Berlin credit union sues over fake bank CD; Guardian Angel Credit Union files class action against Iowa bank.

A small North Country credit union has launched a class action suit against a Midwestern bank, alleging that the bank allowed its employee to negligently walk off with millions of dollars of money belonging to other depository institutions.

Guardian Angel Credit Union, based in Berlin,

MetaBank--with some 13 branches and $686 million in assets traded on the Nasdaq exchange under the ticker CASH launched an investigation into the phony CDs because of an earlier unspecified complaint. It also was later sued by two Texas banks in April 2008.

It found, according to its filing with the Securities and Exchange Commission in May, that a former MetaBank employee--whom both MetaBank and Guardian court filings identify as Charlene M. Pickhinke--had been selling the fraudulent CDs to various financial institutions. There were $4.2 million still outstanding, according to the filing.

Pickhinke, said the bank in its SEC filing, used the proceeds of one CD to pay for another, not taking any money from MetaBank, but "there are unresolved questions as to ... what degree MetaBank might be liable."

Guardian, which has less than $40 million in assets, blames MetaBank. The suit identifies Pickhinke as a supervisory employee, "pan of the bank officers and management" and said that the bank was negligent in hiring her and maintaining her in a supervisory position, as well as putting into place safeguards that would have prevented such a theft.

In addition, MetaBank benefited from the funds, since they were deposited in Pickhinke's account at MetaBank. Therefore, the bank should pay it back with interest, as well as other banks in a similar situation. Guardian estimated that about 50 other phony CDs were sold.

Lisa Binder, a spokeswoman for Meta Financial Group, declined comment because the matter was in litigation.

It had not filed an answer to the complaint filed in Concord, but in answer to a complaint by The Frost National Bank in Texas, the company said it "was not aware of and was not a participant in the alleged sale of the CD" and that "Pickhinke conceived of the CD transaction and sought to benefit from the scheme," which she allegedly carried out "individually and apart from her authorized work at MetaBank."

It added that MetaBank didn't gain anything by the plot.

Guardian's attorney Christopher Meir of North Conway-based Cooper Cargill Chant, would not comment because of the ongoing litigation.

Bob Sanders can be reached at bsanders@nhbr.com.