Texas Federal Judge Dismisses Former CEO’s Lawsuit Against NCUA

A federal judge dismissed a lawsuit against the NCUA brought by former Texas credit union CEO Jeffrey Moats, who claimed the federal agency’s administrative charges against him violated his constitutional rights.

Moats, who was fired from the $92 million Edinburg Teachers Credit Union in Edinburg, Texas after it was conserved, filed an appeal Wednesday to reverse the judge’s ruling.

Last April, the NCUA issued a four-count notice of charges with the U.S. Office of Financial Institution Adjudication against Moats alleging he violated the law and breached his fiduciary duties, causing ETCU to lose more than $4 million. The OFIA is an interagency group of administrative law judges based in Arlington, Va.

By May, Moats filed a civil lawsuit in U.S. District Court in Galveston claiming the NCUA’s ability to issue such charges and the administrative proceedings that would follow were “rife with constitutional problems.” He argued, in part, that the NCUA’s proceedings would deprive him the right to a jury trial and his right to due process.

The NCUA filed a motion to dismiss Moat’s lawsuit because the federal district court lacks the statutory or constitutional power to adjudicate the case.

“The NCUA asserts that Congress has expressly precluded district court jurisdiction over all claims, including constitutional ones, that may affect a NCUA proceeding,” U.S. District Court Judge Jeffrey Vincent Brown wrote in his 10-page ruling. “The court agrees. While courts generally have jurisdiction over all civil cases arising under federal law, Congress may leapfrog district courts by channeling claims through administrative review and directly to the federal appellate courts.”

In its notice of charges, the NCUA alleged that Moats, without board approval, directed ETCU staff to transfer large sums of money to him in connection with a purported retention bonus or supplemental employee compensation plans, which were not approved by the board of directors. What’s more, without board approval, Moats allegedly directed credit union employees to fund his retirement account from ETCU funds, in contradiction to the retirement plan’s terms. He also directed his staff to pay him $220,000 for accrued, unused vacation time in the absence of any ETCU policy permitting such payment without board approval. Moats also allegedly caused the credit union to pay car insurance premiums on his personal vehicle for a number of years.

Moats’ appeal has been filed with the U.S. Court of Appeals for the Fifth Circuit in New Orleans, La.

A separate lawsuit filed last year by Moats in Texas Hidalgo County court against ETCU alleged the credit union breached his employment agreements. He is suing the credit union for $1 million. The lawsuit is scheduled to be heard before a jury trial in October, according to court filings.

ETCU has filed a counterclaim that alleged Moats used the credit union “as a pot of money to finance his luxurious lifestyle,” and that his actions and inactions as CEO led to the conservatorship of the credit union in March 2021.

In 2021, Moats was paid $581,009 and in 2020, he was paid $998,880, according to ETCU’s Form 990 filings with the IRS.

A CU Times review of ETCU’s 990 returns from 2009 to 2019 showed that Moats received $8,799,709 in total compensation, which averaged out to nearly $880,000 annually.

ETCU was released from conservatorship in January 2023.