NEW LONDON, Conn.–Eight years after NCUA shuttered a credit union here as the result of fraud the final 13 account holders who lost some of their deposits are now receiving some of the money back.
The 13 members of New London Security FCU all had deposits in excess of the $100,000 per account insurance limit that was in place at the time the CU was closed in 2008.
NCUA told TheDay.com that about a third of the $570,000 in uninsured accounts above the government deposit threshold at the time had been returned to former members of NLSFCU. The insurance threshold has since been raised to $250,000.
According to TheDay.com, the release of nearly $197,000 last month came from a settlement the NCUA secured in a lawsuit against Wells Fargo Advisors, which was the successor of the brokerage house that employed longtime credit union adviser Edwin F. Rachleff, who was accused of carrying on a 20-year embezzlement scheme.
Rachleff, who committed suicide the day the credit union was dissolved, had been charged with stealing nearly $12 million from the CU.
"This is ... the end of the case," NCUA spokesperson John Fairbanks told TheDay.com. "NCUA as liquidating agent has no further legal action pending or planned."
According to TheDay.com, Fairbanks did not directly address questions of why it took so long to compensate account holders after the lawsuit was settled late last year, but called the case a complex one to unwind, "particularly since the perpetrator was not a credit union employee."
Mark Fletcher, a Florida resident who had two accounts at the Jewish-run credit union, told TheDay.com he received his checks Aug. 25. But he also told the publication he feels that the NCUA, which compensated insured account holders a total of $9.9 million, stiffed him $100,000 by claiming that each individual, rather than each account, was entitled to $100,000.
Fetcher also told TheDay.com he had numerous other questions, such as why the NCUA decided to drop its case against the former credit union's board of directors, which had been blamed for lax oversight in the agency's 2008 liquidation report. Rachleff allegedly had a former credit union manager type numbers into blank investment statements that he then submitted to the New London Security board, theDay.com reported.
In 2008 Rachleff, then 82, was under criminal investigation following an audit. He committed suicide by jumping off the top of the Mohican Senior Apartments in New London on the the same day the agency began liquidating the CU.