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

Docket 98-INS-002

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 administrative 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]. The March 9,1998 appeal follows a denial by the Agent for the Liquidating Agent of a request upon reconsideration.

Background

[redacted], husband and wife, had several accounts at the credit union. Some of the accounts were paid in full leaving three term certificate accounts, for a total of [redacted], in dispute. The [redacted] stated that they gave the assistant manager of the credit union [redacted] in cash, on different dates, to open the three accounts. The [redacted] received completed term share certificates for the first two accounts. The AMAC paid the first two accounts for a total of [redacted].

The [redacted] remaining claim and the subject of this appeal is in the amount of [redacted]. The [redacted] claim they gave the assistant manager [redacted] in cash to open an account approximately one week before the credit union was liquidated. The [redacted] have only a blank passbook to evidence this account. [redacted] submitted a signed statement to AMAC that she could not get the assistant manager to fill in the passbook. There is no deposit slip or other voucher to substantiate the claim. The [redacted] claim in their appeal that they should be paid the [redacted] based on the assistant manager assuring them that credit union records had been updated to reflect the [redacted] deposit and that they had placed their trust in the assistant manager.

Since the time the appeal was filed, the assistant manager of the credit union has entered into a plea agreement with the Assistant United States Attorney. She admitted to twenty counts of misapplication of credit union funds. The [redacted] were named in one of the counts as members from whom the assistant manager took funds and misapplied them.

The Board believes that the evidence, including the plea agreement, establishes a pattern of behavior on the part of the assistant manager where she took cash from the [redacted], told them it would be deposited in their name, and then misapplied the funds. The evidence is sufficient to warrant payment of the [redacted] claim.

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 theLiquidating Agent to pay the [redacted] their claim in the amount of [redacted].

So ORDERED this 30th day of July, 1998, by the National Credit Union Administration Board.

Becky Baker
Secretary of the Board