WAYNE, N.J. — The former president of First Jersey CU is suing the $104-million CU, claiming the she was fired for blowing the whistle on expensive business trips taken by board members that violated the CU's own travel expense policy.
In a suit filed in New Jersey state court, Joanne Lazzara says the several of the directors violated the credit union's travel policy by going on lavish cruises around the world at the CU's expense, and then fired her for notifying state regulators about the violation. The cruises included conferences to places including: Alaska, Panama, Scandinavia, the Mediterranean, Hawaii, and the Bahamas.
Between 2004 and 2007, the travel expenses accrued totaled more than $220,000. Court documents also show that Board Chairman Edward Sinning went on a Scandinavian CU conference cruise with his wife in 2007 and billed the credit union for $13,000. They reserved the most expensive cabin possible — an oceanfront suite with a balcony.
But the expensive travel, the suit alleges, wasn't the only problem. TCU used its liquid assets to pay for the completion of a new building in 2005, instead of taking a mortgage. According to the complaint, this resulted in a loss of liquid assets of approximately $200,000 each year and drove up real estate taxes to an additional $110,000 annually. After the building was completed, Lazzara says she was presented with new goals to increase the CU's net income — goals that were "unrealistic and unachievable," according to the suit because the CU board denied her request for a business development employee and cut the marketing budget.
In 2007, the State of New Jersey audited First Jersey CU's books and records, at which time Lazzara expressed her concern regarding the "escalating educational expenses" that were not disclosed to the credit union's members.
In early 2008, the travel expenses were eventually cited by state examiners as "lavish" and "gratuitous" and the directors were forced to repay anything over $6,000. As a result, the board changed its travel policy last year to restrict out-of-state trips and the number of people who could travel at the same time, and also removed the dollar limit for expenses. The board claims that because the original policy was written several years ago, it was outdated and not remembered by everyone, resulting in unintended violations of the travel policy.
Later, Lazzara was given a much less favorable annual review than her past reviews and a lower bonus. She was told the reason was that she did not meet the goals set out for her. Even later that year, Lazzara was let go after being told she did not have "the same vision" as the board.
Lazzara's lawsuit claims her termination was a direct result of her flagging the education travel expenses to the state. According to Robyne LaGrotta, Lazzara's attorney, Lazzara was stunned when she was fired, and said that she had always received favorable job reviews and "really good raises." The credit union walked her to car in September, after telling her they would not be renewing her contract, which was set to end Dec. 31, 2008. She was paid through the end of her contract.
"She didn't have any bad reviews, and although the board says they had been talking about terminating her employment for a while, there is no documentation of that," LaGrotta said, noting she has subpoenaed copies of e-mails exchanged between board members, as the board members have said this is where the early discussion of Lazarra's firing took place.
CU officials did not return phone calls or e-mails seeking comment, but the CU, which serves current and former postal workers, denies Lazzara was let go as retaliation, and disputes the characterization of the trips.
LaGrotta said that in "an ideal world" all of the current board members would resign, and Lazzara would be paid for her lost salary until she can find comparable employment. LaGrotta noted that today's economy is making it difficult for Lazzara to find a position comparable to the CEO position she held at First Jersey CU.
What she does hope for is a fair amount compensation for her time being out of work, which is still ongoing, and legal fees. "Ideally, we would like if they reinstated her position and paid her retroactive and legal fees. They said 'no.'"
"Our issue isn't just the travel," LaGrotta continued. "It's that they are spending members' money without their knowledge.
