Corporate America Credit Union filed a lawsuit yesterday in Alabama District Court claiming that management and volunteers of U.S. Central Federal Credit Union committed securities fraud.
According to the court documents filed yesterday, the $2 billion retail corporate alleged officers and directors breached fiduciary duties when they purchased now worthless investments. Defendants, which include the Overland Park, Kan.-based accounting firm RubinBrown, are also accused of concealing the full extent of U.S. Central's subprime exposure during December's PIC II conversion.
After U.S. Central was seized, auditors Deloitte & Touche declared "U.S. Central's PIC II was (and presumably always had been) worthless," and "Officer Defendants had modified U.S. Central's accounting policies in a manner designed to conceal the $1.2 billion in losses," according to court documents.
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The suit seeks $9 million in damages, which is equal to the amount Corporate America lost when U.S. Central's PIC II was depleted.
U.S. Central is not listed as a defendant. Rather, listed are dismissed board members Joe Herbst, Charlie Thomas, David Brehmer, Bob Siravo, Larry Eisenhauer, Jim Hansen, Greg Moore, Bill Cheney and John Franklin; dismissed and current officers Francis Lee, David Dickens, and Kathy Brick; and accountant RubinBrown, LLP.
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