Legal fireworks continue to explode in the Los Angeles courtroom of Judge George H. Wu as the onetime top officers of WesCorp and the NCUA wrangle over the extent to which the regulator’s monitoring of the actions of WesCorp officials can be used as an excuse that saves them from blame.
On the one side, defendants Robert Siravo, Todd Lane, Robert Burrell and others. allege that they cannot be blamed for billions in investments in mortgage-backed securities precisely because the NCUA, by virtue of its onsite monitors at WesCorp, knew at every step exactly what WesCorp was buying. The essence of the defendants’ claim is that that knowledge represented a kind of tacit approval.
Not so, NCUA now has countered in a forcefully worded brief filed with the court on Jan. 9. The motion was filed “largely to remove affirmative defenses based on the prefailure actions of the NCUA as regulator–affirmative defenses that have repeatedly been held legally insufficient,” per the paperwork filed by NCUA’s lawyers.
“Because the NCUA’s prefailure conduct does not give rise to legally sufficient affirmative defense, the court should strike all affirmative defenses that are based on conduct by the NCUA prior to WesCorp’s failure.”
In a separate filing, the NCUA reiterated its belief that it cannot be compelled to pay the legal fees of the WesCorp defendants.
The onetime WesCorp executives are believed to have incurred legal fees in the hundreds of thousands of dollars apiece in countering the long-running NCUA civil action that aims to hold them personally responsible for losses suffered by WesCorp.
Judge Wu has indicated he will rule on the motions on Jan. 19.
In a prior ruling, Wu previously dismissed NCUA's complaints against WesCorp’s outside directors.