Naomi Odell, a former accounting clerk for the $18.6 million Wallingford Municipal Federal Credit Union, has been awarded more than $200,000 after a state judge ruled that the Wallingford, Conn., cooperative committed “statutory theft” in seizing the woman's $13,801 Social Security disability benefit and using it to repay a loan she and her husband defaulted on.
After a three-year court battle, Connecticut Superior Court Judge Robin L. Wilson in a 72-page ruling released Aug. 8 said the credit union's move against Odell's benefits were illegal because Social Security is exempt from debt collection.
“In the present case this court granted the plaintiff's (Odell) summary judgment as to the statutory theft count and this court awards damages as to that count,” Wilson wrote in her ruling. The judge also wrote in her opinion that the credit union seizure of Odell's Social Security funds is against the public policy of both the federal and Connecticut government for protecting exempt funds.
In 2005 Odell's husband, Nicholas, secured a loan from Wallingford Municipal FCU. Naomi, who was working at the credit union, co-signed for the loan. Nicholas, however, later defaulted on the loan and the credit union successfully sued him for the $18,433 outstanding loan balance, according to court documents.
Odell was fired by the credit union in April 2007 after she had been diagnosed with multiple sclerosis, according to court documents and her lawyer Joanne Faulkner of New Haven. According to Faulkner, a doctor said Odell would not be able to work full-time, so she lost her full-time position.
In May 2007, Odell applied for Social Security disability benefits. When she applied for those benefits, she provided her account information with Wallingford Municipal FCU because it was the only bank account she had at the time.
About a year later, Odell's Social Security benefits were approved and expected to receive a lump sum payment of $13,801, plus $1,300 a month.
Concerned that the Social Security funds would be sent to the credit union, Odell contacted Manager/President Richard T. Cassello, asking him to return the funds to the Social Security Administration. Odell had opened an account at another bank.
Odell informed Cassello that the Social Security funds were exempt from debt collection. What's more, she also said that she was going to lose her home to foreclosure and needed the money.
The credit union received Odell's Social Security payment benefit on June 2, 2008. Even though Odell's checking account had been closed, she still had a share account. The funds were deposited in that account.
In a written statement, Cassello said the credit union respectfully disagrees with substantial portions of the ruling and plans to appeal by Aug. 28.
Odell has lost her home to foreclosure and lives in an apartment in Middletown with her husband who also is also unable to work, according to her attorney, Joanne Faulkner of New Haven.
“There was no relief in sight after the money was taken,” Odell said in a statement released by her attorney Tuesday. “Our world had been turned upside down and the prospect of arrearage of disability pay and then a monthly benefit to continue to move forward was what had kept us looking up.”
What astonished Faulkner about this case is how hard the credit union fought to keep the $13,800.
“That ($13,800) meant a lot it her; it couldn't possibly have meant all that much to the credit union,” she said. “They put a lot of resources into all of this – a major law firm, two lawyers at all times. It just seemed to me a misallocation of their resources to fight for $13,800.”
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