Siravo and Swedberg, who left WesCorp in 2009 and wasn't named in the original suit, are officially accused of fraud and breach of fiduciary duty in connection with the SERP scheme. NCUA seeks more than $3 million for each claim.

NCUA also accused Siravo of authorizing $1.4 million worth of early SERP from 2006 to 2008 payouts for former Chief Financial Officer Todd Lane, who left WesCorp in 2008 short of his SERP-specified 2015 retirement date. Siravo did not seek board approval in making the change, and is accused of an additional breach of fiduciary duty claim for Lane's payout. Lane, currently CFO of the $1.6 billion California Coast Credit Union, must also face a charge of unjust enrichment.

"Lane knew or should have known, as Chief Financial Officer, that the transaction was unauthorized and improper," NCUA stated.

The suit still includes original charges of breach of fiduciary duties and negligence allegedly committed by former executives Siravo, Robert Burrell and Timothy Sidley, and former directors Robert H. Harvey, Jr., James Jordan, Timothy Kramer, Robin Lentz, John Merlo, Gordon Dames, William Cheney, Warren Nakamura, Brian Osberg, David Rhamy and Sharon Updike.

NCUA alleged the defendants failed to impose prudent concentration limits on private label mortgage-backed securities, particularly Option ARMs, which accounted for 68% of WesCorp's $7 billion in investment losses. NCUA seeks damages from the above defendants in excess of $1 billion.

The suit describes significant changes to WesCorp's business model, aggressively increasing net interest income, operating expenses, assets and borrowings, leveraging borrowings to purchase increasing concentrations of non-agency MBS. Borrowings increased from $420 million to $1.28 billion during Siravo's first two years.

But it was increasing concentrations of non-agency MBS that drove WesCorp to failure, according to the NCUA. In 2002, WesCorp's investment concentration policy restricted private label MBS to 950% of capital. That limit was raised to 1,700% of capital in 2003 and 2,150% of capital in 2005, reaching a high of 2,300% in December 2007.

Officer defendants never proposed, and director defendants never adopted, any concentration limits or concentration reporting for Option ARM MBS or lower tranche investments, the NCUA wrote in its complaint. Instead, WesCorp reported only investment ratings and underlying FICO scores.

According to the complaint, the director defendants "generally attended" asset/liability committee meetings, where officer defendants presented information about the state of the economy, the investment climate and WesCorp's specific investment strategy. They also discussed rising interest rates and slowing housing activity in 2005, the complaint said. However, defendants failed to re-evalute the strategy as economic conditions changed, the complaint said.

The NCUA is seeking more than $1 billion in damages from officer and director defendants in connection with the breach of fiduciary duty and gross negligence accusations.

"While WesCorp curtailed its purchases of AA rated MBS, it took no other steps to address the effect these trends might have on WesCorp's heavy concentration of private label MBS," the suit alleged.

Top executives' compensation increased 14% each year during that period, averaging an 88% raise between 2002 and 2008.

CUNA President/CEO Bill Cheney, a defendant named in the suit, said he was "disappointed" the NCUA chose to pursue the claims against him. "I completed my board service in February 2006, before the securities that caused the majority of losses at WesCorp were purchased in a period when NCUA had an examiner on-site at WesCorp," Cheney said in a statement.

Cheney joined WesCorp's board of directors in May 2002, and was a member of the asset/liability committee from June 2002 to November 2005.

CUNA's leader emphasized that WesCorp's volunteers received no financial benefit of any kind.

Further, the case will not diminish CUNA's effectiveness nor will it hamper Cheney's focus on advancing CUNA's goals and priorities, he said.

Thirteen former volunteers and current and former employees were dropped from the defendants list in the amended complaint. Excused volunteers include newly named California Credit Union League President/CEO Diana Dykstra, and credit union executives Donna Bland, Adam Denbo, Wayne Hope, Susanne Longson, David Roughton and Darren Williams.

Current and former WesCorp employees dropped from the defendants list include Jeremy Calva, Laura Cloherty, James Hayes, Jeff Hamilton, Dwight Johnston and David Trinder.

The amended suit was ordered July 15 by Judge George Wu, who denied the NCUA's motion to substitute itself as plaintiff entirely for the seven original credit unions. Wu granted the NCUA exclusive rights to derivative claims but also granted the credit union plaintiffs the right to continue investigating their direct claims. He also ordered both sides to present a joint amended complaint Aug. 31.

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