LENEXA, Kan. – NCUA announced this afternoon it has filed a notice of claim with Travelers Casualty & Surety Co. to preserve the federal regulator’s right to the full amount of coverage provided under US Central’s Directors and Officers Liability policy.
June 30 was the deadline to file this notice of claim with US Central’s liability insurer in order to preserve the right of NCUA, as conservator for the one-time $52 billion corporate credit union, to seek recoveries under the policy. Filing of the notice to meet the applicable policy deadline is a preliminary step. NCUA said it will take the time necessary to complete its investigation and decide at a later date whether or not to initiate civil litigation against any individual directors or officers.
As part of the claim process, individual notices, known as "demand letters,” were also served on 18 former US Central directors and officers.
The demand letters allege that breaches of fiduciary duties of care and loyalty contributed to US Central losses exceeding the $10 million Travelers policy limit, which was in effect from 2005 to 2009. Demand letters were sent to the following individuals: David Brehmer, Kathryn Brick (the chief financial officer at U.S. Central), William (Bill) Cheney (the new president of CUNA), David Dickens, Larry Eisenhauer, Edward Fox III, John Franklin (CUNA's chief operating officer), Kathy Garner, James Hansen, Joseph Herbst (president of Members United Corproate FCU), Roshara Holub (outgoing president of the Missouri CU Association), Francis Lee (former CEO of U.S. Central), Connie Loveless, Gregory Moore, Robert Siravo (former CEO of WesCorp FCU), Bradford Thomas, Charles Thomas, and William Walby.
Several of these individuals are also being sued for separate roles they had with WesCorp., including Cheney and Siravo.
Losses at U.S. Central the past two years have exceeded more than $10 billion, wiping out more than $3 billion of capital owned by U.S. Central’s 27 corporate members and a $1 billion note infused into the troubled institution by NCUA. The losses have all trickled down to the credit union movement’s 7,800 natural person credit unions.
