The National Credit Union Administration is reviewing the conversion proceedings at Lafayette Federal Credit Union in Kensington, Md., after receiving complaints of voting irregularities leading up to and during the Dec. 16 vote.
Members of the $330 million-asset Lafayette voted 2,555 to 2,537 in favor of the board's plan to convert to a mutual thrift, according to NCUA documents that American Banker obtained through the Freedom of Information Act. The 18-vote margin makes the conversion vote one of the closest ever, and even a slight change in the final tally could alter the outcome.
The integrity of the vote has been challenged by a number of credit union members, who have written letters to the NCUA alleging that Lafayette's board intentionally misled members, refused to provide information, and mishandled ballots.
Conversion opponents argue that such allegations, coupled with the razor-thin margin of approval, should compel the NCUA to invalidate the vote.
"A margin of less than 0.35% indicates to me a definite need for a recall and close, close evaluation," said Scott Stiens, a leader of a group of Lafayette members opposed to the conversion.
John McKechnie, the NCUA's director of public and congressional affairs, said the agency has been in continuing contact with Lafayette officials since the conversion vote. He would not detail the issues the agency is investigating, except to say they include the complaints outlined in letters it has received from Lafayette members.
The review will delay the NCUA's decision on certifying the conversion vote, Mr. McKechnie said. Lafayette officials had expected the NCUA to certify the vote no later than Jan. 2.
"We've asked Lafayette some questions about the voting, and they've asked us for additional time," he said.
Michael Hearne, Lafayette's president and chief executive officer, did not return phone calls requesting comment for this article, but the board posted a statement on the credit union's Web site after announcing that its members had voted to approve the conversion.
"It is interesting to note that, despite our outreach efforts and the press coverage generated by this proposal, fully two thirds of our membership did not cast their ballots," the board said. "This confirms what we had originally expected; the overwhelming majority of members either favors a conversion or remain indifferent to what charter Lafayette operates under."
The post-conversion fate of branches inside two federal buildings is at the heart of the members' complaints. A number of Small Business Administration and U.S. Agency for International Development employees who are also Lafayette members regularly use branches located in the buildings where they work.
The opposition group insists that Lafayette's management team had indicated in earlier disclosures that those branches would remain open, regardless of the vote. However, according to the group, Mr. Hearne told members in a special meeting the day of the vote that he could not be sure if the branches would stay open if the conversion went through.
"If the board had fully informed members about the fate of our branches and answered questions forthrightly, we are confident that at least nine of the members who voted in favor of this proposal would have voted 'no,' " Jim Alrutz, a member of the opposition group, said Wednesday in a press release.
The opposition group also says that Lafayette officials refused to respond in writing to requests for information about the consequences of the vote, and that credit union employees accepted ballots at Lafayette branches, thereby breaking the chain of custody and contaminating the ballots.
