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NY Department of Financial Services takes possession of Municipal CU

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NY Department of Financial Services takes possession of Municipal CU

The New York Department of Financial Services took possession of Municipal CU because of what the regulator called unsafe and unsound conditions.

The DFS also appointed the National Credit Union Administration as conservator.

In 2017, the DFS uncovered deficiencies in board oversight that had facilitated multimillion-dollar embezzlement by the former CEO, Kam Wong. The U.S. Attorney for the Southern District of New York charged Wong with embezzlement, and the NCUA banned him from the credit union industry in May 2018. Wong in November 2018 pleaded guilty to embezzling almost $10 million from the credit union.

The DFS removed Municipal CU's supervisory committee in May 2018 and its board in June 2018 because of "severe deficiencies" in overseeing and managing the credit union's business, the department said. The department designated an on-premises administrator to oversee the general management of the credit union. Based on ongoing supervision by the DFS and NCUA, the former made the decision today to appoint a conservator and terminate the administrator's engagement.

The NCUA will work to resolve issues affecting the credit union's operations while continuing normal member services. Members can continue to conduct normal financial transactions, deposit, access funds, make loan payments and use shares.