Download Flash Player to view this content.

Residents of Deer Island, N.B., are dealing with the loss of the community's only financial institution after a massive fraud by an employee forced the credit union to close.

The small island in the Bay of Fundy had its own credit union for 28 years, but the institution never recovered from losing $1.7 million to fraud over several years. The credit union closed last Thursday.

Mark Flewwelling, the chief executive officer of the Risk Management Agency, which regulates credit unions, said the closure was a business decision.

tp-nb-mark-flewwelling

Mark Flewwelling, the chief executive officer of the Risk Management Agency, says Deer Island Credit Union had become unprofitable. ((CBC))

"The Deer Island Credit Union has over the last few years become unprofitable, as they encountered a serious loss as the result of a fraud," he said.

The credit union was able to recover $1.3 million of the stolen money from insurance.

RCMP investigated the fraud but say the case is now closed. Residents of the island, which has a population of about 1,000, may never know exactly where the stolen money went.

Although the RCMP would not confirm it, residents say the suspected employee was never charged and is now dead.

Dale Barteau, the former board chair of the credit union, said the fraud has stolen people's trust.

"I grew up in an age when a handshake and a nod was as good as a contract," Barteau said. "Perhaps that's one of the sad things, that times have changed."

Residents upset

The Deer Island Credit Union will be merged with the Charlotte County Credit Union in St. George so residents will be able to do their banking in that town or St. Stephen.

Two of the credit union's employees have been transferred to the mainland branch.

Anyone looking to do their banking in person must now take a 20-minute ferry trip to the mainland and then drive another 20 minutes to the credit union.

'A small operation like that could lose $1.7 million and nobody could find it, nobody realized it was gone? Somebody wasn't doing their job somewhere along the line.' — Don Doughty, Deer Island resident

In a small community where news travels quickly, few people were willing to talk about what happened at the credit union.

Two residents who were willing to be interviewed were not happy about the explanation for the closure.

"A small operation like that could lose $1.7 million and nobody could find it, nobody realized it was gone?" Don Doughty asked. "Somebody wasn't doing their job somewhere along the line."

Resident Reg Camick blamed poor oversight.

"The adjusters didn't notice it or anything like that? The guy taking care of the books? Something wrong somewhere.

"And we don't have no credit union because [of it]."

This isn't the first time residents of a Fundy island have lost their credit union. Last year, Campobello Island saw its financial institution shut down, forcing people to endure a roughly 200-kilometre round trip drive and cross the Canada-U.S. border four times.