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Court dismisses defunct CUs members claims vs. NCUA
BRIDGEPORT, Conn. (9/30/11)--A U.S. District judge in Connecticut has dismissed claims against the National Credit Union Administration (NCUA) in a $4 million negligence lawsuit brought by five former members of the defunct New London (Conn.) Security FCU. Senior U.S. District Judge Warren W. Eginton, in a decision filed Sept. 14, granted NCUA's motion to dismiss and rendered as moot a motion to consolidate the case with another lawsuit that the five members filed against brokerage firm Wells Fargo Advisors. Other claims against a local accounting firm and former credit union board members are pending. Eginton noted in his opinion that the case had not been filed by the statute of limitations deadline, which would have required the suit to be filed within six months of NCUA's denial of their claims for compensation. In its role as liquidating agent, NCUA paid all New London depositors, including those who filed the lawsuit, the balance in their accounts up to the federal deposit insurance limit at the time, which was $100,000 per account. For those with balances over the limit, NCUA provided a certificate for claim in liquidation for uninsured shares. An attorney for the five members--Melvin Goldblatt and Douglas C. Antupit of New London, Joan Lazerow of Waterford, Mark D. Fletcher of Florida and Gloria Johnston of California--told local media that the group would retain the right to seek damages from others and would likely appeal the dismissal (The Day Sept. 29). NCUA shuttered the $13 million asset credit union in July 2008 after a routine audit discovered $12 million in irregularities. The credit union's long-time investment adviser and former A.G. Edwards brokerage firm branch manager, Edwin F. Rachleff, 82, who allegedly stole investments from 1988 to July 2008, committed suicide when the credit union was closed , said the court documents. Wells Fargo acquired A.G. Edwards and has been named in a separate lawsuit.

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