Former Credit Union CEO Sues NCUA Over Administrative Law Charges
Jeffrey Moats claims he is being deprived of his Constitutional right to have NCUA’s allegations heard before a jury.
Former Texas credit union CEO Jeffrey Moats is asking a federal judge to stop the NCUA’s administrative action against him because it is his Constitutional right to have the federal agency’s allegations heard before a jury of his peers.
The NCUA claims in its April 24 administrative filing with the United States Office of Financial Institution Adjudication (OFIA) in Arlington, Va., that Moats allegedly committed bank fraud, embezzlement, obstructed an examination, and made false entries on credit union documents, which led to substantial financial losses while he was president/CEO of the $94.2 million Edinburg Teachers Credit Union. He was fired when the credit union was conserved in March 2021. By the end of that year, ETCU posted a net income loss of $2.5 million, according to NCUA financial performance reports.
According to the OFIA filing, the NCUA is suing Moats to pay $4 million in restitution and a $1 million civil money penalty.
After the Edinburg, Texas-based credit union returned to profitability in 2022, the NCUA and the Texas Credit Union Department released ETCU from conservatorship in January of this year.
In addition to this new federal litigation, Moats has refiled a lawsuit in a Texas state court in March that is seeking more than $1 million against the credit union for allegedly breaching his employment contract. ETCU has denied his claim and filed a counter claim against him.
The federal lawsuit, which Moats filed in U.S. District Court in Galveston, Texas, is asking a judge for an injunction that would prohibit the NCUA’s administrative hearings from moving forward before Administrative Law Judge Jennifer Whang.
Moats’ lawsuit argues for injunctive relief because he is being deprived of his Constitutional right to have the NCUA’s allegations heard before a jury.
“Despite the clear constitutional requirement that a jury find facts related to the NCUA’s charges, ALJ (Administrative Law Judge) Whang has already ordered Mr. Moats to appear before her, threatening to impose monetary penalties unless Mr. Moats requested a hearing from her,” Moats’ attorneys wrote in the federal civil lawsuit. “Instead of a jury, the NCUA offers a proceeding before a bureaucrat employed by the same executive branch who investigated and is charging him. This would completely deprive Mr. Moats of any vestige of his Seventh Amendment right to try the common law allegations made against him to a jury of his peers.”
Moats is represented by attorneys at Rusty Hardin and Associates law firm in Houston who declined to comment Wednesday on the NCUA’s allegations and whether the federal lawsuit is expected to delay the administrative hearing proceedings. As of Thursday morning, the NCUA has not filed a response to the lawsuit. The federal agency does not comment on pending litigation.
In the Texas state lawsuit, Moats claims he was terminated without cause and is seeking vested employment benefits owed to him when he was fired. This lawsuit was originally filed by Moats soon after the credit union was conserved. In December 2021, Moats dropped the lawsuit but maintained the right to refile it.
The lawsuit alleges the credit union breached contracts by failing to pay deferred compensation and accrued vacation and sick leave benefits due to Moats.
ETCU, however, filed a counterclaim lawsuit against the former CEO denying his claims and alleged his mismanagement led to violations of his fiduciary duties and fraud.
“There are substantial questions raised over whether many of his alleged contracts are valid, were not properly authorized by the board, or were not fully disclosed to the board,” ETCU’s counterclaim alleged. “His overall performance of his job duties was also conflicted and in breach of his duties as a fiduciary, resulting in financial losses by ETCU. His self-dealing was extraordinary. He has breached every element of his fiduciary duty and caused damages to ETCU. ETCU seeks its actual and exemplary damages in connection with his acts.”