Regulator seeks up to $5 million restitution, penalty from former CEO of Texas credit union

Restitution of at least $4 million, and a civil money penalty of $1 million, is being sought from a former credit union leader for causing a substantial loss to his institution, the federal credit union regulator said Monday.

The suit brought by the National Credit Union Administration (NCUA) against Jeffrey B. Moats, former chief executive officer and board member of Edinburg Teachers Credit Union (ETCU) in Edinburg, Texas, charges that he knowingly and intentionally violated the law, violated his fiduciary duties, and knowingly caused a substantial loss to ETCU exceeding $4 million, the agency said in a release.

The credit union was conserved by the NCUA a little more than two years ago. At the time, no reason was given for the conservatorship of the $106.2 million credit union (with 12,500 members). In January of this year, the agency released the credit union from conservatorship, noting that is assets were then $96 million and counted more than 7,000 members. The credit union serves employees of many of the school districts in the Rio Grande Valley, Texas, the University of Texas Rio Grande Valley, several select employer groups, and persons located within 10 miles of the credit union’s offices, according to the agency.

The NCUA said in January that the credit union was then on a “sound financial footing” and that a new board of directors had been seated.

On Monday, the agency said it filed a four-count notice of charges with the United States Office of Financial Institution Adjudication. The NCUA alleges that Moats, without board approval, directed ETCU staff to transfer large sums to him in connection with purported retention bonus or supplemental employee compensation plans that were never discussed nor approved by the board of directors.

“Moats also without board approval directed ETCU employees to fund his retirement account wholly from ETCU funds, in contradiction to the retirement plan’s terms,” the agency alleged. “Additionally, Moats directed ETCU staff to pay him $220,000 for accrued, unused vacation time in the absence of any ETCU policy permitting such payment without board approval. Finally, Moats, without authorization, caused ETCU to pay car insurance premiums on his personally owned vehicle for a number of years.”

NCUA Files Suit Against Former Edinburg Teachers CEO