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Conference 7.286::dcu

Title:	DCU
Notice:	1996 BoD Election results in 1004
Moderator:	CPEEDY::BRADLEY

Created:	Sat Feb 07 1987
Last Modified:	Fri Jun 06 1997
Last Successful Update:	Fri Jun 06 1997
Number of topics:	1041
Total number of notes:	18759

403.0. "NCUA responds concerning investigation of Mangone and BoD" by PLOUGH::KINZELMAN (Paul Kinzelman) Mon Dec 02 1991 10:24

The following is from the BoD statement (note 343.0):

         During the past few months, the National Credit Union
         Administration (NCUA), our independent auditors and
         legal counsel have conducted extensive investigations of
         DCU to determine the extent of the fraud committed by
         the former president, Richard Mangone.  They have
         concluded, without question, that no board member,
         official or staff member, except Mr. Mangone, was
         involved in any wrongdoing at the credit union.

Due to the Middlesex quote (noted elsewhere) I asked NCUA directly about
whether the BoD was investigated or not because to me, the above statement
says they were. Here is the reply:

    Nov 24, 1991

    Dear Mr Kinzelman:

    I am responding to your letter to me dated November 18, 1991.

    Although I  have  not  read the newspaper article to which to [sic] you
    refer  in  your  letter, the quote is basically accurate.  The NCUA has
    not  conducted  and  has  no  plans  to conduct an investigation of the
    current Digital Employees Federal Credit Union board of directors.  The
    focus   of  our  investigation  has  been  on  Mr.   Mangone's  ongoing
    relationship with the Barnstable Community Federal Credit Union.

    All credit  unions  are  subject to annual and periodic examinations by
    employees  of the NCUA.  Those examination reports are not available to
    the  public  and  are  exempt  from  disclosure  under  the  Freedom of
    Information Act.

    I appreciate your concern for the health of your credit union.

	Sincerely,
	Richard S Schulman (signed)
	Trial Attorney
	Office of General Counsel

****************************************************************

I see a contradiction between the two statements, how about you? In fact,
I could interpret the letter as saying NCUA hadn't even investigated Mangone's
fraud against DCU!

To coin a phrase from another politically significant event,
perhaps the BoD statement is now "inoperative".

T.R	Title	User	Personal Name	Date	Lines
403.1		TOMK::KRUPINSKI	DCU election: Vote for reform!	`Mon Dec 02 1991 11:16`	12
	I disagree. There is a difference between investigating the DCU and investigating the DCU BoD. Schulman's letter (and the BoD statement) refers to NCUA investigations of the DCU. He states that there has been no NCUA investigation of the DCU BoD, but I don't recall anyone ever claiming that there was one. What was claimed was that NCUA investigation (presumably the one referred to in Schulman's letter) concluded that no one except Mangone was involved in any wrongdoing. Tom_K
403.2	Huh?	RGB::SEILER	Larry Seiler	`Mon Dec 02 1991 12:11`	24
	re .1: I don't get it. If there was no NCUA investigation of the DCU BoD, then how could the NCUA conclude that no one except Mangone was involved in any wrongdoing at the DCU? The NCUA seems to be saying that they didn't reach any such conclusion, and in fact didn't even consider that question. If that's so, isn't it a bit presumptuous of our Board to state that the NCUA cleared them? That's how the press release reads to me. And further, that's what Chuck Cockburn told me, in Mark Steinkrauss' presence, on October 28th. Chuck was very clear and forceful on the issue -- he was making the point that since the NCUA looked for criminal conduct on the part of the Board and didn't find the slightest whiff, then that should satisfy everyone. Chuck even said that the NCUA issued a report that completely exhonerated the DCU Board, but he refused to let us see it. It seems to me that all this stretches the limits of what can be called public relations and drifts over the line into deliberate deception. However, that's really beside the point -- I don't think any form of public relations is appropriate when the Board is speaking to the members. I expect them to make clear, simple statements that mean what they appear to say. I think we all deserve that level of honesty and integrity. I think Tom and I agree on that latter point, if nothing else. Enjoy, Larry
403.3		TOMK::KRUPINSKI	DCU election: Vote for reform!	`Mon Dec 02 1991 12:30`	25
	I would expect that an NCUA investigation regarding the Mangone "affair" would inquire into many things, including the behavior and actions of the BoD. My read was that as a result of those inquiries, NCUA determined that the BoD acted properly. But this conclusion was reached as a result of an investigation of the DCU, not as a result of an investigation of the DCU BoD. So NCUA cannot state that they investigated the DCU BoD (and they haven't, in fact they explicitly state they haven't investigated the DCU BoD). But NCUA can state, that as a result of their investigation of the DCU, they found no wrongdoing by the BoD. I think that it would have been more clear if the Board had made a statement something like, "NCUA has conducted an investigation of the DCU. This investigation included a review of BoD involvement, concluded that the BoD was not involved in any wrongdoing." I think something like that would have been more clear and accurate. It would be helpful if a BoD member could confirm that my understanding is correct. Tom_K
403.4	Exhaustive audit still necessary	PLOUGH::KINZELMAN	Paul Kinzelman	`Mon Dec 02 1991 14:02`	16
	Schulman statement that NCUA "focused" on Mangone's relationship with Barnstable, implies NCUA has no data to say either way about the involvement of the BoD. NCUA just hasn't bothered to look. This is in direct contradiction to Cockburn's assertion at the meeting as noted by Larry Seiler. I was present at that meeting also and heard the same thing that Larry did, which is why I was amazed by the Middlesex news report. Furthermore, my understanding from my verbal discussing with Schulman was that the NCUA has no interest in having anything to do with DCU (other than routine audits) as long as DCU is solvent (which it is). That adds weight to my conclusion that NCUA has no interest in looking into whether the BoD was involved or not. We simply don't know. It would seem to me that a exhaustive audit has not been done and is more necessary than ever.