HARAHAN, La.–A federal judge has ruled the Treasury Department was right when it ordered OnPath FCU to repay more than $12 million in CDFI funds, finding Treasury’s request meets the criteria of the Administrative Procedure Act.
The court’s ruling follows a civil action filed by the credit union in December of 2021 in federal court in response to the Treasury Department demand in which it asked the court to include the “expert report” from Terrene Ratigan to supplement the administrative record. But Judge Sarah S. Vance rejected OnPath’s motion and sided with the defendant, the Treasury Department, saying the new Ratigan Report and other materials “add nothing of significance to the existing record.”
The court also rejected the $500-million OnPath Credit Union’s request that additional statements and documents be admitted as evidence.
What’s at Issue
At issue is $12 million in Community Development Financial Institution (CDFI) funds received by OnPath from 2006-09 and then again in 2011 and 2012. OnPath, which received its CDFI certification in 2006, said it used the CDFI funding to help members and communities devastated by Hurricane Katrina.
Court documents note that on Oct. 4, 2016 Treasury’s Office of Inspector General (OIG) began to audit the awards received by OnPath, and that on July 11, 2018 it issued its findings.
The OIG said it found “the CDFI Fund certified (OnPath)…in January 2006 based on invalid information: in OnPath’s original application for assistance.
“The OIG recommended that the Director of the CDFI Fund ‘determine whether (OnPath) was in default of its…Assistance Agreements as a result of submitting invalid information in its Certification Application and Assistance Agreements.’ It further recommended that the CDFI Fund ‘take appropriate action to include…requiring (OnPath) to reimburse the CDFI Fund’ for certain awards received,” the court documents continue.
‘Improper Payments’
The court noted that in 2019 OnPath was notified that the CDFI Fund had “determined that, as a result of (OnPath) submitting invalid information in its 2006 Certification Application, the FYs 2006 through 2009, 2011 and 2012 awards…constitute improper payments in accordance with the Improper Payments Elimination and Recovery Improvement Act.”
In that same communication, the court said OnPath was ordered to repay the funds.
OnPath, which has approximately 62,000 members, responded with a lawsuit in May of 2020 against the CDFI fund and asked the federal court to review the case under the Administrative Procedure Act. OnPath said it was seeking a declaratory judgement that the CDFI Fund wrongfully terminated the Assistance Agreements and that it was entitled to the awards.
OnPath has noted that the OIG did not find any evidence the credit union misused the funds or was out of compliance with Treasury’s CDFI rules.
The credit union is seeking a jury trial in the case.
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