NEW LONDON, Conn. – NCUA last week filed suit against the auditors for New London Security FCU, a one-time $13 million credit union whose investment manager leaped to his death in July 2008 as NCUA examiners were closing in on his fraud.
The suit, the second filed by NCUA in the fraud, names New London firm Ed Lorah & Associates, LLC, which acquired the credit union’s long-time auditor, Beller, Shepatin & Co., PC, in September 2007.
In its suit, NCUA claims the auditors should have known that Edwin Ratchleff, a former director of the credit union who served as its investment advisor, was stealing funds, an estimated $12 million, by investing credit union money in his own accounts.
The 82-year-old Rachleff jumped to his death from the top floor of a nearby senior citizens home the same day the 73-year-old credit union was being taken over and liquidated by NCUA. The regulator found as much as $12.1 million of funds missing from the $12.7 million institution. The failure cost the National CU Share Insurance Fund $9.7 million.
“As a result of Beller Shepatin’s professional malpractice, and breach of contract, the Credit Union’s investment in a fraudulent investment account went undetected for many years,” claims NCUA.
Officials at Ed Lorah & Co. did not return a phone call seeking comment yesterday.
NCUA also has filed suit in the case against Wells Fargo Investment Advisors, which eventually acquired the remnants of the firm Ratchleff worked for, A.G. Edwards & Co.
