Struggling credit union now limiting withdrawals

Feb. 25, 2010

By PATRICK E. LITOWITZ
New Castle News

The board of directors overseeing a struggling credit union have voted to limit the amount of money members may withdraw.

The move is in response to public disclosure that the Lawrence County School Employees’ Credit Union reported a net loss of $3.4 million in the fourth quarter of 2009.

In another development, the U.S. Department of Treasury’s financial crimes unit has been alerted to the credit union’s troubles.

The board resolution allows members to remove up to $5,000 in a week. Withdrawals exceeding $5,000 require members to provide notice 10 business days in advance.

The National Credit Union Share Insurance Fund insures member accounts up to $250,000.

Board President Kenneth W. Cotton said Monday that federal auditors discovered irregularities with credit union accounting in late September.

Cotton said the board is waiting on a National Credit Union Administration report. The credit union’s future is tied to its recommendations. Options include selling off assets or merging with another credit union. The report will not be made public.

“We are sorry for any inconvenience this may cause you,” the board said in a statement.

“We hope you will continue to support the credit union as we work through this process without our manager.”

Holly Cowan, a Slippery Rock Township resident, served as chief executive officer and board member. She reportedly left her job five months ago. Cotton declined to discuss the reason for her departure.

In the interim, a national administration representative and First Choice Federal Credit Union staffers are working with the credit union’s only employee.

First Choice, located in Union Township, is providing management assistance.

The Financial Crimes Enforcement Network, a division of the U.S. Department of Treasury, and the credit union’s bonding company have been notified of developments.

The national representative, who asked not to be identified, said a “suspicious activities report” is forwarded to the financial crimes unit if losses exceed a certain amount.

The credit union, chartered in 1937, had approximately 1,900 clients last year. Its members consist of county school district employees and their relatives.

Serving on the volunteer board are Cotton, Joseph Croach, Brian Glass and Donna Pezzuolo.