An appeals court last week declined to rehear a case from former Texas credit union CEO Jeffrey Moats on challenging the constitutionality of the NCUA's administrative authority, paving the way for the federal agency to pursue a $4 million restitution claim against him.
In August 2025, a three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans unanimously upheld a lower court's ruling that dismissed a lawsuit against the NCUA brought by Moats, former president/CEO of the $96.8 million Edinburg Teacher Credit Union (ETCU) in Edinburg. He claimed the federal agency's administrative charges against him violated his constitutional rights.
Moats was fired when the NCUA placed the credit union into conservatorship in March 2021. The agency ended the conservatorship in June 2023.
Last October, Moats asked the full court – en banc of 17 judges – to rehear his case, contending the three-judge panel did not address the constitutional challenges to the NCUA administrative authority.
In April 2023, the NCUA issued a four-count notice of charges against Moats with the U.S. Office of Financial Institution Adjudication (OFIA), an interagency group of administrative law judges based in Arlington, Va. The agency alleged the former CEO violated the law and breached his fiduciary duties, causing ETCU to lose more than $4 million.
According to the NCUA, Moats directed ETCU staff – without board approval – to transfer large sums of money to him in connection with a purported retention bonus or supplemental employee compensation plans, which were not approved by the board. The agency also alleged that Moats instructed employees to fund his retirement account using credit union money, contrary to the terms of the retirement plan.
In addition, Moats allegedly approved payment to himself of $220,000 for accrued but unused vacation time despite the absence of any board‑approved policy allowing such a payout. The NCUA further alleged that the credit union paid insurance premiums on Moats' personal vehicle for several years.
The federal agency is seeking restitution of at least $4 million to ETCU and a civil money penalty of $1 million.
With the appeals court declining to rehear Moats' case, it should pave the way for the OFIA to pursue an administrative hearing, which is listed on the interagency's docket. If the OFIA rules against Moats, he would have the right to appeal.
Moats sued to block the NCUA's charges against him, arguing the federal agency's administrative charges against him violated his constitutional rights to due process and a jury trial.
But in 2024, U.S. District Court Judge Jeffrey Vincent Brown in Galveston, Texas ruled that district courts lack jurisdiction to adjudicate claims, including constitutional claims, that would interfere with ongoing NCUA administrative proceedings.
The 5th Circuit agreed.
"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."
Peter Strozniak can be reached at peter.strozniak@arc-network.com.
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