NCUA Makes Good on Threat to Recover CU's Losses

Since discussions to settle a case involving an $11.8 million loss from the defunct New London Security Federal Credit Union fell through, the NCUA has moved forward with a suit to recover the misappropriated funds.

According to the Jan. 29 suit, the case involves Edwin Rachleff, a deceased investment broker and financial adviser for A.G. Edwards & Sons Inc., which later merged with Wachovia Securities and then Wells Fargo, who handled investments for New London. Rachleff allegedly created fake account statements that showed the CU was worth $11.8 million, according to the NCUA. The funds were supposedly deposited into the CU’s account from 1998 to 2003. However, the funds NCUA is seeking were not there. As a result, the CU was declared insolvent and then liquidated. Rachleff committed suicide in July 2008 on the same date of the CU’s liquidation.