Longtime CU CEO Claims NCUA Owes Him More Than $300,000

James Perna, a 42-year credit union president/CEO, claims the NCUA owes him more than $300,000 after he lost his long-held job when state regulators conserved Detroit’s Health One Credit Union in 2014 and named the independent federal agency as the liquidating agent.

The NCUA asked a Michigan federal judge last week to dismiss Perna’s lawsuit claiming it is based on misplaced legal arguments, false claims and misleading statements. The NCUA acted within its authority, the federal agency argued, by repudiating his employment contract and firing him in May 2014 when state regulators conserved the credit union for unsafe and unsound practices.

Throughout Perna’s four-decade tenure, the $14.5 million Health One CU did not appear to have any financial challenges until 2013 when the cooperative posted a net income loss of more than $1.3 million at the end of that year compared to a net income gain of more than $139,000 at the end of 2012, according to NCUA financial performance reports.

In 2014, the credit union continued to lose money and recorded a net income loss of $651,309 at the end of the third quarter.

Over the years, the credit union appeared to have had challenges with higher than peer average delinquent loans and charge offs. By the end of 2012, the credit union posted a delinquent loan rate of nearly 4%, which increased to 7% in 2013 and 10% in 2014. Net charge offs also increased from 0.52% in 2012 to more than one percent in 2014, according to NCUA financial performance reports.

Soon after the Michigan Department of Insurance and Financial Services named the NCUA as the liquidating agent, Health One’s 3,664 members, assets, shares and selected loans were assumed in December 2014 by the $1.2 billion New England Federal Credit Union in Williston, Vt.

In October 2014, Perna filed a claim for unpaid wages and fringe benefits with the Michigan Occupational Safety and Health Administration Wage and Hour Program, which determined Perna’s dispute should be resolved by the American Arbitration Association.

Although the AAA awarded Perna a lump sum severance of $315,645 last October, the arbitrator also said that the NCUA was not a substituted party to Perna’s employment contract and was not responsible for paying severance.

In 2013, Perna received W-2 compensation of $183,538, plus $4,000 in retirement and deferred compensation and $16,963 in nontaxable benefits, according to Health One’s IRS 990 filing.  In 2014, he received W-2 compensation of $76,144.

Perna filed a lawsuit in November 2018 in a Michigan state court claiming the arbitrator exceeded his powers and erroneously determined the NCUA  had no liability for the damages awarded to Perna.

The NCUA is requesting that the state lawsuit be transferred to federal court because it has original jurisdiction over this legal dispute.