EL PASO, Texas—The former manager of the failed El Paso's FCU facing an NCUA lawsuit for allegedly funneling $19 million into different accounts, and using some of that money to benefit herself and her husband, has been ordered to live off of her spouse's salary.
Maria Guadalupe Hernandez and her husband, Rene Hernandez, appeared before Senior U.S. District Judge David Briones Friday morning for a preliminary injunction hearing.
NCUA, which liquidated the $5-million CU in 2012 due to the losses, filed the suit October 15.
The lawsuit states that Maria Hernandez, who started as the CU’s manager in 1986, beginning sometime before 2004 and "on numerous occasions she caused the credit union to engage in "fraudulent schemes," including issuing share certificates—ranging from $99,000 to $249,000—to nonmember financial institutions without recording the certificates or receipt of the funds in the credit union's financial records.
The lawsuit alleges Maria Hernandez caused the credit union to issue about $19 million in unrecorded nonmember share certificates, the total losses cited in the case. The lawsuit also claims an investigation by NCUA identified about $3.7 million in documented losses to EPFCU caused by the actions of Maria Hernandez, of which about $2.1 million "has been traced to the personal benefit of Maria and Rene" Hernandez, the El Paso Times reported.
NCUA alleges Maria Hernandez used fake accounts, along with accounts in friends' names and accounts belonging to dead credit union members, to funnel the money back to herself.
During Friday's hearing, the Hernandezes agreed to use Rene Hernandez's salary as the football coach at Chapin High School for living expenses.
The couple also owns two vacation rental homes, and will use that income to pay for maintenance fees and other expenses tied to the two homes. Any money left over will be put into an escrow account, said Mary Stillinger, Maria Hernandez's attorney, during Friday's hearing, the El Paso Times reported.
Stillinger also said the couple's East Side home is their most "valuable asset," but was purchased with the proceeds from another home the couple owned and is not tied to the money Maria Hernandez allegedly took.
According to El Paso Central Appraisal District records, the home is valued at nearly $400,000.
Briones told the Hernandezes that if they were to take out a second mortgage or other principal on the home, they would have to obtain the court's approval first.
"Everything should be restricted. Everything," Briones said during the hearing. "There should be a criminal number on this file, quite frankly." Maria and Rene Hernandez have not been criminally charged.
The lawsuit seeks compensatory damages to be determined at trial, and temporary and permanent injunctions prohibiting the Hernandez's from distributing or getting rid of any assets. A trial date for the lawsuit has not yet been set.
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