Decision and Order on Appeal Espirito Santo Federal Credit Union

UNITED STATES OF AMERICA

BEFORE THE NATIONAL CREDIT UNION ADMINISTRATION

In the Matter of [redacted]

Insurance Claim
Espirito Santo Federal Credit Union

Docket 98-INS-001

Decision and Order on Appeal

Decision

This matter comes before the National Credit Union Administration Board (Board) pursuant to 12 CFR 745.202 as an appeal of the determination by the Agent for the Liquidating Agent of Espirito Santo Federal Credit Union denying the [redacted] insurance claim in the amount of [redacted].

Background

Espirito Santo Federal Credit Union, located in Fall River, Massachusetts, was an associational credit union, chartered to serve members of the Espirito Santo Roman Catholic Parish in Fall River. It was placed into involuntary liquidation due to insolvency, effective September 5, 1997. The liquidation was due to alleged embezzlement involving certain credit union officials.

[redacted], husband and wife, had four accounts at the credit union. They had two regular share accounts and two term share certificate accounts. These accounts were established on August 27, 1997.

Signature cards were found for the two regular share accounts. These cards contained joint account agreements signed by both [redacted]. The term share certificates are evidenced by term share certificate passbooks. A box appearing on the passbooks to be checked when the certificate is to be issued in the name of more than one owner. Credit union personnel filled out the passbooks and left the box blank on both passbooks. The credit union issued computer generated receipts on the day the accounts were established. The receipts for regular share account [redacted] and term share certificate account [redacted] were issued to [redacted]; the receipts for regular share account [redacted] and term share certificate [redacted] were issued to [redacted].

The Agent for the Liquidating Agent insured all of the [redacted] accounts as joint accounts held by the same combination of individuals. The funds in the four accounts were added together and insured for a total of [redacted], leaving [redacted] uninsured. Unpaid dividends in the amount of [redacted] brings the uninsured total to [redacted].

The [redacted] claim that they had two single ownership certificate accounts, one in the name of [redacted] and the other in the name of [redacted].

The Board is satisfied that the [redacted] established two individual term share certificate accounts. The events surrounding the establishment of the accounts indicates that: the [redacted] intended to establish the certificate accounts as single ownership accounts, one for [redacted] and one for [redacted]; and the [redacted] intended to have their funds fully insured. These accounts are insured up to $100,000 each for [redacted] pursuant to Section 745.3 of the NCUA Rules and Regulations.

Order

For the reasons set forth above, it is ORDERED as follows:

The Board reverses the Agent for the Liquidating Agent’s decision to deny [redacted] claim in the amount of [redacted] and grants the [redacted] appeal. The Board directs the Agent for the Liquidating Agent to pay the [redacted] their claim in the amount of [redacted].

So ORDERED this 23rd day of June, 1998 by the National Credit Union Administration Board.

Becky Baker
Secretary of the Board