Credit Union Times - October 1, 2008 - (Page 36) NEWS TEXANS COMMERCIAL: Three Senior Staffers Win Wrongful Termination Suit (Continued from page 1) president/chief operating officer were fired in 2006 by David Addison, president/CEO of $2 billion Texans CU. The convoluted case involved defamatory statements, discussions of a bank conversion, a possible sale of Texans Commercial to a larger credit union and unpaid compensation packages, according to the petition (CU Times, Sept. 12, 2007). O’Shea, Valdez and Fox are entitled to $1 million each, said Hal Gillespie, an attorney with Gillespie, Rozen, Watsky & Jones P.C., who represented the plaintiffs. “They were defamed. With your career, it’s the equivalent of being killed and someone asking ‘how are you doing,’” Gillespie said. In a Sept. 23 e-mailed statement, Texans CU said “[Sept. 22’s] verdict was disappointing. Since Texans is currently discussing options for appeal, we are limited to what we can discuss publicly. Texans will continue to vigorously defend itself against the many inaccurate and untrue allegations contained in the lawsuit,” said Matt Davis, executive vice president, Texans CU. In September 2008, Texans CU told Credit Union Times that it sold its majority interest in Texans Commercial in late 2007 as a means for the CUSO to pursue capital outside of the CU industry (CU Times, Sept. 10, 2008). The credit union retained a minority interest in the company and 100% ownership of the pre-existing loans but the majority stake was sold to a real estate professional. Once a prosperous commercial lending CUSO, Texans Commercial Capital’s delinquency rate rose sharply in late 2007 compared to 2006 and 2005 as a result of its commercial and real estate loans. The CUSO has since pulled back the reins on member business loans. Gillespie said Texans Commercial’s sale was not noted by the claimants. Meanwhile, Gillespie said he is confident that his clients will recover the compensation they are seeking. He acknowledged that the jury returned “a relatively conservative verdict” and that they were “one vote away from going into punitive damages.” Still, beyond the ruling in favor of his clients, Gillespie reiterated how the two-year ordeal has affected the former CUSO executives. One plaintiff remains unemployed and two have been “underemployed” since being terminated. “Everyone’s tired and wants to regroup,” Gillespie said. “We’re glad that the jury ruled in their favor.” —msamaad@cutimes.com Fired Texans Insurance CUSO President Not Back Despite Arbiter’s Ruling By MICHELLE A. SAMAAD CU Times Senior Staff Reporter DALLAS — Although Texans Credit Union reported that Kevin M. Curley, the former president of Texans Insurance Group who was found to have been wrongfully terminated, is back in the post, he is not. Curley, who was fired in April 2007, had been reinstated following an arbitrator’s ruling that he was wrongfully terminated, but Curley’s attorney, Bill Brewer, has a different take on the matter. Curley, in fact, has not been allowed back on the job, according to Brewer. Credit Union Times talked with Curley on Sept. 23 who confirmed Brewer’s statement. Curley is the former president of Curley Insurance Group LLC, which was bought by $2 billion Texans CU in January 2007. The conglomerate of companies became Texans Insurance Group with Curley remaining on staff. Curley was terminated in April 2007 and filed a claim against the CUSO citing a breach of a three-year employment agreement that was to end on Dec. 31, 2009. On July 8, 2008, a Texas arbitrator ruled in favor of Curley saying he was entitled to return to the job, back pay and benefits. (CU Times, July 30, 2008). Brewer said Texans CU has given the impression that Curley has been back at the helm of Texans Insurance Group since Sept 1. Indeed, in a Sept. 4 e-mail, Texans CU Executive Vice President Matt Davis confirmed with Credit Union Times that Curley was “reinstated” on Sept 1. However, Brewer said shortly after the July 8 arbitration hearing, Curley attempted to return to work but was told “not to report.” Curley was paid $350,000 in back pay but is still waiting on additional benefit and legal fee compensation, Brewer said, adding he is not sure if the former CUSO president is on the payroll. Texans CU did not respond to a request for comment by press time. “They’re playing semantic games. They have refused to allow him to return,” Brewer said. “That’s despite several letters sent reminding [Texans] that he is ready, willing, able and in fact, anxious to return.” ous consequences for our financial markets and for our economy,” he said. “There is no way to stabilize the markets other than through government intervention.” Perhaps sensing the need to strike a populist pose, Mr. Paulson went on to say, “This is all about the American taxpayer. That’s all we care about.” At that, the 21 members of the committee remained stoned-faced, but the visitors’ section of the committee room did not even try to stifle a round of snickers. The federal officials most responsible for the health of the nation’s finances and economy were then treated to a withering round of brickbats from the left and the right of the political spectrum. Republican Sen. Jim Bunning said, “This massive bailout is not a solution. It’s financial socialism, and it’s un-American.” There has been no word at press time if Paulson, Bernanke, et al will be called before Congress to name names of fellow travelers. “I think we’re going down the road of France now. In all due respect for my French friends,” said the ranking Republican on committee, Sen. Richard Shelby. Later Sen. Shelby left Paulson stuttering to answer when he asked: “What if it doesn’t work? You assume it will work, but you can’t assure us that you know it’s going to work because you thought some of the other plans were going to work.” Even outside the committee room, the anger and frustration among lawmakers was palpable. And resistance to the pressure to act by the end of the week was at the top of the list. Rep. Joe L. Barton of Texas said, “Just because God created the world in seven days doesn’t mean we have to pass this bill in seven days.” (Note to Rep. Barton: Most copies of Genesis say God did it all in six days.) Rep. Henry Waxman, chairman of the House Oversight Committee, also rejected the pressure to act within the week. “While we need to move quickly,” he said, “we should not be stampeded into enacting a flawed proposal at huge costs to the taxpayer.” Brewer said Curley was told that he would have to report to Gary Kirkindoll, president of Texans Services Group and David Addison, president/CEO of Texans CU but it remained unclear how the reporting process would take place. Curley has not been allowed on the CUSO’s premises and has been barred from talking to any of its employees, Brewer said. “This man spent 20 years of his life building [the insurance business]. He has a three-year earn-out and that’s going up in smoke,” Brewer said. A little over a week ago, Brewer said he filed yet another wrongful termination suit on Curley’s behalf citing breach of contract and failure to pay additional compensation owed to him. “It’s a wild state of affairs. There seems to be a siege mentality over there [at Texans CU],” Brewer said, adding he had the opportunity to sit in on another the financial institution’s other case involving the firing of three former executives with Texans Commercial Capital (See related story, p. 1). —msamaad@cutimes.com The breadth and scope of Paulson’s political failure became clear on Wednesday when President Bush decided it was time to address the nation during prime time. Earlier in the day, presidential candidate Sen. John McCain jumped into the spotlight by “suspending” his campaign, begging off Friday’s scheduled debate with Sen. Barack Obama and vowing to return to Washington to lead his congressional colleagues in fashioning a bailout bill. In his address, President Bush offered a bland, 12-minute primer on the housing market and mortgagebacked securities dynamics. He also summoned congressional leaders and the two presidential candidates to the White House in hopes of working out compromise legislation. But forging a bipartisan bill seemed well under way on Capitol Hill earlier in the day. Paulson and Bernanke testified before the hostile lawmakers of the House Financial Services Committee. By then, Paulson had given up all hope of a “clean” bill. He seemed willing, even anxious, to cave–um, compromise. One by one, committee chairman Barney Frank, who is the lead negotiator for congressional Democrats, extracted major concessions. Paulson agreed to some form of foreclosure relief and major oversight of the bailout operation. He even conceded that an executive pay cap for those firms participating in the buy up of sour securities was now on the table. A host of other issues remain to be resolved, including changes in bankruptcy law and equity stakes in firms benefiting from the rescue. One plot point stands out in the dramatic arc that unfolded last week. How could an erstwhile Wall Street Master of the Universe not realize the implications of demanding unrestrained assess to $700 billion? Paulson learned this week that, while he may serve at the pleasure of the president, his job description and performance review now resides with Congress. —dshoultz@cutimes.com (Continued from previous page) And he decided to go for broke. Paulson insisted that he did not need to set up a new agency to spend the $700 billion; his Treasury and the Federal Reserve could handle it themselves, with a little help from private investment bankers. His plan called for no oversight of this massive operation, no means for participating institutions to repay taxpayers for their “loans” and no new regulations on financial companies. Perhaps most stunningly, Paulson’s plan also included a provision intended to prevent any kind of judicial review. On the TV talk shows, Paulson called his request for $700 http://www.cutimes.com
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