Regulators shutter Miami Gardens credit union with history of regulatory violations

A Miami Gardens-based federal credit union whose board includes several local public officials has been shut down and liquidated by federal regulators.

The nonprofit North Dade Community Development Federal Credit Union had assets of $3 million and served 616 members at the end of last year, according to its regulator, the National Credit Union Administration.

In a statement released March 31, the NCUA said the credit union had “violated various provisions of its charter, bylaws and federal regulations” and would be shut down. A federal banking insurance fund will compensate members up to $250,000.

The closure follows a series of regulatory actions since 2013, including a fine last year of $300,000 for “willful” violations of the Bank Secrecy Act and the U.S. Patriot Act.

Regulators said the small credit union allowed “high-risk” money service businesses — many of them in Latin America and the Middle East — to wire nearly $2 billion through its one branch to foreign countries in 2013 alone. Those funds could have been used in money laundering operations or to support terrorist organizations, regulators said.

At one point, 90 percent of the financial institution’s revenues came from fees on such wire transfers.

“When a small institution opens its doors to the world, takes on greater risks than it can manage, and puts profits before [anti-money laundering] controls, bad actors are bound to take advantage,” said Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network, which levied the fine, in a 2014 statement.

Board members listed on the credit union’s final quarterly statement from December 2014 include chairperson David Williams, Jr., who sits on the City Council of Miami Gardens, and Sharon Pritchett, a state representative.

Neither official returned a phone message requesting comment left late on Friday afternoon.

The credit union, which has five employees, was founded in 1997 — in part with $500,000 in county money — to help spur development in Miami Gardens. By charter, the credit union’s services were limited to residents of northwest Miami-Dade County.

But a 2013 federal cease-and-desist order found the North Dade credit union had failed to verify that its customers were in the appropriate geographic range and that their transactions were legitimate.

Regulators rarely shut down credit unions. In 2014, there were only 11 liquidations nationwide.

Sherwood DuBose, a Miami Gardens businessman who sat on the credit union’s board, defended its actions in a phone interview.

“Every wire transfer was done with the proper protocol and knowledge of appropriate regulators,” DuBose said. “We reported any suspicious transactions we were asked to perform. Everything was compliant.”

DuBose said the board had voluntarily liquidated the credit union because its capital ratio had fallen below acceptable levels.

But John Fairbanks, a spokesman for the NCUA, said that wasn’t true.

“The liquidation of North Dade Community Development Federal Credit Union was involuntary,” Fairbanks said. “NCUA made the decision to liquidate the credit union and discontinue operations after determining the credit union had violated various provisions of its charter, bylaws and federal regulations.”

Ken Thomas, a local banking consultant, said the credit union’s actions were a “case study” in how white-collar fraud works in South Florida — and questioned why its behavior was allowed to continue for so long.

“Bad actors are looking for smaller financial institutions because they can fly under the radar,” Thomas said. “This is a wake-up call to regulators that they need to look at the smaller players in the industry too.”

The North Dade credit union was founded as part of a joint effort by a local chapter of the NAACP, several neighborhood churches in Miami Gardens and a Miami-Dade County agency, the Metro-Miami Action Plan Trust.

The credit union’s goal was to help finance local businesses and allow residents to establish their own bank accounts instead of cashing checks at pawn shops and liquor stores.

Other board members include Ronetta Taylor, city clerk for Miami Gardens, and Beverly Coffey, the credit union’s CEO. The credit union’s website remains active, although its phone line appears to have been disconnected.

Miami Herald staff writer Lance Dixon contributed to this report