ODESSA, Texas -- Another credit union that tried to convert to amutual bank charter and then withdrew its application appearspoised to sue members who opposed that move and helped organizeother members to oppose it.

The $115 million First Basin Credit Union has obtained a courtorder allowing it to depose three members who opposed theconversion and helped organize the members' group Save First Basinon the grounds that they may have slandered the credit union'sleadership in their opposition. First Basin first suspended itscharter change application in February before the end of the votingperiod and then withdrew it. It did so because it alleged thatmembers were being lied to about the conversion attempt.

"Letty Ayala-Moreno, Carol Uranga and Sylvia Acosta signed aletter which was mailed to First Basin's members. The letter andother communications contained false, defamatory and disparaginginformation about the credit union and its officers and directors,"alleged Shem Culpepper, First Basin's CEO in a prepared releaseabout the move. "In our view, the letter, a Web site and otheractivities may have created a cause for slander. We want to ensurefair and balanced information is being provided to our members. Ithasn't been, so we launched an investigation."

But Moreno countered that she and the others are not worriedabout the deposition. "All we have done is tell the truth," shesaid, speculating that the move might be a scare tactic by the CUthat still has not set a date for its annual meeting, at which timemembers could replace three of the board members; First Basin hasuntil the end of March to schedule and hold the meeting with 15days notice.

Texas law permits a party to seek depositions if it suspectsthere may be cause for legal action, according to sources familiarwith Texas civil procedures. Texas Rule of Civil Procedure 202 doesnot require a potential plaintiff to prove to a court that he orshe has the grounds to file a lawsuit, only that the likely benefitof discovering the information outweighs the cost of gettingit.

The rule is widely considered to be a strong tool in hands ofplaintiffs who suspect they may have a cause to sue but lacksufficient information to bring a case.

"The credit union's business prospects and financial condition,and the reputations of our board of directors, have been damaged,"Culpepper said. "We respect the rights of any member to disagreewith our proposal, but we want to get to the bottom of whathappened and set the record straight for the benefit of all ourmembers."

Culpepper did not return calls or e-mail seeking further commenton what the CU considered to have been slanderous conduct byopponents to its charter change proposal.

Wrong Number

Legal documents the CU filed to support its case for deposingthe three members included a one-paragraph affidavit, in bothSpanish and translated into English, signed by a credit unionmember, Maria Sigala, which alleged that she had been contacted byan unidentified person who told her she had to vote against theconversion to protect her accounts. They also included a page fromwhat appeared to be the first draft of the letter Save First Basinsent to other members about the conversion attempt and a pressrelease from the Save First Basin group.

"There was an incident recently in which I received telephonecalls from an unknown number requesting to speak with my husband,Miguel Sigala," the affidavit read. "On one of these calls from thesame unknown number, I asked them if I could help them because myhusband was not available, and they accepted to speak with me. Thecall was in regards to the conversion of First Basin Credit Unionto a bank. This person indicated that I had to vote against theconversion. Should I vote for the conversion, this person said Iwould lose the funds I have deposited at First Basin and that FirstBasin would close my account if the conversion to a bank tookplace."

Moreno has denied anyone from Save First Basin either made callslike this or had a hand in making them. She has also pointed outthat the members group lacked the phone numbers or other contactinformation for other credit union members outside their ownorganization to make such calls.

The CU also appeared not to have communicated to the court thatthe one page of the member letter that it offered as an exhibitcame from a letter that was never actually mailed to members. Theversion of the letter that was sent was reviewed by NCUA, whichnegotiated changes with the members group and the CU. This was alsonot communicated to the court.

Hidden Agendas

There were signs, however, that the target of the depositionswas not really Save First Basin but the National Center for MemberTrust, a credit union advocacy group that supports members who wantto retain their CU's charter in the charter conversion process.

Culpepper called the members the CU sought to depose mere"puppets" for the NCMT and depicted the credit union industry asvictim to a "hapless" situation.

"The Save First Basin group appears to be merely puppets for awell-funded, radical credit union industry group based in NorthCarolina. Its hidden agenda is to preserve the hapless status quoin the credit union industry. These outsiders have no stake in ourcommunity or our credit union, but they routinely interfere withcredit union charter conversions across the country. We have tostart with deposing Ayala-Moreno, Uranga and Acosta in order toreach the real culprits."

NCMT said it regretted the action and expressed confidence thatthe CU would eventually hold the annual meeting that its memberswere requesting.

"It is sad to see that Mr. Culpepper and First Basin's board aretaking legal action against members for having exercised theirlegal right, as owners of the credit union, to oppose theconversion proposal. We trust that Mr. Culpepper has determinedthat costly legal action is in the best of interest of the creditunion's members," said Randy Chambers, a leader of NCMT and chieffinancial officer for Self Help Credit Union, headquartered inDurham, N.C.

"To date, he has failed to inform members of how they voted orhold their annual meeting. We question how members gain when thedemocratic process is ignored, or when you call your members'puppets'," he added.

Indeed, Moreno said she would not be surprised to learn that thedepositions were meant to discourage members from insisting on theannual meeting, where the members' group hopes to vote out some ofthe board members who supported the conversion.

Save First Basin maintains that the CU's bylaws require FirstBasin to hold an annual meeting before the end of March and to give15 days notice of the meeting date. They said the CU has not donethat, and they are pressing it to do so.

Regulatory Affairs

The opposition group might find an ally in the state's creditunion regulator. The Texas Credit Union Department declined tocomment directly but said it was keeping an eye on thesituation.

The department does not enforce credit union bylaws, but creditunions chartered by the state are required by state statute to holdan annual meeting, although it does not say when it must be held,according to Harold Feeney, commissioner of the Texas Credit UnionDepartment.

Members of First Basin Credit Union have said that the CU'sbylaws call for the credit union to hold its annual meeting nolater than the end of March, but that the CU has not yet set adate. The members want the annual meeting because they want tomount a slate of candidates to run for the three board seats up forelection.

When asked whether the statute's language meant that a creditunion would have to hold an annual meeting no more than 365 daysafter its previous annual meeting, Feeney said the department wasreviewing the issue of how to interpret and enforce the statutoryrequirement for credit unions to hold annual meetings.

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