The NCUA said it filed suit Thursday against David Addison, former CEO of Texans Credit Union, blaming Addison for the credit union’s financial woes.
The suit filed in U.S. District court in Dallas alleges “Addison breached his fiduciary duty to members and was ‘grossly negligent’ in his management of the credit union, which is now in conservatorship.”
The conservatorship occurred in 2011 after Addison led the acquisition of financial services firm OBS Holdings Inc. and other investments that eventually resulted in $16 million in losses at the Richardson, Texas, credit union, the NCUA said.
“Addison’s gamble with TCU’s funds in these high-risk, largely unstable businesses and investments is what caused TCU’s ultimate downfall,” the NCUA said. Its complaint did not ask for a specific damage award.
- Pursued acquisitions and investments that “exposed TCU to an extraordinary level of risk,” ultimately costing the credit union debilitating losses.
- Knew his actions could significantly injure the credit union and violated certain credit union laws. He nonetheless pursued the purchase of OBS,
- Ignored counsel that the OBS acquisition was extremely risky and was impermissible under Texas law.
- Concealed and misrepresented material information about his business dealings to TCU’s board of directors in order to push through his agenda.
“Mr. Addison’s actions were very costly to the credit union, and financial institution regulators have a responsibility to hold accountable those parties—institutions or individuals—when they undermine safety and soundness,” NCUA Board Chairman Debbie Matz said.
TCU’s situation has improved operating efficiencies and risk management since the NCUA seizure and it earned more than $21 million this year as of Nov. 30, the NCUA said. TCU now has almost 130,000 members and approximately $1.4 billion in assets, the agency said.
“NCUA is required by statute to take every action we can to recover TCU’s losses, including legal action,” Matz said. “Any recoveries in this case will go directly to TCU, assisting in NCUA’s rehabilitation efforts at TCU.”