DES MOINES, Iowa – The former president of Community 1st CU, who is battling the $400 million credit union over his July 2011 firing, filed suit in federal court last week in an attempt to gain access to $1.5 million in retirement benefits promised him under his employment contract.
In his suit, filed in U.S. District Court for the Southern District of Iowa, Terry Maloy claims the one-time Deere Community FCU did not prove his dismissal was for “cause,” and thus he is due the payment promised him under the credit union’s 457 (f) Retention Plan.
Maloy, who joined the Ottumwa credit union in 2004 and became its CEO in 2006, signed the 457 plan in 2010, entitling him to a retention bonus of $1.5 million if he remaining employed there through January 1, 2020. Under the terms of the plan, Maloy would forfeit all rights to the retention bonus in the event of an involuntary separation “for cause,” according to the suit.
“For cause” was defined as the commission of a felony or gross misdemeanor of fraud or dishonesty; willful violation of any law, rule or regulation, other than a traffic violation; intentional failure to perform stated duties; or breach of fiduciary duties involving personal profit.
Maloy was fired on July 8, 2011 for what the board of directors called sexual harassment, which they say violated the retirement plan’s prohibition on violation of law, rule or regulation, that is, the credit union’s policy on harassment and non-discrimination.
Maloy claims the directors failed to interview him until after he filed a suit in state court for wrongful termination. He claims the denial of his retirement benefits by the board violates the Employee Retirement Income Security Act, better known as ERISA, and amounts to a conflict of interest because they are the same people who oversaw his employment as well as the administrators of the retirement plan.
Officials with the credit union did not immediately return a phone call seeking comment.
Maloy could not be reached for comment.