The $18.6 million Wallingford Municipal Federal Credit Union has appealed a state court decision to award Naomi Odell more than $200,505 after the judge ruled that the Wallingford, Conn., cooperative committed “statutory theft” in seizing the woman's $13,801 Social Security disability benefit and using it to repay a loan her husband defaulted loan.

After a three-year court battle, Connecticut Superior Court Judge Robin L. Wilson in a 72-page ruling released Aug. 8 said the credit union's move against Odell's benefits were illegal because Social Security is exempt from debt collection

Wallingford Municipal's FCU's attorney, Michael T. McCormack of Hartford, Conn., filed a document in Connecticut's Appellate Court Tuesday that lists nine issues, claiming that the judge made “reversible errors” that were made by the state judge.

In at least two of the issues listed on the court document, Wallingford Municipal FCU's appeal argues that Judge Wilson made an error in ruling against the cooperative from exercising its “right of setoff funds” that allowed the credit union to use Odell's Social Security money to repay the loan.

The credit union also is asking the state appellate court to reverse the lower court's decision that awarded Odell $62,846 in the statutory theft claim, the $41,403 in punitive damages and the $96,255 in attorney fees and costs.

A hearing before the Connecticut Appellate Court has not yet been scheduled.

“It seems like a misallocation of resources to devote so much money to keep a small Social Security disability check,” Odell's attorney, Joanne Faulkner of New Haven, said in reaction to the credit union's appeal.

In 2005 Odell's husband, Nicholas, secured a loan from Wallingford Municipal FCU. Naomi, who was working at the credit union, co-signed for the loan. Nicholas, however, later defaulted on the loan and the credit union successfully sued him for the $18,433 outstanding loan balance, according to court documents.

Odell was fired by the credit union in April 2007 after she had been diagnosed with multiple sclerosis, according to court documents and her lawyer. According to Faulkner, a doctor said Odell would not be able to work full-time, so she lost her full-time position.

In May 2007, Odell applied for Social Security disability benefits. When she applied for those benefits, she provided her account information with Wallingford Municipal FCU because it was the only bank account she had at the time.

About a year later, Odell's Social Security benefits were approved and expected to receive a lump sum payment of $13,801, plus $1,300 a month.

Concerned that the Social Security funds would be sent to the credit union, Odell contacted Manager/President Richard T. Cassello, asking him to return the funds to the Social Security Administration. Odell had opened an account at another bank.

Odell informed Cassello that the Social Security funds were exempt from debt collection. What's more, she also said that she was going to lose her home to foreclosure and needed the money.

The credit union received Odell's Social Security payment benefit on June 2, 2008. Even though Odell's checking account had been closed, she still had a share account. The funds were deposited in that account.

Odell has lost her home to foreclosure and lives in an apartment in Middletown with her husband who also is also unable to work, according to her attorney.

Instant Insights /

Federal Credit Union Appealing Court Ruling on Social Security Funds

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