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Travel perks of credit union directors came under new scrutiny this month following revelations surrounding a whistle-blower’s suit brought last December by the fired CEO of a New Jersey credit union. At issue is an estimated $100,000 in travel expenses for overseas trips more than a year ago by 12 directors of the $104 million First Jersey CU of Wayne. The board’s travel came under harsh media glare, including a special “Investigators” TV broadcast May 18 on ABC’s New York affiliate. The actual suit, now pending in a New Jersey state court, was brought by Joann Lazzara, the former CEO of First Jersey, claiming she was ousted from her job last October as retaliation for notifying state examiners about “lavish” and “gratuitous” trips on CU-sponsored cruises to Scandinavia, Panama, Alaska and elsewhere during 2006-2007 by the CU’s directors and their spouses. The Lazzara complaint, brought in Passaic County Superior Court in Paterson, N.J., seeks damages against the CU under the state’s Conscientious Employee Protection Act, which shields employees “from retaliation from disclosure of unsafe working conditions to a supervisor or public body.” Lazzara contends she was illegally terminated after she alerted examiners in 2008 of the policy violations regarding trips exceeding a $6,000 per trip limit. The complaint lists a number of the trips taken by board members exceeding $12,000, and according to Robyne LaGrotta, a Totowa attorney representing Lazzara, state examiners demanded the money be returned. First Jersey has since altered its travel policy for board members and placed restrictions on out of state trips and the number of people who can travel at the same time, but it also removed the dollar limit for expenses, said LaGrotta. First Jersey has declined comment on the Lazzara complaint with the acting CEO of the CU, Debbie Gordon, vice president of operations, saying only that the litigation is “a private court matter between our former CEO and the board.” First Jersey’s attorney, Gregory Keller, denied that Lazzara was fired for her disclosure, but rather “the board made a business decision based on her performance.” The league leadership maintained that the Lazzara suit is an individual case and that director travel rules are set by established regulatory guidelines and internal policies. Officials said they understood the media’s attention to the issue of director perks in light of bank bailouts. The fact that “$12,000 makes headlines when taxpayers are paying out billions to restore bank capital” does seem odd, declared Shawn Gilfedder, chairman of the league and president/CEO of the $215 million McGraw Hill Employees CU of East Windsor, N.J. “Every institution allocates travel expense based on its own operating budget,” said Gilfedder, and when “boundaries are over stepped,” action needs to be taken. The First Jersey suit represents an internal dispute involving the governance process, he said. As for the ABC news show, the ex-CEO herself appeared on the segment voicing her complaints about First Jersey practices, calling the trips “outright abuse.” The trips “were an excuse to take the family and get away,” Lazzara told WABC Reporter Sarah Wallace. “There was more money spent by board members than I spent on my employees for the year, and my employee staff is 31.” The CU has a large membership base of postal workers. In addition to Lazzara’s comments, the ABC segment was highlighted by a filmed confrontation between Wallace and board members at First Jersey’s annual meeting May 1 in which the chairman, Edward Sinning, and other directors respond to the trip complaints with Wallace inviting First Jersey members in the audience to challenge the board on the “educational” nature of the trips. –[email protected]

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