Copper workers' credit union is called sound

The Utah League of Credit Unions responded Thursday to media reports that federal investigators are looking into allegations of embezzlement at Utah Copper Employees Credit Union, stating the allegations underscore the importance of "prudent reserves and proper insurance for member deposits."

The FBI confirmed Wednesday it is investigating Utah Copper Employees Credit Union, though it declined to confirm reports that its investigation centers on a former credit union employee, who may have embezzled millions of dollars over a period of decades.

Early Thursday, the ULCU issued a statement, stressing that the credit union is still operational and that members' deposits are protected.

The league stated the allegations at Utah Copper Employees Credit Union bring to light one reason why credit unions are mandated to hold back a certain percentage of reserves (rather than returning the money back to members in the form of dividends). The issue is part of the debate between Utah's banks and credit unions. Bankers argue some credit unions are using their reserves to grow, beyond the safety and soundness requirements the funds were intended to insure.

Not so, according to the League.

"From time to time in the financial services industry, allegations such as these surface and must be taken seriously," ULCU president Scott Earl said in the statement. "We are all reminded once again of the importance of prudent reserves and proper insurance for member deposits. When all is said and done, Utah Copper Employees Credit Union will fulfill its obligations to all concerned, especially its members. The credit union's safety and soundness are not in question.

"Even if the allegations prove true, this will reinforce the soundness of the system of audits and insurance put in place by the state and other entities. The system works."

FBI spokeswoman Kelly Kleinvachter said Thursday the investigation is still in its early stages. No charges or indictments have been filed.

Orla Beth Peck, credit union supervisor at the state's Department of Financial Institutions, said there are levels of protection for members — the credit union's reserves, federal insurance (which insures individual accounts up to $100,000, but may insure more, depending on the type or ownership of the account) and bond coverage.

"The members' money is not at risk," Peck said. "There are levels of protection in place for them. And the institution is still there, making money. There isn't any great need to run in and move your money."

Still, Peck said prudent money management is always wise, whether or not the allegations are true.

"In general, even though the federal insurance is out there for you, I tend to encourage people not to have any more than the insured amount in any one institution," Peck said. "Spread your money around. Don't put all your eggs in one basket. But at the same time, even if someone had more than $100,000 (at one institution), that doesn't mean they're not insured."

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