Attorney Felix Valenzuela, who is representing Mr. Hernandez, said although named as a defendant in the lawsuit, his client was not implicated of any wrongdoing. Attorney Mary Stillinger, who is representing Mrs. Hernandez, did not respond to an email request for comment Friday morning and could not be reached by phone.

Beginning sometime before 2004, the NCUA alleged that Hernandez issued share certificates in amounts ranging from $99,000 to $249,000 to non-member financial institutions without recording the certificates in the books. Over the years, she issued $19 million in non-member share certificates that were not posted in the cooperative's records, according to court documents.

NCUA said its investigation found that Hernandez converted some or all of the funds from the unrecorded share certificates for her personal use. For example, the NCUA said it identified $3.6 million in documented losses of which $2.1 million was traced to the personal benefit of Hernandez and her husband.

According to the lawsuit, Hernandez hid the scheme from examiners and EPFCU's board through fake statements and reports, as well as bogus accounts of personal friends, dormant accounts and accounts in the names of deceased members.

The lawsuit comes more than two years after the federal agency placed EPFCU into involuntary liquidation on Sept. 28, 2012.

A year later, a material loss review report by NCUA Inspector General James Hagen, contained several redacted sections that concealed details. However, one passage left untouched said share certificates were omitted from the credit union's books.

The report also said the NCUA could have reduced losses to the share insurance fund had the regulator done a better job at identifying and following up on fraud risk factors at the failed $5 million EPFCU.

While the report also blamed Mrs. Hernandez and financially unsophisticated volunteers for the failure, the report revealed that the credit union's examiner-in-charge later joined the EPCFU's board.