A Georgia couple has filed suit against Delray Beach, Florida-based IBM Southeast Employees' Credit Union and a former CUNA Brokerage Services, Inc. (CBSI) representative, alleging that they were bilked out of their retirement savings and that the credit union should have known the advisor and her alleged business partner were shady, according to documents filed in Georgia State Court.

Edward and Yvonne Ray claimed that in November 2016, IBMSECU invited them to meet with CBSI advisors to discuss consolidating their retirement assets so they could be better managed. During a meeting with two advisors at one of the credit union's branches, the couple agreed to transfer about $330,000 to CBSI. But instead of putting the money into CBSI brokerage accounts, the advisors allegedly diverted it to three other companies, two of which they controlled. The plaintiffs also claimed their signatures were forged on some of the paperwork.

One of the advisors had also been suspended from the securities industry at the time of the meeting, they claimed.

For the first six months of 2017, the couple contacted one of the CBSI advisors to find out where their money was. By July 2017, however, CBSI had allegedly informed the couple that there was no money in their CBSI accounts and that their advisor had left the organization. The couple filed suit in January 2018.

“This is a case about a retirement-aged married couple that were robbed at their own bank by unscrupulous financial advisers associated with IBMSECU,” the complaint said.

“We are unable to comment specifically on the pending litigation, but we take any alleged breach of trust seriously. While IBMSECU disputes the Rays' claims, we are cooperating with regulators and law enforcement in their investigations of this matter,” IBMSECU President/CEO Michael Miller said in a statement to CU Times.

In court filings, IBMSECU, which has $1.1 billion in assets and about 81,000 members, denied the allegations, stating that, among other things, the damages were not caused by its negligence or conduct, that it had no fiduciary relationship with the plaintiffs, that it did not know the advisor named in the suit was untrustworthy, and that it acted in good faith.

On April 30, the credit union asked the court to dismiss the suit, stating that the couple's account application agreement with CBSI compelled them to arbitration, that the credit union didn't participate in or benefit from the fraud, and that any purported assertion that the advisor was trustworthy was “nothing more than IBMSECU's expression of opinion, hope, and expectation.”

“Because plaintiffs cannot show that IBMSECU made a misrepresentation of fact plaintiffs' negligent misrepresentation claim should be dismissed,” it noted.

A spokesperson for CBSI was also unable to comment on the litigation, but indicated that it too took any alleged breach of trust seriously, disputed the claims and was cooperating with regulators and law enforcement.

Instant Insights /

Couple Sues After CU's Advisors Allegedly Steal Their Retirement Savings

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