Del Norte Supervisory Fights Stall as N.M. Gov. Ponders Action; Auditors File Suit
LOS ALAMOS, N.M. -- Members of a New Mexico Credit Union have turned to Gov. Bill Richardson's office for assistance in their ongoing fight with Del Norte Credit Union's board. In addition, the credit union's former auditors have sued the CU seeking payment for services rendered to the supervisory committee. Neither the board nor the credit union returned calls at press time seeking comment on the controversy.
The controversy began in late February this year when the $315 million Del Norte Credit Union Board of Directors changed the credit union's bylaws to allow the expulsion of both the former supervisory committee chairman Joe Gutierrez and his wife, Bertha, from the credit union. It intensified when the board made another bylaw change, transforming the supervisory committee from an elected committee to an appointed one--even though the balloting for an elected supervisory committee had already begun.
Charles Monta??o, one of the two incumbent members of the supervisory committee who was running to retain his seat, called the supervisory committee change little more than a blatant attempt to disenfranchise members.
Monta??o, an auditor for the state of New Mexico, said that he doesn't necessarily want to keep an elected supervisory committee if members want an appointed board. However, he said the way to make the change would be to put the question to a vote of the members before the next election, not while balloting was taking place.
The situation further picked up steam at the CU's May 7 annual meeting, where members said the board refused to let any of the members speak or to raise any issues. More than 200 of the CUs 42,000 members signed a petition seeking to have the board rescind its decision to change the committee structure.
Monta??o has taken a leading role among members opposed to the move and has led the attempt to appeal the Del Norte decision about the supervisory committee. Concerns were first voiced to Bill Verant, the director of the financial institutions division of the state's Regulation and Licensing Department.
Monta??o indicated that he didn't expect much help from Verant, who had actually been in the room when the board made the votes on Gutierrez and to change the bylaws regarding the supervisory committee. But Monta??o was surprised that Verant's department has declined, so far, to get involved.
"The department seems to have concluded that the board had the authority to change the bylaws, which was never the members' question. We have always agreed that the board could change the CU bylaws," said Monta??o. The question we had was whether the board had the authority to make that change to apply retroactively, to an election which was already underway, that had candidates in hand for which balloting had started."
Monta??o has contacted the office of Gov. Richardson (D) about the controversy, but, as of press time, there had not been a decision from the governor on how to proceed. The governor's office did not return calls seeking comment on what course the governor might take, if any.
In a separate development, Del Norte has been sued by the auditing firm that the supervisory committee hired.
The suit was filed in state district court on July 29 by the firm of Pulakos & Alongi. Members maintained that the previous supervisory committee hired Pulakos to conduct internal audits of the institution. The complaint alleges debt and money due, breach of contract and unjust enrichment, according to a court Web site.
Court documents show that more than half the money being sought is owed for investigations the firm performed at the request of the CU's former supervisory committee. The auditing firm is seeking almost $50,000 in payment for auditing services, over $26,000 of which the CU incurred for investigations launched by the supervisory committee.
"From time to time, Del Norte, through Mr. Gutierrez, would request Pulakos & Alongi to perform 'special projects,'" the firm wrote in its complaint. "These 'special projects' typically involved investigating potential malfeasance by the board of directors, the management or employees of Del Norte. The supervisory committee and Mr. Gutierrez were charged by federal and state law to perform these 'special projects,'" the firm wrote.
Reports from these special project investigations went straight to the supervisory committee, and Pulakos & Alongi acknowledged in its contracts with the credit union that it might have to supply documents pertaining to its findings to the NCUA or other regulatory authorities.
Del Norte has not responded to calls for comment on the suit or the board changes. No dates have been set for arguments in the court case.
Barring action from the governor, Monta??o indicated the members may use litigation as their only hope of redress and to force the credit union's board to acknowledge that it cannot invalidate a credit union election "just because it's convenient."
"I definitely think this situation speaks to whether credit unions in New Mexico are really member-owned and operated cooperatives or not," Monta??o said. "That credit union members cannot get their boards to even reveal the outcome of an election is truly ludicrous."