NCUA Files Suit on New London Loss

The NCUA has moved forward filing a suit to recover $12 million from the defunct New London Security Federal Credit Union after discussions to reach a settlement fell through.

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. Wells Fargo is named as the defendant in NCUA’s suit. Rachleff allegedly created fake account statements that showed the CU was worth $11.8 million, according to the regulator. The funds were supposedly deposited into the CU’s account from 1998 to 2003. However, the funds the NCUA is seeking was 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.