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Credit union ignored regulatory agency, emails show

by: FILE PHOTO - St. Helens Community Federal Credit Union CEO Brooke VanVleet in the credit union lobby at the St. Helens location.A plaintiff in a lawsuit alleging the St. Helens Community Federal Credit Union violated federal credit union bylaws during a 2012 recall vote of its board members has dropped his legal complaint and is instead vying for a seat on the credit union’s board.

Rainier-based businessman Steve Knebel points to documentation from the National Credit Union Administration, which has regulatory oversight of federal credit unions, that indicates the St. Helens Community Federal Credit Union did indeed violate federal bylaws, which had been a focus of his lawsuit.

Knebel will run for a position on the board this month.

The St. Helens Community Federal Credit Union was subject of the 14-month-long lawsuit over its controversial use of absentee mail-in ballots in a 2012 recall election of five board members.

Recently acquired emails between the St. Helens Community Federal Credit Union and the NCUA show credit union officials were advised prior to the election that counting mail-in ballots would violate federal credit union bylaws.

In an August 2012 email exchange between St. Helens Community Federal Credit Union CEO Brook Van Vleet and Hilary Tormala, supervisory examiner with the NCUA, Tormala advised that recall votes can only be counted if cast by persons attending a special meeting on the matter.

Van Vleet argued in the emails that absentee ballots would allow more members to participate, and the credit union sent a ballot to every one of its 15,000 members in September 2012, resulting in the retainer of those up for recall.

“As noted below, the vote for a special meeting needs to be done in person,” Tormala wrote in the August 2012 email. “I agree with your thoughts on using an absentee ballot, but unfortunately, the voting needs to take place at the special meeting. If you want a second opinion, you could contact our Office of General Counsel.”

In a 2012 letter from the credit union mailed to its members prior to the recall vote, Van Vleet wrote, “While respecting the members’ rights to voice their opinions through this process, I strongly advise you that an unwarranted and impulsive recall at this time will be disruptive to the credit union.”

That letter, Knebel has alleged, unfairly influenced the vote of credit union members who chose to skip the in-person vote on the recall and instead vote remotely. Knebel said those who were in attendance at the special meeting voted to recall the five board members, but absentee votes tipped the scales in the board’s favor.

A March 2013 letter from Michael J. McKenna, general counsel for the NCUA, to Knebel’s attorney affirmed the counting of absentee ballots in recall elections violates federal credit union bylaws.

“The use of mail ballots in a director removal election violates the FCU bylaws,” the letter reads, continuing, “State law plays no role in determining governance issues where the FCU bylaws are clear and unambiguous.”

Credit union maintains

its position

by: FILE PHOTO - The St. Helens Community Federal Credit Union will hold an annual meeting June 24 where member Steve Knebel will run for a position on the board. In an email to the Spotlight, St. Helens Community Federal Credit Union Vice President Ryann Weaver wrote that the credit union still feels it was in compliance with FCU bylaws, despite clear documentation from the NCUA that it wasn’t.

“The board agreed in August 2012, and continues to agree, that the use of absentee ballots for the special meeting was permissible under the bylaws,” Weaver wrote. “The board also agreed that the use of mail ballots was the best way to provide the entire membership with the opportunity to vote in the special meeting.”

While Weaver claims judges in Knebel’s lawsuit ruled the NCUA letter was merely an opinion and not binding, the NCUA’s website states that it has sole responsibility for all legal matters affecting the NCUA, including “providing interpretations of the Federal Credit Union Act and NCUA Rules and Regulations to the agency and to outside parties.”

Specifically, the Federal Credit Union bylaw states: “Notwithstanding any other provisions in the bylaws, any director or committee member of of this credit union may be removed from office by the affirmative vote of a majority of the members present at a special meeting called for the purpose, but only after an opportunity has been given to be heard.”

While the NCUA acknowledged the violation, it balances it against other considerations concerning member rights and opted to not intervene in the mail-in campaign.

An email from the agency states, “In making this determination, we review all of the facts and circumstances and consider whether the violation presents a safety and soundness concern or threatens members’ fundamental material rights.”

Weaver wrote that the NCUA, after reviewing Knebel’s information and the accompanying legal analysis, “determined it would not intervene to prohibit the use of mail ballots or otherwise interfere with the special meeting. The NCUA determined that the credit union’s actions did not violate fundamental member rights.”

Lawsuit dropped

Knebel dropped the lawsuit in April, claiming he could no longer afford the legal battle, which he says cost him more than $18,000 in legal fees.

Weaver told the Spotlight that Knebel’s attorneys in April solicited the credit union for a settlement on the lawsuit, which Knebel said is “absolutely not true.”

The settlement, which Knebel declined, would have required both he and his wife to leave the credit union, sign a non-disparagement clause and not pick up the lawsuit again.

“I’d like to make darn sure they never do this again,” Knebel said about his motivation behind the lawsuit. “They seem to think I’m living in the past, but this has been a continuous, ongoing process for two years.”

Still a member of the credit union, Knebel plans to run for a position on the board at an annual meeting on June 24.

“My opinion is that they pretty much ignored the 650 people that turned in a petition, and the seven board members and CEO decided to engineer their own fixed election,” Knebel said.

The credit union’s board of directors has indicated it does not want him to join and has called his effort to hold the credit union accountable a “crusade of harassment.”

“At this point, Mr. Knebel’s actions are little more than an attempt to distract our members and community from the significant progress we have made since he first tried to remove legitimately elected board memers to advance his personal agenda,” a June 9 statement from the board reads.

Knebel was part of a group that started a recall petition in June 2012 after an annual meeting when the credit union’s then-CEO and board chair, Charlotte Hart, allegedly told members the board was not in talks with Wauna Federal Credit Union about a merger. Several days later Hart announced the credit union had already signed an agreement with Wauna to begin preliminary merger discussions.