The $18.6 million Wallingford Municipal Federal Credit Union has settled its three-and-a-half- year legal battle with a former accounting clerk. Naomi Odell had successfully sued the Wallingford, Conn., cooperative for seizing her $13,801 Social Security disability benefit to repay a bad loan; however, the credit union had appealed the verdict.

“I don't want to discuss the specific terms of the settlement, but my client views it as mutually beneficial,” said Erich H Gaston, a Waterbury,Conn.-based lawyer representing the credit union. “It (the settlement) was a substantial payment made by the liability insurer, and my client also made a contribution. Obviously, my client would have preferred to win the case outright, but sometimes the more prudent thing to do is to settle the case.”

The settlement was reached on Jan. 29 through a court-sponsored mediation program, Gaston said. However, a notice of Wallingford Municipal FCU's decision to drop its appeal was not publicly posted until Feb. 20, court documents show.

Connecticut Superior Court Judge Robin L. Wilson judge ruled in August that Wallingford Municipal FCU committed “statutory theft” and awarded Odell more than $200,000. In a 72-page ruling, Judge Wilson said the credit union's move against Odell's benefits was illegal because Social Security is exempt from debt collection.

Less than a month after that state court ruling, Wallingford Municipal FCU filed an appeal with Connecticut's Appellate Court, arguing that Wilson made an error in her ruling, saying the cooperative's “right of setoff funds” allowed it to use Odell's Social Security money to repay the loan.

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 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. 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. She 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 Richard T. Cassello, who was then the manager/CEO of the credit union. She asked him to return the funds to the Social Security Administration. Odell had opened an account at another bank.

She informed Cassello that the Social Security funds were exempt from debt collection. What's more, Odell 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, court records show.

Cassello is no longer working at Wallingford Municipal FCU.

Odell's lawyer, Joanne Faulkner of New Haven, Conn., did not return a phone call and an email seeking comments about the settlement.