.

DLCA attorney Fredrick Norford said some documents were being withheld because, he claimed, the entity is under investigation by the Virgin Islands Inspector General’s Office.

V.I. Inspector General Steven van Beverhoudt, said he would not comment on that claim.

The documents that DLCA did provide show Stan Roberson has been allowed to renew his business license every year since 2008. His current business license does not expire until Aug. 31, 2012.

Police did not look

Roberson’s application process at the DLCA required the V.I. Police Department to conduct a criminal background check on him. In November 2005, the department did the check. The name they looked for was Stanley B. Roberson, and they found no criminal record for him.

They never took his fingerprints. They never looked outside the Virgin Islands.

The only thing the V.I. Police Department did was search its own files, and because Roberson had not been operating in the territory at that point, they found nothing.

A thorough background check, of the type that would be appropriate for someone running a financial institution, would have included a national search using NCIC, the National Crime Information Center.

The Police Department’s inadequate investigation and lack of initiative spotlights yet another V.I. government loophole that allows criminals to find shelter in the territory.

The DLCA file on Roberson and Jilapuhn shows no further criminal background checks after 2005. If the DLCA had conducted additional, and more thorough, background checks on Stan Roberson, the agency would have found reason to deny him a license to operate an uninsured credit union.

Trouble in Colorado

In 2004, a year before setting his sights on the Virgin islands, Roberson had registered Jilapuhn as a corporation in Colorado. Under that umbrella name, he also registered Stateside Communications, Tradewinds Financial and Her Majesty’s Credit Union.

In 2010, Her Majesty’s Credit Union caught the eye of Colorado State Securities Commissioner Fred Joseph, who told The Daily News that he saw some ads on Google promising 7.75 percent returns on certificates of deposit. Because 7.75 percent is an unusually high interest rate on a CD, Joseph suspected it was a scam.

He also suspected that Her Majesty’s Credit Union was selling unregistered securities — an illegal practice under federal law, punishable as a felony.

“The accounts they had were not federally insured, so what they were issuing seemed to be promissory notes, and they’re not registered securities,” Joseph said.

Joseph noticed, too, that while the credit union was operating in the Virgin Islands, its “processing center” was located in Colorado. Joseph subpoenaed a long list of documents and information from Stan Roberson.

Roberson refused to comply.

And suddenly Roberson was gone and Her Majesty’s Credit Union had a new CEO: John Wesley Williams.

Williams took a defiant stance. In a letter to his attorney, Steve Feder, dated Oct. 12, 2010, Williams sought to use the Virgin Islands business license as a weapon to try to block Colorado’s probe and to claim that Colorado had no regulatory jurisdiction over Her Majesty’s Credit Union.

Williams said that based on a May 2010 memorandum of understanding between the Virgin Islands DLCA and the Lt. Governor’s Office, HMCU must follow all rules and regulations of the National Credit Union Administration. “The NCUA does not permit corporations to own or be a holding company for any credit union whether state or federally regulated,” Williams wrote.

The thrust of his argument was that the Jilapuhn corporation registered in Colorado could not legally own Her Majesty’s Credit Union in the Virgin Islands.

“This institution will not provide any documents to any state court, state government, representative of such nor any official of Jilapuhn Inc. as these parties do not have proper authorization to view such documents,” he wrote.

“Please understand that Mr. Roberson and Jilapuhn, Inc. do not represent the interest of HMCU in any capacity and are not authorized by this institution to do so,” Williams wrote.

Williams pressed his argument further by asserting that no employees of HMCU were located in Denver. However, Williams himself, the HMCU chief executive officer, was living in Denver at that time and has lived there for at least the last three years.

The Daily News searched public records for any addresses for Williams outside Colorado and found none.

A Colorado judge did not agree with Williams’ position on jurisdiction and found Stan Roberson in contempt of court for failing to produce the credit union documents the state had subpoenaed.

Roberson still would not turn over the documents, and on Dec. 9, 2010, a state judge sentenced him to six months in the Denver County Jail.

The National Credit Union Association then issued a “notice of prohibition” barring Stan Roberson from any future involvement in a federally regulated or insured credit union.

Roberson then made a deal. He told the judge that he would provide the documents the investigators sought, and he got out of jail after a month of his sentence.

He did not fulfill his side of the deal.

Roberson produced some — but not all — of the documents he promised, Joseph said.

Roberson then shifted to a different deception, leading Joseph to think that the trouble was over.

“He closed the operation here in Colorado,” Joseph said.

That did not turn out to be accurate.

He simply moved Jilapuhn’s corporate offices — out of sight to a small airstrip in the middle of nowhere.

And Stan Roberson turned into Stan McDuffie.

A sign in the window

Kendra Prosper opened a savings account at HMCU in the Tutu Park Mall on Feb. 26, 2011. Prosper came to St. Thomas from Dominica 10 years ago. She has a green card, and until last month, her income came from cleaning houses. Now she provides in-home care to an elderly man.

Prosper said a friend told her about Her Majesty’s Credit Union, so she went to the mall to check it out. She said she was looking for a place to open a savings account, and she liked that HMCU did not offer ATM cards so she would not be tempted to spend her savings.

“At first it was OK,” she said, but then HMCU began providing excuses instead of money.

In a March 30 interview, she said: “When I went three weeks ago to get some money, the lady said ‘the system is down.’ “And every time, I keep on going, ‘the system is still down.’ ”

Prosper said the branch had two employees at first, but in January, branch manager Gwenneth Clarke told Prosper she had to fire the other teller.

When “the system went down” and stayed down, Prosper said, Clarke began to use carbon copy deposit slips instead of the official looking printed statements the credit union previously issued for each transaction.

Prosper said Clarke accepted money from credit union members but would not let members withdraw from their accounts.

Clarke has refused to talk with The Daily News about HMCU.

Then one day in February, Prosper and other HMCU members showed up and found the door to HMCU was locked and the lights were off.

A sign taped to the office window gave instructions that raised suspicions.

“Please note. This branch is temporarily closed due to the illness of the Branch Employee. For all transactions please call
1-888-920-0824 or go online and utilize online banking for transactions requests at www.hmcu.net. Please check account statements for further updates. We apologize for the inconvenience. Signed, CEO Stan McDuffie.”

Prosper, who needed to withdraw some of her money, did what the sign said, only to discover it led nowhere.

“The number they had on the door, it wasn’t working at all,” Prosper said.

All it did was provide a taped welcome message and sales pitches for HMCU.

She went to the website and eventually tracked down a Colorado phone number for Jilapuhn. After leaving a number of messages for the CEO, who was going by the name Stan McDuffie, she finally got him on the phone.

“He said if I have money to save, I could send it to the Denver, Colorado branch,” Prosper said.

However, there is no Colorado branch for HMCU.

Prosper said Stan McDuffie also sought to reassure her by saying that HMCU would be opening a new branch on St. Thomas on May 1. At first, he said it would be on Norre Gade. Then he said it would be in Palm Passage, she said.

Prosper was fed up, so she asked McDuffie to send her the balance in her account, which was about $565, and then close the account.

He told her he would send her a check, she said.

She asked him instead to wire her the money through Western Union or MoneyGram, but he told her he did not have an account with those businesses.

In addition to dodging her demand for her money, McDuffie — who actually is Stan Roberson — would not relinquish his hold on it.

“He told me he’s not closing out my account so when they open the new branch, I ‘could go ahead,’ ” and continue doing business with HMCU, Prosper said.

Now, a month later, there are no indications that HMCU is opening a new branch anywhere on St. Thomas — and Prosper still has not received her money and wonders whether she ever will.

“This man,” Prosper said, slowly, shaking her head in doubt. “I don’t know. I don’t know.”

Another depositor, Elizabeth George, a newcomer to St. Thomas from Dominica, also told The Daily News that she fears she never will see her savings again.

George opened her account at Her Majesty’s Credit Union in January. She was told the “system is down,” but she was not yet suspicious. She made two deposits, one on Jan. 12, 2012, for $210 and one on Feb. 3, 2012, for $400.

When a friend told her the credit union had closed down, she went to the HMCU office at the mall to take her savings out.

Like Prosper, George was determined to get her money. She, too, called Stan McDuffie in Colorado, and she heard a story similar to the one he told Prosper.

George said McDuffie assured her that HMCU was still in business and was preparing to open a new branch downtown.

She said he promised to send her a check for the balance in her account.

The check has not arrived, and George is desperate.

“I need my money,” George said. “I’m less than a year here. I don’t have a steady job.”

She said she chose Her Majesty’s Credit Union as the place to open a savings account because she heard that banks require a minimum balance or a minimum amount to open the account. She said the credit unions in her native Dominica always seemed to be good, so she thought she could trust Her Majesty’s Credit Union.

After she opened her account, she told her sister about it. “She asked me, ‘you think the credit union safe?’ I said, ‘I think so,’” George said.

“I hope we can get our money back.”

HMCU’s explanation

Stan McDuffie told The Daily News on March 23 that a new HMCU branch would open in a few weeks.

“The branch is temporarily closed because we only had one employee there,” he said. “We will be opening up May 1.”

He said the employee’s departure was sudden and no one had a chance to tell the credit union’s members what was going on.

“It hit us by surprise as well,” Stan McDuffie said, then he added: “That’s really all I can say right now, I don’t want to get into talking and say something I shouldn’t.”

What he did not disclose to the credit union depositors or The Daily News was that HMCU’s landlord, Tutu Park Ltd., had taken legal action against HMCU.

On March 13, Tutu Park filed a civil lawsuit in V.I. Superior Court against Jilapuhn Inc. seeking action for breach of contract and debt.

Tutu Park states in the suit that HMCU is “substantially delinquent” in its lease obligations and as of Jan. 1, 2012, owed $37,595.71, not including fees and interest.

According to a statement dated Jan. 4, the last rent payment the credit union made was in December 2010 for $966.33.

The case has been assigned to V.I. Superior Court Judge Michael Dunston.

To date, the court has received no reply from defendant HMCU.

At the airport

On March 22, a Daily News reporter visited the two Colorado locations that HMCU listed on its website. The first one, at 12015 East 46th Ave.

in Denver, is an office complex occupied by a number of businesses — none of which are Her Majesty’s Credit Union or Jilapuhn.

Those names are not on the building’s directory.

When reached by phone, Stan McDuffie told The Daily News that the Denver location had been closed and the corporate offices were now “consolidated” into a single office.

The Daily News reporter located the new office, but it is not at a metropolitan center. Open fields
surround a small building alongside a lonely,
windswept airstrip optimistically named Front Range Regional Airport.

A truck stop near an Interstate 70 exit, about three miles from the airport, is one of the few businesses nearby.

At the airport, the only trace of HMCU was the name Jilapuhn on a sign at 37397 Cessna Way. The door was locked, but parked in front of the
building was a Jeep with specialty Alpha Phi Alpha fraternity Virgin Islands license plates and an Auburn University wheel cover on the spare tire.

A man who identified himself as “Mr. McDuffie” responded to a knock on the door. His face matches the police mug shot of Stan Roberson-Battle taken after his Georgia arrest in 2006.

McDuffie said he lived in Colorado full-time. He declined to answer questions about Her Majesty’s Credit Union. He said the company would issue a press release the next day.

It did not.

McDuffie later said that on April 6 he would hold a videotaped conversation in his attorney’s office in Golden, Colo., in which he promised he would discuss litigation that the credit union would have filed in federal court by then.

“A lot of what I have is going to implicate a lot of people,” he said. “There is more going on with us than most of our members understand.”

April 6 has come and gone, and to date, the promised litigation has not materialized. No lawsuits have been filed by Jilapuhn, Her Majesty’s Credit Union or Stan McDuffie.

— Sean McCoy contributed to this report. Contact reporter Aldeth Lewin at 340-714-9111 or email alewin@dailynews.vi.

 

What happened when?

July 1992: Stanley Bernard Roberson-Battle files for personal bankruptcy in Montgomery, Ala.

April 1994: Stanley B. Battle pleads guilty in federal court in Atlanta to one misdemeanor count of embezzling. He is sentenced to two years’ probation, a $500 fine and ordered to pay $4,279.97 in restitution.

December 1997: Jilapuhn Inc. is registered as a corporation with the Georgia Secretary of State.

February 2004: Jilapuhn is registered as a corporation with the Colorado Secretary of State.

January 2005: Jilapuhn Federal Credit Union opens in East Point, Ga.

March 2005: Jilapuhn files articles of incorporation with the V.I. Lt. Governor’s Office.

August 2005: The National Credit Union Administration shuts down Jilapuhn Federal Credit Union.

September 2005: Jilapuhn is issued a certificate of incorporation by the V.I. Lt. Governor’s Office for the purpose of banking and communications.

November 2005: Jilapuhn doing business as Jita Communications applies for a business license from the V.I. Department of Licensing and Consumer Affairs.

August 2006: Stanley B. Roberson-Battle is arrested in East Point, Ga., and charged with deposit account fraud.

October 2007: Jilapuhn files and receives a certificate of trade name for Her Majesty’s Credit Union from the Lt. Governor’s Office.

August 2008: Jilapuhn doing business as Her Majesty’s Credit Union is licensed by V.I. Department of Licensing and Consumer Affairs for credit union services.

May 2010: The Lt. Governor’s Office Division of Banking and Insurance signs a memorandum of understanding with the V.I. Department of Licensing and Consumer Affairs about methods to regulate credit unions in the territory.

September 2010: Her Majesty’s Credit Union files articles of incorporation with the Lt. Governor’s Office, which finds the articles deficient, and does not accept them.

December 2010: Stan Roberson is found guilty of contempt of court for failing to produce documents to the Colorado Securities Commission and sentenced to 180 days in jail.

June 2011: The National Credit Union Administration board issues an order prohibiting Stan Roberson from being involved in any federally insured credit union.

January 2012: The U.S. Securities and Exchange Commission issues a formal order for an investigation “In the matter of Her Majesty’s Credit Union.”

March 2012: Tutu Park Limited files a lawsuit against Her Majesty’s Credit Union in V.I. Superior Court for breach of contract. The credit union has not paid rent since December 2010 and owes $37,595.71 in back rent and fees.

March 2012: The U.S. Securities and Exchange Commission asks a federal judge to enforce the subpoenas previously issued for documents from Jilapuhn and Her Majesty’s Credit Union.

May 6, 2012: The MOU between the Lt. Governor’s Office and DLCA expires.

 

Terms to know

Credit Union: A credit union is a nonprofit financial institution that is governed by its members. It can be state chartered or federally chartered and must provide its members with share insurance. The difference between credit unions and banks is that credit unions have shares, whereas banks have deposits. Banks are for-profit companies, while credit unions are not-for-profit companies. Whereas banks charge interest on loans, collect fees and penalties and reinvest all that to make more money, credit unions are owned by their members (account holders), and any profit made is paid back to members or reinvested into their organization. Credit unions have a defined membership, such as an employee group. The members elect the officers, and the officers are accountable to the members.

CUNA: The Credit Union National Association, a trade association for credit unions.

Federal credit union: A credit union chartered, insured and regulated by the federal government.

FDIC: Federal Deposit Insurance Corporation, established in 1933 to give bank depositors confidence their money was safe. FDIC insures bank customers’ deposits up to $250,000 per individual per bank.

HMCU: Her Majesty’s Credit Union, an unregulated, uninsured, unincorporated business that claims to be a genuine credit union but does not follow standard credit union standards and practices.

Jilapuhn: Stands for “Jesus is Lord all praises unto his name.” It is doing business in the Virgin Islands as Her Majesty’s Credit Union.

NCUA: The National Credit Union Administration. The NCUA is the independent federal agency that charters and supervises federal credit unions. NCUA operates the National Credit Union Share Insurance Fund, which insures the savings of federal credit union members. It is not to be confused with Credit Union National Association, CUNA, the trade confederation of thousands of individual credit unions.

Securities: Financial instruments such as stocks, bonds and certificates of deposit. They cannot be sold legally unless they are registered with the Securities and Exchange Commission. To sell or attempt to sell a security before it is registered is a felony.

SEC: Securities and Exchange Commission. It is the agency responsible for enforcing the federal laws regulating the securities industry, the nation’s stock exchanges and electronic securities markets.

Unregistered securities: Stocks, bonds, certificates of deposit and other financial investment instruments that are not registered with the Securities and Exchange Commission. To sell or attempt to sell a financial security before it is registered is a felony.

State-chartered credit union: A credit union that is regulated by the state in which it is located and is subject to the laws of that state. Some state-chartered credit unions are privately insured, some are federally insured.

 

 

St. Croix Daily Deals powered by ReferLocal
\

Best of the VI

Best of the VI: After more than 100,000 text and Facebook votes were cast, it is time to unveil the winners.

Daily News

Try our e-newspaper delivered to you every day

Island Trader

Good stuff, best buys, great fun

Crucian Trader

Celebrating St. Croix History, Culture and People

Island Action

Your complete guide to where to go and what to do this week in the Virgin Islands.