NEW LONDON, Conn. – NCUA has filed a claim in probate court against the state of an elderly investment broker for New London Security FCU who leaped to his death last July, just before regulators were closing in on his apparent fraud that sunk the $13 million institution.
NCUA claims that Edwin Rachleff, stole as much as $11.8 million from the credit union through an investment fraud.
The 82-year-old Rachleff committed suicide by jumping out of an 11-story window hours after NCUA shut the 72-year-old credit union and seized its records.
NCUA claims that the local office of AG Edwards & Co., the defunct broker where Rachleff worked, had no record of the $11.8 million he had purportedly invested with the company. The missing funds bankrupted the tiny credit union, which had only 365 members, and forced the NCUA to liquidate it soon after.
The probate records show a June 2008 statement of the credit union’s accounts at AG Edwards, which purported to include investments in Federal Home Loan Banks, Fannie mae and Farm Credit Banks, which apparently do not exist.
The NCUA seizure seemed unusual because the credit union appeared to be healthy, with only $5,000 of reported losses for the first half of the year and 17% capital. But one thing stood out, the credit union had just $234,000 in loans to members, meaning more than 98% of its assets were in investments.
