ALEXANDRIA, Va.–NCUA, acting as Conservator of Western Corporate Federal Credit Union (WesCorp), filed papers in Superior Court in Los Angeles Dec. 30 to intervene as plaintiff in a lawsuit against several current and former employees and officials of WesCorp.The agency is maintaining that it is the proper plaintiff and should be permitted to replace the current plaintiffs and determine whether and how to proceed with any action against WesCorp’s former Board members and employees.
As reported earlier by Credit Union Journal, a civil action has been brought by a number of natural-person credit unions that are members of WesCorp, alleges negligence and breach of fiduciary duties in connection with WesCorp’s substantial investments in residential mortgage backed securities and collateralized debt obligations. Among the CUs involved in the suit are 1st Valley CU, Glendale Area Schools FCU, Tulare County FCU, Cascade FCU, Northwest Plus CU, Stamford FCU.
That suit compiled by New York City-based attorney Scott Kamber, claims WesCorp’s management “embarked ona a wildly irresponsible Wall Street gambling spree in mortgage-backed securities, losing billions of member dollars it was charged with conservatively maintaining as liquid assets.”
Named as defendants in that suit are former WesCorp CEO Robert Siravo, former Chairman Robert Harvey (CEO of Seattle Metro CU), former Vice Chairman James Jordan, CEO of Schools Financial Credit Union, and former board member Bill Cheney, CEO of the California/Nevada leagues.
WesCorp was placed into conservatorship by NCUA in March.
“As Conservator, NCUA has an obligation to protect the interests of all the members of WesCorp,” said NCUA General Counsel Bob Fenner in a statement. “NCUA has been actively investigating whether legal action is appropriate against many different parties, including former WesCorp officials, to redress the losses the institution has suffered. That investigation is continuing.
“Federal law provides that NCUA as Conservator is the appropriate party to represent the interests of all members in connection with any recovery attempts,” Fenner said. “ While we did not choose to initiate this litigation, we believe NCUA has an obligation to intervene because claims of this nature belong to all of WesCorp’s members, not just the first plaintiffs to arrive at the courthouse.”
