Whistleblower Lawsuit Alleges Financial Improprieties at Hawaii Community FCU

Former Vice President of Finance, Renee Inaba, filed a whistleblower lawsuit against Hawaii Community Federal Credit Union (HCFCU).

The complaint alleges insider enrichment by managers, use of HCFCU funds for personal expenses, and conflicts of interest arising from undocumented relationships with vendors.

The lawsuit claims that while implementing cost cutting measures, Ms. Inaba found "rampant, endemic corruption, financial improprieties, conflicts of interest and breaches of fiduciary duty by managers of HCFCU."

According to the complaint, HCFCU managers went to Mixx Bar and other bars charging the bar tabs for food and drinks to the credit union as a business expense.

Ms. Inaba questioned the propriety of using of credit union funds to fly management and the board to a luxury resort -- the Grand Wailea on Maui. She was rebuffed by management and told "it's not that bad, not like we have corporate jets like the guys on the mainland."

Paragraphs 27 through 32 outlines alleged conflicts of interest associated with the use of vendors for printing, mailing and cleaning services.

The lawsuit further alleges that management had pushed through a prior Board of Directors a compensation package that would benefit the managers at the expense of credit union members. The planned payments would range from planned payments to insiders of $750,000 and over $1,000,000.

If it was not for the lawsuit, members of HCFCU would be clueless about these alleged practices by management, especially management's compensation.

This raises an interesting point -- whatever happened to NCUA's Outreach Task Force recommendation that total compensation to senior executive officers be disclosed to the credit union members annually. NCUA, when it issued the report, stated that such transparency would provide credit union members with information to evaluate a material expense, as well as those officials responsible for establishing the compensation package.