STUDIO CITY, Calif.–A class action lawsuit that is seeking at least $40 million in damages has been filed against former members of the board and the supervisory committee of the now defunct CBS Employees FCU, which was conserved by NCUA earlier this year amid allegations the former CEO had embezzled funds that were twice the reported asset size of the credit union.
The suit also lists as a plaintiff the credit union into which CBS Employees FCU was merged.
The 18-page complaint filed in Los Angeles Superior Court alleges the board and supervisory committee failed to exercise sufficient oversight of former CEO Edward Rostohar, who has pleaded guilty and is now awaiting sentencing. CUToday.info reported extensively on the embezzlement and collapse of the then $21-million credit union, including here and here.
Deadline.com, which is among the outlets that have reported on the suit’s filing, has made a copy of the filing available here.
The lawsuit was filed by CBSEFCU member Victor M. Webb, whom the lawsuit says joined the credit union in 1970 while an employee of CBS, and numerous other plaintiffs, including University Credit Union, into which the remnants of CBS Employees FCU were merged.
“The lack of reasonably (sic) oversight and negligence of the Board allowed Rostohar to embezzle enough of the Credit Union’s cash to wipe out the Credit Union to the detriment of Plaintiff and other members of the Credit Union because it deprived them of over $40 million in value which would have resulted in anticipated benefits to the Credit Union members/owners such as lower rates on credit products such as car loans, mortgages and credit cards and higher-rate savings accounts,” the complaint reads.
The suit further states that the led plaintiff, Victor Webb, suffered as the result of being paid less on his deposits and being charged more on loans, due to the embezzlement.
The lawsuit names individual members of the board and supervisory committee as defendants, including Lynn Altman, Douglas Edwards, Marilyn Fischer, Robert Haxby, Marsha Miller, Yvette Pappalardo, Clara Schwarz, Lisa Schwartz and Marian Turnbull, and supervisory committee members Cima Baker-Lawson, Carol Wackeen and Sarah Xu.
The suit does not name as a defendant any company that may have provided Directors & Officers liability coverage to the board and supervisory committee.
The plaintiffs are being represented by McCune Wright Arevalo, LLP.