Just to follow up from my last post of this problem. Since then we open a case (00285069) with CA and CA SE was able to pin point the problem has to do with the WSDL used to pull User Group Membership, which has a query that need to be optimized. This is what CA SE did and we were provided with a fix patch, which we implemented and our problem got corrected. So, basically, if you ran into this problem the perhaps the same fix patch will also correct your problem. The solution provided works for us and we are happy with it.