LITTLE FALLS, Minn.–A request by CUMIS Insurance Society that asked the Federal Minnesota District Court for a summary judgment on whether or not it has to cover $3 million St. Francis Campus Credit Union (SFCCU) alleges was embezzled, has been denied.
According to MCRecord.com, CUMIS attempted to rescind SFCCU’s policy with the company after the alleged embezzlement was discovered in January 2014. The embezzlement eventually led to the conservatorship of St. Francis Campus Credit Union and then its liquidation.
In its court filing, CUMMIS had argued that former manager and CEO Margurite Cofell, who allegedly embezzled the money, had lied to the company as part of its insurance application when asked if any directors, officers or employees had knowledge of an act that would lead to a claim against the CU, MCRecord.com reported.
However, the CU argued that since Cofell was allegedly acting against the SFCCU and allegedly lied about that specific issue, the insurance can’t be rescinded based on that.
MCRecord.com further reported that court documents also say CUMIS argued that because NCUA representatives cashed the check refunding premiums paid that came with a denial letter, that the agency had agreed to the rescission of the policy.
According to court documents, the letter and the check were separated during mail sorting and the check was cashed pursuant to the receivership policies of the CU, MCRecord.com reported.
The NCUA said the person who sorted the mail did not have the knowledge to make a decision agreeing to the end of the insurance policy.
The court ruled that CUMIS could not show NCUAB had completely and without a doubt agreed with the rescission, MCRecord.com reported. As a result, the court chose to deny CUMIS’ motion for summary judgment, but court documents also note that the discovery process could change its opinion.