Trial date set for defendants in case that cost AEA millions

A trial has been scheduled for Jan. 10 in U.S. District Court in Phoenix for three defendants on multiple charges of misuse of AEA Federal Credit Union funds that cost the financial institution millions of dollars and contributed to its insolvency.

The scheduling order from the U.S. District Court of the District of Arizona states that: “From or about May of 2005 through or on about November 2009, defendant William Liddle, acting in his capacity as vice president of AEA's business lending department, approved millions of dollars in questionable business loans to defendant Frank Ruiz ...”

Liddle approved Ruiz and his five limited liability corporations for approximately 50 business loans totaling approximately $22 million, the document states.

In return, according to the legal document, Liddle and his wife, Rhonda, received cash, a home, vehicles and other benefits totaling more than $1 million from Ruiz.

The document states that the defendants obtained “unreasonably large and unjustified business loans from AEA” without proper documentation and in disregard for AEA's lending practices and procedures, using the money for “speculative and often times inchoate business ventures,” kickbacks and personal use.

“... the defendants structured their business and personal association in a ‘pyramiding' or ‘ponzi' manner that required them to continually increase borrowings from AEA to cover the failed, troubled and inadequately collateralized loans originally authorized, and to continue to pay for the lavish lifestyle defendants sought to enjoy and maintain from funds misappropriated from AEA,” the document states.

Analysis of loan documents and bank records indicates that Liddle would approve a new or increased loan to one of the Ruiz entities, Ruiz would take a draw on the loan and AEA would issue him a check. Ruiz would then cash the check at AEA and shortly after a cash deposit would be made, almost always by Rhonda Liddle into the Liddles' joint checking account, according to the court scheduling order.

Entities in which Ruiz was a member or the sole member included Desert Best Distributing LLC, Desert Best Technologies LLC, Desert Best Enterprises LLC, CTW LLC and Yuma Fun Factory LLC.

On Dec. 10, Liddle, his wife and Ruiz were indicted by a grand jury on 68 counts that included one count of conspiracy, 44 counts of federal credit institution fraud, three counts of wire fraud, 14 counts of misapplication of financial institution funds and six counts of transactional money laundering.

A week later on Dec. 17, AEA was placed under conservatorship by the National Credit Union Administration when its net worth ratio plunged to a minus 7.63.

When asked for comment on the case involving Liddle, NCUA spokesman David Small referred back to the news release the regulator agency issued in December in which it stated that AEA was placed under conservatorship “due to its declining financial condition” and linked those difficulties to “problems in its loan portfolio.”

Otherwise, Small said, he couldn't comment on the case.

Attorneys for the Liddles and Ruiz did not respond by press time for requests for comments.