The ousted board of a Brooklyn, N.Y.-based credit union is suing the National Credit Union Administration, claiming its dismissal was motivated by ethnic bias and based on outdated information.
Six former directors of Polish and Slavic Credit Union, including onetime general manager Marcin Sar, filed its suit April 28, less than two weeks after the regulator removed the six-member board and placed the $594 million-asset credit union into a conservatorship.
The suit, filed in U.S. District Court in New York, asks the court to overturn the NCUA's decision and reinstate the board. It contends that the regulator "acted in reckless disregard of the facts" and came to conclusions based on "a series of stale, unsupported allegations and unfounded assertions."
The suit also alleges that Richard S. Shulman, the NCUA's examining attorney, "has demonstrated a clear anti-Polish bias, a lack of impartiality ... , and a total disregard for professional and ethical standards of conduct."
A spokeswoman for the NCUA declined to comment on the suit, and the agency has asked that the court proceedings be closed to the public.
Mr. Shulman did not return phone calls seeking comment.
When the NCUA took over the credit union last month, the regulator said in a statement that the grounds for conservatorship included "mismanagement, failure of the board of directors to meet their fiduciary responsibility to their members, and a weak audit function."
The NCUA said it does not elaborate on actions taken.
The former directors' court filings say the NCUA's problems with Polish and Slavic stem from the credit union's failure to report large currency transactions to the U.S. Treasury. Under the Bank Secrecy Act, transactions over $10,000-or those that look suspicious-must be reported.
The directors say the credit union notified the regulators of potential violations in February 1997. They contend the violations were accidental and that the credit union has amended its policies so that the reports would be properly filed.
Polish and Slavic, founded in 1976, is the nation's largest "associational" credit union. In contrast to those with geographic or employer-based memberships, it accepts anyone who pays a $10 annual membership fee to a neighborhood Polish community center.
The board of Polish and Slavic Center, the local community center, adopted a resolution this week endorsing the NCUA's actions.
