BRUNSWICK, Ga. – NCUA is working closely with officials at troubled Georgia Coastal FCU after the one-time $14 million credit union fired its CEO who had won the job just four months earlier, after she disclosed insider dealings between her predecessor and board members.
NCUA has approved the credit union’s request to expand the credit union’s former chemical employees-based membership to a community charter and to designate it as a low income credit union, making it available for low-interest loans and grants through NCUA’s Community Development Revolving Loan Program, according to Laura McKinley, a former bank CEO hired recently to head the now-$10 million credit union.
Georgia Coast reported a $234,000 loss for the first quarter of 2012 and net worth of 4.6%, with no undivided earnings.
The NCUA assistance comes after Marla Thomas, the chief financial officer since 2005, filed suit over her February firing, shortly after she was named CEO after exposing a financial deal between her predecessor, David Knox, and a director from whom Knox had agreed to buy underwater property. The director, Wayne Neal, a local real estate developer, is named as defendant in the suit, along with Knox, board chairman Cecil Little, and the credit union.
Thomas alleges that she discovered as early as 2008 that her boss, Knox, had been overdrawing various accounts at the credit union and making no-interest loans to himself, and was upbraided by Knox when she brought the practice to his attention. She reported these overdrafts to the board, putting the two on a collision course.
Later, Thomas learned that the CEO planned to build a house on a lot owned by director Neal that was in foreclosure and that Neal would be paid from a construction loan financed by the credit union. According to the suit, CEO Knox told Thomas because the appraisal came in very low, he planned to increase his salary by the amount of the payments in order to spread out the credit union’s loss. At one point, the suit claims, Knox told Thomas to print out his payroll earnings in order to estimate the amount his salary would have to be increased.
Because of the involvement of a board member, Thomas contacted the supervisory committee, then later, NCUA, with her concerns, as well as CUNA Mutual, which subsequently revoked Knox’s bond. Knox was eventually put on leave, and eventually fired, with Thomas promoted to interim CEO in November of 2011.
But on February 6, the Board, through Chairman Little and Neal, fired Thomas and hired Knox’s nephew to replace her, according to the suit. Eventually McKinley was hired as interim CEO.
McKinley, who had headed nearby Ogelthorpe Bank until its 2011 failure, declined Friday to discuss the dispute but only said she has been approved by NCUA to become the credit union permanent CEO. She referred all inquiries to the credit union’s lawyers who did not respond to a request for comment.
McKinley herself is suing the FDIC over $711,000 in severance pay she alleges she was entitled to when the regulator took over her bank.
Thomas’s lawyer, Todd Brooks, said Friday his client was never given an adequate explanation for her dismissal. “She was given some reasons but we do not think they were valid,” he told The Credit Union Journal. “From our perspective, we think Mrs. Thomas was treated very grievously and we’re looking forward to bringing out the facts in our complaint.”