Federal Judge Rejects Former CEO's Request to Prevent Credit Union Liquidation

He warned of the credit union's liquidation in court filings because he received statements from multiple members who were told by NCUA staff to "Get your money out because we are shutting this down on Friday."

"That is what raised serious concern for me. Even if that timeline did not happen, those statements point to a real risk that liquidation is still being considered," Washington said. "I want to be clear, my goal is not to create conflict. My goal is to make sure there is a fair chance to stabilize the credit union and protect the members before any final decision like that is made. At the end of the day, this is about the people who rely on this institution. They deserve a fair process and a real opportunity for this to work."

Washington said he is reviewing next steps to ensure that all relevant facts and member impacts are properly considered.

But he did not say whether that means he plans to ask Judge Miller to reconsider his decision or to file an appeal.

While sympathetic to Washington's position, Judge Miller denied Washington's TRO motion because he did not show he would be irreparably harmed if the credit union is liquidated.

"This is true because the credit union is a entity separate from Washington; his status as founder and member do not grant him a sufficient interest to establish that he will personally suffer harm from the liquidation," Judge Miller wrote. "The potential effect liquidation could have on his pending application for relief does not change this analysis. Likewise, Washington's discussion of imminent harm to the Credit Union's account holders is not convincing because he may not seek relief for other individuals under these circumstances."

In his full statement to CU Times, Washington said his core concern is whether the credit union is moving toward liquidation without an opportunity to stabilize and leverage what he described as viable alternatives.

Last Thursday, Washington also filed a separate emergency supplementary notice regarding newly discovered facts. He claimed that "actions taken during conservatorship include the execution of financial instruments bearing (his) name and/or signature without (his) authorization."
Washington claimed that using his name and/or signature in financial instruments without authorization "creates direct and immediate harm, including potential legal, financial and reputational consequences."

"This ongoing conduct further underscores the urgency of Plaintiff's (Washington) request for immediate injunctive relief," Washington stated. "Additionally, while Defendant (NCUA) asserts that Plaintiff lacks standing, the use of Plaintiff's identity or authority in financial transactions demonstrates a direct and personal connection to the conduct at issue."

However, the problem with this argument, Judge Miller wrote, is that even if Washington's claim is true, he fails to show how this alleged harm would be remedied by enjoining the liquidation of the credit union.

The legal dispute between Washington and the NCUA began less than two weeks after People Trust Community was conserved. On Jan. 23, Washington filed an application for relief from the Jan. 16 conservatorship.

The filing alleged vendor system failures, NCUA examiner conflicts of interest, supervision inconsistencies, federal ethics violations and the undermining of Washington's executive authority. He asked the court for a stay of conservatorship actions pending judicial review. In February, the NCUA moved to dismiss the application, arguing that only the credit union itself – through a valid board of directors resolution – can challenge an NCUA action.

In March, Washington filed an amended complaint, alleging the timing of events and communications submitted – including those submitted outside of the credit union's management process – raised questions about whether the regulatory review was undermined when the agency decided to conserve the credit union. He again asked the court to set aside the conservatorship decision pending judicial review.

The NCUA also filed a motion to dismiss Washington's amended complaint, contending that even if Washington's allegations are true, the federal agency had lawful authority to order the conservatorship because of the credit union's deteriorating financial condition.

At the end of last year, People Trust Community posted a loss of $927,691 and a net worth ratio of -20.90%, compared to a loss of $108,879 in 2024 and a net worth ratio of 7.75%, according to NCUA financial performance reports. In 2023, when it opened for business, the credit union recorded a loss of $47,571 and a net worth of 11.07%. The credit union had been chartered in 2022.

However, in his amended complaint, Washington said he submitted a revised business plan on Dec. 22, within the agency's timeframe, to address these financial issues.

However, on Dec. 21, a meeting of the board of directors occurred. Washington said he didn't attend that meeting because he was not notified about it. As a result, no management record of the meeting was created through the credit union's governance procedures.

Washington alleged that then-Board Chair Michael Pridgeon submitted a request to the NCUA seeking an additional extension for the revised business plan. He argued the regulatory communication with the NCUA was historically handled through executive management and that this request was submitted outside the established management communications process.

Although the NCUA granted the extension request for the revised business plan, it conserved the credit union less than a month later, according to the amended complaint.

READ MORE: Arlo Washington's full statement.

Peter Strozniak can be reached at peter.strozniak@arc.network.com.