Credit union spending controversy

May 18, 2009 10:23:59 PM PDT
Board members at First Jersey Credit Union say the trips were for education, but the former CEO of a New Jersey credit union says board members violated their own policy on travel expenses, and then let her go for flagging state auditors. This is the first time that CEO is speaking out after filing a lawsuit under the state whistle blowers act. She claims board members of First Jersey Credit Union ousted her because she flagged the state about their questionable educational trips

"I think this was outright abuse," said Joanne Lazzara about cruises to exotic locations. "Panama, Alaska, Mediterranean, Scandinavia?."

Trips taken by Board members of First Jersey Credit Union headquartered in Wayne, largely made up of postal workers. Lazarra, the now former CEO who didn't go on the trips, is suing, claiming the board ousted her for blowing the whistle on their escalating and improper "education" expenses.

"It was not educational. They may have attended a couple of classes, but this was not educational," Lazarra said. "It was an excuse to take the family and get away.... There was more money spent by board members than I spent on my employees for the year and my employee staff is 31."

Lazzara's invoices show, for example, that Board Chairman Edward Sinning went on a Scandinavian credit union conference cruise with his wife in 2007. Total price was nearly $13,000. They reserved the most expensive cabin possible -- an oceanfront suite with a balcony.

Others, like board member Bruce Grygus, cruised with his wife to Alaska that same year. In 13 days, there were just 3 meetings on the itinerary. Total price was also nearly $13,000.

"They violated their own policy. They wrote a policy for $6,000 and they violated their own policy," Lazzara said. "At a time when we should be cutting costs, they were booking cruises."

We decided to ask the board about the "educational expenses" at the recent annual meeting at the credit union, but they declined to answer our questions.

A state audit for 2006, according to these sworn statements, labeled the amount that board members expensed for education as "gratuitous," the itineraries as "lavish," and ordered those who expensed anything over $6,000 to pay it back.

She angered board members because they were happy in their world of taking these trips so long as no one disturbed that, and she got in the way of that," attorney Robyne LaGrotta said.

"We're no different than what's happening with the Merrill Lynch's and the AIG's. We're just on a smaller scale, and it's not me, a CEO, that's doing it. It's the board members," Lazzara explained.

The Board denies Lazzara was retaliated against and they dispute the state's characterizations of the trips, but so, far, no has disputed the amount that was spent.

The board did change its travel policy in 2008, restricting out of state trips and the number of people who could travel at the same time. They completely removed the dollar limit for expenses.