Milwaukee World: LATEST ON CENTRAL STATES MORTGAGE DISASTER

JUNGEN ATTORNEY FAULTS NEWS COVERAGE

Says Board of Directors to Blame

Credit Union Owners of Failed Mortgage Company Listed Here

The Death (Sort of) of a Website

Special to the Readers of Milwaukeeworld.com

By Michael Horne

And The Milwaukee World Hound Dog Team

Attorney Stephen Kravit, representing former Central States Mortgage Company [CSMC, Inc.] CEO Richard Jungen and others is critical of recent news accounts linking his clients to the surprise closing of the mortgage company yesterday, Monday, March 9th, 2009.

He faults an item in the Monday Credit Union Times ("Central States Mortgage Suspends Operations") and Milwaukee Journal Sentinel reportage on the case. Kravit says it "was not accurate to the extent it suggests that my clients had anything to do with the closing of Central States yesterday, or in the repeated false statement that my clients somehow caused $15 million in damages to that company, just because that raw number was placed in a pleading filed by Central States."

The pleading, in Milwaukee County Case #2009CV001723, CSMC, Inc. vs Interim Funding, LLC, claimed Jungen and his co-defendents (Elaine Jungen, Jerry Poehnelt and Chuck Miller) caused damages in the amount of $15 million due to their actions while managing the firm..

Kravit has been telling news outlets including the Journal Sentinel, "the $15 million figure was placed in Central States' complaint precisely to have the press repeat that baseless figure over and over, which your paper and all others have dutifully done." However, Kravit says "the so called damages stated in the Central States complaint violates Wis. Stat. Section 802.02(1m)(a) which states: 'With respect to a tort claim seeking the recovery of money, the demand for judgment may not specify the amount of money the pleader seeks.' The statutory prohibition just cited is to prevent the exact unfair prejudice to the persons sued that has occurred."

Instead, Kravit says the cessation of operations "is in no way the result of any action by Dick Jungen or any of the persons named in CSMC's so-called 'racketeering' lawsuit filed last month."

The Real Reason Behind Central States Closing

Kravit says Central States shut down because present management was funding operating costs from money dedicated to mortgage payments.

"The board uncovered a serious cash flow deficiency. The matter is being investigated. It was reported that present management collected funds for operations rather than paying off the mortgages of the underlying lenders. [Emphasis added.--Ed.] This all occurred long after the departures of Dick Jungen, Elaine Jungen, Chuck Miller and Jerry Poehnelt."

Firm Makes No Mention of Jungen in Statement

In fact, the terse press release issued by CSMC announcing the closing (which appeared subsequent to the posting of the item in Milwaukeeworld announcing the closing) makes no mention of Jungen and his associates.

Instead, Kravit says, CSMC's "difficulties were the same ones other major mortgage lenders experienced in the last two years -- declining values, job losses, and credit deterioration. ... It is false and defamatory to claim that my clients caused $15 million in losses, or any losses to Central States that were not due to deteriorating market factors." Kravit's press release notes all controlling directors of CSMS are presidents of credit unions. [See list of Credit Union owners below.--Ed.]

"My clients believe this action was brought at the behest of the credit union president directors to mask their own responsibility for the decline of CSMC, and divert attention from their significant management oversight failures. The management oversight failure by the credit union president directors now appears terminal for Central States."

[It appears while I was writing this post, Rich Kirchen was on much the same theme at the Business Journal. "Jungen Strikes Back at CSMC Board"--Ed.]

THE (SORT OF) DEATH OF A WEBSITE

The Central States Mortgage Incorporated website is now one for the ages, although I have a link here that will send you to past versions of the company's website for the years 2001-2007. (Who knows if it might come in handy, if only as a lesson that you can not necessarily eliminate a website once it is up.)

I make a point of this because CSMI management used their website yesterday to inform customers and others that it was "suspending operations," yet yanked that direct communication less than 24 hours later. But, the management was as sloppy at dismantling its internet presence as it was managing its affairs, since --The Central States Mortgage - Oakbrook, Illinois website is still operable.

--Michael Horne

WHO OWNS CSMC?

Here, for the first time, is a readily accessible list of the websites of the Credit Union Owners of CSMC, Inc.

http://www.allcocu.com/

ALLCO Credit Union

http://www.amccu.org/

Am Community Credit Union

https://www.americancu.com/

American Credit Union

http://www.aurorahealthcare.org/misc/creditunion/aboutus.asp
Aurora Credit Union

http://www.communitycu.com/choose/?wptheme=CCU%20Families
Community Credit Union

https://www.dupagecu.com/
Dupage Credit Union