WASHINGTON - The federal government is investigating former officials of the failed Capital Corporate Federal Credit Union who are suspected of improper dealings with a broker-dealer.

The National Credit Union Administration is probing former investment officer Bruce Townshend, former chief executive J. Clayton Brooke, an unidentified broker-dealer, and board members.

The targets were disclosed in a June 30 letter the agency sent to Cumis Insurance Society Inc., which holds Cap Corp's fidelity bond. The letter said that NCUA may press claims under the "employee dishonesty" and "theft, disappearance, and destruction" coverages of the Cumis bond.

"The NCUA investigation to date indicates that former Cap Corp employees, including without limitation Bruce Townshend and, possibly, J. Clayton Brooke, may have acted dishonestly in the context of their relationship with a broker-dealer," wrote J. Leonard Skiles, president of the agency's asset liquidation management center.

In an interview, Mr. Brooke declined to comment. Mr. Townshend could not be reached for comment.

Further, the letter said an unidentified broker-dealer may have committed a "theft" by "charging excessive mark-ups and commissions for securities sold to Cap Corp."

The letter also said that directors of the failed $1.5 billion-asset institution could be at fault.

"These claims are predicated upon the preconservatorship and preliquidation acts, errors, omissions, and breaches of duty of the board members and senior operating officials of Cap Corp in their failure to plan, direct, monitor, and supervise the handling of the Cap Corp investment portfolio," the two-page letter said.

The agency intensified its investigation this month when it retained the Washington-based law firm of Storch & Brenner, which has experience probing securities claims for the Federal Deposit Insurance Corp.

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