ALEXANDRIA, Va.–NCUA has filed charges against a former credit union CEO it alleges took substantial money from the credit union in unapproved funds, caused losses to the CU, and hid the scheme in bogus board minutes he created and then had the former chairman sign.
The action has been taken against Jeffrey B. Moats, the former CEO and board member of Edinburg Teachers Credit Union Texas, for what the agency said is “knowingly and intentionally violating the law, breaching his fiduciary duties, and knowingly causing a substantial loss to ETCU exceeding $4 million.”
The NCUA is seeking restitution of at least $4 million to Edinburg Teachers Credit Union and a civil money penalty of $1 million. The four-count notice of charges was filed with the United States Office of Financial Institution Adjudication.
Unapproved Transfers
In its filing, NCUA is alleging Moats, without board approval:
- Directed ETCU staff to transfer large sums to him in connection with purported retention bonus or supplemental employee compensation plans that were never discussed nor approved by the board of directors.
- Directed ETCU employees to fund his retirement account wholly from ETCU funds, in contradiction to the retirement plan’s terms.
- Directed ETCU staff to pay him $220,000 for accrued, unused vacation time in the absence of any ETCU policy permitting such payment without board approval.
- Caused ETCU to pay car insurance premiums on his personally owned vehicle for a number of years.
NCUA’s lawsuit shows that during a January 2021 examination, examiners “noticed a large debit balance in a general ledger and determined that there had been several large transfers to Moats’ personal accounts from this account.”
‘Fabricated Responses’
The agency further alleged that on Jan. 26, 2021, with examiners from the Texas Credit Union Department and NCUA requested Moats provide documentation supporting the transfers, “Moats delayed and ultimately provided documents that were fabricated in response to the examiners’ requests for records.”
The suit later states, “Despite having never held the office of Board Secretary, Moats personally drafted and maintained minutes of the board meetings of ETCU. By his own control of the board meeting minutes, Moats fabricated approvals for large transfers to himself within the minutes where, in fact, those transfers were never discussed by nor approved by the board of directors.
Chairman Signed Stacks of Minutes
“To avoid detection of the falsehoods he inserted into the board minutes, Moats would periodically request that the chairman of the board of directors come to the ETCU premises and sign stacks of board meeting minutes without the opportunity to review,” the complaint continues. “Moats would label the pages requiring signature with sticky notes and request that all minutes be signed in one sitting. While the board meeting minutes reflect that at each meeting the prior meetings’ minutes were approved, in practice the minutes were not reviewed by directors.”
NCUA said ultimately it found the credit union was operating in an unsafe and unsound manner, and all members of the board were relieved of their duties.
History at Credit Union
According to the agency, joined Edinburg Teachers Credit Union as its CEO in 1995 and became a member of the board in 2012.
As CUToday.info reported here, on March 26, 2021, the Texas Credit Union Department conserved Edinburg Teachers, appointed the NCUA as Agent for the Conservator, and NCUA removed Moats from his positions as CEO and board member.
At the time it was placed into conservatorship, its Sept. 30, 2022 call report showed $316,931 in net income through the first nine months of the year, with capital at 21.55% and $96.4 million in net income.
Released From Conservatorship
Edinburg Teachers Credit Union was released from conservatorship and returned to the control of its members on Jan. 27, 2023. The CU’s year-end 2022 call report shows $96.3-million in assets, $415,963 in net income and net worth of 21.67%.
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