16 | July 22, 2020 | Credit Union Times | cutimes.com
information on its CDFI application did not square with the OIG’sassessments. Moreover, the OIGasserted OnPath violated the government’s assistance agreementsbecause it failed to deploy CDFIfunds.
In what may be a rare legalmove, the $362 million OnPathfiled a federal lawsuit in May tostop the $12,298,806 repaymentdemand made by the U.S. Department of Treasury and the CDFIFund in November 2019.
The credit union is looking tobring its arguments before a jury,claiming that repaying the government would adversely affect thelow-income members it is serving.
Although the OIG report did
not identify the credit union’s ex-
ecutives, Mignhon Tourné was
serving as OnPath’s president/
CEO when the credit union re-
ceived the federal funds from
2006 to 2012. She stepped down
from her position in 2016. OnPath
did not respond to CU Times’ re-
quest for additional comments.
As of July 13, the OIG did not an-
swer the assertions made in the
credit union’s lawsuit and the fed-
eral agency did not respond to CU
Times’ request for comment.
On Nov. 13, 2019, the CDFI fund
delivered a “notification of recall
[for] improper payments” docu-
ment that said the federal agency
determined OnPath submitted in-
valid information in its CDFI cer-
tification program for fiscal years
2006 to 2009, 2011 and 2012. As a
result, the CDFI funds distributed
to OnPath “constitute improper
payments under the Improper
Payments Elimination and Recov-
ery Improvement Act of 2012,” ac-
cording to the lawsuit.
OnPath claims the OIG initiated an audit in 2014 after receivingallegations that the credit union“had not engaged in eligible activities that saved its target markets and other targeted populations as required under the CDFIprogram.” However, the OIG’s 42-page audit report, which was publicly released in July 2019, did notrefer to those allegations.
To receive CDFI certification,
organizations must direct at least
60% of their financial product
activities to a target market that
includes at least one investment
area or targeted population. The
investment area includes a CDFI-
approved area that is economi-
cally distressed. A target market is
an area where low-income people
or other targeted populations such
as African Americans, Hispanics
or Native Americans live. Low-in-
come people are defined as mem-
bers whose family income is not
more than 80% of the metropoli-
tan area’s median family income
or greater than 80% of the non-
metropolitan area’s median family
OnPath received more than$7.2 million in CDFI financial assistance from 2006 to 2009, andin 2011 and 2012. In addition, thecredit union received $5 millionfrom the CDFI Healthy Food Financial Initiative (HFFI) in 2011and 2012. The credit union alsoreceived nearly $300,000 in technical assistance funding, but theCDFI is not contesting that money. OnPath did not receive anyCDFI funds in 2010.
In a letter to the OIG, OnPath’s lawyer, Phillip BuffingtonJr. in Ridgeland, Miss., wrotethat the OIG report contains several mischaracterizations andinaccuracies.
“ASI (the former name of On-
Path FCU) continues to believe
it submitted correct information
in its applications for CDFI certi-
fication and CDFI program assis-
tance. Management would also
state that instead of working with
ASI to validate the actual meth-
odology it used in the CDFI appli-
cations process, OIG developed
its own methodology to support
its own conclusions,” Buffington
wrote. “Because OIG applied a dif-
ferent methodology to the same
dataset, the results were substan-
tively different. The OIG report
reflects these differences as inac-
curacies, which ASI again believes
is a mischaracterization of the in-
formation. OIG’s methodology is
not based on regulation or CDFI
written policy in place at the time
for the 2005 CDFI application.”
What’s more, CDFI guidelines at
that time allowed credit unions to
create and apply their own meth-
odologies for application purpos-
es, according to Buffington. Addi-
tionally, the credit union’s lawsuit
noted that the CDFI fund did not
have established methodologies
or statistically valid standards for
evaluating certification and assis-
Buffington also wrote in his letter that the credit union soughtguidance from the U.S. Department of Treasury during the application process and that thecredit union received support andratification from the federal agency for the information OnPathused in its applications.
During the application process,Buffington contended the creditunion regularly requested information from treasury officials toensure the accuracy of all documents and reports submitted.
At no time was the credit unionturned away for inaccurate or incomplete reports or applications,according to Buffington.
OnPath did acknowledge thatit has not deployed all of the HFFIand FA awards as required by theCDFI assistance agreements.
“However, ASI notified CDFI
of (its) difficulty in lending out
the HFFI funds and formerly re-
quested an extension from CDFI,”
Buffington wrote. “CDFI granted
the extension to ASI through an
amendment of the assistance
agreement. Current manage-
ment is still in contact with CDFI
regarding the lack of demand of
HFFI loans. ASI holds all of the
non-deployed HIFF-FA funds
in a restricted liability account
as it continues to await instruc-
tion from CDFI on how to move
However, with respect to HFFI-
FA awards, the OIG said it con-
firmed with the Treasury Depart-
ment that it did not execute any
amendment to grant an extension
in OnPath’s assistance agreement,
according to the OIG report.
Moreover, contrary to what OnPath has claimed, the OIG arguedthat it did not develop and apply amethodology to the dataset separate from that in the credit union’sCDFI certification application.
“However, we identified significant discrepancies in (ASI’s)methodology,” the OIG reportstated. “It was the responsibilityof ASI management to support itsmethodology and the underlyingdata used in its application forCDFI certification and financialassistance. In all we have workedwith ASI management during thecourse of the audit and concludedthat it (the credit union) was unable to provide documentationsufficient to support the decisionsand actions taken with respect toASI’s CDFI certification and financial assistance awards.” n
CDFICONT. FROM PAGE 1
Y Feds want a Louisiana credit union to repay
$12 million in CDFI program funds.
Y An Office of Inspector General audit reportclaims OnPath FCU submitted invalidinformation on applications.
Y The credit union says the assertions made bythe OIG are not backed by evidence.
U.S. Department of the Treasury.
Damage outside of New Orleans after Hurricane Katrina.