An additional 21 businesses and individuals from Illinois andMissouri filed civil lawsuits against the $1 billion Scott CreditUnion and its former business relationship manager, allegingconsumer fraud that may involve millions of dollars.

Seven new civil lawsuits were filed last month in St. ClairCounty Circuit Court in Belleville, Ill. These latest legal actionsfollow a similar civil lawsuit alleging consumer fraud and othercharges filed last year by Dave Butz, a former NFL Super Bowl Champion of Swansea, Ill.,and Eugene Schill of St. Louis.

However, in addition to denying consumer fraud allegations,lawyers for the Edwardsville, Ill.-based credit union argued incourt documents that Butz and Schill may have benefited from thealleged fraud by its indicted business relationship manager.

Moreover, if Butz and Schill suspected any fraud, they werenegligent for not stopping or reporting it, according to SCUlawyers.

The credit union argued in court documents that it is notvicariously liable for the alleged fraudulent conduct of Theodore Longust, its former business relationship manager. Hewas charged in November with nine felony charges of fraud,misapplication of funds and money laundering that involved morethan $12 million.

Although Longust pleaded not guilty in December, he may enter anew plea this week, according to court documents.

In addition to consumer fraud, Butz, Schill and 21 otherindividuals and businesses made a new allegation of negligenthiring against the credit union.

The lawsuits claimed Longust had no or insufficient backgroundor qualifications to work as a business lender at the time of hishiring. The lawsuits also claimed that the former business bankerreceived no or insufficient training with regard to federal andIllinois regulations governing commercial lending.

“The employer Scott Credit Union knew or should have known thatTheodore Longust had a particular unfitness for the position so asto create a danger of harm to third persons, and in particular, theplaintiffs,” Belleville, Ill.-based lawyer Grey Chatham Jr. wrote.He is representing the Butz, Schill and the other plaintiffs.

In answering this new allegation,Chicago-based credit union lawyers James R. Branit and ThomasJacobson argued that Butz and Schill failed to allege any factsthat Longust was unqualified or that poor training led him tocommit his alleged fraud.

“This allegation is conclusory because plaintiffs provide nofacts as to why Longust was not qualified to be hired or whatScott Credit Union should have known of this fact when he washired,” Branit and Jacobson wrote in court documents.

Nevertheless, Branit and Jacobson argued that based on theirinformation and belief, Butz and Schill frequently communicatedwith Longust during the time he was embezzling from the creditunion.

“Dave Butz and Eugene Schill had a duty to do what a reasonableperson would have done under the same or similar circumstance,”they wrote in court documents. “If Dave Butz and Eugene Schill knewor suspected that Theodore Longust embezzled credit union funds …then Dave Butz and Eugene Schill were negligent in not stopping orreporting Theodore Longust's conduct.”

The credit union lawyers also alleged that Butz and Schilland/or companies they are associated with may have benefited fromLongust's fraud.

“I'm unaware of the volume of communications that Mr. Butz andMr. Schill had with Mr. Longust, but any communication was betweenclients and their banker,” Chatam said. “What the credit unionclaims is an attempt to mitigate the damages that my clients haveincurred based on the credit union's actions.”

Nonetheless, Chatham noted that the credit union's lawyersadmitted in court documents that Longust embezzled credit unionfunds, created fictitious loans, misapplied funds to pay loans withfunds from other loans, increased credit limits on loans that didnot have the requisite approvals, issued business loans without therequired documentation or security and issued letters of creditwithout the required documentation and security.

Longust worked at SCU from November 2005 to December 2014. Hehad a lending limit of $50,000 in 2008 and $100,000 from 2009 to2014, but he was required to obtain approval from the business loancommittee for any loan exceeding those amounts. The credit union'sboard was required to approve all credit extensions of more than $1million.

A criminal indictment alleged Longust submitted a false reportthat misstated loan balances, omitted loan amounts andunderreported loans of more than $12 million. Longust submitted thereport to SCU President/CEO Frank A. Padak and Chief LendingOfficer Craig Burkhard in 2014, according to the indictment.

He allegedly began his fraudulent scheme inNovember 2008 by creating an unauthorized loan in the name of theSouth County Baptist Church. Court documents did not say whetherLongust was a member of that church.

Though the amount of the church loan was not specified in courtdocuments, Longust allegedly used more than $76,000 from that loan to payoff his personal credit card bills.

Moreover, the indictment alleged that Longust misapplied SCUfunds by completing loan advances from three business loanaccounts.

For example, in one instance he made loan advances from a loanaccount in two transactions totaling $301,000. Those transactionsbrought the outstanding balance of the loan to $1.4 million.

On the second business loan account, he made loan advancestotaling $212,000, which caused the outstanding balance on thataccount to grow to $1.6 million. On the third business account,Longust made a loan advance of more than $129,000, whichcaused the outstanding balance on that loan account to reach $1.5million.

According to the civil lawsuits, SCU and Longust are alleged tohave opened unsecured lines of credit without authorization andsignature of the plaintiffs, removed money from their accountswithout authorization, denied access to funds or accounts,attempted to collects fund from plaintiffs from past due accountsthat were unauthorized, withheld misappropriated funds and deceivedplaintiffs.

The companies and individuals named as plaintiffs in the newcivil lawsuits are Gary Pierce, Trio Properties & ManagementLLC, Mary Hubbard, Integrated Construction Resources LLC, AmaniInvestments LLC, Deryl Brown, Mid City Development LLC, WaveseerHoldings LLC, Gateway Capitol Group LLC, TM Partnership LLC, SchillInvestment Fund LLC, P2 Commercial LLC, GFO Properties LLC, GeneO'Donnell, Becky Anderson, Physicians Choice Wellness LLC, TimO'Donnell, Complete Supplements LLC, Bill Haskins, P2 PropertiesLLC, and Joe Plescia.

These plaintiffs, as well as Butz and Schill, claimed theirprofessional reputations have been damaged and are unable to borrowor enter into new business ventures. They are also claimed they arenow on the hook for millions of dollars in fraudulent lines ofcredit that were handed over by the credit union to debtcollectors.

When reached by CU Times Tuesday, SCU said it does notcomment on legal matters.