The internal rift at Patelco Credit Union has widened.

A majority of the board and the senior managers of the $1 billion-asset institution has asked the Justice Department to investigate evidence that credit union insiders defrauded the government in order to kill an acquisition.

Separately, the San Francisco credit union's supervisory committee - an entity apart from the board - is probing the accusers for alleged management abuses.

The internal finger-pointing all started as Patelco tried to pull off the biggest merger in credit union history by combining with First Technology Federal Credit Union in Beaverton, Ore. The merger divided the institution, with each side accusing the other of serious criminal misconduct.

In an April 18 letter to the National Credit Union Administration, Patelco chairman Carol Sorrick charged that merger opponents had forged a letter from the late chairman of the credit union, Lael L. Berkstresser.

Ms. Berkstresser, who died Jan. 7, was a solid supporter of the merger. However, the undated letter, which was received by the NCUA on Jan. 19, opposed Patelco's combination with First Technology.

Ms. Sorrick said the letter "constitutes a knowing and willful falsification of material facts concerning the merger, designed to defraud NCUA in its consideration of the application."

She asked the agency to make a criminal referral to the Justice Department regarding the matter. Patelco directly asked the department to investigate the letter on April 11, according to NCUA General Counsel Robert M. Fenner.

Ms. Sorrick also forwarded to the NCUA an anonymous letter of apology to Patelco chief executive Edgar F. Callahan from someone who claims to have been conspiring to oust him.

That March 21 letter states that "board members, (supervisory) committee members, a few staff, and a former employee" felt "stepped on" by the merger and decided to work together to topple Mr. Callahan. The letter suggests that it was this group who forged the letter from Ms. Berkstresser.

"Before Lael got sick, we began laying plans, watching and waiting for the right time. When she died, a door opened," the letter states. "Somewhere along the way, the plan got out of hand. Now I am adamantly opposed to what they are doing."

The NCUA's Mr. Fenner would not comment on whether the agency has made a criminal referral to the Justice Department. But in an April 27 letter to Patelco, Mr. Fenner suggests it would be "moot" because Patelco already had filed a complaint directly.

The allegedly forged letter did not weigh in the agency's decision, Mr. Fenner said. He also dismissed the relevance of the anonymous apology letter, noting that Mr. Callahan has criticized other charges made anonymously.

"I see no more reason that the anonymous 'Dear Ed' letter you enclosed should be regarded as credible evidence than the anonymous submissions expressing a contrary view of which you complain," Mr. Fenner said in the letter.

NCUA officials have insisted that they are not taking sides and do not know who is telling the truth at the country's 14th-largest credit union.

But the regulator has backed Patelco's supervisory committee in its effort to investigate a range of alleged management abuses ranging from intimidating employees to destroying documents.

The committee also has gone to the San Francisco County Superior Court for support, and last month a judge upheld the committee's right to conduct an investigation.

On May 17 the court will hear a motion by the supervisory committee to dismiss a cross complaint filed by Patelco, which is charging the committee with breaching its fiduciary duty.

Mr. Callahan is angry that the NCUA has backed an investigation against the credit union, but apparently won't refer to Justice a case of potential criminal behavior.

"My only thought is they're the ones the forgery was addressed to and they have been hurt directly and we've been hurt indirectly," he said. "Here's an area that clearly needs to be investigated and the regulators aren't doing anything."

There's no doubt in the mind of Ms. Berkstresser's mother, Naomi, that her daughter did not write the letter nor share its beliefs.

"It's an absolute forgery," the elder Ms. Berkstresser said in an interview. "It's absolutely ridiculous."

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