WASHINGTON The former CEO of Constitution Corporate FCU asked a federal appeals court yesterday to overturn the NCUA Board’s ruling denying him some $250,000 in back pay and benefits after the federal regulator took over his failed corporate in September 2010, along with two others.
Robert Nealon, who headed the one-time $1.7 billion corporate from July 2004 until its 2010 demise, claims NCUA was wrong to repudiate $62,300 in a 457 (b) retirement plan and $178,000 in severance pay under an employment contract NCUA itself had approved the year before. Nealon is also seeking lawyers’ fees and interest on the money.
The Connecticut-based institution was one of five failed corporates taken over by NCUA due to their investments in mortgage-backed securities, including U.S. Central FCU, WesCorp FCU and two others seized on the same day as Constitution, Members United Corporate FCU and Southwest Corporate FCU. The failure of Constitution State, the smallest of the five, is estimated to cost $200 million to resolve.
Senior executives at all five corporates were immediately terminated by NCUA and their employment contracts and other benefits repudiated, or voided, after NCUA took them under conservatorship.
NCUA has recently moved to eliminate such repudiation disputes by enacting a new regulation in 2011 that automatically voids severance deals, “golden parachutes,” for executives of failed credit unions.
Nealon, who was scheduled to earn $267,141 through 2012 under a five-year contract, claims he intentionally agreed with NCUA, which had jurisdiction over all corporates at that point via supervisory agreements, to amend his contract lower because of the troubled state of his corporate. He said therefore it was unfair for NCUA to repudiate his pay because it had approved the contract.
The liquidating agent for NCUA denied Nealon’s appeal, saying the money in the 457 retirement account amounted to a creditor’s claim and was therefore repudiated, and the severance money was also validly repudiated. The NCUA Board voted in closed meeting Dec. 6 to uphold that ruling. Nealon asked the U.S. Court of Appeals for the District of Columbia to overturn the NCUA Board’s decision.
An attorney representing Nealon did not return a phone call seeking comment.
NCUA declined to comment on the case.