NEW YORK (Reuters) – New York’s top financial regulator on Friday seized the state’s oldest credit union, Municipal Credit Union, saying it suffered from “unsafe and unsound” conditions after its former chief executive pleaded guilty to embezzlement.
The seizure by New York’s Department of Financial Services followed Kam Wong’s guilty plea last Nov. 19 in federal court to embezzling millions of dollars from the Manhattan-based credit union, which he led from 2007 to 2018.
Linda Lacewell, the state’s acting financial services superintendent, said her office appointed the National Credit Union Administration as the credit union’s conservator.
She said the regulators will work to ensure that members’ funds are protected and services continue uninterrupted.
Municipal Credit Union said it was founded in 1916 after New York City Mayor John Purroy Mitchel said city employees should be able to save at reasonable rates, and also borrow without paying the high interest rates demanded by loan sharks.
According to its 2017 annual report, the credit union had $2.68 billion of assets and served more than 425,000 members.
Prosecutors said Wong submitted sham invoices for dental work, received millions of dollars of payments instead of a long-term disability policy, and spent $3.55 million of his ill-gotten money on New York State Lottery tickets.
Wong’s sentencing is set for June 4. He agreed as part of his plea to pay the credit union $9.9 million in restitution.
Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis