After prison, former bank leader files for bankruptcy
Jungen was founder of Central States Mortgage Co.
Seven months after completing a prison sentence, Richard Jungen, once the top executive at the state’s largest mortgage banking firm, has filed for bankruptcy.
The bankruptcy petition filed by the founder of Central States Mortgage Co. said Jungen, 69, has $18.9 million in liabilities and assets of $361,000.
“I have $15 million of bank judgments against me and no assets,” Jungen said in a brief interview Thursday, adding that he has served his time and believed that his bankruptcy filing was not newsworthy.
In addition to the money owed to the lenders, Jungen also owes $540,000 to Kravit Hovel & Krawczyk, his criminal defense lawyers.
“There were no winners here,” said Stephen Kravit, who represented Jungen in the criminal case and in civil matters stemming from the sudden collapse of Central States in 2009.
In a Chapter 7 bankruptcy, a debtor’s assets can be liquidated to pay creditors. Certain assets, such as pension funds and a person’s home, are generally exempt from the proceedings.
Some of Jungen’s largest creditors and the amount owed include:
Ridgestone Bank in Brookfield: $1.234 million.
M&I Marshall & Ilsley Bank, which is now owned by BMO Harris Bank: $788,946.
Johnson Bank, Green Bay: $348,404.
Prime Financial Credit Union, Cudahy: $105,639.
Prior to the closing of Central States — a shutdown that threw more than 200 people out of work — Jungen was a wellknown and respected figure in his industry.
He had been a director at the Wisconsin Mortgage Bankers Association and served on numerous civic groups in Wauwatosa, including its economic development corporation and tax assessment review board.
The Central States closure came after months of infighting at the company that resulted in the ouster of Jungen and others. The Central States board sued Jungen and other now-former executives for racketeering, charging they defrauded the company out of $15 million. Jungen and the others denied the allegations and the suit was later dropped when Central States went into receivership.
Jungen and three associates were indicted in 2013 for engineering a scheme to illegally pay more than $9 million of the company’s money to themselves and other investors.
Jungen pleaded guilty to obstruction of justice in 2015 for directing a colleague to backdate a letter — an action that prosecutors say caused the FBI to waste hundreds of hours
of investigation. Prosecutors agreed to drop charges of fraud and embezzlement.
He was sentenced to one year in federal prison. He was in the federal prison camp in Duluth, Minn., from June 2015 until March, when he was released and allowed to finish his sentence in a halfway house and then home confinement. He completed his sentence in April.
Jungen’s ex-wife and former company president, Elaine Jungen, was indicted with Jungen but charges against her were later dropped. Also charged was David Chapman, an investor in the $9 million investment pool. He was sentenced last year to one year of probation after pleading guilty to obstruction. Jerome Poehnelt, the former chief financial officer at Central
States, also was charged in the scheme and those charges are pending.
A group of Wisconsin credit unions that owned more than 70% of Central States has repeatedly said they were the victims of the scheme and that Jungen and investors in the $9 million fund received payments while the credit unions that owned Central States were stuck holding bad loans.
“There were a lot of players at the time — both within the credit unions and within Central States — whose reach exceeded their grasp at a time when the economy was flourishing,” Kravit said.
“No one had any idea of the economic debacle that was to come in housing.”
Jungen’s bankruptcy filing was made last month and says that he is now receiving monthly income of $2,409, most of which is coming from Social Security.
As part of the bankruptcy,
Jungen — whose company wrote $3 billion in loans during its last three years of operation — had to take an online personal financial management class and he received a “certificate of debtor education.”
The filing also discloses that in 2015 he posted a $242,092 capital gain and that he collected $25,000 in rental income in 2014 and $27,000 the following year.
Jungen owns a Wauwatosa home that he said has a value of $180,000 and that he has “possession” of a 2001 Mercedes ML 320 that is owned by Kristian Jungen, the bankruptcy filing states.
He is also an owner of a handful of limited liability companies, one of which owns a vacation home in Phoenix and a second that owns a 1998 27-foot Sea Ray boat. The filing states that Jungen does not believe his interests in those LLCs could be marketed.