Board Bullying Claim
A whistleblower lawsuit filed Feb. 27 in New York District Court claims a former CEO of the $145 million Ukrainian National FCU suffered discrimination and retaliation so severe, it caused her to suffer a heart attack and default on her mortgage loan.
Plaintiff Christine Balko claims in the suit that the New York-based credit union’s board–in particular, long-time volunteer Vsevolod Salenko–objected to her reporting of federal regulatory violations to the NCUA and responded with retaliation and threats.
The rift allegedly began after Balko had been managing the credit union for four years, and reported to the NCUA board election bylaw and protocol violations, the purchase of prohibited investments and the misappropriation of funds by a branch manager in May 2009. According to court documents, that complaint triggered an NCUA audit that revealed an inadequate governance model, lowered the credit union’s CAMEL rating to a 4, earned it the troubled condition label and resulted in a letter of understanding from the regulator to correct the findings.
Salenko, who has served as a volunteer at the credit union for more than 46 years, allegedly opposed a new NCUA-mandated governance model that stripped board members of their operational titles and duties.
“The new governance model stood in the way of Salenko regaining his perceived righteous power over the day-to-day operations” at the credit union, court documents stated.
According to the suit, by year-end 2009, Balko’s manager position was eliminated. Balko reported the action to the NCUA, which allegedly required the credit union to put a CEO into place. Balko was rehired as an interim CEO and soon after, in January 2010, the credit union board hired Ken Fredriksen to replace Balko as CEO. Balko was terminated on Feb. 12. The following month, she was elected to the board, and her newly elected board members appointed her to the chairman’s position. According to the lawsuit, the board then asked Balko to step down as chairman and reassume the CEO position. Fredriksen was demoted to chief financial officer, and he resigned three weeks late.
The infighting continued, escalating in early 2012 after loan documents allegedly concealed from Balko that a business loan rate was renegotiated for a co-signer board member and that the loan would put the credit union over its 12.25% business loan to assets cap. Balko claims in the suit she presented the loan for board approval without realizing the documents were incomplete. Salenko, serving as chairman of the supervisory committee, allegedly seized upon the action, claiming Balko had misled the board. He then called for an investigation on March 8.
Balko became so distressed about the investigation, she claims she suffered a heart attack on March 9. A day later, on March 10, Salenko called a special board meeting that resulted in her termination. Balko was still recovering in an intensive care unit and unable to attend the meeting or answer the charges.
After losing her job, Balko claims she fell behind on her mortgage payments and credit union staff offered her a modification per NCUA guidance. Balko accepted the modification, but before the offer closed, a Salenko-led board rescinded the workout at a June 2012 board meeting.
Salenko and other volunteers named in the suit remain on the credit union’s board and supervisory committee, according to the credit union’s website. Natalia Pachashynska, accused in the suit of violating NCUA regulations and credit union bylaws while a branch manager, is now the credit union’s CEO, according to NCUA records and the credit union’s website.
For its part, the Ukrainian National’s financials appear to be in order. As of Dec. 31, the credit reported net worth of 9.48%, loan losses below peer and a $213,000 net profit.
Balko is seeking recovery of unpaid compensation, a mortgage modification, compensatory damages and punitive damages.