WARRENTON, Va.–A judge has ruled that Northern Piedmont FCU, which lost nearly $2-million as the result of loan participations with another CU that failed due to an embezzlement, will stand in line ahead of NCUA when it comes to restitution payments.
Northern Piedmont FCU, Warrenton, Va., lost approximately $1.7-million as the result of loan participations in which it had invested with the now defunct Lynrocten FCU. Lynrocten was placed into conservatorship in May 2013 following the discovery of a years-long embezzlement by then-Manager Linda Sue Newcomb and then Head Teller Teresa Wieringo Humphries, who caused more than $10-million in losses to LFCU as the result of a bogus loan scheme in which at one point nearly 90% of the loans were fraudulent.
More than a year ago Northern Piedmont FCU filed suit to recover funds. U.S. District Court Judge Norman Moon has now ruled that NPFCU will take priority over any claims made by NCUA when restitution is paid. Both Newcomb and Humphries have been sentenced to federal prison and the women have been jointly ordered to pay more than $10-million in restitution.
The losses suffered by the $18.3-million Northern Piedmont, whose logo ironically features two hands in a handshake, have led to difficult financial challenges for the CU in recent years.