LOS ANGELES – Former WesCorp CEO Robert Siravo told a federal court here he is ready to defend himself against charges of managerial negligence in the failure of the one-time $34 billion corporate, but that additional charges brought by NCUA alleging he plotted to pad his retirement benefits by millions are nothing but a “sideshow” to the main event and should be dismissed.
“This case is about WesCorp’s investment decisions, which Mr. Siravo is fully prepared to defend on the merits,” lawyers for the ex-WesCorp chief wrote in a motion to dismiss this week. “It has nothing to do with the [retirement plan] amendments, the implications of which were fully disclosed to the Board.”
Siravo said there is no evidence to prove that he plotted with the WesCorp director of human resources to pump up his retirement benefits so that he was paid $6.9 million as he planned his exit the year before WesCorp was taken over by NCUA. In fact, Siravo’s lawyer said the multi-million severance package actually was less than the $7.4 million he would have been entitled to under the corporate’s old retirement benefits.
Siravo, who ran WesCorp from 2002 until its demise in 2009 and ultimate conservatorship by NCUA, is front and center of the biggest loss in credit union history, which NCUA expects to reach as much as $7 billion. NCUA has charged Siravo and other top WesCorp officers, as well as 11 members of the board of directors, in a civil suit with breach of fiduciary duties and gross negligence in the huge corporate failure. The regulator also has charged Siravo and the HR director, Thomas Swedberg, with fraud in connection with the amended retirement plans that NCUA alleges increased the payouts for three top executives by more than $2.5 million.
The claims by the former WesCorp CEO come as the former WesCorp directors responded to the NCUA charges by pointing their fingers back at the federal regulator, who, they pointed out, had examiners housed on-site at WesCorp throughout its demise and knew what was going on at all times.
Siravo derided NCUA’s charges of negligence, saying NCUA is looking for scapegoats for the financial meltdown that claimed hundreds of financial institutions, including the corporate giant and four other corporates. NCUA is in the process of liquidating WesCorp along with U.S. Central FCU, Members United Corporate FCU, Southwest Corporate FCU and Constitution Corporate FCU.
“The original lawsuit used 20/20 hindsight to claim that certain officers and directors of WesCorp breached their duty to the company by overinvesting in mortgage-backed securities,” he says in his brief. “Apparently realizing the ubiquity of this situation, NCUA decided to amend the complaint to add claims [of fraud].”
“The new claims have nothing to do with the gravamen of the complaint – WesCorp’s MBS investments. Rather, they relate to the changes in the [retirement program] issued to certain WesCorp executives,” claims Siravo.
“The sole purpose of [the fraud charges] is to create a sideshow to buttress the investment claim.”
