Banned Former CU Manager Pleads To Return To CUs

Register now

The former manager of Jessop Employees FCU is seeking the unprecedented overturning of a 1999 NCUA prohibition order, which would allow her to work again or get involved with a credit union or bank.

In a letter to NCUA, Patricia Watson said her involvement in and subsequent ban from the industry for a broad travel voucher scam that implicated directors and employees was caused by the dominance of the board.

"Yes we did wrong, but we did it because the board told us to do it, and we did not realize it was that big of a deal," said Watson of the scam in which directors claimed thousands of dollars in phony travel vouchers from the credit union.

Watson was one of 11 individuals at the credit union, including nine of the 11 directors, who were banned as a result of the scheme. Because of the scheme, CUNA Mutual Group revoked the fidelity bond of the credit union, forcing NCUA to take the $18-million institution under conservatorship for a year.

Under the scam, the individuals gave themselves cash advances for more than $60,000 in travel expenses, but never utilized the funds for travel.

In her letter to NCUA, Watson said she was hired after the scheme was well under way and felt pressured to go along because her bosses, the board of directors, were involved. "We employees were just trying to keep peace with the board," said Watson. "After all, they hired, fired, determined each employee's raise and disciplined each employee."

Watson, who consented to the NCUA prohibition order, said she wasn't even sure she wants to work for a credit union, but would like to be eligible to serve on a board. "I don't think I would like to work for a credit union or bank but I would like to know I could if I chose to," she said. "I feel I would make a good board member because I have been on the other side as an employee and I know a lot more about credit unions than most board members. I am a good person and have always been thankful for God's gifts to me. I pray you will be forgiving of our mistakes and grant us a pardon."

In a legal opinion letter to Watson, NCUA said under the procedures Watson and anyone else who wants to petition for reinstatement may send a request to the NCUA board and the request must identify any institution the individual hopes to work for. If it is a bank, he or she must petition the appropriate banking agency, as well. Any review will include the individual's actions since the prohibition order was issued and evidence of rehabilitation since then.

Hattie Ulan, deputy general counsel at NCUA, said several individuals have contacted NCUA staff about reinstatement but no requests have ever gone all the way to the board and no prohibition has ever been overturned.

Under prohibition orders, an individual is banned from working for or with any federally insured financial institution with a fine of up to $1-million a day for any violation of the order.

"We employees have all been punished for over five years," said Watson. "We all lost our incomes, insurance, etc. We also lost our professions and had to start our careers over. I think we all paid a high price whereas the board members lost nothing and they were the ultimate cause of the situation. The board members all had other jobs and had nothing to lose by their actions. They also felt they could do ANYTHING they wanted and NOBODY could do a thing about it."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER