D. Edward Wells FCU's Members' Accounts Receive a New Home as CDCU is Liquidated

ALEXANDRIA, Va.-D. Edward Wells Federal Credit Union of Springfield, Mass. has been liquidated and its members are being folded into the Western Massachusetts Telephone Workers Credit Union field of membership. While Western Massachusetts Telephone Workers will serve most of the members of the $5-million liquidated credit union, NCUA is still working with some to resolve accounts affected by what it described as poor record keeping by the former management team. NCUA discovered the credit union’s insolvent condition and confirmed previous concerns about the prior management team’s failure to comply with the Federal Credit Union Act and NCUA Rules and Regulations during the institution’s conservatorship. About a year ago, D. Edward Wells’ management, led by then-CEO Carol Aranjo, attempted to obtain a temporary restraining order against NCUA, fearing that the agency would seize the credit union. The judge denied the motion, saying it could not keep the regulator from entering the credit union. NCUA’s then-Region I Director Layne Bumgardner said his office tried to work through the credit union’s problems without taking administrative action. Just prior to the credit union’s attempted restraining order, NCUA had received a letter from the National Federation of Community Development Credit Unions complaining that the credit union did not return at maturity the principle of a share certificate after several requests. Aranjo is a past chairman of NFCDCU. Court documents, such as NCUA’s memorandum in opposition to the respondents’ application to block the conservatorship also alleged that D. Edward Wells made an illegal loan for 33% of the credit union’s total assets and 424% of its net worth, which was not disclosed on the credit union’s books; overdrawn accounts in aggregate of more than $1 million as of Feb. 28, including CEO Aranjo’s account for over $71,470; and withholding of books and documentation from examiners by the credit union. Additionally, NCUA said that the credit union failed to reconcile its main operating account with Fleet Bank since May 31, 2002, making it impossible to determine the credit union’s liquidity position at the time. NCUA made the decision to discontinue D. Edward Wells Federal Credit Union independent operations after determining that the credit union was seriously insolvent and had no prospects for restoring viable operations. The credit union was placed into conservatorship on Feb. 21, 2003. NCUA Chairman Dennis Dollar stated that “a goal of conservatorship is always to return the credit union to the control of its members if at all possible. In this instance, the extremely poor financial condition of the credit union left it insolvent and precluded a return to the membership as we had hoped; however, we are pleased that virtually every member of D. Edward Wells is today receiving credit union service by Western Mass Telephone Workers Credit Union.” Western Massachusetts Telephone Workers has $257 million in assets and serves more than 15,000 members in the Springfield area. [email protected]