ODESSA, Texas - First Basin CU, which was forced by members to abandon its conversion to a mutual savings bank, has filed suit in state court saying opponents of the charter switch illegally interfered in the initiative.
The suit charges The National Center for Member Trust, Self-Help CU, as well as the founder of Save First Basin CU, Letty Moreno, interfered in attempts to convert to a savings bank by disseminating false information to members of the credit union, the public and the media.
The credit union also claims the defendants or “individuals at their discretion” contacted members warning them that they would lose all money they had deposited in the credit union, and that First Basin would close all their accounts.
Also named as defendants are: Ector County Commissioner Armando Rodriguez, Odessa Hispanic Chamber of Commerce CEO Manny Puga, and three members of Save First Basin. The $125-million credit union has asked the court to recover $600,000 from the National Center and Self-Help CU, which helped found the Trust; money the credit union said it spent on the failed conversion.
Jim Blaine, CEO of State Employees’ Credit Union, Raleigh, N.C., and a founding volunteer of the National Center for Member Trust, told Credit Union Journal he understood the Center has been named in the suit, but at press time he had not yet been served.
“It is bad that these conversion processes always end up being messy,” he declared. “The National Center for Member Trust wants procedures put in place that everyone can follow with a clear conscience. Members deserve to have clear information, then they can vote for what is best for the credit union.”
The issues dredged up when a credit union attempts to convert to a bank “always seem to be the same,” Blaine assessed. “Both sides say information was not provided clearly or at the right time. No disrespect for either side, but it doesn’t do anybody any good to have lawyers argue it out. We need a standard process for mergers and liquidations, as there is in the private sector.”
First Basin began the conversion process almost two years ago, but suspended the member vote in February, citing “misinformation” in phone calls being made from Save First Basin to members. The vote was officially cancelled in March.
This is at least the fourth time a credit union has abandoned its conversion to a mutual savings bank and sued members opposing the conversion. (c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com
