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Nun Says Letter Forged 5th Group Disputes Record Of Gift to Franklin Affiliate - Dec 24, 1988 - Omaha World-Herald

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Dec 24, 1988 Nun Says Letter Forged 5th Group Disputes Record Of Gift to Franklin Affiliate; [Sunrise Edition] Paul Goodsell. Omaha World - Herald. Omaha, Neb. pg. 1

Full Text (588 words)
(Copyright 1988 Omaha World-Herald Company)

A fifth religious organization says it was falsely listed as a donor to an affiliate of Franklin Community Federal Credit Union and the treasurer of the organization said her signature was forged on letters saying the money was being given.

Sister Mary Swain, treasurer of Sisters of Loretto in Nerinx, Ky., said she was contacted in October by auditors who wanted her to verify $85,682 in grants that Consumer Services Organization said it received from the sisters during 1986 and 1987.

Sister Swain said the auditors, from the Omaha firm of Sommer Magnuson Dawson, sent her copies of letters purportedly from the religious order to CSO, an affiliate of Franklin Credit Union. The letters announced grants to CSO from the sisters.

Sister Swain told The World-Herald that her organization did not make any grants to CSO. She said her signature was forged on the letters that bore the Sisters of Loretto letterhead.
"They never came out of this office," she said.

The World-Herald reported last month that four national church organizations have said they did not make $1.3 million in grants that CSO had claimed as revenues.

Records Investigated

FBI and Internal Revenue Service agents are investigating whether grant records were falsified to "launder" CSO's income - creating the impression that CSO funds came from donations when the money actually came from deposits in the Franklin Credit Union, a person close to the investigation said.

A civil lawsuit filed in U.S. District Court in Omaha alleges that $980,000 was funneled into CSO this year, using money deposited in Franklin but not recorded on the credit union's books.

The same lawsuit alleges that Lawrence E. King Jr., Franklin's chief executive officer, diverted Franklin assets for his personal and business use.

An estimated $38.4 million in certificates of deposit were not recorded on Franklin's official records, National Credit Union Administration (NCUA) officials have said.

CSO, which provides financial counseling and other services to low-income people, also subsidized the daily operation of its parent credit union. CSO owns Franklin's building at 1723 N. 33rd St. and paid nearly all of Franklin's payroll. CSO also provided a $235,000 subsidy to Franklin during 1986, according to an audit given by CSO to the City of Omaha.

Sister Swain said the purported grant letters said that the Sisters of Loretto had given CSO $35,682 in August 1986 and $50,000 in August 1987.

'Bad Things'

She said she believes that someone in Omaha obtained the religious order's letterhead because she had written to Franklin about certificates of deposit in the credit union. She said the letterhead probably was cut off the earlier letter to Franklin and photocopied for the CSO grant letters.

After receiving the letters, Sister Swain said, she called a contact at Franklin and demanded an explanation. She said she was told that there were "bad things going on" within the organization but that the order's deposits with Franklin were unaffected.

Sister Swain said she was somewhat satisfied, but asked for a letter from Franklin's attorney explaining the grant letter and clarifying that CSO never received grants from the organization.

"Knowing what I know now, I should have called the NCUA," she said.
About two weeks later, the NCUA closed Franklin.

Sister Swain said the NCUA's insurance fund has covered the order's deposits at Franklin, although the organization lost some interest because its CDs were at the $100,000 limit.

The Sisters of Loretto had separate accounts for the organization itself and a school it operates, she said.

Gift Grant Forgery Nun

Credit: World-Herald Staff Writer


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