Settlement reached in U.S. Central case

July 26, 2011

Settlement reached in U.S. Central case

July 27, 2011 – A settlement was reached Monday in a lawsuit brought against former executives and directors of U.S. Central in which Corporate America CU alleges that the former corporate's management and executives provided misleading information that led Corporate America to purchase at-risk capital.

This settlement resolves the case in which the defendants were slated to testify in Alabama District Court on Aug. 1, according to a Credit Union Journal report yesterday.

The report noted key figures who were set to testify, including Francis Lee, who was the former corporate's CEO; Joseph Herbst, who was both chairman of board and president of Members United Corporate FCU; David Dickens, U.S. Central's former head of asset liability management and CUNA President Bill Cheney, who was on U.S. Central's board at the time.

Following the announcement that the parties in the case reached a settlement, NAFCU reaffirmed its position on the need for transparency and accountability in stabilizing and reforming the corporate credit union system. This transparency, the association maintains, includes both strengthening the NCUA's oversight of corporates and determining any culpability on the part of the management and boards of these failed institutions. "As these cases move through the judicial system, our goal is to move forward with the least cost to our members and prevent any reoccurrences of past failings," said NAFCU General Counsel and Vice President of Regulatory Affairs Carrie Hunt.

In its suit, Corporate America CU claimed that the directors and officers of U.S. Central concealed losses prior to the credit union's $450 million purchase of U.S. Central paid-in capital in December 2008, the report noted. That capital was depleted weeks after the purchase.

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