ODESSA, Texas - A state court has allowed First Basin CU to schedule depositions for representatives of several out-of-state credit unions whom FBCU says financed efforts to derail the credit union’s conversion to a mutual savings bank.
First Basin suspended its vote to convert to a savings bank last month amid allegations that its members were being called by someone spreading “falsehoods” about the conversion, including the possibility members would lose their deposits if the switch-to-bank went through.
The depositions are a precursor to a possible suit by the $125-million credit union against the National Center for Member Trust, an organization that has funded the opposition to several credit union conversions.
Deposition notices were issued last week to the National Center for Member Trust and to GTE FCU, North Carolina State Employees CU and Self Help CU, three credit unions that organized the Center, though at press time the center’s chairman, GTE FCU CEO Bucky Sebastian, said he had not been served with such notice.
In addition, deposition notices were sent to three members of Save First Basin, a group of members opposing the switch of their credit union to a bank that was aided by the Center, sources told Credit Union Journal.
Among the information being sought in the depositions is whether any of the opponents engaged in or hired a third party to call First Basin members and lobby them to vote against the conversion.
Self-Help CU’s Randy Chambers, who is one of the three founders of the NCMT, confirmed that the Center did offer technical and monetary assistance that was requested by Save First Basin CU, the group of members who protested the proposed conversion.
“We helped pay the cost of a mailing they did,” Chambers said. Though he didn’t know the exact amount of the funds in questions, he said it was, “a drop in the bucket compared to the $500,000 of member money the credit union has used in this effort. We felt like they should at least have a water gun to fight against the cannon.”
The bigger issue, agreed Sebastian, is what he called the misuse of members’ money.
“The most insidious thing going on is the unconscionable, unsavory use of members’ resources to challenge other members who don’t agree [with the board and management team,” Sebastian said. “It should be illegal for a credit union to use its members’ money to go after other members simply because they disagreed with what management wanted to do with the credit union.”
And the perhaps the biggest issue of all: the potential “chilling effect” of the lawsuit.
“My observation is that they tried to intimidate members who challenged the conversion at Lafayette [FCU in Maryland] and they felt that worked, so now they’re going to try the same thing at First Basin,” Sebastian advised. “It is unconscionable that they would try to sue members for exercising their rights. This has a chilling effect. I think of a Russian gulag. The credit union is squandering members’ money and the poor people they’re going after can’t do that. If it comes to these members having to decide between feeding their families or continuing to fight for their credit union, they’re going to feed their families. They will have succeeded in making the members go away, and the next time a credit union decides to convert, members will be wary of getting involved in it.”
Some have suggested the Coalition for Credit Union Charter Options has been coaching the board and management team of First Basin on the potential lawsuit, but CCUCO’s Lee Bettis said his group has not been involved with First Basin’s conversion effort in any way beyond documents and materials that are readily available on its website. Bettis added that CCUCO last fall sent some of those documents to every credit union with more than $100 million in assets.
