The “Poughkeepsie Loan Fraud Ring” fooled a credit union three times into loaning money for luxury used cars. And now the lender wants compensation for its losses.
Hudson Heritage Federal Credit Union has sued Cumis Insurance Society of Madison, Wisconsin, for refusing to pay a $134,879 claim under its “forgery and alteration” coverage.
Hudson Heritage said it relied on electronic versions of original documents, in what has become a growing risk to credit unions, according to the lawsuit filed on April 21 in federal court in White Plains.
Cumis advertised its risk management services and did annual assessments of Hudson. The insurer knew that Hudson’s portfolio included a significant number of loans for buying used vehicles, the lawsuit states, and it was aware that the credit union relied on electronic versions of documents to evaluate loan applications.
And it was just such documents that led to losses.
Hudson Heritage has nearly 37,000 members, served by its headquarters in Middletown and 11 branches. Membership is open to anyone who lives, works, worships or goes to school in Orange, Ulster or Dutchess counties.
The scam began in April 2016, when a man identified as Glendale Tyrone Jenkins applied for membership in the credit union and asked for a used car loan. His driver’s license showed a Georgia address, but he provided a Verizon utility bill to establish residency in Poughkeepsie.
The credit union loaned him $15,290 to buy a 2012 BMW that was titled to a person in the Arverne section of Queens.
Then Jenkins defaulted on the loan.
Hudson Heritage discovered that the car was actually owned by someone else in Queens, the title had been altered and the Poughkeepsie address was fabricated.
Last May, a man identified as Ernst R. Gracia applied for membership and a loan. His driver’s license showed a Brooklyn address, but he provided a GEICO Insurance document and ADP earnings statement to establish a Poughkeepsie address. He got $59,295 for a 2007 Bentley titled to a Eugene Jenkins in Arverne.
Gracia defaulted on the loan. The Bentley was actually owned by a Bronx company.
In June, a woman identified as Erin Larkin applied for membership and a loan. Her driver’s license showed a Chelsea address in Manhattan, but she used a GEICO document to establish Poughkeepsie as her home.
She received $60,294 for a 2014 BMW titled to Glendale Jenkins in Arverne.
She defaulted and Hudson Heritage discovered that the car was actually owned by a woman in Brooklyn.
Every transaction was connected directly to Glendale Jenkins or a relative. Every car was titled to someone at the same Arverne address on the Rockaway Peninsula. Every loan applicant claimed to live in Poughkeepsie, but had a driver’s license showing a different address.
“The various connections between the three loan fraud members,” the lawsuit states, “evidences that they were working together to defraud the credit union.”
Cumis rejected Hudson’s claim for losses and rejected the claim two more times after more information and documents were supplied.
The credit union is suing Cumis for breach of contract and negligence.
Wendy Serafin, a spokeswoman for Cumis, said the company does not comment on pending legal matters.
So, where are the loan applicants now and were their names real? Did they even take delivery of the cars, and if so, where are they? And did the Poughkeepsie Loan Fraud Ring scam any other lenders?
Messages to a Hudson official and credit union lawyers were not answered.