Audit Reveals Credit Union’s $12M Loss Was Due to Decades of Fraud
A federal audit of an Omaha-based credit union found statement fraud spanning decades that resulted in the loss of millions of dollars.
In a letter obtained by First Alert 6 on Tuesday, the National Credit Union Administration’s Inspector General shed light on Creighton Federal Credit Union’s sudden loss of $12.2 million in 2024.
Account statements led some banking watchdogs who spoke to First Alert 6 on Monday to begin raising questions around the fact that Creighton FCU, a $67 million institution, managed to suddenly lose 18 percent of its value in the span of just 90 days last spring.
The audit, requested by U.S. Rep. Mike Flood (R-Neb.), revealed the losses weren’t sudden at all.
According to NCUA Inspector General James Hagen, the loss of $12.2 million was accumulated over more than two decades as a result of statement fraud conducted by the institution’s former CFO, and that the NCUA had no knowledge of the fraud until after the CFO died in April 2024.
The CFO understated Creighton FCU’s ATM expenses to “artificially boost Creighton’s income statement over 26 years, which resulted in the more than $12 million loss,” the NCUA claims.
The missing money wasn’t used for direct personal gain, though, according to the NCUA. An audit of the CFO’s entire family uncovered no evidence that the money had ever been transferred improperly or illegally. The Inspector General believes the CFO perpetrated fraud with the goal of making Creighton FCU appear as if it were a thriving financial institution in the eyes of its board and membership.
In reality, it was failing.
In August 2024, Creighton FCU merged with Cobalt Federal Credit Union after declaring itself insolvent. No Creighton FCU members lost money as the accounts were federally insured.
One of those members of Creighton FCU — which was an independent organization entirely separate from Creighton University — was Omaha City Councilman Ron Hug.
“I think I knew everybody in the credit union on a first-name basis,” Hug said. “This is quite shocking. I’m very surprised because in my dealings with them, I found them to be extremely conservative.”
In total, Creighton FCU had about 150 ATMs, and the operation of those ATMs is largely where the fraud took place, according to the report, which exposed the institution’s weak accounting system to back-post, forward-post, and delete transactions when generating annual financial statements.
“I think [the Inspector General’s report] clearly says there was no personal gain,” Hug said. “There’s no personal intent. I think it was just a poor decision in accounting practices.”
Regardless of intent, Chip Filson, a banking watchdog who used to serve as a program director for the NCUA, is wondering how the fraud even happened. How did the CFO of a federally-insured credit union commit fraud for a quarter-century without anyone noticing?
“Even rudimentary due diligence would have discovered this kind of default,” Filson said.
The NCUA Inspector General will now conduct a full review of the oversight process. First Alert 6 contacted the former president of Creighton FCU, who declined to comment on the audit’s findings.