A CEO is suing her credit union and its board chair, a North Carolina state representative, who allegedly engineered her termination, cursed, yelled and belittled her at board meetings and claimed that he was responsible for the credit union's financial turnaround during the annual membership meeting in March.

Betty Eileen Donovan, 64, who worked at the $55.4 million Bragg Mutual Federal Credit Union for more than 30 years and was appointed its president/CEO in November 2015, filed a federal lawsuit last week in a U.S. District Court claiming the Fayetteville, N.C.-based cooperative discriminated and retaliated against her which led to the former executive's wrongful discharge in February.

What's more, the lawsuit singled out John Szoka, the Bragg Mutual FCU's board chair and a Republican state representative of North Carolina's 45th district, which includes Cumberland County.

Donovan's lawsuit alleges Szoka and the credit union “repeatedly engage[d] in unlawful conduct towards Ms. Donovan.”

The lawsuit specifically claims that Szoka and six other board members failed to comply with the Federal Credit Union Act's requirements that the board make decisions based on what is in the best interests of the membership. Donovan also alleged that the board did not produce complete and accurate minutes of board meetings to show whether it followed legislative and regulatory requirements in its deliberations.

The former CEO also claimed that the board failed to provide specific reasons for her termination and never gave her the opportunity to present her defense and to correct deficiencies.

According to Donovan, after meeting in a two-hour closed session on Feb. 15, board members told her she was being fired because they “no longer trusted her judgment.”

During her CEO tenure, Szoka “regularly displayed an unlawful animus towards Ms. Donovan (including based upon her age, gender and/or protected activity),” according to the lawsuit.

During board meetings, Szoka commonly yelled, cursed and belittled Donovan without any justification; the state legislator also allegedly met with another board member to discuss his personal agenda to undermine Donovan's authority, according to the lawsuit.

In one example stated in the lawsuit, Donovan said she fired the credit union's vice president of lending and marketing on January 2. Donovan said she provided Szoka and the board a “good-faith bases” for her decision to fire the executive. Later that same day, however, Szoka allegedly rescinded the termination and reinstated the executive who is a close friend of the state legislator, according to the lawsuit. Skoda also allegedly falsely stated that his decision was supported by the board, Donovan claimed in her lawsuit.

In the lawsuit, Donovan also indicated that she attended the credit union's annual membership meeting on March 13.

According to Donovan, the members were not aware that she had been fired and that all references to her leadership were deleted from the 2017 annual report.

During the membership meeting, Szoka was introduced as Bragg Mutual FCU president, and he took credit for the credit union's $950,000 net income gain at the end of 2017, Donovan claimed.

At the end of her first year as CEO in 2016, the credit union posted a net income gain of $505,085 and a net income gain of $956,212 at the end of 2017, according to NCUA's financial performance reports. Bragg Mutual also improved its net worth from 11.89% in 2015 to 13.35% in 2017, while its ROAA jumped from a -0.21 in 2015 to 1.79% in 2017.

Donovan also is suing Bragg Mutual and Szoka under the NCUA's whistleblower protections. The former CEO alleged that she was retaliated against for reporting to the NCUA possible violations of law and regulations allegedly committed by Szoka and the credit union.

Szoka and Bragg Mutual FCU did not return phone calls and emails from CU Times that requested their comments for this article. The credit union has not filed a response to Donovan's lawsuit.

Donovan is suing for unspecified compensatory and punitive damages, as well as other costs.

Instant Insights /

CEO Sues Credit Union & State Rep. for Wrongful Discharge

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