KENSINGTON, Md. -
In a statement issued to members, Lafayette management, which has been the target of numerous member complaints and an NCUA investigation over the controversial charter switch, attributed their decision to withdraw the application to errors by its independent auditor, RSM McGladrey during the vote counting.
"We are deeply disappointed that the integrity of the balloting process has been irredeemably compromised due to errors by RSM McGladrey in the tabulation process. In the opinion of the Board, these errors make it impossible to confidently ascertain the will of the membership," the credit union said of the razor-thin 18-vote margin out of almost 5,100 votes cast.
But RSM McGladrey, the well-respected national accounting firm, which had withdrawn its certification of the vote after NCUA raised questions, said it was never allowed by Lafayette to commence a recount, saying instead that Lafayette's CEO, Michael Herne and its counsel, Richard Garabedian of Washington, "subsequently instructed RSM McGladrey to cease activity on the recount until further notice."
NCUA, which has fielded numerous member complaints over the vote process, had launched its own investigation into the conversion, but had yet to reach a conclusion. "We were in the process of conducting our review of the voting process of Lafayette when we received word that they were withdrawing their application," said John McKechnie, chief spokesperson for the agency.
As they have throughout the entire process, Lafayette officials refused to comment.
The reversal of course came as opposition to the change to bank continued to grow among members, who believe the vote was engineered to favor the conversion. "I think what happened is they couldn't find enough support for the vote," said Scott Stiens, an angry Lafayette member who is leading an effort to recall the board and dump the management.
He said the members will continue their drive for a special meeting to recall the board, then replace it with a new panel that would fire the management.
"These people don't deserve to remain at the head of a credit union if they're not interested in running a credit union, if they depart from the credit union values and philosophy," said Stiens. "I want to facilitate a change in leadership."
Stiens also said members want to explore whether they could capture some of the more than $300,000 in fees paid by Lafayette to pursue the ill-fated conversion. "That is credit union money that was spent without our approval," he asserted.
By the end of last week the members had gathered more than 725 member names on a petition urging the credit union to call a special meeting where the members would vote on a recall of the board. Lafayette bylaws require the board to call a special meeting by a petition of 750 members.
This is the third time that member opposition has helped force the withdrawal of a bid to convert to mutual savings bank, following decisions by Columbia CU, in Vancouver, Wash., and DFCU Financial, in Dearborn, Mich., to abandon conversion initiatives.
