Appeals Court to Hear Dismissed $3.6 Million Navy Federal Fraud Case Involving Member

A Virginia appeals court will hear legal arguments over the dismissal of a lawsuit against the $165 billion Navy Federal Credit Union in Vienna, Va., and a highly decorated retired veteran who was swindled out of $3.6 million before he died.

Janine Satterfield of Tacoma, Wash., who is the administrator of the estate of the late U.S. Navy Commander Larry W. Cook, sued Navy Federal and Wells Fargo for negligence. In May, U.S. District Court Judge Claude M. Hilton in Alexandria Va., threw out her lawsuit after Navy Federal and Wells Fargo filed motions to dismiss the case, which attracted national media attention.

On June 12, Satterfield filed a motion based on new evidence and other legal grounds, which sought to reinstate the lawsuit so that it can be heard and decided by a jury. In August, however, Judge Hilton denied that motion. Satterfield then filed her appeal earlier this month with the U.S. Court of Appeals for the Fourth Circuit in Richmond.

The multimillion-dollar fraud scheme that victimized Cook began on Oct. 6, 2020, and lasted up to April 20, 2021, the day before his death at age 76. In just six months, the retired nuclear submarine commander and a member of Navy Federal since the 1970s, sent 75 international wire transfers totaling $3,608,700 to unknown persons at two banks in Thailand.

Satterfield’s four legal claims were dismissed in her lawsuit, including her key negligence allegation. She claimed Navy Federal failed to protect the veteran even after the credit union reported him to Fairfax County Adult Protective Services (APS) because the international wires indicated possible elder financial exploitation.

Judge Hilton agreed with arguments made by Navy Federal attorneys that Virginia law does not impose an obligation on the credit union to have shielded Cook from the criminal conduct of third-party scammers or to have refused to process the transactions he directed Navy Federal to initiate merely because it had a concern the circumstances were suspicious.

Satterfield’s legal argument to reinstate her lawsuit that will be heard before the Appeals Court is based in part on new evidence, which includes an affidavit of Sean C. Gray, a former employee of APS who worked with Navy Federal on the Cook case.

On Dec. 15, 2020, after 28 wires had been sent by Commander Cook, a Navy Federal representative reported him to APS for “incoming wires and outgoing wires” that were conducted in a manner indicative of possible elder financial exploitation, according to court documents.

Gray said he went to Commander Cook’s house to speak to him, but he refused to open the door. He also said he later spoke with Commander Cook over the phone.

“Mr. Cook cursed me out on the phone call after I attempted to explain to him that he was a victim of financial exploitation,” Gray stated in the affidavit. “Mr. Cook did not believe me and told me so. However, Mr. Cook did not seem to know reality. He was not able to tell me what the transfers were for. He was not able to tell me who the people were that he was wiring. It seemed to me that he was not capable of understanding what was going on.”

Because of the large amount of money involved that was being wired overseas, Gray made a referral to the FBI.

On Jan. 28, 2021, Special Agent Tim Ervin, now retired, stopped by Commander Cook’s home in Herndon, Va., but he did not answer the door or was not home. Court documents show Ervin sent Commander Cook an email requesting an interview and expressed concern to the retired veteran that he may be a victim of fraud. Although Ervin asked Commander Cook to call him, it is unknown if he ever did or whether Ervin interviewed him.

Ervin declined a CU Times request for an interview.

Gray said he contacted Navy Federal and informed them that it was his belief that Cook was incapacitated.

“I attempted to have NFCU sit down and meet with Mr. Cook in person. That meeting would have provided a better catalyst for APS to go to court and get a conservator appointed for Mr. Cook,” Gray wrote in his affidavit. “I recall that I explained to NFCU that they needed to make Mr. Cook come into a branch to actually meet him and then if there were concerns with his capacity, they could contact APS and make a referral with their evidence. In spite of my conversations with NFCU, they refused to do as was being asked, knowing that there was concern that Mr. Cook was incapacitated and the victim of financial exploitation. NFCU could have stopped the wires and could have refused the transactions, but they did not.”

Navy Federal lawyers dismissed this new evidence as a “prop intended to inflame public opinion and cast negative light on Navy Federal.”

“Plaintiff proffers a single, self-serving affidavit from former Adult Protective Services employee, Sean Gray to argue that the surfacing of “new evidence” dictates that the case be reinstated,” Navy Federal lawyers wrote, arguing the Gray affidavit contains improper opinion evidence and lacks foundation.

“More importantly, however, the Gray affidavit does nothing to establish that Navy Federal owed Cook a duty, which was the primary reason this Court dismissed (Satterfield’s) claims. In his affidavit, Gray avers that upon meeting with Cook, ‘It seemed to me that he was not capable of understanding what was going on.’ Gray asserts that he explained to Navy Federal that he believed there was a capacity issue, attempted to arrange an in-person meeting between Cook and Navy Federal, and posits that Navy Federal should have put in protocols to “stop the transactions” given that they knew he was the possible victim of financial exploitation. Gray concludes with his opinion that Navy Federal “could have done more and did not.”

Although Navy Federal attorneys acknowledged Gray is free to have his own opinions, the inclusion of these opinions in the affidavit of a fact witness is improper and they should be disregarded.

Gray’s affidavit is also inconsistent with the APS report, Navy Federal lawyers wrote in court documents, arguing that the report contains no indication that the credit union refused to cooperate with APS or that APS was of the opinion that Navy Federal should have done more.

In addition, the APS report did not indicate any concern that Gray, or any other APS worker, questioned Cook’s capacity or that concerns about his capacity were communicated to Navy Federal. Instead, the report indicates that Cook was clear in his communications that he did not need assistance and APS should stay out of it.

The APS report also repeatedly notes that, due to Cook’s unwillingness to cooperate, APS was not able to ascertain Cook’s functional abilities or mental health history, according to Navy Federal’s attorneys.

“Gray’s affidavit is entirely devoid of any qualifications to support his opinions as to what protocols a financial institution should institute as he has no personal knowledge about what those protocols should be and has no background or training in the myriad laws and regulations that control a credit union such as Navy Federal,” the credit union’s attorneys wrote. “Gray’s affidavit should be stricken from the record and disregarded entirely.”