Polish And Slavic FCU Embroiled in Yet More Leadership Controversy; Will NCUA Step In?

BROOKLYN, N.Y. – In 1999, the NCUA put the then $595 million Polish and Slavic FCU into conservatorship after a series of investigations into voting irregularities led to subsequent investigations of management and financial irregularities. Now, five years later it appears that similar management and financial problems have cropped up again at the credit union and NCUA may again be on a collision course with the now $1 billion FCU. Here is what is known. On November 30, 2004, about 300 people, roughly 200 members and 100 employees, stormed a meeting of the credit union’s 10 member board demanding the board accept a petition which, allegedly 1,500 members had signed seeking a special meeting at which time at least six of the credit union’s board members could be recalled. The credit union’s employees became alarmed after the board declined to renew the management contracts of some of the credit union’s senior management and did so without first taking steps to find others to fill their positions, according to one source who spoke anonymously. The members became alarmed when no one from the board appeared willing to discuss what was going on and they perceived that the board was not unified. By the time the members left the meeting the police had been called. Founded in 1976, Polish and Slavic FCU has over 66,000 members and has become a pillar of the Polish community in and around Brooklyn. Members, the majority of whom speak either Polish exclusively or Polish as a first language, rely upon and trust the credit union as an institution which maintains a Polish leadership and where they can safely put their money. In a press release, the credit union acknowledged not renewing the contract of Danuta Sieminski, the credit union’s current CEO, after having given her administrative leave as of November 30. John Scerbo, the current COO, is running the credit union while the credit union uses a “specialized recruiting firm” to find another CEO. “We would like to emphasize that none of the members of the board of directors will pursue the position of CEO nor any other position at the credit union,” the credit union said. Gregorz Szczubelek, vice president of marketing for the credit union, declined to answer any questions about the credit union’s leadership shakeup, citing the instructions of senior management. Samuel Paulicelli, the credit union’s CFO, whose contract also expires December 31, has also been told that his contract will not be renewed and there may be other senior management who have also been told their tenure with the credit union may end on December 31, according to a source familiar with the credit union’s operations. Board Conflicts Raging Sources close to the credit union say that the firing of the CEO and the storming of the board meeting are merely two of the latest and most visible manifestations of a board battle that has been raging for some time and may never have really ended when the NCUA put the credit union into conservatorship in 1999. The battle has been ugly, with many and varied charges flying back and forth between two broad groups of board members and litigation between board members and their critics. Two critics who have been willing to speak up for the record have been Derek Michalski and Margaret Chudziak, both volunteers with a non-profit organization called Forum Organized to Protect Poles (FOPP), headquartered in Edison, New Jersey. Michalski who is not a member of the credit union and Chudiak, who is, said that they began observing the credit union’s actions more closely after finding evidence that several current and former board members had been involved in activities which directly preyed upon some of the poorest members of the Polish community. Michalski and Chudniak allege that the credit union’s board has become engaged in cronyism and corruption and that some board members have been practicing law without licenses and preying on elderly and immigrant Poles. “At this point I think another conservatorship from the NCUA would be a good thing for the credit union,” said Michalski. “Whether it comes from federal authority, state authority, or from the industry, something has to be done to restore confidence in this credit union.” Michalski and Chudniak allege that current board member Andrew Kaminski has practiced law without a license in New York and used that to prey on Poles in New York, an allegation which has also run in the Polish language press. They also allege that a former board member, Andrew Olshevski, also practiced law without a license and has defrauded Polish immigrants with green card schemes and deposited the money in the credit union. For his part, Kaminski has sued Michalski and Chudniak, FOPP, and different Polish language papers that have printed the allegations as well as interviews with area residents, who claimed to be his victims, a fact that makes Michalski laugh. “We aren’t scared,” he said. “This is the United States, a country I love. This is a country of freedom where people can bring corruption to light, not like in Poland under the communists.” And it should be noted that Michalski and Chudniak are not without their critics as well. The most often adjective you hear applied to them, generally by the people they criticize, is “crazy,” along with “trouble makers” and “publicity seekers.” “There are people who are always seeing crookedness everywhere,” said one source high in the credit union who asked to keep his name out of the story. “But sometimes things are really just what they seem.” Indeed it is the flow of accusations and counter accusations, litigation and threats of litigation, which makes it very hard to get a real picture of what is going on in the credit union. Currently, a consensus of different sources agree that the board is more or less divided between a roughly six member faction of board members led by Kaminski, and a roughly four member faction of board members led by an attorney and board member named Mark Zawisny. According to sources familiar with the credit union, Kaminski’s camp may be closely associated with a former board member named Marcin Sar who had also been manager of the credit union when the credit union had engaged in the activity that got it fined by the Treasury Department. A conflict between Sar and CEO Sieminski, which may have helped Sar lose his bond insurance with CUNA Mutual somehow, may have led to Sieminski’s contract not being renewed, the sources said. CUNA Mutual has declined to say that they did or did not remove the bond, citing confidentiality rules. Other sources which have long been familiar with the credit union lay the responsibility for the fight at a desire on the part of each faction to control how the credit union invests its $485 million investment portfolio, suggesting that neither side would be above getting kickbacks from friends with whom they invest the funds. Where is NCUA? Whatever the reason, sources familiar with the credit union and its current management firmly suggest that the agency would have to do something to bring some order and regularity to the way the board is managing this billion dollar institution. The NCUA has confirmed to the FOPP that one of its staff members will participate by teleconference with a meeting on December 16 at which time they will examine documents that FOPP says it has collected to back up its charges. The staff member will also hear statements from Poles who say they have been harmed by Polish and Slavic board members. An attorney from the credit union is also supposed to be present, FOPP said. NCUA backed off from sending a representative to the meeting after word of the scheduled discussion appeared in the press, but quickly offered the teleconference alternative, FOPP maintained. For its part, NCUA would neither confirm nor deny the meeting, saying only that the agency maintains contact with the credit unions it regulates and that communications with credit union members are the business of the credit union. One board member has said that the board is seeking legal opinions on why they do not have to recognize the petition. Several sources said that it is likely NCUA wants to do something to help straighten the credit union out but that the agency may be gun shy about it in the wake of the previous conservatorship and round of litigation. One possible move might be to give the credit union a CAMEL 4 rating which would mean it merits a Special Actions staff person being on the premises to both help oversee credit union operations and to help investigate some of the varying allegations regarding the board. “The bottom line for everyone is that the agency understands that this credit union is a mess and needs some help,” said one source who spoke off the record. 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