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AEA's financial woes the top story of 2010
Selected by the Yuma Sun news staff as Yuma's top story for 2010 was the deteriorating financial situation of AEA Federal Credit Union over the past year that led to the institution's being placed in conservatorship in December.
It also has led to criminal charges against a former AEA business lending official and other Yumans, as well as a tangle of bankruptcy and foreclosure for various businesses that had received loans from AEA.
The $309 million AEA had been on the National Credit Union Administration's watch list for months after it endured large real estate losses. Its net worth ratio fell from 8.22 percent in September 2009 to 2 percent in September 2010.
The NCUA assumed control of the longtime local credit union on Dec. 17, assuring AEA's 49,130 members that service will continue uninterrupted and their money is safe. Member accounts are insured up to $250,000 by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund managed by NCUA and backed by the full faith and credit of the U.S. government.
As part of the conservatorship, AEA's board of directors was dissolved and operation of the credit union is under the control of NCUA conservatorship CEO Thomas Martin.
While the future of AEA remains undecided, possible options are liquidation, merger or ongoing preservation.
“NCUA always considers the best interests of members and preservation of their assets as well as cost to the NCUSIF when making a determination,” explained John McKechnie, director of congressional and public affairs for NCUA.
AEA had been struggling for some time due in large part to difficulties stemming from multimillion-dollar losses in its commercial loan portfolio.
After a lengthy FBI investigation, a federal grand jury in early December handed down indictments of 68 counts for an alleged kickback scheme against William Liddle, former vice president of business lending for AEA; his wife, Rhonda; and Yuma businessman Frank Ruiz.
The indictment alleges that Liddle and his wife received almost $1 million from Ruiz in exchange for millions of dollars in fraudulent business loans to Ruiz as the developer for Yuma Fun Factory and Top of the Kress.
The Yuma Fun Factory, which Ruiz had sold, was closed in April, less than a year after it opened. Its personal property was the subject of a Chapter 7 bankruptcy filing, and its real property was in foreclosure. According to bankruptcy court records, Yuma Fun Factory LLC listed its assets as worth $441,850 while it owed AEA $4.7 million.
Top of the Kress, a nightclub Ruiz opened in downtown Yuma in March, filed for Chapter 11 bankruptcy protection in July.
Ruiz and Liddle both have filed personal bankruptcy.
AEA has assumed ownership of Yuma Fun Factory, but the family entertainment center remains closed and its future is unclear. Top of the Kress remains open but its future also remains unclear with its principal owner facing criminal charges.
In another case involving business loans with AEA, Ken Stevenson, former owner of the now-closed T&K Auto, was arrested in July on charges of felony counts of theft and fraudulent schemes and artifices. Stevenson entered a plea agreement in December that could send him to prison for nearly four years.
AEA incurred further losses with the bankruptcy of Two Guys Auto and the foreclosure of the historic Lee Hotel in downtown Yuma.