NEW YORK—The former CEO of Montauk CU, which was conserved by the New York State Department of Financial Services Sept. 18, filed a lawsuit Tuesday accusing the regulator of preventing him from consulting his own lawyer after they took over his business.
The majority of Montauk’s lending is in taxi medallion loans. The value of taxi medallion loans in New York—as well as in other cities across the U.S.—has dropped markedly due to ride sharing services such as Uber.
NCUA data shows that Montauk delinquencies rose to 2.96% through June, and had been steadily increasing in the past year. In just six months, ROA dropped from 1.09% at the close of 2014 to -2.36% through June. Capital fell from 12.35% at the end of the year to 10.34% by the end of June.
The New York State Department of Financial Services placed Montauk into conservatorship because of unsafe and unsound conditions at the credit union, the NCUA stated in a release.
Louis Jimenez, who guided the $178-million Montauk before the conservatorship, is asking a judge to give him permission to share information with his outside counsel, as well as overturn the state takeover of his credit union. Richard C. DiChiara is now listed on NCUA’s website as running the institution.
“I have been advised by NYDFS (the state Department of Financial Services) that I am not to disclose to any party — including my own counsel — Montauk’s communications with the NYDFS … without first obtaining a written waiver from NYDFS,” Jiminez said in an affidavit filed in Manhattan state Supreme Court.
Jiminez said he is “unaware of any legal authority” under state banking law that bars him from sharing information with his lawyers, the New York Post reported.
Matt Anderson, a spokesman for the state agency told he Post: “Our action was necessary, legal, and in the public interest. We will respond further in court.”
Also, the agency maintains that under the banking law, its filings are confidential unless the agency provides a waiver for disclosure — a procedure that is standard among virtually all bank regulators.