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CU System
Uninsured depositors file suit in New London closure
NEW HAVEN, Conn. (3/8/11)--Five members who had deposits in the now defunct New London Security FCU filed a lawsuit Thursday in a U.S. District Court in New Haven, Conn., seeking $4 million in damages from the National Credit Union Administration (NCUA). The suit stems from a $12 million embezzlement by the $13 million asset credit union's long-time investment advisor and former A.G. Edwards branch manager, Edwin F. Rachleff. Rachleff, 82, committed suicide while the NCUA was in the processes of closing the credit union in July 2008. An audit revealed Rachleff allegedly stole the investments from 1988 to July 2008. In the suit, the five members allege that NCUA examiners, supervisors and administrators were "negligent in carrying out their ministerial duties and responsibilities" while examining the credit unions' investments. They say they lost $4 million in uninsured deposits and presented their administrative claims to NCUA on Feb. 10, 2010. NCUA denied the claims in their entirety on Aug. 11, 2010, according to the complaint filed Thursday. Filing the suit were Melvin Goldblatt and Joan Lazerow of Connecticut, Mark D. Fetcher, of Florida; Gloria Johnston of California; and Douglas C. Antupit of Connecticut. They also have filed lawsuits against Wells Fargo Advisors, a subsidiary of Wells Fargo & Co., which is a successor in interest to Wachovia and the brokerage firm A.G. Edwards and Sons.


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