Members At Lafayette FCU Cry Foul Over Conversion Vote

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KENSINGTON, Md. - Members of Lafayette FCU alleged improprieties in the vote to convert the credit union to a bank and called on NCUA last week to invalidate the ballot, which passed by a razor-thin margin of just 18 votes out of almost 5,100 cast.

"There are a ton of irregularities," asserted Scott Stiens, a member who has been leading an effort to oust Lafayette's board of directors as a result of the conversion bid. Stiens was one of several members who said they were unable to vote because of misinformation provided during the balloting.

Stiens said he had planned to vote at the Dec. 16 special meeting, but was prevented from attending because his car broke down, and that he believed his ballot needed to be counted by that date. But several members said they were told their ballot would be counted as long as it was mailed and postmarked by that date.

Other members cited shortcomings in the process. Tom Carter, a worker at US Agency for International Development who has helped develop third world credit unions, alleged that the disclosures sent by Lafayette were deeply flawed, by among other things, incorrect information related to the future of the branches inside government offices. While Lafayette told members it had no plans to close branches, it has been notified by the U.S. Small Business Administration, one of its main sponsor groups, it will be required to close the SBA branch because of security concerns.

"Had the disclosures been clear and not misleading then it probably would have lost," said Carter of the conversion vote.

Credit union officials would not comment last week on the members' allegations.

Almost 5,100 or the credit union's 16,000 members, about 32%, participated in the vote-a higher percentage than most conversion ballots-with 2,555 voting in favor and 2,537 voting against.

Stiens and other members have sent letters to both the credit union's supervisory committee and NCUA asking that those and other issues related to the 90-day ballot be investigated.

Among the issues being raised by members:

* Confusion over where members could vote. Some members believed they could vote at branches. Others did not understand this, the group stated.

* Some members claim they did not receive ballots in time to vote.

* Misleading information about the loss of rent-free branches afforded the credit union in SBA and at the U.S. Agency for International Development.

"Management told us the AID branch is the busiest branch we have," said Ajit Joshi, an AID employee. "They hid the truth about losing our rent-free branch. Many more members would have had serious reservations about the conversion had they known that simple fact."

Stiens said he and others believe that paid credit union employees solicited and handled ballots in the branches, violating NCUA regulations on independent balloting, as well as the credit union's own rules laid out in disclosures. "If they had told all members to vote in the branches, a lot more folks who missed the deadline would have voted," he said.

He also wondered how the credit union counted illegible ballots-the so-called "hanging chad" issue. He suggested that NCUA be allowed to inspect those ballots to determine whether they were "yes" or "no" votes.

"They were changing the rules as they went along to get that edge, which came out to just 18 votes," said Stiens.

NCUA confirmed it is reviewing the members' complaints and will take them into consideration when deciding whether to certify the vote, as they are required to do.

Meantime, the members said they will continue their petition drive for a special meeting. (c) 2007 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com

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