NCUA, Already A Plaintiff, Now Defendant
NEW LONDON, Conn. – In a 40-page amendment to a lawsuit it filed in July, five members who lost investments in New London Security FCU are alleging that regulators were negligent in allowing fraud to go on unabated before it was finally shuttered.
The suit, filed by attorney Robert Reardon of the New London-based Reardon Law Firm, has named as defendants the now-shuttered CU’s former board, other advisors, the brokerage firm and the widow of the CU’s long-time investment advisor, Edwin F. Rachief, who committed suicide in 2008 on the day NCUA shut it down. But NCUA, which has filed a separate lawsuit against brokerage and accounting firms used by the credit union, now also is being named a defendant.
Reardon is using as basis for the amended suit a report by the agency’s Office of Inspector General that found 21 individual counts of failings by the regulator. The credit union had reported $12.7 million in assets, but NCUA found that some $12.1 million of that were investments that did not exist.