LOS ANGELES – A federal judge yesterday rejected requests from five WesCorp FCU executives being sued by NCUA for reimbursement of their legal fees during the case and told them to “get in line” with other WesCorp creditors after their case is completed.
In dismissing the executives counterclaims U.S. Judge George Wu said the WesCorp figures will have to submit their claims to NCUA, as the liquidating agent of the one-time $34 billion corporate, and NCUA could decide at that point whether to award legal fees on a pro rata basis, depending on how much money is remaining in the liquidating estate.
Judge Wu ruled that for the WesCorp figures to recover their legal expenses they must file administrative claims with NCUA after the end of their cases.
The ruling comes as the five figures—former CEO Bob Siravo, CFO Todd Lane, Chief Investment Officer Bob Burrell, Chief Risk Officer Timothy Sidley and Human Resources Director Thomas Swedberg – are ringing up hundreds of thousands of dollars in lawyers bills to defend themselves against NCUA’s civil suit claiming that their gross negligence led to the spectacular 2009 failure of the San Dimas, Calif., corporate credit union. Two of the figures, Burrell and Sidley, have agreed in recent days to settle their cases for undisclosed conditions.
In counterclaims filed in the case the WesCorp figures say insurance policies taken out by WesCorp specifically indemnifies them against any judgment rendered against them in civil suits like the NCUA action, and promise to pay their legal expenses. Judge Wu put off a final ruling on the issue of indemnification.
The issue of indemnification is a complicated one because NCUA allowed the insurance covering the executives to lapse after taking over the troubled corporate in March 2009, which means there is no insurance coverage that would pay NCUA any damages in the case.
