Former Texans Credit Union CEO David Addison, the subject of a Dec. 20 breach of fiduciary duty lawsuit filed by the NCUA, was recently involved in the purchase of a majority ownership of a credit union investment CUSO.
Addison, who was a founder and partner of Dallas-based Aberdeen Capital Holdings, was a player in Aberdeen’s 51% stakeholder purchase of Kansas City-based credit union investment CUSO CNBS LLC, according to a Nov. 2 letter posted on the CUSO’s website.
CNBS touted Addison’s 20-year credit union career in the letter, noting he is “among several partners” in Aberdeen.
However, CNBS President Brian Hague told Credit Union Times the lawsuit will have no impact on CNBS.
“He is not Aberdeen,” Hague said of Addison.
The CNBS president said he has spoken with Aberdeen about Addison’s investment position in the firm and was told the former TCU president is a minority investor.
Hague stressed that the NCUA’s suit is still just an allegation.
If the federal regulator is successful in collecting damages from Addison, Hague said the NCUA could conceivably seize his investment assets in Aberdeen if he still owns a stake, but Addison is still “once removed” from any investment in CNBS.
The remaining 49% ownership of CNBS is split among 14 corporate and natural person credit unions. Hague said he has not received any calls from owners concerned about the NCUA’s suit.
Rick Lappi, president/CEO of the $82 million Duluth Teachers Credit Union, said he’s not concerned about Addison’s past ties to CNBS, even though his Minnesota credit union owns a small percentage of the CUSO. Lappi said the NCUA suit and any potential fallout is irrelevant, because his 8,000-member credit union’s stake in CNBS is “immaterial” on his balance sheet. Additionally, DTCU doesn’t currently use the CUSO for investments, given the low rate of return offered on securities.
“There’s just not a lot of risk for us there,” Lappi said.
According to Addison’s LinkedIn profile, the former Texans CEO left Aberdeen in November 2012. It is unknown if Addison still owns a financial stake in Aberdeen.
Attempts to reach Aberdeen were unsuccessful; the company’s listed phone number is connected to a fax machine.
Attempts to reach Addison were also unsuccessful. His home phone number in Frisco, Texas has been disconnected, and online directories report he has moved to Madisonville, La. The NCUA’s suit lists Addison’s last known address as being in Texas, but Hague confirmed Addison moved to the New Orleans area approximately one year ago and had been commuting between the Big Easy and Dallas.
Aberdeen financial records list former TCU executive Todd Frerichs as an officer, along with Wyatt Henderson and Allen Jones. Frerichs’ LinkedIn account says he joined Aberdeen as chief financial officer in November, after two and a half years as a consultant at the Federal Reserve Bank of New York.
Frerichs was also chief financial officer of OBS Financial Services Inc., the TCU subsidiary the NCUA fingers in its lawsuit as the cause of TCU’s failure. Frerichs had been an officer at Texans CU and its subsidiaries, including OBS, from 2005 until May 2010, approximately one year before the credit union was seized by the NCUA.
Addison resigned from Texans CU in January 2009 and the NCUA conserved the credit union. One of the NCUA’s accusations in the subsequent lawsuit is that while TCU posted significant net losses during Addison’s tenure, his salary and benefits “increased substantially.”
According to non-profit reporting website Guidestar.org, Addison earned $523,236 from TCU in 2008, and was paid $534,605 in 2009 despite only working there one month that year.