Latest AEA report: $31.8 million loss over 15 months
The bleeding continues at AEA Federal Credit Union as management struggles to recover from millions of dollars in bad loans that resulted in being placed under conservatorship by the National Credit Union Administration.
In the 15 months that included all of 2010 and the first quarter of this year, the institution charged off $31.8 million, according to AEA's call reports, which are financial reports that can be found on the NCUA website. Of that, $17 million was charged off in the first quarter of 2011 alone.
AEA estimated it still had nearly $28.3 million in loan losses on its books. In addition, there are still $40 million in delinquent loans of 30 days or more past due on the books, according to the most recent call report posted March 31 on the NCUA website.
AEA management didn't return a phone call seeking comment. In an email, NCUA spokesman David Small responded: “NCUA would never comment on specific loan information to an individual nor any pending legal matters.”
Some of those loan losses can be attributed to the recession. However, millions of dollars were lost in a tangled web of loans that led to a trail of bankruptcies and criminal charges against AEA's former business loan officer and the businessman who was the principal beneficiary of his largess.
That businessman is Frank Ruiz, who recently pleaded guilty to transactional money laundering and conspiracy for his role in the misuse of AEA funds. He is scheduled to be sentenced in October.
Ruiz could receive a lighter sentence in exchange for cooperating in the investigation into his co-defendants, William and Rhonda Liddle. As AEA's former loan officer, Liddle allegedly approved $22 million in fraudulent business loans to Ruiz in a kickback scheme.
So where did that $22 million go? It's a murky trail and involves several companies Ruiz either owned or co-owned. All are in bankruptcy, as is Ruiz personally.
According to an amended plan of reorganization filed in May by Ruiz, AEA was listed as holding a total of $17.9 million in unsecured claims against Ruiz and three companies. Those companies include:
• Desert Best Enterprises, DBA as Top of the Kress. That company's bankruptcy filing in July 2010 didn't list the exact dollar amount of its liabilities but indicated they were between $10 million and $50 million. The 20 largest creditors amount to $1.89 million, begging the question of where the rest of the liabilities are. Listed creditors include AEA and several contractors who were left with tens of thousands of dollars in unpaid bills for the construction of the business at 284 S. Main St.
• CTW LLC apparently related to the purchase of downtown property at 278 and 280 S. Main St. where Ruiz planned to develop the Long Bar. The bankruptcy filing didn't list the exact dollar amount of CTW's liabilities but indicated they were between $1 million and $10 million. It listed AEA claims totaling $1.7 million and another $40,645 line of credit.
• Desert Best Distributing LLC, a janitorial supply business started by Ruiz. The bankruptcy filing listed liabilities of between $500,000 and $1 million. AEA is not listed among the top creditors.
The reorganization plan also lists Ruiz as a debtor. However, personal bankruptcy records for him could not be found.
AEA has a pending lawsuit in bankruptcy court objecting to Ruiz's seeking a discharge of his personal bankruptcy, confirmed attorney Michael King, who is representing the credit union. King also noted that “activity is taking place to take control of collateral ... actions to liquidate collateral and apply the proceeds to debts.”
Some of Ruiz's debt to AEA for the Yuma Fun Factory reportedly were assumed by Dan Thelen when he and partners Robert Busse and LaVette Malone took over the family entertainment center from Ruiz. In the Fun Factory bankruptcy filing, they're listed as co-debtors for $4.7 million owed AEA. In addition, Thelen lists $10.7 million in business debt to AEA in his personal bankruptcy filing.
Thelen didn't return a phone call seeking comment.
The closed Fun Factory has since been acquired by AEA, which according to one source is trying to sell the property. Top of the Kress currently remains open for business.
According to bankruptcy documents, other defaulted large business loans in recent years at AEA include:
• Kenneth Stevenson, DBA T&K Auto Sales, filed for bankruptcy in September 2010 in which he listed a debt of $3.1 million to AEA. In December, Stevenson admitted to defrauding customers in a plea agreement.
• Cactus West Developers LLC, of which Todd Burch was the 100 percent stockholder, listed a debt of $8.6 million to AEA in its bankruptcy filing.
• Two Guys Auto co-owners David Limon and Miguel Aramburo in their bankruptcy filings listed co-debts to AEA of $244,959 as a personal guarantee for the business, $55,317 as business working capital, a business flooring line of $273,408 and business credit line of $14,078.
• Lee Hotel through an AEA loan was purchased for $1.2 million. After being foreclosed by AEA, the historic property was sold for $185,000.
Joyce Lobeck can be reached at firstname.lastname@example.org or 539-6853.