Scott Credit Union admits that former Business Relationship Manager Theodore Longust embezzled funds and created fictitious loans, but denies that it is liable for his criminal conduct in a former St. Louis Cardinals football player’s suit alleging fraud.
Longust was indicted on fraud charges in federal court in East St. Louis last November. The case remains pending. Scott Credit Union and Longust have been named defendants in multiple fraud lawsuits as a result of Longust’s actions.
Plaintiff Dave Butz played as a defensive lineman for the Cardinals for two seasons and for the Washington Redskins for 14 seasons.
Scott Credit Union answered the amended complaint filed by Butz and Eugene Schill on March 31 through attorneys James Branit and Thomas Jacobson of Litchfield Cavo LLP. The defendant denies liability, but states that whether the defendants were required to comply with several federal laws and regulations are questions of law for the court to decide.
Scott Credit Union admits that Longust embezzled credit union funds, created fictitious loans, misapplied funds to pay loans with funds from other loans, increased credit limits on loans that did not have the requisite board approval, issued business loans without the required documentation or security and issued letters of credit without the required documentation and security.
However, the defendant denies that Longust was acting as an agent, servant or employee of Scott Credit Union when he participated in fraudulent or criminal conduct.
Instead, the defendant argues that as Business Relationship Manager, Longust “engaged in the business of providing commercial loans and commercial lines of credit to entrepreneurs throughout the region.”
Scott Credit Union also filed seven affirmative defenses. It restates that Longust was not acting as an agent or employee of the credit union when he performed fraudulent conduct, meaning the defendant was not liable for Longust’s actions.
Additionally, the defendant argues that it did not benefit from Longust’s conduct.
Scott Credit Union pointed out that while Longust has been named a defendant in the case, he has failed to appear or participate in the litigation.
The defendant also argues that the plaintiffs “frequently communicated” with Longust while he was participating in fraud. Scott Credit Union suggests that Butz and Schill knew or suspected that Longust was involved in fraud and may have benefited from his conduct.
The plaintiffs answered Scott Credit Union’s affirmative defenses on April 12 through attorney Grey Chatham Jr. of Chatham & Baricevic. They deny the all allegations against them.
Butz and Schill allege Scott Credit Union removed currency and opened unsecured lines of credit from their accounts, allegedly leaving them on the hook for millions in past due accounts.
They claim the defendants falsified documents, forged signatures, attempted to collect millions from past due accounts that were unauthorized and unsupported.
They further claim the defendants willfully used their names to extend commercial lines of credit to fictitious or random companies unrelated to the plaintiffs.
As a result, Butz and Schill allege they endured obstacles in their ability to legitimately borrow money, start new business ventures and uphold their professional reputations. They allege they are not personal guarantors for millions of dollars in fraudulent lines of credit that are now in arrears. They also allege violations of the Illinois Credit Union Act and breach of fiduciary duty.
Associate Judge Randall Kelley scheduled a status conference for May 18 at 8:30 a.m.
St. Clair County Circuit Court case number 15-L-234