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.
Thursday, February 25, 2010
Wednesday, February 24, 2010
Credit union’s future uncertain
Feb. 23, 2010
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
A New Castle-based credit union lost $3.4 million during the last three months of 2009.
“We have endured some losses. I can’t confirm the total amount,” said Kenneth W. Cotton, president of the credit union’s board of directors. “The entire situation is really a complete shock to the whole board.”
Federal auditors uncovered irregularities with Lawrence County School Employees’ Credit Union finances in late September.
The credit union, chartered in 1937, serves approximately 1,900 clients. Its members consist of county school district employees and their relatives.
“As of right now, we’re still in business,” Cotton said. “I want to reinforce that (members’) accounts are insured to $250,000. We’re trying to avoid panic at any cost.
“We currently have assets available to our members.”
Cotton said the credit union is working with the National Credit Union Administration and First Choice Federal Credit Union, located in Union Township, to assist with operations. The NCUA is a federal agency that regulates and charters credit unions.
“All we know is there are accounting irregularities,” Cotton said. “We had to write off some loans.”
Financial information obtained from the NCUA highlights problems in the fourth quarter of 2009.
Cash assets fell from $2.6 million in September to $152,000 at year’s end. During the same period, loan write-offs jumped from $6,600 to $770,000. Loss on investments reached $2.4 million in December. Conversely, no losses were reported between December 2008 through September 2009.
Cotton said the board is waiting for an auditor’s report, which will detail what took place and will recommend what actions the credit union should take.
Cherie Umbel, NCUA spokeswoman, said the report’s contents will not be made public.
A volunteer board oversees the credit union’s operations. Joining Cotton on the board are Joseph Croach, Brian Glass and Donna Pezzuolo.
“I’m just a figurehead,” Croach said. “We’re ignorant of what’s going on.”
Attempts to reach Glass and Pezzuolo for comments were unsuccessful.
Today the credit union’s staff consists of a teller, who declined to be identified. She said that the credit union’s chief executive officer, Holly Cowan, has not been in the office for the last five months. Cowan also served on the board.
“She no longer works for us,” Cotton said.
Stating that it was a personnel issue, he declined to discuss her departure.
Attempts to reach Cowan by phone and at her Slippery Rock Township home were unsuccessful.
There have been 185 bank failures since 2008, according to federal regulators. In comparison, credit unions have proved to be stable operations.
Just 15 were liquidated in 2009 in addition to one this year. Of those, 13 had their assets purchased by other credit unions.
The New Castle Area School District said the number of employees making deposits to the Lawrence County School Employees’ Credit Union dropped from 115 to 79.
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
A New Castle-based credit union lost $3.4 million during the last three months of 2009.
“We have endured some losses. I can’t confirm the total amount,” said Kenneth W. Cotton, president of the credit union’s board of directors. “The entire situation is really a complete shock to the whole board.”
Federal auditors uncovered irregularities with Lawrence County School Employees’ Credit Union finances in late September.
The credit union, chartered in 1937, serves approximately 1,900 clients. Its members consist of county school district employees and their relatives.
“As of right now, we’re still in business,” Cotton said. “I want to reinforce that (members’) accounts are insured to $250,000. We’re trying to avoid panic at any cost.
“We currently have assets available to our members.”
Cotton said the credit union is working with the National Credit Union Administration and First Choice Federal Credit Union, located in Union Township, to assist with operations. The NCUA is a federal agency that regulates and charters credit unions.
“All we know is there are accounting irregularities,” Cotton said. “We had to write off some loans.”
Financial information obtained from the NCUA highlights problems in the fourth quarter of 2009.
Cash assets fell from $2.6 million in September to $152,000 at year’s end. During the same period, loan write-offs jumped from $6,600 to $770,000. Loss on investments reached $2.4 million in December. Conversely, no losses were reported between December 2008 through September 2009.
Cotton said the board is waiting for an auditor’s report, which will detail what took place and will recommend what actions the credit union should take.
Cherie Umbel, NCUA spokeswoman, said the report’s contents will not be made public.
A volunteer board oversees the credit union’s operations. Joining Cotton on the board are Joseph Croach, Brian Glass and Donna Pezzuolo.
“I’m just a figurehead,” Croach said. “We’re ignorant of what’s going on.”
Attempts to reach Glass and Pezzuolo for comments were unsuccessful.
Today the credit union’s staff consists of a teller, who declined to be identified. She said that the credit union’s chief executive officer, Holly Cowan, has not been in the office for the last five months. Cowan also served on the board.
“She no longer works for us,” Cotton said.
Stating that it was a personnel issue, he declined to discuss her departure.
Attempts to reach Cowan by phone and at her Slippery Rock Township home were unsuccessful.
There have been 185 bank failures since 2008, according to federal regulators. In comparison, credit unions have proved to be stable operations.
Just 15 were liquidated in 2009 in addition to one this year. Of those, 13 had their assets purchased by other credit unions.
The New Castle Area School District said the number of employees making deposits to the Lawrence County School Employees’ Credit Union dropped from 115 to 79.
Saturday, February 6, 2010
Audit’s clean slate pleases district
Feb. 6, 2010
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
Nothing thrilled Karen Humphrey.
Superintendent George Gabriel and business manager Joseph Ambrosini agreed. Nothing was good.
The state Auditor General’s preliminary audit of the New Castle Area School District came up clean — no findings or observations. That’s a first in approximately 40 years.
“It was clear as a bell,” Humphrey said. “It was exciting news.”
She was one of five school board members who attended Monday’s conference with state auditors. The report covers the 2006-2007 and 2007-2008 school years.
The Auditor General’s office must finalize the report before forwarding it to the Pennsylvania Department of Education and releasing it to the public.
The Auditor General’s office consistently has issued findings and observations against the school system. Abbie Baxter-Betley, the district’s assistant business manager, examined audits dating back to 1973. Each noted some flaw in district operations.
“We had to sit through some pretty rough audits in the past,” said Humphrey, who has served on the board since December 1995.
Among the areas targeted were transportation, financial reporting and teacher certification. The topic causing the greatest uproar dealt with travel and conference expenses.
Nicholas DeRosa, a retired school district administrator, was singled out in the past for unverified and unnecessary costs involving conferences in New Orleans, San Francisco and San Diego. In an unrelated matter, DeRosa is facing federal charges of bank fraud, mail fraud and money laundering conspiracy as part of a mortgage fraud investigation.
Former board member Peter J. Yerage had found himself under scrutiny regarding travel expenses to a conference in Washington, D.C.
“Prior audits were embarrassing, to say the least,” Gabriel said. “We’re no longer going to accept findings or observations.”
Ambrosini said that $85 million passed through the district during the audit period.
“The auditors told the administration and board that to have no findings or observations is monumental for a district our size,” he said.
Auditors reviewed seven areas, ranging from compliance with past audit findings to the operations of the Information Technology Department.
“They even checked the lights around the buildings,” Ambrosini said.
Gabriel said the school system’s performance resulted from a collective effort.
“What this (comes) down to is effective management of school district funds and providing quality
programs for our kids.”
Humphrey said the audit shows that New Castle’s administrators are serious about their responsibilities.
“When George said he wanted a clean audit, they weren’t just words,” she said. “It is important for a community to have a school district (it) can be proud of.”
By PATRICK E. LITOWITZ
plitowitz@ncnewsonline.com
Nothing thrilled Karen Humphrey.
Superintendent George Gabriel and business manager Joseph Ambrosini agreed. Nothing was good.
The state Auditor General’s preliminary audit of the New Castle Area School District came up clean — no findings or observations. That’s a first in approximately 40 years.
“It was clear as a bell,” Humphrey said. “It was exciting news.”
She was one of five school board members who attended Monday’s conference with state auditors. The report covers the 2006-2007 and 2007-2008 school years.
The Auditor General’s office must finalize the report before forwarding it to the Pennsylvania Department of Education and releasing it to the public.
The Auditor General’s office consistently has issued findings and observations against the school system. Abbie Baxter-Betley, the district’s assistant business manager, examined audits dating back to 1973. Each noted some flaw in district operations.
“We had to sit through some pretty rough audits in the past,” said Humphrey, who has served on the board since December 1995.
Among the areas targeted were transportation, financial reporting and teacher certification. The topic causing the greatest uproar dealt with travel and conference expenses.
Nicholas DeRosa, a retired school district administrator, was singled out in the past for unverified and unnecessary costs involving conferences in New Orleans, San Francisco and San Diego. In an unrelated matter, DeRosa is facing federal charges of bank fraud, mail fraud and money laundering conspiracy as part of a mortgage fraud investigation.
Former board member Peter J. Yerage had found himself under scrutiny regarding travel expenses to a conference in Washington, D.C.
“Prior audits were embarrassing, to say the least,” Gabriel said. “We’re no longer going to accept findings or observations.”
Ambrosini said that $85 million passed through the district during the audit period.
“The auditors told the administration and board that to have no findings or observations is monumental for a district our size,” he said.
Auditors reviewed seven areas, ranging from compliance with past audit findings to the operations of the Information Technology Department.
“They even checked the lights around the buildings,” Ambrosini said.
Gabriel said the school system’s performance resulted from a collective effort.
“What this (comes) down to is effective management of school district funds and providing quality
programs for our kids.”
Humphrey said the audit shows that New Castle’s administrators are serious about their responsibilities.
“When George said he wanted a clean audit, they weren’t just words,” she said. “It is important for a community to have a school district (it) can be proud of.”
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