The Credit Union National Association has two interesting articles on a credit union based in the U.S. Virgin Islands with an office in Colorado. In January 2009, FatWallet members discussed the legitimacy of this credit union which had several issues such as the lack of NCUA insurance, unusually high CD rates and the advertising that one didn't have to be a member of the credit union to open a CD. The name of the institution is Her Majesty’s Credit Union. I don't want to promote it with a link, but if you're interested in what it looks like, you can use this google link. It's still advertising that one can open CDs without being a member. There are no longer any 7% CDs, but the CD rates continue to be around one percentage point higher than the best CD rates currently available from federally insured institutions.
In CUNA's first article on May 13th, it mentioned that the credit union "has caught the eye of state and federal regulators, who are trying to determine if the credit union is legitimate or if it is a fraud." The article provided some interesting history about the credit union founder:
The credit union was formed by Stan Roberson, CEO of Jilapuhn Inc., of Denver, formerly of East Point, Ga. Roberson's company was the founding sponsor of another credit union -- Jilapuhn Employees FCU in East Point, Ga., which was formed in January of 2005 but liquidated by the NCUA eight months later.
CUNA's second article that came out today reported on the meeting between Roberson and representatives of the Credit Union Association of Colorado (CUAC). According to the article, CUAC remains concerned about "various inconsistencies uncovered" at the meeting.
The credit union continues to operate since according to the article:
No one has proved the credit union isn't legitimate. Due to a loophole, the state of Colorado has no legal standing to shut the credit union down. NCUA has no standing either.
Several aspects of this credit union remind me of the Caribbean-based Millennium Bank which also advertised very high CD rates. The SEC put an end to the bank in March 2009.
As I mentioned in last year's Millennium Bank post, if you see a website advertising a very high rate on a certificate of deposit or some other bank-like account, you should first determine if the website is from a FDIC or NCUA insured institution. Both FDIC and NCUA are agencies of the US federal government. FDIC covers banks, and NCUA covers credit unions. I have more details in this 2007 post on verifying FDIC or NCUA membership. I also discuss the benefits of FDIC and NCUA membership. It's more than just deposit insurance.
Thanks to the reader Cactus who mentioned this news in the Open Discussion Thread.