REIDSVILLE, N.C. — Nearly 30 members of American Partners Federal Credit Union said they have allegedly lost $3 million of their retirement savings through an investment advisor working at the credit union and 14 have filed a lawsuit against both to recover their money.
The 14 plaintiffs said they invested $1.3 million of their personal retirement savings through David Morgan, an investment advisor with Mariner Financial, who was provided office space and administrative assistance by American Partners, according to the opinion Brown v. American Partners FCU NO. COA06-392 filed with the North Carolina Court of Appeals on June 5.
Starting in the late 1990s, the investments "performed satisfactorily" for a period of time with plaintiffs receiving monthly distribution checks but the checks eventually ceased arriving. The Plaintiffs claim that when they asked about the status of the investments, both the American Partners and Morgan assured them that the principal was intact, and the monthly distributions would resume shortly. In late 2003, however, plaintiffs learned that Morgan was filing for bankruptcy and the company in which their money had been invested, Evergreen, Ltd., had filed for bankruptcy in January 2001. Evergreen was an offshore fund managed by those who eventually pleaded guilty to fraud and other charges for bilking $214 million from more than 2,000 investors worldwide, according to an Oct. 14 article in the Greensboro News and Record.
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"What struck me is one of the big things in a credit union relationship is an issue of trust," Philip Mohr, the attorney with Womble Carlyle Sandridge & Rice, PLLC, who is representing the members, told Credit Union Times. "A lot of these members who lost their money founded the credit union."
Mohr said a mediation settlement conference is scheduled for December and he is hoping the case will be resolved then.
"The credit union does not comment on any ongoing litigation," said Cindy Paschal, vice president of compliance at American Partners. "The credit union, Dorinda [Simpson, the CU's CEO] and Ann [Boone, the now-retired vice president] are confident that at the end of the day, they did nothing wrong."
Scott Hale, the attorney with Hagan, Davis, Mangum, Barrett, Langley & Hale representing American Partners, said "we're vigorously defending the claims" and "we've complied with all deadlines" in response to Mohr's claims the credit union has been "dragging their feet" in providing documentation.
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