Corporate America's securities fraud lawsuit against the former board and management of U.S. Central Federal Credit Union claims the bust wholesale corporate had counted on selling its impaired investments to the U.S. Treasury Department through the Troubled Assets Relief Program while it was soliciting PIC II conversions from member corporates.
"While (U.S. Central management and volunteers) were seeking out TARP funds in a last ditch effort to forestall conservatorship, they and Defendant RubinBrown, LLP were holding out the PIC II securities as valuable investments for the Plaintiff," court documents state.
CACU also takes exception with an NCUA waiver that allowed U.S. Central to require participation in PIC II conversion as a condition of membership.
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The suit sources a Dec. 12, 2008 U.S. Central circular that stated, "while the exchange offer is voluntary, the U.S. Central Board has amended U.S. Central's Membership Policy to make the purchase of PIC II a condition of membership."
Failure to subscribe to PIC II would, upon board vote, "result in the termination of membership in U.S. Central for such corporate credit union."
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