Former CEO of Conserved Texas Credit Union Drops Lawsuit Against NCUA
Since Jeff Moats was fired, Edinburg Teachers CU’s assets, loans and membership have plummeted.
A Texas federal judge last week granted a joint stipulation order to dismiss a lawsuit after a months-long legal battle waged by Jeffrey Moats against the Edinburg Teachers Credit Union and the NCUA.
Moats was the former president/CEO of the Edinburg, Texas-based credit union after it was conserved in March by the Texas Credit Union Department, which appointed the NCUA as the conservator. The federal agency repudiated Moats’ employment contract and fired him.
The lawsuit was dismissed without prejudice, meaning Moats can refile the civil suit. When reached by the CU Times this week a lawyer for Moats declined to comment to explain why the lawsuit was dropped.
The former CEO said in court documents that he decided to sue the NCUA because it failed to pay actual damages resulting from his employment contracts with the credit union, the federal agency’s refusal to return his personal belongings and to honor his employment agreements, including refusing to provide basic information related to his employment, and the NCUA’s refusal to pay his post termination compensation and benefits.
Among some of Moats’ claimed personal belongings include artwork on display at the credit union office worth an estimated $275,000, according to court documents.
In November, the NCUA asked U.S. District Court Judge James R. Nowlin in Austin to dismiss Moats’ lawsuit arguing that it was acting within its regulatory authority to fire Moats and take possession of ETCU’s operations to preserve its assets.
The federal agency said it returned most, but not all, of Moats’ personal property while it investigates whether certain artwork claimed by Moats may have been purchased with commingled funds.
Although Texas regulators did not provide a specific reason for conserving ETCU, the NCUA revealed in court documents that it is conducting an investigation “against him (Moats) for, among other things, commingling credit union funds.”
NCUA’s court documents showed email exchanges between the federal agency and Moats’ lawyer.
“On the evening of the Conservatorship, (March 26), Mr. Moats volunteered that he knew he had ‘a commingling problem’ with regard to his accounts at Vanguard,” the NCUA’s trial attorney, Bruce R. Hegyi, wrote in an April 19 email to one of Moats’ lawyers, Terry Kernell in Houston. “These are issues we are continuing to look into.”
In an April 21 email to Hegyi, Kernell wrote: “There is no commingling problem with respect to any Vanguard accounts, and Mr. Moats never said there was. If you were told he used those words you were misinformed. We both need to know who is saying otherwise.”
Kernell’s email continued: “If the commission justified conservatorship with any evidence allegedly showing Mr. Moats obtaining monies not ‘validly and lawfully belonging to him’ (NCUA) has it and can send it to us so we can respond. If not, (NCUA) is withholding his personal property while looking for reasons for withholding it.”
On April 22, Hegyi somewhat expanded his allegation in an email to Kernell by writing, “Mr. Moats admitted wrongdoing to various NCUA personnel, including a ‘commingling problem’ related to Vanguard accounts.”
In Moats court documents, he has denied any commingling of funds, and to his knowledge he is not under a criminal investigation and no criminal actions have been initiated against him.
Moats noted that since he was terminated from his position, ETCU assets have fallen from $111 million at the end of March to $104 million at the end of September, while loans dropped from $14 million to $12 million during the same quarters. Membership also has plummeted from 12,543 in the first quarter to its current membership of 7,487, according to Call Reports.
NCUA financial performance reports show ETCU posted a loss of $284,111 in the second quarter and a loss of $814,519 in the third quarter.
Nevertheless, it appears that the NCUA may not have plans to liquidate the credit union. On Dec. 22, the ETCU hosted a Christmas open house event for members, and presumably the public, to “come in and see YOUR credit union’s new look,” an invitation on its website read.
The event included refreshments and a chance to win a prize, according to its website.
Marsha Hahn is listed as ETCU CEO. She describes her professional status as a Conservator CEO – NCUA, a position she has held since March 2019, her LinkedIn profile page showed.