There was more legal fallout, albeit indirect, from the Central States Mortgage Co. bankruptcy this week relating to a breach of contract claim against one of the Wisconsin credit union investors.
"It's really just a frivolous suit without any merit whatsoever," declared Steve Wesson, president/CEO of the defendant Guardian CU of West Milwaukee, accused of violating a management pact and "retention bonus" deal relating to the planned merger and CUSO formation by another Central States investor, the $190 million Prime Financial CU of Cudahy.
Wesson said the suit brought by Richard Koenig, a former chairman of Central States and ex-president/CEO of Prime Financial, contained untruths about a proposed 2008 merger between the two Milwaukee area CUs. It seems odd, said Wesson that the Koenig suit "is being brought now five months after we ended the merger talks." Koenig was not immediately available for comment.
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Both CUs had suffered loan losses relating in part to the Central States collapse but Wesson said his $280 million CU is now in better shape though it did lose $2.3 million last year. Prime Financial was seized by NCUA and state regulators in February and is being operated as a conservatorship.
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