FT. MYERS, Fla. – A federal judge agreed yesterday to NCUA’s request to strike a jury trial in a suit where the credit union regulator is seeking to foreclose on some two dozen borrowers from one of three credit unions caught in an ill-fated Florida real estate speculation.
The judge ruled that the borrowers, members of the failed Huron River Area FCU, waived the right to a jury trial when they bought into the speculation, part of a get-rich-quick scheme known as Millionaire University.
Huron River Area FCU, a one-time $360 million Michigan credit union, was one of three credit union failures, along with Colorado’s Norlarco CU and New Horizons Community FCU, that failed after financing loans in the south Florida scheme that promised double-digit annual returns. Huron River Area, which cost NCUA $40 million in losses, and Norlarco, which cost $10 million, are among the biggest credit union failures ever.
The 2007 failure of Huron River Area and the 2008 failure of Norlarco left NCUA holdings hundreds of millions of dollars of mortgages in the two Florida developments and working through the legal process to foreclose on millions of dollars of other loans.
In yesterday’s ruling, the U.S. District Court for the Middle District of Florida rejected the borrowers’ claims that the waiver of a jury trial they signed as part of the loan agreement was not applicable in a case of alleged fraud; and that NCUA, which has assumed all rights to the failed credit union as its liquidating agent, has not waived its ability to enforce the jury trial.
“Judicial economy and the conservation of resources would certainly be promoted by trying this case to a court instead of a jury,” wrote Judge Charlene Honeywell. “There are numerous parties and voluminous records. Moreover, the Court is very familiar with this matter, having handled this case for nearly two years. The matter remaining for trial is simply the foreclosure of mortgages.”
A trial in the case, which will now be decided by the judge, is scheduled for Nov. 7.
