Stanley McDuffie, 46, of Denver was advised of his rights Monday in V.I. Superior Court on St. Thomas and charged with embezzlement by fiduciary, obtaining money by false pretenses, conspiracy and racketeering for allegedly selling bogus CDs through Her Majesty’s Credit Union.
V.I Superior Court Judge Kathleen Mackay set McDuffie’s bail at $50,000, according to court staff.
John Williams, comptroller of HMCU, was also charged Monday. As of 4 p.m. Tuesday, charging documents had yet to be filed in V.I. Superior Court, but an affidavit from V.I. Department of Justice Special Investigations Director James McCall outlining the allegations and criminal charges had been filed in relation to the case.
Her Majesty’s Credit Union was created by McDuffie (under the name Stanley Roberson) and Williams in 2008 as the territorial face of their Colorado company, Jilapuhn Inc., according to court documents filed by the SEC in March of 2012.
The V.I. charges filed Monday stem from HMCU customers, here in the Virgin Islands and stateside, complaining that they purchased certificates of deposit with a certain level of guaranteed interest and were subsequently unable to withdraw their funds or cash out their CDs.
The U.S. Securities and Exchange Commission, in a related civil fraud case, documents how one Florida resident allegedly tried, unsuccessfully, to get his money back from HMCU. That person, who is not named in SEC documents, purportedly purchased two CDs worth a total of $150,000 in 2008. But it stopped paying interest in 2011 and subsequently has failed to repay the investor’s principal of $50,000 when the purported CD matured in December 2011.
The credit union has an office in Denver, and its creators reside in Aurora, Co. The company first came under scrutiny by Colorado state regulators, who issued subpoenas seeking information in 2010.
The company refused to comply and the officers refused to appear in court. As a result, a Colorado judge sentence McDuffie to two concurrent six-month sentences in prison for contempt of court.
The SEC subsequently took up the case, followed by the V.I. Department of Justice.
Despite calling itself a credit union, the SEC says HMCU has never been chartered as a credit union by Colorado, by any other state or by the National Credit Union Administration (“NCUA”), the federal regulator of federally chartered credit unions. Her Majesty’s Credit Union is not insured by the National Credit Union Share Insurance Fund, a U.S. government-backed fund used to protect deposits of credit union members.
While HMCU has said its investor funds are insured up to $100,000 by Lloyd’s of London, the SEC and Lloyd’s of London say that is not true.
In April of 2012, after the SEC opened its civil case, V.I. Attorney General Vincent Frazer said the V.I. Department of Justice was also investigating the credit union. In May of 2012, the V.I. Division of Licensing and Consumer Affairs set up complaint procedures for V.I. residents who have been unable to withdraw their deposits from HMCU. (See related links below)
Frazer could not be reached for comment Tuesday.