The fate of Corporate America Credit Union's securities fraud lawsuit against former U.S. Central Federal Credit Union executives and volunteers is now in the hands of an Alabama federal judge: the Hon. Inge Johnson.
The $2.2 billion corporate wrapped up the first phase of the lawsuit Jan. 22, filing oppositions to defendants' expected motions to dismiss.
Corporate America President/CEO Thomas Bonds said Judge Johnson will now review the court documents and determine if the case will move forward.
Bonds said defendants, which include individuals and U.S. Central accounting firm RubinBrown, argued the case was a derivative claim. As such, U.S. Central should be the one filing the claim against its own board. Because U.S. Central is under conservatorship, that party should be the NCUA, the defense claimed.
While the legal strategy is similar to that argued by the NCUA when it filed a motion to intervene in the WesCorp lawsuit, Bonds said the NCUA has not filed any motions in this case.
Defendants also argued that paid-in capital doesn't meet the definition of a security, so they aren't subject to the SEC laws allegedly violated in the securities fraud suit. Bonds countered U.S. Central's own materials pitching PIC investments described them as such.
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