ALEXANDRIA, Va.–The former CEO of a federal credit union who was cited by NCUA for creating operational deficiencies, who was denied a position on the CU’s board and who alleged the agency retaliated because of his political views, has had his appeal to join the board denied by NCUA.
According to the Decision and Order on Appeal published on NCUA’s website, the former CEO, whose name, credit union and region in which it operated were not included in the Decision, the CEO oversaw a CU that had been downgraded to CAMEL 4 in June of 2019, when it was issued a Letter of Understanding and Agreement that cited numerous operational issues and infernal control weaknesses.
Among the deficiencies cited were “significant recordkeeping concerns, secondary capital violations, insider abuse, lending deficiencies, HELOC statement disclosure concerns, Regulation B (ECOA) adverse action notices noncompliance, and insufficient budget and strategic planning.”
‘Not in Members’ Best Interests’
NCUA stated in the Decision that the former CEO had sought a seat on the credit union’s board, but his name was rejected by the CU’s nominating committee. NCUA also noted that it has the authority to “disapprove an individual’s service if it finds that the competence, experience, character, or integrity of the individual indicates that it would not be in the best interests of the members of the credit union or of the public to permit the individual to be employed by, or associated with, the credit union.”
The former CEO, however, was nominated for the board from the floor during the credit union’s annual meeting in November and won election, after which he filed an application to serve with the NCUA regional office, which denied the application. The CEO appealed to the regional office which upheld its own decision, before he filed an appeal to the NCUA board.
The NCUA board then voted to uphold the regional office’s ruling.
‘No Reasonable Expectations of Falsifications’
“In his appeal, Petitioner contends that certain findings contained in the examination report that the Region cited as a basis for its denial were falsified. In support of these assertions, Petitioner provides narrative information to explain and challenge the Region’s examination findings concerning insider abuse and preferential treatment,” the Decision reads. “However, some of Petitioner’s explanations appear inconsistent with well documented examiner’s findings and DORs in the examination report, the LUA, and representations by the board of directors made to the NCUA in its certified statement. Further, the findings contested by Petitioner in his notice of appeal are only some, but not all, of the factors that constituted the basis for the Region’s denial.
“Based on the board’s review of the record, there are no reasonable indications of falsifications or other misconduct on the part of the Region,” the Decision’s text continues. “The Region’s denial was reasonably based on well documented concerns about Petitioner’s competence, character, or integrity as demonstrated by his conduct during his tenure as CEO at the FCU.”
The Decision then lists examples of how the CEO led to “significant supervisory deficiencies” that had “necessitated replacing Petitioner with the current CEO on short notice.”
No ‘Racial Animus or Reprisal’
In addition, the Decision notes, “In his notice of appeal, Petitioner alleges the Region’s denial of his application may have been motivated by racial animus or reprisal due to his political views, historical links to Senator Bernie Sanders, or his potential whistleblowing. As a basis for his retaliation allegations, Petitioner points to a Washington Times news article that the Region’s examiner purportedly brought to the FCU’s examination, which reported on Petitioner’s appointment to the Consumer Financial Protection Bureau’s Credit Union Advisory Council and detailed Petitioner’s political affiliations.
“However, upon review of the record, there is no evidence to reasonably support Petitioner’s allegations of retaliation or reprisal. The Region strongly denied those allegations as “categorically false” in its March 15 denial letter, noting the Region was ‘not aware of your political views or affiliations and they are wholly irrelevant to [its] analysis,’ and ‘political views or affiliation [play] absolutely no role in the decision to approve, or disapprove, an applicant for board membership or any position in a credit union.’ The Region further noted that ‘neither the regional office nor the field staff have any record of you filing a whistleblower complaint or an examination complaint.’ There is no indication in the record that the Washington Times news article factored into the Region’s decision on the application.”