"Continental FCU has not agreed to the Wings Financial hostile takeover nor will it allow itself to be associated with such an attempt," Continental's attorneys wrote.

Continental also takes issue with the third sentence of the petition which reads "I am asking for this Special Meeting and mail ballot to confirm to the Board of Continental Federal Credit Union, the members' desire for this merger" saying it, too is "ambiguous and misleading" because it does not offer an explanation and introduces for the first time, the concept of a special meeting. The bylaws of a FCU, "as promulgated by the NCUA," require the board chair to set the date of a special meeting, the attorneys wrote.

Wings Financial says it wants both boards to enter into "good faith discussions", but Continental said it has done so at least three times, not including the latest proposal.

"Further, by definition, good faith negotiations necessarily presuppose that the parties may or may not enter into an agreement. In this use, the Petition boldly requires the parties to enter into a merger plan and agreement apparently whether or not the Board of Continental FCU determines such an arrangement will be in the best interest of the members of Continental FCU. With all due respect, such a resolution is not and could not be undertaken in 'good faith,'" according to the letter.

In an April 6 article, Parish told the Minneapolis/St. Paul Business Journal that the petition campaign has not been a financial burden.

"In the overall context of gathering membership…[this campaign] is relatively inexpensive. This entire project, if successful, would cost far less than the normal acquisition of the same number of members," Parish told the publication.

The publication reported Parish saying Wings Financial needs 750 "verified" signatures to appeal to Continental's board of directors. As had been told to Credit Union Times several times before, the CU would not say how many signatures it had collected only saying that the number is "in line with expectations."

On another matter, citing NCUA Rule 708b, Continental also reminds Wings Financial that "the only means to effectuate a voluntary merger" between two credit unions is to first obtain a resolution of the Board of each credit union to merge. A merger application is then submitted to and approved by NCUA. "Then, and only then, may a merger proposal be submitted to a credit union's membership for a vote."

Indeed, NCUA Chairman JoAnn Johnson reiterated that position at an April 5 Massachusetts Credit Union Governmental Affairs Day Conference in Boston. The Wings/Continental matter has "underscored the validity of the concept that credit union boards have an essential role in determining whether a merger is beneficial to the credit unions and their members." The agency said it will ensure that all statutory and regulatory requirements are being followed including an assessment of the accuracy of all advertising and representations being made about the merger, as well as a careful review of other federal financial institution rules governing mergers between and among banks, thrifts and other corporations to ensure that NCUA regulations are as comprehensive as possible. NCUA said it is prepared to address any inadequacies or insufficiencies that threaten member protection, transparency and fairness.

"It is not proper for a third party pursuing its own ends to seek to override the decision of a Board of directors of a federal credit union," Continental's attorneys said. "Simply put, you do not have the right to 'appeal' the rejection of the Wings Financial March 9, 2007 hostile takeover by the Continental FCU Board." "We will pursue any other legal issues if NCUA doesn't step in," said Joe Melchione, an attorney with Styskal, Wiese & Melchione, LLP representing Continental. "This is a demonstration of their callous disregard for Continental members and federal law. We believe, based on statements NCUA said last week, that this will put them on notice." Melchione said he had not received any form of response from Wings Financial as of press time. "This campaign constitutes a gross attempt at corporate theft," he said. "This is unprecedented. It violates the very principles of cooperatives but beyond that , their campaign violates the laws surrounding mergers."

Another issue of contention is the legality and source of the $200 payments Wings Financial is offering members should a merger with Continental ever be finalized, the attorneys wrote. The $200 "per capita" payment to "induce a merger" is not authorized under the Federal Credit Union Act or interpretations thereof, according to the letter. It also raises concerns on whether an officer, director, employee or agent of a CU is being influenced or rewarded in connection with a business transaction. Attorneys are also questioning exactly where the money would come from.

"[We] surmise that the payment arises from Continental FCU's net worth such that Wings Financial is offering Continental FCU members their own Credit Union Capital," according to the letter, citing "recent public statements." Wings Financial had previously said that if Continental paid each member $200 it would "damage their earnings power" and lead to higher rates and fees.

According to Continental's attorneys, "for a purposed payout of somewhere between four and five million dollars, Wings Financial stands to gain approximately $24 million from the coffers of Continental FCU [as well as Continental FCU's branch network, loans, share deposits, membership lists and assets]." The $200 payout would "not even result in an equalization of the net worth of the respective credit unions."

Attorneys cite the "infamous bank robber" Willie Sutton when asked by a reporter why he robbed banks answered "because that's where the money is."

"Similarly, the Wings Financial hostile takeover is not based on the best interests of [Continental's] members but rather because 'that's where the money is,'" the letter read. –[email protected]