A lawsuit filed by a church against the NCUA in connection withthe collapse of St. Paul Croatian Federal Credit Union has beendismissed.

U.S. District Court Judge Donald C. Nugent in Cleveland hasdismissed the suit filed by Holy Love Ministry in North Ridgeville,Ohio, that claimed it was entitled to an additional $250,000deposit insurance payment on $1.7 million in accounts it held withSt. Paul Croatian FCU when the Eastlake, Ohio, credit unioncollapsed in 2010 following the exposure of a $70 million fraudscheme.

Although this lawsuit was dismissed Oct. 11, Holy Love Ministry has filed a second lawsuit to recoup its$1.7 million under the Federal Tort Claims Act. The church also isasking for $1.5 million in compensatory damages, according to courtdocuments.

The first lawsuit was brought by Holy Love Ministry in June2011, about 14 months following NCUA's liquidation process ofSPCFCU.

More than 20 people have either been indicted or imprisoned for their involvement in the St. PaulCroatian FCU case, one of the largest fraud cases in credit unionhistory.

Anthony Raguz, the former credit union CEO, was sentenced lastNovember to 14 years in federal prison after he admitted toapproving more than 1,000 fraudulent loans totaling $70 million toabout 300 account holders at the credit union from 2000 to 2010.Several other account holders also were convicted and are nowserving prison terms.

When SPCFCU was placed into conservatorship by the NCUA in April 2010, Holy Love Ministry held $1.7 million in twodifferent accounts with the credit union. The NCUA boarddetermined Holy Love Ministry was entitled to the maximum $250,000in insurance coverage.

In the lawsuit, however, Holy Love claimed the two accounts hadmultiple members who were designated as signers on each account,which entitled the church to an additional $250,000 depositinsurance payment. The accounts were set up by Joseph Plavac,an officer of the church and a former CEO of SPCFCU, courtdocuments show. Plavac also served on the credit union's board ofdirectors.

However, the NCUA argued that legal entities, includingnon-profit corporations such as Holy Love Ministry, are noteligible for joint account coverage because it is only available tonatural persons.

“Based upon a thorough review of the record in this matter, theNCUA Board's financial determination as to insurance coverage onHoly Love's accounts was supported by substantial evidence and wasnot arbitrary, capricious, an abuse of discretion or contrary tolaw,” Nugent wrote in his dismissal ruling.

However, Holy Love Ministries filed a second federal lawsuit inAugust claiming that the NCUA and the federal government violatedthe Federal Tort Claims Act. The FTCA allows anyone to sue for“money damages….that were caused by the negligent and wrongful actsand omissions of employees of the U.S. government.” A court hearingfor this lawsuit is scheduled for November.

The lawsuit claims that NCUA was allegedly negligent and breached its fiduciary dutybefore and during the federal regulator's liquidation of SPCFCU byallegedly:

• Misrepresenting to Holy Love that it needed to keep its moneyin St. Paul's;
• Helping other members of St. Paul's restructure their accountsfor maximum coverage, but failing to provide Holy Love with thesame service;
• Failing to properly monitor St. Paul's in the months leading upto conservatorship, and
• Denying Holy Love's hardship request for money in excess of the$5,000 limit.

According to the lawsuit, the NCUA sent a letter to accountholders during the SPCFCU liquidation that it would consider“exception” requests on a case-by-case basis to the $5,000withdrawal limit. An exception would include an “emergency to meeta previously established commitment for a home purchase,” accordingto court documents.

Holy Love requested such a “hardship exception” on manyoccasions because its $1.7 million accounts supported the church'sbuilding fund. According to court documents, the church madesignificant changes to its facilities as part of a two-yearbuilding project costing more than $12 million.

“The loss (of these funds) had rendered Holy Love's situationdesperate,” the lawsuit states.

Attorneys from the U.S. Department of Justice who arerepresenting NCUA and the U.S. government were unavailable forcomment Wednesday because of the government shutdown.

John Fairbanks, NCUA spokesperson, said the NCUA does notcomment on pending litigation.

The NCUA has projected its loss in the SPCFCU case t0 be $186.4million. The liquidation of the credit union has so far netted$22.6 million in recoveries from all areas including loan paymentsand liquidation of cash accounts.

The agency has filed 61 lawsuits against SPCFCU-related partiesclaiming more than $4 million in damages and said late last yearthat it had recovered $1.2 million so far.