Fallout from the CU National Mortgage LLC fraud continues to rain down.
The $313 million Educational Systems Federal Credit Union has filed a suit in federal court seeking to a declaration that the loss it suffered in the CU National fraud is, in fact, covered by its bond with CUNA Mutual.
In papers filed with the U.S. District Court for Maryland, the credit union asserted that the bond had been in effect during the time when the fraud took place and that the bond defined servicing contractors as credit union employees for purposes of insurance against dishonest actions by employees.
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CUNA Mutual has not yet commented on the complaint.
The credit union related in its court documents that the insurer had tried to go to court previously, in state court in Wisconsin, for a court order that it's bond did not cover the losses but that the effort had been dismissed. Educational Systems said it had never been served the original suit. Educational Systems had only found out about the suit, the CU said in its court filing, when officers for the credit union asked CUNA Mutual and its legal counsel, point blank, in a "face to face meeting" whether the insurer had filed any suit involving the credit union.
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