Eastern Corporate Federal Credit Union President/CEO Jane Melchionda has accused U.S. Central Federal Credit Union of withholding crucial information from its members in her Part 704 comment letter.
The leader of the Burlington, Mass.-based corporate wrote that from 2005 to 2007 she questioned U.S. Central's growth and investment strategies on numerous occasions, but was given "limited information about the portfolio" that affected due diligence and investment decisions.
Melchionda wrote she later learned the top tier corporate was granted several regulatory waivers by the NCUA in late 2007 to "operate without the customary level of oversight." A "cloak of secrecy" prevented members from learning of the compromised regulatory standards.
"When we began our withdrawal process in 2008, we discovered that U.S. Central secretly had changed its membership capital rules too, preventing us from obtaining our money."
Corporate Central Credit Union filed suit against U.S. Central last fall alleging breach of contract bylaws when U.S. Central withheld its "Excess Investments," which resulted from a scheduled twice-annual re-calculation of Corporate Central's required U.S. Central Member Capital Account contribution.
The Wisconsin-based corporate said U.S. Central illegally confiscated more than $6 million in excess member capital it owed the Corporate Central as of Dec. 31, 2008.