Subpoenas Target Ousted Board Members Of U.S. Central Corp
BIRMINGHAM, Ala.-Corporate America CU last Friday subpoenaed the records of the corporate credit unions run by the ousted directors of U.S. Central FCU as part of its suit challenging the ill-fated $450 million capital offering by U.S. Central in December of 2008 that was wiped out by losses only weeks later.
Corporate America, one of the biggest surviving corporates after the failure of U.S. Central and four other corporates, is seeking reimbursement of its capital plus interest, which could amount to more than $10 million. A court ruling in its favor, which would come against NCUA as conservator of U.S. Central or insurers for the targeted figures, could have the effect of recapitalizing the surviving corporates.
The newly issued subpoenas ask for all records relating to the controversial offering that are held by WesCorp FCU, First Carolina CU, Georgia Corporate FCU, Kansas Corporate CU, West Virginia Corporate CU, Virginia Corporate FCU and Members United Corporate FCU, whose CEOs sat on the board of U.S. Central until they were removed during the NCUA conservatorship in March 2009.
The Alabama corporate also has served interrogatories on the one-time directors, including WesCorp's Bob Siravo, First Carolina's David Brehmer, Georgia Corporate's Greg Moore, Kansas Corporate's Larry Eisenhauer, West Virginia's Charles Thomas, Members United's Joseph Herbst, Virginia Corporate's ex-CEO James Hansen, as well as CUNA President Bill Cheney, and CUNA Vice President John Franklin, all of whom sat on the board of U.S. Central in its final days, along with U.S. Central's CEO Francis Lee, CFO Kathy Brick and vice president David Dickens, to determine what the executives and directors knew about the ill-fated capital offering.
Corporate America has subpoenaed a variety of entities that advised U.S. Central, including Callahan & Associates, BDO Seidman, Clayton Financial Services and Pacific Investment Management Co., better known as PIMCO.
The suit claims that the corporate figures intentionally concealed $1.2 billion in losses U.S. Central conceded in January of 2009, just weeks after completion of the offering, which converted $450 million of semi-permanent paid-in-capital to permanent PIC that was erased by the losses. Since then, losses mushroomed to as much as $6 billion, prompting last fall's liquidation of the one-time $52-billion corporate giant. Corporate America claims it and U.S. Central's 26 other corporate members were kept in the dark about the extent of U.S. Central's losses at that time and were never given an opportunity to withdraw the at-risk capital.