More than two years since New London Security Federal Credit Union was liquidated after alleged investment fraud led to its collapse, a number of lawsuits are still pending to recoup nearly $12 million in losses with the latest naming the NCUA as a target.
In July, five persons filed a motion in the U.S. District Court in Bridgeport, Conn., claiming the NCUA was negligent in oversight of New London, which lost nearly $12 million after financial advisor Edwin Rachleff, now deceased, allegedly committed fraud with the CU's investment accounts.
The latest motion from the plaintiffs cited the NCUA Office of Inspector General material loss review report released in fall 2009 that said New London's management failed to implement adequate internal control over the CU's investment activity. The OIG also acknowledged that NCUA's examiners failed to adequately evaluate the risk in New London's investment program.
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