CLEVELAND-A federal court has rejected a bid by a tiny church here to recover $1.5 million it lost in 2010's failure of St. Paul Croatian FCU, ruling the decision is up to NCUA, which itself is expecting to be left with $170 million in losses in the case.
Holy Love Ministries had almost $1.8 million in CDs with SPCFCU, but was reimbursed by NCUA only for the maximum allowable $250,000 under NCUSIF rules when the CU went bust. The church, the biggest victim of the CU fraud, says it will have to file for bankruptcy unless it recovers the funds.
The church, which had a representative on the board of the $240-million CU, tried to withdraw its funds in the days just prior to the NCUA takeover of St. Paul's Croatian, but was told by NCUA officials to wait until after the weekend to pull its money, lest it prompt a run on deposits. But the following day NCUA took SPCFCU under conservatorship amid a massive loan fraud and limited depositors to $5,000 withdrawals until a determination on the maximum $250,000 withdrawals were made. The following week, NCUA liquidated the 67-year-old CU.
An appeal to the NCUA board was rejected before the civil suit was filed. Holy Love Ministries has also sought to attach its claims to criminal cases brought against the chief perpetrators of the fraud.
But the U.S. District Court for the District of Northern Ohio ruled Holy Love Ministries "has no standing to assert itself as a victim-as that designation is solely for the NCUA under federal law."
