Alan Guthartz, president of Nationwide Tenants Federal Credit Union, still burns when he talks about the day six months ago when the federal regulator shut him down.
"It was like an Eliot Ness raid," he said. "Fifteen examiners, including the regional director, paraded in to shut down our little credit union. I'd never even seen the regional director before."
The regulators' ambush made Mr. Guthartz angry enough to become the first industry official since 1991 to challenge a takeover by the National Credit Union Administration. On May 24, a couple of weeks after regulators poured into Nationwide Tenants, Mr. Guthartz sued the agency in the U.S. District Court for the District of Columbia.
Frustrated with a slow legal process and wanting to expose what he calls an act of regulatory injustice, Mr. Guthartz is seeking publicity.
"Everything's fallen apart and we've done nothing wrong," Mr. Guthartz said in an interview. "I feel if the government can do something like this to somebody in this age, and somebody can't fight back, it's ridiculous."
Mr. Guthartz portrays the New Hyde Park, N.Y., credit union as a highly capitalized, $150,000-asset institution that after nine years of operation was on the brink of opening its first branch. Then, unexpectedly, the NCUA turned out the lights.
Court documents submitted by the NCUA, however, cast doubt on the credit union's story.
The agency claimed that Mr. Guthartz used the credit union as nothing more than a bank for him and a small group of cronies.
"There are only 26 members out of 200,000 potential members, and the president owns or is associated with 78% of all shares on deposit," according to the agency's confidential conservatorship report. "Only one loan is outstanding and the borrower is the chairman of the credit committee."
The accusation that he was deliberately underserving the membership base "really gets me angry," said Mr. Guthartz.
The credit union, which had consciously decided to grow slowly, was working to bring in more members, he said. Also, it was about to open a branch in a Sears store and was considering opening branches in other stores. "If they wanted us to expand faster, they should've said so," he said. "You don't just pull the plug."
The agency report accuses Mr. Guthartz of falsifying records, not producing records for examiners, shoddy record keeping, and lack of internal controls.
Mr. Guthartz categorically denies all of the agency's accusations, saying: "That's a lot of bull."
To back him up he has sworn affidavits from the credit union treasurer and an accountant who say nothing was wrong with the credit unions' books.
Mr. Guthartz is still waiting for his day in court. The district court judge is weighing whether to grant a request by the NCUA to try the case in New York.
The NCUA said it wants to change venues for reasons of convenience; Mr. Guthartz thinks it's a stalling move designed to drive up his legal fees. Already, he said, the case is costing him a fortune.
