U.S. Court of Appeals for the Fifth Circuit in New Orleans. Photo: Mike Scarcella/ALM
A federal appeals court has cleared the NCUA to move forward with administrative charges against former Edinburg Teachers Credit Union CEO Jeffrey Moats, who allegedly caused the institution’s $4 million loss and conservatorship.
The 5th U.S. Circuit Court of Appeals in New Orleans on Monday upheld a lower court's decision that federal courts lack jurisdiction once the NCUA initiates an enforcement action by filing a formal notice under Section 1786(k)(1) of the Federal Credit Union Act.
“The district court was correct in concluding that it lacked subject matter jurisdiction to hear Moats’s suit and in dismissing his complaint,” the appeals court wrote in its nine-page ruling.
Moats had filed a lawsuit in Galveston, Texas, claiming the NCUA’s administrative enforcement action deprived him of his constitutional rights to due process and a jury trial. U.S. District Judge Jeffrey Vincent Brown dismissed the suit in April 2024, prompting Moats to appeal.
“The (Appeals) court’s decision would subject Mr. Moats to an unconstitutional tribunal — an agency that acts as prosecutor, judge and jury. And that constitutional violation cannot be fully remedied after it has occurred,” Molly Nixon, one of the attorneys who represented Moats, said. NCUA lawyers did not respond to a CU Times request for comment.
The three-judge appeals court panel did not address Moats’ constitutional claims.
“To prevent the NCUA from conducting its enforcement action, Moats filed a complaint in federal district court in which he urged various constitution theories,” the Appeals Court wrote. “But these merits are not before us. The only question before us is whether the district court erred when it dismissed Moats’s complaint for lack of subject matter jurisdiction. It did not, so we affirm.”
The NCUA claimed in its April 2023 administrative filing with the U.S. Office of Financial Adjudication in Arlington, Va., that Moats allegedly committed bank fraud, embezzlement, obstructed an examination and made false entries on credit union documents while he was CEO for the $94.7 million Edinburg Teachers Credit Union in Edinburg, Texas.
He was fired when the credit union was conserved in March 2021. By the end of that year, the credit union posted a loss of $3.5 million, according to NCUA financial performance reports. Edinburg Teachers was released from conservatorship in January 2023.
The NCUA is suing Moats to pay $4 million in restitution and a $1 million civil penalty.
If the federal agency rules against him following an administrative hearing, Moats would have the right to appeal the decision in federal court.
Read More: Moats v. NCUA Appeals Ruling.
Peter Strozniak can be reached at pstrozniak@cutimes.com.
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