LAS VEGAS – Private deposit insurer American Share Insurance filed suit in federal court against CUNA Mutual Group’s CUMIS Insurance Society claiming the credit union insurer is bound by a $685,000 bond claim for the 2009 failure of ASI-client Cumorah Credit Union.
The suit, removed from state to federal court last week, claims the CUMIS bond for the one-time $210-million Las Vegas credit union should cover losses accrued for a $2.5 million member business loan Cumorah’s chief operating/chief lending officer Kim Taufer approved without the consent of the board of directors, as required under the credit union’s lending policies. Taufer, said ASI, “acted without authority and breach of his trust.”
CUMIS eventually rejected the bond claim by ASI, which obtained to legal rights to Cumorah after it liquidated the credit union for Nevada’s Mormon Church in October 2009 at a loss to the private insurer of $8 million. The remnants of the private insurance failure were assigned to Credit Union 1 of Rantoul, Ill.
In denying the bond claim, CUMIS said Taufer told the company an increase in the MBL line of credit was approved by Tony Mook, Cumorah’s CEO, and that the credit union lacked formal policies for open-ended lines of credit, such as the one in dispute.
Cumorah is one of a half-dozen Nevada credit unions to fail over the past three years during the state’s severe recession.
CUNA Mutual Group declined to comment.
