General Operating Procedures

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=3 height=64 BGCOLOR="#FFFFFF" TEXT="#080000" bgproperties="fixed" background="04b64643.gif"> <div> <I>General Operating Procedures</I></div> <div> </div> </td> </tr><tr> <td valign="top" rowspan="2" width=160 BGCOLOR="#996666" TEXT="#080000" bgproperties="fixed" background="04a64643.gif"> <div> <A HREF="id52.htm" TARGET="_top" TITLE="Current Topic"><U><B>Current Topic</B></U></A></div> <bR> <bR> <bR> <div> <A HREF="id64_m.htm#top_of_page" TARGET="TRLX_Middle" TITLE="General Operating Procedures"><U><B>Top of Page</B></U></A></div> </td> <td valign="top" height=389 colspan=2 BGCOLOR="#FFFFFF" TEXT="#080000" bgproperties="fixed" background="04b64643.gif"> <div> <B> <A NAME="top_of_page"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B></div> <DIV ALIGN="LEFT"></DIV> <div> SECTION 8 - GENERAL OPERATING PROCEDURES</div> <bR> <div> <U>TABLE OF CONTENTS</U></div> <bR> <div> <A HREF="#acting_as_your_own_lawyer" TITLE="General Operating Procedures"><U>ACTING AS YOUR OWN LAWYER</U></A>     </div> <bR> <div> <A HREF="#agency_and_agents___credit_union" TITLE="General Operating Procedures"><U>AGENCY AND AGENTS - CREDIT UNION RESPONSIBILITIES</U></A>     </div> <bR> <div> <A HREF="#legal_actions_against_the_credit_union" TITLE="General Operating Procedures"><U>LEGAL ACTIONS AGAINST THE CREDIT UNION</U></A>     </div> <bR> <div> <A HREF="#subpoenas" TITLE="General Operating Procedures"><U>SUBPOENAS</U></A>     </div> <bR> <div> <A HREF="#power_of_attorney" TITLE="General Operating Procedures"><U>POWER OF ATTORNEY</U></A>     </div> <bR> <div> <A HREF="#checklist_for_power_of_attorney" TITLE="General Operating Procedures"><U>CHECKLIST FOR POWER OF ATTORNEY</U></A>     </div> <bR> <div> <A HREF="#computer_contracts" TITLE="General Operating Procedures"><U>COMPUTER CONTRACTS</U></A>     </div> <bR> <div> <A HREF="#computer_fraud" TITLE="General Operating Procedures"><U>COMPUTER FRAUD</U></A>     </div> <bR> <div> <A HREF="#escheat" TITLE="General Operating Procedures"><U>ESCHEAT</U></A>     </div> <bR> <div> <A HREF="#soldiers_and_sailors_civil_relief_act" TITLE="General Operating Procedures"><U>SOLDIERS AND SAILORS CIVIL RELIEF ACT</U></A>     </div> <bR> <div> <A HREF="#loan_insurance" TITLE="General Operating Procedures"><U>LOAN INSURANCE</U></A>     </div> <bR> <div> <A HREF="#bond_coverage___fraudulent_acts_and" TITLE="General Operating Procedures"><U>BOND COVERAGE - FRAUDULENT ACTS AND TRANSACTIONS</U></A>     </div> <bR> <div> <A HREF="#i_r_s__tax_levy" TITLE="General Operating Procedures"><U>I.R.S. TAX LEVY</U></A>     </div> <bR> <div> <A HREF="#responsibilities_of_the_board_of" TITLE="General Operating Procedures"><U>RESPONSIBILITIES OF THE BOARD OF DIRECTORS</U></A>     </div> <bR> <div> <A HREF="#expulsion_of_a_member" TITLE="General Operating Procedures"><U>EXPULSION OF A MEMBER</U></A>     </div> <bR> <div> <A HREF="#indemnification_of_the_board_of" TITLE="General Operating Procedures"><U>INDEMNIFICATION OF THE BOARD OF DIRECTORS</U></A>     </div> <bR> <div> <A HREF="#living_trusts" TITLE="General Operating Procedures"><U>LIVING TRUSTS</U></A>     </div> <bR> <div> <A HREF="#sexual_harassment" TITLE="General Operating Procedures"><U>SEXUAL HARASSMENT</U></A>   </div> <bR> <div> CHECKING ACCOUNT TIPS  </div> <bR> <bR> <bR> <bR> <div> <B>SECTION 8 - GENERAL OPERATING PROCEDURES</B></div> <bR> <div> <B> <A NAME="acting_as_your_own_lawyer"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B></div> <DIV ALIGN="LEFT"></DIV> <div> <B>ACTING AS YOUR OWN LAWYER</B></div> <bR> <div>      Generally speaking, a corporation, whether as a plaintiff or as a defendant, cannot represent itself through an officer or manager in a legal proceeding.</div> <bR> <div>      The exception is a case in which the amount of judgment sought is small enough to be brought in the Small Claims Division of the Superior Court's Special Civil Part.  The jurisdictional limit of the Small Claims Division is $2,000.00.  That means that if you wish to sue a member and the amount you seek to recover is less than $2,000.00, you may bring the action without an attorney in the Small Claims Division.  The Court is very informal and operates similar to the "People's Court" program on television. </div> <bR> <div>      The Court Clerks are usually very helpful in completing the forms.  Make sure you bring a copy of the Note to attach to the complaint.  Include <U>all</U> interest to the date you file the complaint, even if you wrote off the loan years ago.  NCUA requires you to write off the loan because it is non-performing.  However, the member still owes the Credit Union all of that unpaid interest.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="agency_and_agents___credit_union"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>AGENCY AND AGENTS - CREDIT UNION RESPONSIBILITIES</B></div> <bR> <div>      In legal terminology, the use of the word "agent" or "agency" carries a special meaning with respect to the rights and/or liabilities created by the act of one person on behalf of another.  A good legal definition of an agent is "one who undertakes to transact some business, or to manage some affair for another, by the authority and on the account of the other person, and to render an account for such business affair".</div> <bR> <div>      When a Credit Union hires an employee to work in its office, be it a clerk, teller or office manager, such person is an agent of the Credit Union, and if the acts performed by the agent are, or appear to be within the power delegated by the Credit Union, then the Credit Union becomes liable for the acts of its agents.  The same rationale applies when a Credit Union retains an organization or a person to repossess a vehicle.  If the acts performed by the organization or person are within the apparent scope of the authority given to it by the Credit Union, the Credit Union may be held liable for errors or wrongs committed by such organization or person.  The Credit Union should therefore specifically set the limits within which the people in its organization may act on behalf of the Credit Union.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="legal_actions_against_the_credit_union"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>LEGAL</B><B> ACTIONS AGAINST THE CREDIT UNION</B></div> <bR> <div>      Indirect legal actions involving a Credit Union may arise from situations where spouses or family members are contesting the disposition of a member's shares or insurance.  The Credit Union is named as a defendant because it has the money, which is the basis of the suit.</div> <bR> <div>      Direct actions against a Credit Union may also arise from an accident in which an employee, member or third party is  injured because of the Credit Union's negligence.  Direct actions against a Credit Union may also arise from the refusal of a member's loan application, from a repossession, from an employment discrimination claim or from an alleged violation of the Equal Credit Opportunity Act.  Sometimes complaints are made to State or Federal administrative agencies such as the New Jersey Civil Rights Commission or the Equal Employment Opportunity Commission.  Rarely will the service of the Summons and Complaint come as a surprise.  If there is an argument over a member's account, you will have had demands made previously.  If an accident has occurred, you will be aware of it, and should have taken statements from the parties and the witnesses.  If discrimination is involved, the Credit Union will have had verbal complaints first.  Whenever you have knowledge of a potential claim you have an obligation to report the situation to your insurance carrier.</div> <bR> <div>      If a complaint is filed in the courts, the Credit Union has 35 days after it is served with the complaint to file an answer.  The various regulatory agencies, such as the Equal Employment Opportunity Commission and the NJ Wage and Hour Commission, may also serve the credit union with a notice of hearing.  This will generally require a hearing at the agency and should be treated with the same degree of concern as a court complaint.</div> <bR> <div>      Every Credit Union, whether it occupies its own building or uses the sponsor's premises, should have liability insurance for personal injury and property damage.  It should also have additional policy riders such as directors and officers liability and employment practices liability.  These extra riders should be discussed with your insurance agent.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="subpoenas"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>SUBPOENAS</B></div> <bR> <div>      When members are involved in litigation between themselves, the Credit Union will sometimes receive demands for information pertaining to member's accounts, transactions, shareholdings, etc.  Where a member has voluntarily, in writing, authorized the Credit Union to release such information, no problem exists.  Where there is no authorization from the member, no information may be revealed unless a legal document is served upon the Credit Union from a Court or agency that has jurisdiction over the Credit Union.  Those courts and agencies are generally only from New Jersey or federal authorities.  A Credit Union with branches in various states is also subject to the jurisdiction of those states.  The documents (subpoena, levy, demand to produce documents, etc.) must specify the name or names of the persons about whom the inquiry is being made, the nature of the information requested and the documents (share and loan account ledgers, applications, notes, etc.) that are required.  Don't respond to a general fishing expedition.  Call up the agency or attorney serving the notice and ask them what they really want.  Make them think. </div> <bR> <div>      Where the subpoena has been issued by a Court or agency with jurisdiction over the Credit Union, it must be honored and the Credit Union must appear at the hearing or produce the records requested.  In most cases, the person serving the subpoena only wants records.  However, the subpoena usually contains language ordering a person to appear at a certain place.  Don’t be shy about calling up the attorney who prepared the subpoena and asking them what they want.  In most cases you will only have to send them copies of documents and will not have to appear personally.</div> <bR> <div>      To sum up, if the Credit Union is neither a plaintiff nor a defendant in a legal action, you may not give any information to any party in the action about a member, unless the member has consented or unless you have been served with a valid subpoena.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="power_of_attorney"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>POWER OF ATTORNEY</B></div> <bR> <div>      A Power of Attorney is a signed and acknowledged (notarized) written document in which a Principal authorizes an Agent to act on his behalf.  The Principal is the person executing the Power of Attorney and the Agent is generally referred to as an attorney-in-fact.  Any Credit Union can rely upon a Power of Attorney.  There are two types of Powers of Attorney, General and Special.  A General Power of Attorney is a blanket right given by the Principal to the Agent, permitting the Agent to do anything that the Principal could do.  A Special Power of Attorney is for a specific purpose.  For instance, a father might authorize his son to act as his Agent to perform "financial transactions at the ABC Credit Union", in that case the son would only be able to transact business at the Credit Union, but would not be able to deal with the father's account at another financial institution.</div> <bR> <div>      A Credit Union that is presented with a Power of Attorney must read it to make sure that it authorizes financial transactions at the Credit Union.  If it is a General Power of Attorney it may state only that it authorizes the Agent to act in all matter as if he or she were the Principal.  That broad authority includes the power to conduct financial transactions.  </div> <bR> <div>      A Credit Union should only rely on a Power of Attorney which is signed and acknowledged by its Member and which contains an actual original signature of the Principal.  Alternatively, if the Credit Union receives an affidavit of the Agent stating that an original is not available, then the Credit Union may accept a photocopy of the Power of Attorney provided it is certified to be a true copy of the original by either (1) another banking institution; or (2) the county recording office of the County in which the original was recorded.  Powers of Attorney are generally only recorded if they are going to effect real estate.  </div> <bR> <div>      A Credit Union does not have to rely on the Power of Attorney if it believes in good faith (1) that it is not genuine; (2) that the Principal is dead; (3) that the Power of Attorney has been revoked; or (4) that the Principal was under a disability at the time of the execution of the Power of Attorney.  Under New Jersey law the concept of good faith means that something was done honestly regardless or whether it was done negligently.</div> <bR> <div>      It is important that the Power of Attorney be examined carefully.  Sometimes the Principal will only give the Agent the right to act if the Principal becomes disabled.  If the Power of Attorney contains such language, the Credit Union may not allow the Agent to perform the financial transaction unless it is provided with proof, to the Credit Union's satisfaction, that the Principal is then under a disability.  In this case it would be prudent to obtain proof each time the Agent wants to deal with the account.</div> <bR> <div>      It is also recommended that if an Agent is to deal with a Member's account through a Power of Attorney, that the Agent provide evidence satisfactory to the Credit Union of his identity and execute a signature card.  If the Credit Union refuses to permit an Agent to perform an act pursuant to a Power of Attorney, then it must notify the Agent, in writing, that the Power of Attorney has been rejected and provide a reason for the rejection.</div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="checklist_for_power_of_attorney"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>CHECKLIST FOR POWER OF ATTORNEY</B></div> <bR> <div>      The following checklist should assist the credit union in addressing the various considerations that must be evaluated before relying on a power of attorney.</div> <bR> <div>      The power of attorney must:</div> <bR> <div>           be in writing;</div> <bR> <div>           be signed and dated by the principal;</div> <bR> <div>           appoint a person to deal with the account <B>(the attorney-in-fact)</B>;</div> <bR> <div>           be notarized;</div> <bR> <div>           specify an effective date;</div> <bR> <div>           designate the property the attorney-in-fact has the right to control.</div> <bR> <div>      The credit union must always read the document creating the power of attorney very carefully in order to determine that the attorney-in-fact has the authority to do what he or she is proposing to do; and that the attorney-in-fact is exercising his or her authority at the proper time and in the proper manner.</div> <bR> <div> Specific matters of concern to the credit union include:</div> <bR> <div> whether the attorney-in-fact has the authority to deposit and withdraw from accounts in the name of the principal at the credit union; and</div> <bR> <div> whether the attorney-in-fact has the authority to enter the principal's safe deposit box and whether there are any contrary provisions to this authority in the safe deposit box agreement.</div> <bR> <div>      Has the power of attorney been terminated:</div> <bR> <div>           by revocation by the principal;</div> <bR> <div>           by occurrence of an express condition within the document;</div> <bR> <div>           by the incapacity of the principal; or</div> <bR> <div>           by the death of the principal?</div> <bR> <div>      The credit union must read the document carefully in order to determine that no condition or event has occurred that terminates the attorney-in-fact's authority to act under the specified conditions enumerated in the power of attorney.</div> <bR> <div>      If the credit union is unsure whether the attorney-in-fact's appointment has been revoked or terminated by the principal's incapacity or death, it can request the attorney-in-fact to sign a written statement before a notary that the appointment has not been revoked or terminated by the principal's incapacity or death.</div> <bR> <div> The credit union must see an original, signed copy of the power of attorney and keep a photocopy in its files. The person at the credit union who examined the original should so state on the copy. Also, check grantor's signature against the signature card.</div> <bR> <div>      If the credit union decides to rely on the power of attorney, it must require the attorney-in-fact to sign all documents associated with the transaction as follows: "by <B>[attorney-in-fact's name]</B> as attorney-in-fact for <B>[name of principal]</B>."</div> <bR> <div>      Whenever the credit union decides not to honor a power of attorney, it should make a copy of the document for its files and attach a written explanation of why it rejected the power of attorney.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="computer_contracts"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>COMPUTER CONTRACTS</B></div> <bR> <bR> <div>      This article discusses some of the issues with regard to contracts with suppliers of data processing equipment and other computer systems.</div> <bR> <div>      Contracts with computer suppliers are written from the supplier's point of view and generally do not provide sufficient protection to the user.  A supplier may come armed with glossy brochures and rosy promises and then present you with a contract which is totally inadequate to govern your relationship with him.  If you have any doubts with regard to the contract, it should be reviewed by your attorney.  The following list sets forth some of the problem areas of which you should be aware:</div> <bR> <div>      1.     Many contracts contain terms in computer oriented language which may have specific meanings or may have meanings of which you are not aware.</div> <bR> <div>      2.     A date for the program to be on line should be set forth.</div> <bR> <div>      3.     Supplier should represent that the equipment will attain a certain acceptable level of service.</div> <bR> <div>      4.     Supplier should set forth the types of service you will be receiving and when each type will be provided.</div> <bR> <div>      5.     Training schedules and their costs should be set forth.</div> <bR> <div>      6.     Specify when the system will be on or off line.</div> <bR> <div>      7.     Your rights to terminate should be specified.  </div> <bR> <div>      8.     The supplier's rights to terminate should be limited to certain specific reasons as you do not want to be without essential information over a dispute with regard to a $20.00 bill.</div> <bR> <div>      9.     If supplier is to terminate for any reason, he should give you an extended notice period (i.e. one hundred twenty (120) days) to give you time to make arrangements with a new supplier.</div> <bR> <div>      10.     The contract must set forth who is responsible for complying with Consumer Regulations such as Reg. Z, Reg. B and the Fair Credit Reporting Act.  If a supplier represents that its equipment can perform these tasks, then it should assume the responsibility of complying with all the revisions to the law and should indemnify you if any claim is made against you for violations of the law.  This is extremely important.</div> <bR> <div>      11.     If you have remote terminals, you should be covered under the property liability policy of the property owner.  </div> <bR> <div>      12.     There should be a specific procedure for the resolution of any errors.  It should specify how long records are to be retained, which records are to be retained, how you obtain a timely response from the system, and compliance with all Reg. Z error resolution procedures.</div> <bR> <div>      13.     There should be a provision with regard to the confidentiality of all records and permission of the credit union should be obtained before the supplier releases any information.</div> <bR> <div>      The above should not be considered an exclusive list of the items to review in any contract.  However, they are some of the important items that are not usually addressed in the standard form contracts provided by the supplier and are listed to make you aware of the types of questions that should be considered when negotiating with a supplier.  In entering any such contract you should always be concerned with what will happen when things go wrong.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="computer_fraud"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>COMPUTER FRAUD</B></div> <bR> <div>      This area deals not only with the theft of money, but also with the disruption or vandalism of a computer system.  The most frequent culprits are employees, and knowledgeable management supervision is the most effective way to prevent computer fraud.  Absolute protection of a computer system is probably not cost effective, however, the following issues should receive attention at all Credit Unions regardless of their size:</div> <bR> <div>      (a)     Few employees should have access to all aspects of the computer system.  Employees should have access only to those aspects necessary to do their jobs;</div> <bR> <div>      (b)     When an employee is using the system, an activity log should record what is done in order to create an effective audit trail.  On more sophisticated systems this trail should include anything that is looked at, whether or not a change is made.  This information helps a trained auditor to detect frauds early;</div> <bR> <div>      (c)     Back-ups should be created for critical software and data.  The back-up disks or tapes should be stored outside the Credit Union in a secure location;</div> <bR> <div>      (d)     In a small Credit Union, knowledgeable management supervision is critical.  The supervisory committee should be the check upon management and should be knowledgeable in the area of computer equipment;</div> <bR> <div>      (e)     Employees should be trained never to give out their pass words and to positively identify anyone given access to the computer or any area where computer software or data is stored.  People have posed as repairmen or consultants to obtain access to the system and then made transfers into their own accounts.</div> <bR> <div>      It is interesting to note that the amount stolen by computer fraud is inversely related to the chance of being caught and prosecuted.  If a person steals $10,000.00 there is an eighty (80%) percent chance of being caught and prosecuted.  If he steals $250,000.00 the chance declines to forty (40%) percent.  If he steals $1,000,000.00 or more the chance declines to four (4%) percent.  A person who gains access to your computer system can just as easily steal $10,000.00 as $10,000,000.00.  This is an area where you should be forever vigilant.</div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="escheat"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>ESCHEAT</B></div> <bR> <div>      Escheat is a legal term used to describe the power of the State to take personal property which does not have an owner.  The law (<U>N.J.S.A.</U> 46:30B-1) provides that if the property has remained unclaimed for a specific, statutory period, it shall be presumed to be abandoned.  The Escheat Law also provides for an administrative procedure for transferring the property to the State for safe keeping.</div> <bR> <div>      Shares, including accrued interest thereon, are personal property and are presumed abandoned unless the owner of the funds has, within ten (10) years:</div> <bR> <div> (a)     increased or decreased the amount on deposit or presented a passbook or similar evidence of the deposit for crediting of interest;</div> <bR> <div>      (b)     communicated in writing with the credit union concerning the account;</div> <bR> <div>      (c)     otherwise indicated an interest in the account as evidenced by a written memorandum or other record on file prepared by a credit union employee;</div> <bR> <div>      (d)     owned other accounts (or property) in the credit union and the credit union communicates in writing with the owner at the address to which communications regarding the other property regularly are sent; or</div> <bR> <div>      (e)     had another relationship with the credit union concerning which the owner has communicated in writing or for which there is a file memo indicating the owner's indication of an interest in such other property, etc.</div> <bR> <div>      Funds payable on a share draft, check or similar instrument to a person, company, corporation, or other entity, where such party or person remains unknown for five (5) years is presumed abandoned.  </div> <bR> <div>      A report of unclaimed property is to be filed with the State Treasurer before November 1st of each year containing information as of the preceding June 30th.  The report must contain the following information:</div> <bR> <div> (a)     name;</div> <bR> <div> (b)     last known address;</div> <bR> <div> (c)     description of the property (account);</div> <bR> <div> (d)     value or amount:  accounts under $25.00 may be reported in the aggregate;</div> <bR> <div> (e)     date when property became payable, demandable, or returnable;</div> <bR> <div> (f)     date of last transaction.</div> <bR> <div>      (g)     Social Security number or Federal I.D. number of account.</div> <bR> <div>      At the time the report is filed the Credit Union must turn the funds over to the State Treasurer.  The State Treasurer will publish a notice about the property.  Credit Unions need not publish a list of the accounts.</div> <bR> <div>      If, after the Credit Union has sent the funds to the State Treasurer, a person makes a claim for funds from the Credit Union, the Credit Union should refer that person to the State Treasurer. </div> <bR> <div>      In addition to the report, the Credit Union must send written notice to the last known address if the address is one which the bank's records do not disclose to be inaccurate and if the value of the property (in this case, the account) is $50.00 or more.  This notice is to be sent "not more than 120 days before filing the report" referred to above.</div> <bR> <div>      Under previous law the Credit Union could not charge the dormant account any fee because of inactivity or cease the payment of interest.  The new law modifies this restriction.  It permits a charge due to inactivity if (1) there is a written agreement between the Credit Union and the member which permits such a charge or the cessation of interest, (2) notice of the imposition is sent to the last known address not more than three months before the charges are imposed, and (3) the bank regularly imposes such charges and does not regularly reverse or otherwise cancel the charges.  The implementation of such charges will require Credit Unions to revise their rules and regulations governing accounts.</div> <bR> <div>      The act also deals with personal property other than deposits and accounts.  A summary of these provisions is as follows:</div> <bR> <div> <TABLE BORDER="0" CELLPADDING="1" CELLSPACING="1" WIDTH="627" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="VOID" RULES="NONE" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 225 WIDTH="310"><div> <U>Type of Property</U></div> <bR> <div> Contents of Safe-Deposit Boxes</div> <bR> <div> Checks (including certified checks and cashiers checks) and drafts</div> <bR> <div> Stock shares or other evidence of interest in a business</div> <bR> <div> Stock Dividends</div> <bR> <div> Travelers' Check</div> <bR> <div> Money Orders</div> </tD> <tD VALIGN=TOP WIDTH="310"><div> <U>Abandonment Period</U></div> <bR> <div> 5 years after expiration of rental period</div> <bR> <div>  5 years</div> <bR> <bR> <div>  7 years</div> <bR> <div>  7 years</div> <bR> <div> 15 years</div> <bR> <div>  7 years</div> </tD> </tR> </TABLE></div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="soldiers_and_sailors_civil_relief_act"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>SOLDIERS AND SAILORS CIVIL RELIEF ACT</B></div> <bR> <div>      The Soldiers and Sailors Civil Relief Act is a federal law that was passed to further the interest of the nation by temporarily limiting financial obligations for individuals whose ability to repay has been lessened as a result of being called to active duty.  It recognizes that some individuals who incur debts prior to being called to active duty may not be able to afford those loan payments once they are called up.  If the ability of the reservist to repay previous loans is "materially affected" by the call-up, then the interest on a previously outstanding loan is reduced to 6% a year.  The presumption is that a call-up does materially affect the reservist's ability to repay and it would be upon the Credit Union to rebut that presumption.</div> <bR> <div>      The protection of the Act begins on the date service begins and ends when an individual is separated from active duty.  You should ask to see a copy of the reservist's orders to report for active duty.  The restrictions of the Act do not apply to personnel who were already on active duty when they took out the loan.  The theory is that those individuals were familiar with their financial circumstances and would have not borrowed voluntarily if they could not repay.  However, a reservist who is called up counted on his or her regular salary to pay the loan and generally will be making less when they are called to active duty.  </div> <bR> <div>      In certain circumstances companies will continue the reservist's regular pay while he or she is on active duty.  In this situation, their circumstances would not be "materially affected" and the Credit Union could seek to have the Court continue the interest at the regular rate.  However, note that the Credit Union must go to Court in order to do this, and in most cases that will not be economically practical.</div> <bR> <div>      The 6% limitation applies to outstanding balances on loans taken out prior to active duty, including credit card lending, home equity lines, home mortgages, car loans, share secured loans and signature loans.  It does not apply to new advances under any existing credit cards or home equity line of credit program taken after the reservist receives orders to report.  The 6% limitation also applies to joint obligations incurred prior to the reservist's call-up, even if the joint obligor is not called up.</div> <bR> <div>      A reservist may not suspend payments without Court approval.  Also the Act provides that the member and the Credit Union may modify the terms of the loan if they both agree.  Therefore, the member may ask you to renegotiate the terms of the loan at any interest rate that the two of you can agree upon.  In this situation the 6% rate does not apply.</div> <bR> <div>      Open end obligations such as credit card borrowing and home equity lines of credit require a change in terms notice under Truth and Lending whenever the terms are altered.  However, rate reductions are explicitly exempted from such notice requirements.  Therefore, the Credit Union does not have to give a change in terms notice when it lowers the interest rate to 6%.  However, change in terms requirements must be met when the member is no longer on active duty and the Credit Union seeks to increase the interest to the regular rate.  Not less than fifteen (15) days prior to the rate increase, the Credit Union must provide a written notice to the member.  The Federal Reserve Board has indicated that the notice may be given at any time.  Therefore, it is suggested that you give the change in terms notice as soon as possible after receiving a copy of the reservist's orders to report to active duty.  The notice should state that the rate will be increased to the original rate upon discharge of the reservist from active duty.  The regular rate on the loan may be reinstated as soon as the reservist is no longer on active duty.</div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="loan_insurance"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>LOAN INSURANCE</B></div> <bR> <div>      Many Credit Unions have terminated loan protection insurance, particularly the disability portion thereof, due to its expense.  In lieu thereof, the borrower is advised that he may secure some form of disability coverage, at his own expense, that will pay the loan in the event he becomes disabled.</div> <bR> <div>      A New Jersey law suit produced a defense in which a delinquent borrower alleged that his loan was covered by disability insurance.  From the facts, it appeared that when the Credit Union terminated the disability insurance, approximately two (2) years before the maturity date of the loan, no notice was given to the member,  The court held that the disability insurance was a condition of the loan and that the failure to give notice of its cancellation was sufficient cause to enter a verdict in favor of the borrower.</div> <bR> <div>      It is recommended that when a Credit Union wants to terminate a life or disability plan for which it has been paying, that it notify all members with outstanding loans at least 90 days prior to the termination. </div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="bond_coverage___fraudulent_acts_and"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>BOND COVERAGE - FRAUDULENT ACTS AND TRANSACTIONS</B></div> <bR> <bR> <div> <B>1.     FRAUDULENT ACTS BY OFFICERS, DIRECTORS AND EMPLOYEES</B></div> <bR> <div> Fraudulent actions of any kind by an officer, director or employee are covered by the bond.  No special clauses with added premiums are necessary.</div> <bR> <div> <B>2.     FRAUDULENT ACTS IN LOAN TRANSACTIONS</B></div> <bR> <div> Credit Unions desiring to insure against forgery or alteration of loan instruments can secure, by paying an additional premium, coverage for those particular activities.  However, it must be clearly understood that although the clauses refer to the word "fraud", only acts of fraud involving forgery or alteration are covered.  Other types of fraud are not covered by the bond.  For example, a member applies for a loan which requires that he put up stocks or bonds as collateral.  The stocks or bonds are delivered to the Credit Union to be held as a pledge until the loan is paid.  It turns out that the property pledged does not belong to the borrowing member.  This is a form of fraud on the Credit Union not covered by the bond.</div> <bR> <div>      Another example is when a member applies for a loan to buy an automobile and agrees that he will      execute the Security Agreement and will secure and deliver to the Credit Union a Certificate of           Ownership showing the lien of the Credit Union thereon.  The member receives the loan proceeds, buys      the car, but secures a Certificate of Ownership that does not show the Credit Union as the holder of the      lien.  In addition, the member fails to deliver the Certificate of Ownership to the Credit Union.  This is      fraud, but would not be covered by the insuring clauses previously mentioned.</div> <bR> <div> To sum up, the CUNA Mutual Bond does not insure against all fraudulent acts committed by members.  It protects only with respect to officers, directors and employees.  Coverage is available, by paying the additional premium, for acts of forgery or alteration by members.  Fraudulent activity in a loan transaction, other than forgery or alteration, is not covered by the bond or the additional insuring clauses.</div> <div>  </div> <div> <B>     </B><B> <A NAME="i_r_s__tax_levy"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>I.R.S. TAX LEVY</B></div> <bR> <bR> <div>      The Internal Revenue Service occasionally seeks to seize a member share account in order to satisfy unpaid taxes.  Prior to doing so, the I.R.S. must file a tax lien in the County and issue a Notice of Levy to the Credit Union.   When a Credit Union receives such a Notice it is obligated to turn over the shares.  However, if the shares are pledged to secure an outstanding loan, the Credit Union generally writes a letter to the I.R.S. so advising it and the I.R.S. asserts no further claim against the monies.</div> <bR> <div>      However, state-chartered Credit Unions in Kansas and Wyoming have had unpleasant experiences with regard to I.R.S. Notices to Levy.</div> <bR> <div>      In Kansas, a Credit Union received a Notice and advised the I.R.S. in writing that the shares were pledged to secure a loan which was in default at the time.  The Credit Union had no further contact from the I.R.S. until a complaint was filed seeking to seize the shares plus a 50% penalty.  The I.R.S. would not negotiate and the matter was tried in the Federal Court, which ruled in favor of the Internal Revenue Service.</div> <bR> <div>      In Wyoming, a Credit Union was served with a Notice to Levy, turned over the share funds to the I.R.S. under protest, and then demanded the return under several theories.  A letter campaign was organized immediately following the turn over of funds and the Credit Unions' Attorney sent a detailed memo to the local I.R.S. office indicating why the Credit Union thought it had priority over the I.R.S. lien.  Nothing was heard from the I.R.S. and so further letters were sent by the Attorney.  Finally, the money was returned to the Credit Union by the I.R.S. with no explanation.</div> <bR> <div>      The two cases involved state chartered Credit Unions and indicate the hazards facing Credit Unions in this area.  The I.R.S. has not forced the issue with any federally chartered Credit Unions.  They may feel that they are on less secure ground due to the fact that Federal Law provides a lien of shares to the Credit Union.  In the two cases cited there was a State Law which granted a lien, but the Kansas office of the I.R.S. apparently felt its lien prevailed.  Two separate I.R.S. offices were involved in the two separate States which indicates that there is no central effort on the part of the Internal Revenue Service to assert priority over pledged shares.  Credit Unions should weigh the following matters in determining when to resist an I.R.S. Levy:</div> <bR> <div>      (i)     The amount in the Share Account is very important.  It certainly would not be wise to refuse to turn over a small amount whether the Credit Union thought it had priority or not;</div> <bR> <div>      (ii)     One of the most crucial facts that a Credit Union can have in support of its priority position is the fact that the member was in default on the loan prior to the I.R.S. Tax Lien being filed.</div> <bR> <div>      (iii)     The Credit Union should also examine the adequacy of its other collateral for the loan.  Should it be adequately collateralized then there would be no need to spend the necessary expenses in resisting the levy.</div> <bR> <div>      a.     <U>21-Day Holding Period</U>.</div> <bR> <div>           IRS Regulations require a 21-day holding period before the Credit Union may turn the fund over to the IRS after a levy.  When the IRS levies on a Member's account, the Credit Union must freeze the account and then turn over the deposit to the IRS district director on the first business day following 21 calendar days after the date the levy is made.  The Credit Union must surrender the deposits unless it receives notice from the IRS that the levy is released, or the holding period has been extended.</div> <bR> <div>           The levy applies only to those funds on deposit at the time the levy is served.  In addition to surrendering the funds that are frozen, the Credit Union must include any dividends or interest that have accrued on those deposits prior and during the holding period (or any extension).  However, the Credit Union must not surrender any amount greater than the amount of the levy.  </div> <bR> <div>           The examples provided by the IRS are very helpful in understanding what sums are to be surrendered:</div> <bR> <div>           <U>Example 1</U>:  On April 2, 2000, a notice of levy for an unpaid income tax assessment due from Member A in the amount of $10,000 is served on ABC Credit Union with respect to Member A's share account.  At the time the notice of levy is served, ABC Credit Union holds $5,000 in Member A's dividend bearing share account.  On April 24, 2000 (the first business day after the 21-day holding period) the Credit Union must surrender $5,000 plus any dividends that accrued on the account under the terms of Member A's contract with ABC Credit Union up through April 23, 2000, (the last day of the holding period).</div> <bR> <div>           <U>Example 2</U>:  The facts are the same as in Example 1 except that on April 3, 2000, Member A deposits an additional $5,000 into the account.  On April 24, 2000, ABC Credit Union must still surrender only $5,000 plus the dividends which accrued thereon until the end of the holding period, because the notice of levy served on April 2, 2000, attached only to those funds on deposit at the time the notice was served and not any subsequent deposits.</div> <bR> <div>           <U>Example 3</U>:  The facts are the same as in Example 1 except that at the time the notice of levy is served on ABC Credit Union, Member A's share account contains $50,000.  On April 24, 2000, ABC Credit Union must surrender $10,000, which is the amount of the levy.  The levy will not apply to any dividends that accrue on the deposit during the 21-day holding period, because the entire amount of the levy is satisfied by the deposits existing at the time the levy is served.</div> <bR> <div>           <U>Example 4</U>:  The facts are the same as in Example 1 except that the amount of the levy is $5,002.  Under the terms of Member A's contract with ABC Credit Union, the account will earn more than $2 of dividends during the 21-day holding period.  On April 24, 2000, ABC Credit Union must surrender $5,002 to the district director.  The remaining dividends which accrued during the 21-day holding period are not subject to the levy.</div> <bR> <div>           <U>Example 5</U>:  On September 3, 2000, Member A opens a $5,000 sixmonth share certificate account with ABC Credit Union.  Under the terms of the account, the depositor must forfeit up to 30 days of dividends on the account in the event of early withdrawal.  On January 4, 2001, a notice of levy for an unpaid income tax assessment due from Member A in the amount of $10,000 is served with respect to Member A's share certificate account.  On January 26, 2001, ABC Credit Union must surrender $5,000 plus the dividends which accrued on the account through January 25, 2001, minus the penalty of 30 days of dividends as provided in the deposit agreement.</div> <bR> <div>           <U>Example 6</U>:  Same facts as in Example 5 except that the notice of levy is served on ABC Credit Union on February 15, 2001.  The certificate matures on March 8, ABC Credit must surrender $5,000 plus the dividends that accrued on the certificate without any reduction for penalties.</div> <bR> <div>           If the Credit Union remits dividends or interests to the IRS as a result of the levy, those dividends or interests are treated as payments to the Member and must be included in the Member's 1099 Form.</div> <bR> <div>           It is conceivable that the Member may waive the 21-day holding period and notify the Credit Union to turn over the funds to the IRS immediately after the levy.  If you are contacted by your Member and told to do this, make sure you get his approval in writing.  When you forward the funds to the IRS, advise them that the Member waived the 21-day waiting period.  If the Member believes the levy is incorrect, then the Member must notify the IRS which must investigate and resolve the alleged error.  Any dispute about the levy is between the Member and IRS, and not the Credit Union.  In such a situation you will either receive notice from the IRS to extend the 21-day holding period or to release the levy.</div> <bR> <div>      b.     <U>Effect of Honoring Levy</U></div> <bR> <div>           A Credit Union that properly identifies the account on which the IRS has levied and adheres to the holding period and surrender requirements that are set forth above, his discharged from any obligation or liability to the Member with regard to the funds.</div> <bR> <div>           However, if the Credit Union surrenders funds held in an account not properly subject to an IRS levy (i.e. in which the Member has not apparent interest), it is not relieved of liability to a third party who has an interest in the account.  However, if the Credit Union makes a good faith determination that the Member has an apparent interest in the funds and surrenders them pursuant to the levy, then the Credit Union is relieved of liability to a third party who has an interest in the funds, if it is subsequently determined that the funds were not properly subject to levy.</div> <bR> <div>           Examples are as follows:</div> <bR> <div>           <U>Example 1</U>:  ABC Credit Union is served with a notice of levy for an unpaid tax liability due from Member A in the amount of $2,000.  ABC Credit Union holds $2,000 in a joint share draft account in the names of A or B or C.  Although all of the deposits into the account were made by B and C, A has an unrestricted right to withdraw the funds from the account.  ABC Credit Union surrenders the entire account to the IRS district director at the end of the 21-day holding period.  Under the regulations, ABC Credit Union is not liable to B or C for any amount, even if B or C can prove that the funds in the account did not belong to A, because A's unrestricted right to withdraw the funds is an interest which is subject to levy.  B or C may, however, seek the return of the funds from the United States as provided in the Internal Revenue Code.</div> <bR> <div>           <U>Example 2</U>:  ABC Credit Union is served with a notice of levy for any unpaid tax liability due from "John H. Smith, Sr." in the amount of $5,000.  ABC Credit Union fails to read the notice of levy carefully.  When searching its records, ABC Credit Union finds the name of "John H. Smith, Jr." and looks no further.  ABC Credit Union surrenders $5,000 from John H. Smith, Jr.'s share account to the IRS district director.  ABC Credit Union is not discharged from liability to John H. Smith, Jr. because the delinquent taxpayer (John H. Smith, Sr.) had no apparent interest in the account of John H. Smith, Jr.  (Generally, John H. Smith, Jr. may seek return of the payment from the United States as provided in the Internal </div> <div> Revenue Code).</div> <bR> <div>           <U>Example 3</U>:  ABC Credit Union is served with a notice of levy for an unpaid tax liability due from "Robert A. Jones" in the amount of $5,000.  ABC Credit Union searches its records and identifies four separate accounts of $1,000 each in the name of "Robert A. Jones."  All four accounts list different addresses and social security identification numbers.  ABC Credit Union surrenders all four accounts totaling $4,000 in response to the levy.  ABC Credit Union could not in good faith have determined that all four accounts were levied upon.  Therefore, ABC Credit Union is not discharged from liability to any person other than the taxpayer whose account was levied upon. (26 C.F.R. §301.6332-1(c)(4))</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="responsibilities_of_the_board_of"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>RESPONSIBILITIES OF THE BOARD OF DIRECTORS</B></div> <bR> <bR> <div>      The Federal Credit Union Act states that the Board of Directors shall have the general direction and control of the affairs of the Federal Credit Union.  The election of a person to the Board of Directors should not be considered an honorary post, but carries with it a heavy responsibility which cannot be delegated.  The Act requires both "general direction" and "control of the affairs" of the Credit Union.  General direction involves the policy decisions made by the Board within the guidelines and limitations of the legal framework.  Control of the affairs involves hiring competent people to run the Credit Union and seeing that Board established policies and prudent business practices are carried out by those employees.  </div> <bR> <div>      The law has defined two (2) components of the duty owed to the Credit Union by its Directors:</div> <bR> <div> (a)     the duty of care requires that Directors act with care in fulfilling their task of policy making and monitoring Credit Union operations;</div> <bR> <div> (b)     the standard is the same degree of care and prudence that men, prompted by self interest, generally exercise in their own affairs.  However, because they direct financial institutions, board member's duty of care is generally held to be higher than that of other corporate directors.</div> <bR> <div>      (c)     the duty of loyalty requires directors to avoid using their positions as directors to gain personal advantage.  This particularly relates to business or investment opportunities which are closely related to the activities of the Credit Union.  Investigation reveals that many failed Credit Unions display a failure of the Board to pay attention to this duty of loyalty.</div> <bR> <div>      Credit Union directors can properly fulfill their duties by following these guidelines:</div> <bR> <div> (1)     <B>Attend all meetings</B>.  All directors are held responsible for the actions of those who do attend.  Too many directors feel that their election is an honorary post that requires no further action on their part.  If they abdicate their responsibility to other directors and those directors do not act in a prudent manner, all of the directors are responsible for the imprudent actions of those who do act;</div> <bR> <div>      (2)     <B>Know the legal framework governing the Credit Union.</B>  This is a highly regulated industry and it is imperative that directors keep up with changes in the law.  Credit Unions are providing many more sophisticated services these days than they ever have before and they should not be reluctant to seek expert help when necessary.  The expert help should be sought before there is a problem and not after it is too late;</div> <bR> <div>      (3)     <B>Do the things specifically required of the Board.</B>  This includes the review of all financial statements and reports prepared by the staff;  appointment of committees;  oversight of committees to assure they are functioning properly; and a review of the insurance program of the Credit Union at least annually;</div> <bR> <div>      (4)     <B>Receive, review and compare all financial reports.</B>  These usually indicate the first warning of trouble.  The Board should insist that a comparison of the important points in the financial reports be made for the last several years so that any trends can be spotted early;</div> <bR> <div>      (5)     <B>Plan and prepare a budget</B>;</div> <bR> <div>      (6)     <B>Keep accurate minutes of Board meetings.</B>  Assure that an independent and competent person keeps the minutes and that they accurately reflect the actions taken at the meeting.  Do not just rubber stamp the minutes at the next meeting.  Rather, review them and assure that they actually incorporate what was discussed.  Make sure that they are not creatively edited by the person keeping the minutes so that they do not accurately reflect the actions taken;</div> <bR> <div>      (7)     <B>Maintain a good working relationship with its regulators.</B>  All examinations should be reviewed carefully and follow up corrections should be taken.  However, the staff should be directed to require that any suggestions and exceptions made by the regulators be documented in writing.  Suggestions from the regulators should not be blindly accepted.  If there is any question with regard to the suggestions or exceptions found by the regulators, seek competent advice immediately;</div> <bR> <div>      (8)     <B>Establish investment guidelines for the Credit Union.</B>  Set the authority for the employees and staff within those guidelines and monitor and control execution of the investment program.  Do not abdicate your responsibility entirely to the staff;</div> <bR> <div>      (9)     <B>Employment policies should be clearly defined and fairly enforced.</B>  They should be non-discriminatory, free of sexual harassment and should be consistently and fairly applied.  </div> <bR> <div>      When a problem is identified, do something about it.  It will not go away and will only get worse.  Directors not only have the responsibility if they act, but they also have the responsibility if they fail to act.  Therefore, identify problems early and attempt to correct them immediately. </div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="expulsion_of_a_member"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>EXPULSION OF A MEMBER</B></div> <bR> <div>      Some Credit Union have asked whether or not a member can be expelled by action of the Board of Directors.  A Credit Union member may only be expelled by resolution of the Board due to non-participation in the affairs of the Credit Union.  In order to expel a member for that purpose the Board must define what non-participation is and must apply it across the Board to all members.  Generally, the Credit Unions are seeking only to expel one member for something that member has done in the past, generally a bankruptcy which has caused the Credit Union to lose money or a defaulted loan.  </div> <bR> <div>      It is possible to expel a member for other reasons, however, such expulsion may only be accomplished by the Credit Union members.  In order to do so, a special meeting of the members must be called and a two-thirds vote of the members present must be obtained after the member has been given the opportunity to be heard.  Please note that it does not require a two-thirds vote of all the members of the Credit Union, but only a two-thirds vote of those members who choose to attend.  </div> <bR> <bR> <div>      In order to accomplish such an expulsion a special meeting would be called in accordance with the By-Laws of the Credit Union.  The notice of the meeting should state the purpose and should be mailed to all members in accordance with the provisions of the By-Laws.  At the time of the meeting, the purpose will be stated by the President and the member who is proposed for expulsion will be given a chance to make a statement.  The members present would then vote and would determine the outcome of the request for expulsion.  </div> <bR> <div>      Withdrawal or expulsion of a member does not operate to relieve the member from liability to the Credit Union.  Therefore, it is not necessary to delay an expulsion hearing until the member's loan has been paid.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="indemnification_of_the_board_of"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>INDEMNIFICATION OF THE BOARD OF DIRECTORS</B></div> <bR> <bR> <div>      The NCUA Regulation 701.33 provides that a FCU may indemnify its officials and current and former employees for expenses reasonably incurred in connection with judicial or administrative proceedings to which they are or may become parties by reason of the performance of their official duties.</div> <bR> <div>      The regulation requires that such indemnification shall be consistent either with the standards applicable to CUs generally in the state in which their principal office is located.  The indemnification can be effectuated through the by-law amendment, individual contract or board resolution.</div> <bR> <div>      Indemnification provides financial protection by the CU for its directors, officers and employees against expenses and liabilities incurred by them in connection with proceedings based upon an alleged breach of some duty in their service to or on behalf of the CU.  The indemnification provisions seek to draw a balance between the CU's goal of protecting its officials and employees and the membership's goal of prohibiting indemnification where it might protect or encourage wrongful or improper conduct.  All Credit Unions should investigate the possibility of obtaining directors and officers liability insurance to protect against claims.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="living_trusts"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>LIVING TRUSTS*</B></div> <bR> <div>      As a result of intensive marketing efforts by attorneys and purveyors of "Do-It-Yourself" kits, credit unions are finding themselves facing requests by members to establish Revocable Living Trusts. These materials will assist you in setting up the proper account.  These trusts will be referred to by their common name - living trusts.</div> <bR> <div>      <B>1.     THE NATURE OF LIVING TRUSTS</B></div> <bR> <div>           A.     <B>What is a Trust?</B>  Trusts are established under state law, and treated as distinct legal entities with a life, purpose, and function all their own, separate and distinct from that of the creators.  Trusts can take many shapes and forms, and the documents you receive from the member may be entitled Family Trust or Revocable Trust.  They are treated the same way.</div> <bR> <div>           B.     <B>Why Create a Living Trust?</B>  The purpose of a Living trust is for the members to continue to enjoy the use and benefit of their property during their lifetimes. Typically, Living trusts are initially funded by the trustor(s) transferring all of their present assets (house, vehicles, accounts, investments) into the trust.  The trustor(s), say a husband and wife, appoint themselves as trustees and initial beneficiaries.  Income from the assets then supports the husband and wife during their lifetime, and is passed through the Living trust upon the death of the survivor of them, by a successor trustee nominated by the husband and wife in the Living trust.  Since the couple's assets pass to their heirs through the Living trust, the probate process is avoided.</div> <bR> <div>                Usually, the members setting up Living trusts are trying to retain control of their assets for as long as possible.  The result in the typical Living trust is that the trustors, trustees, and initial beneficiaries will all be the same people that owned the assets individually.  <U>It is important to understand that, once the Living trust is established, these people are no longer acting as individuals, but are now acting on behalf of the Living trust</U>.  The impact of this change is explained in the following sections.</div> <bR> <div> *  With thanks to Steven Patrick Rodeman, Staff Attorney, Oregon Credit Union League.</div> <bR> <div>      <B>2.     LIVING TRUSTS AS ACCOUNTHOLDERS</B></div> <bR> <div> Trusts are typically recognized under state law as separate legal entities.  Therefore, when the members establish their Living trust and transfer their credit union deposits to the trust, the members are actually transferring the account funds from one entity to another.  This transfer and new account relationship raises a number of issues.</div> <bR> <div>           A.     <B>Membership Requirements.</B> As you know, a person must qualify for membership before he or she can establish an account with a credit union.  Therefore, before the member can transfer funds from his or her account to the Living trust, the trust must establish an account with the credit union and qualify for membership.  To qualify, the credit union's charter must allow it to accept "organizations" or "associations" of its members.  NCUA has stated that the trust qualifies as an organization or association of members if all the parties to the trust (donors, trustees, and beneficiaries) are within that credit union's field of membership.  That requirement includes <U>all</U> beneficiaries with any vested or contingent interest, so the successor beneficiaries must be included in this review for membership qualification.  Since most credit union charters include family members, this should not present a problem.</div> <bR> <div>           B.     <B>Account Setup--Documents Required</B></div> <bR> <div>                1.     <B>Credit Union Documents Used.</B> <U>Remember, the Living trust is a member in its own right</U>.  No special membership card or agreement is needed.</div> <bR> <div>                2.     <B>Trust Documents Needed.</B> The less the credit union knows about the terms of the trust, the better.  Credit unions have no need to know such things as what percentage of the assets will go to which beneficiaries.  The full extent of your responsibility is to make sure that this Living trust qualifies for membership, and the person seeking to transact business on behalf of the trust is properly appointed.  To that end, the credit union just has to have enough information from the trust to determine the following:</div> <bR> <div>                     <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     The parties to the trust (trustors, trustees, and beneficiaries, including successors), to see if it qualifies for membership: and</div> <bR> <div>                     <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     The successor trustees, and the conditions under which they will serve, so that the credit union will how who is authorized to transact trust business in the future, and the conditions upon that authorization.  </div> <bR> <div>                     <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     Attached to these materials is a sample Certification of Trustee to be used in all cases to obtain the information you require to establish the account.</div> <bR> <div>           C.     <B>Account Ownership/Transactions.</B> If it qualifies under the above conditions, then the Living trust can establish an account with the credit union.  The account will be owned by the trust.  It will not be a trust account, but the same as any other individual account owned by a member.  Make sure that you understand the consequences of that ownership:</div> <bR> <div>                <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     Only the trustee can transact business with that account.  If the member designates someone else as trustee, or if a successor trustee is appointed, the member no longer has direct access to those funds.</div> <bR> <div>                <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     The trustee must transact the trust's business in his or her representative capacity.  Signatures on agreements and authorizations must be as trustee, not in the member's original individual capacity.  (i.e., "John Doe, Trustee")</div> <bR> <div>                <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     The account must be set up and carried in the name of the trust, not the individual members or trustees.  Membership cards should be completed using the name set forth in the Certification of Trust.</div> <bR> <div>           D.      <B>Taxpayer Identification Numbers.</B>  As a separate entity, the Living trust will be assigned its own taxpayer identification number for IRS reporting purposes. Typically, this number will be the same as the original member's social security number, but it may be different depending upon the terms of, and parties to, the trust.  Use the number the trustee provides on the Certification of Trust.  If the trustee does not know, make him or her find out from the attorney who drafted the trust or other competent estate planner. </div> <bR> <div>           E.     <B>Share Insurance.</B> Living trusts are insured up to $100,000.00 for each beneficiary provided the beneficiaries are spouse, child, grandchild, parent, brother or sister.</div> <bR> <div>           F.     <B>IRA Accounts.</B> If the member has an existing IRA account, he or she cannot transfer the account to the name of the Living trust.  IRA accounts can only be owned by individuals, not associations.  However, the Living trust can be named beneficiary of the account.  </div> <div>           G.     <B>Garnishments/Levies.</B> As a separate entity, the Living Trust's assets can only be reached by a garnishment or levy that specifically names the trust.  Those issued in the names of the individuals are not effective in reaching accounts owned by the Living trust. </div> <bR> <div>           H.     <B>Setoff.</B>  Any credit union lien on funds, whether voluntary or involuntary, only attaches to deposits if there is a mutually of obligation between the depositor and the debt. Therefore, the Living trust's funds would only be subject to the right of setoff if the trust itself was obligated on the transaction giving rise to the debt.  The procedure and circumstances under which the Living trust should be added as an obligor on the member's existing loans is discussed in the next section.</div> <bR> <div>           I.     <B>Direct Deposits.</B>  Many of your member's accounts may receive direct deposits from sponsor's payroll, social security checks or through the ACH.  You probably made the member sign a deposit authorization form that allows you to transfer the direct deposits into their accounts.  However, when you change the account over into the name of the Living Trust, the authorization will need to be redone because you are no longer depositing to the original member's account but instead are depositing into the account owned by the trust.</div> <bR> <div>           J.     <B>Election Voting</B>.  As a member, the Living Trust has the same right to vote at your annual meeting as any other member.  The trustee will vote on behalf of the Living Trust.  In most cases, the trustee is your member.  If the member has also retained his regular share account, then he may cast 2 votes, one as the member and one as the trustee of the trust.</div> <bR> <div> <B>3.     LIVING TRUST AS BORROWER</B></div> <bR> <div> Remember the purpose and structure of these Living trusts: All assets are conveyed to a separate entity for distribution to other people.  The impact of any loan transaction depends upon whether the member has an existing loan, or is seeking a new one.</div> <bR> <div>      A.     <B>Existing Loans.</B> If the member already has a loan with the credit union at the time that the Living trust is created, the main concern of the member will be to transfer title of the property subject to the loan into the Living trust's name.  What impact this has upon the credit union's loan depends primarily upon the type of property involved.</div> <bR> <div>           1.     <B>Personal Property/Vehicles.</B> Where personal property or vehicles are the collateral involved, the member will want to have any applicable titles reissued in the name of the Living trust.  Your credit union needs to make sure that it retains its lien position.  Therefore, when the member requests the title transfer and you send the certificate of title to the DMV to reflect the change in debtor name, make sure that the credit union retains its lien position.  Also, since the titled owner has changed, the credit union must have the trustee sign a security agreement to make sure that the credit union has a valid security interest granted by the person with present title to the property. </div> <bR> <div>           2.     <B>Real Property.</B>  If the member wants to transfer a house to the trust, and you have a mortgage on that house, it is suggested that you not modify any of your mortgage documents.  Merely consent to the transfer.  In this way the priority of your mortgage will not be affected.</div> <bR> <div>           3.     <B>Loan Repayment.</B> If the member is transferring all of his or her present assets into the hands of the Living trust, your credit union needs to make sure that its source of payment is not one of those assets.  Normally, the credit union will be looking to future wages as the source of repayment on its loan, which cannot be assigned prospectively to the Living trust.  Therefore, the member would still be obligated to make loan payments.  However, if the credit union is looking to income-producing property, such as a rental, business, or an annuity that can be transferred to the Living trust, it must get the trust obligated on the loan as well.</div> <bR> <div>      B.     <B>New Loans.</B> As a member in its own right, there is no reason that a Living trust could not be granted a loan by the credit union.  However, a number of bridges would need to be crossed.</div> <bR> <div>           1.     <B>Authority to Borrower.</B> The Living trust must explicitly grant the trustee the power to place a lien on trust assets and borrow against future income.  Verify that this power is granted in the trust.</div> <bR> <div>           2.     <B>Loan Limit</B>.  Article XII, Section I of NCUA's Standard Bylaws limits loans to non-natural persons to their shareholdings in the credit union.  A standard amendment to this provision allows larger loans if made jointly to a majority of the members of the association, individually, and to the association. </div> <bR> <div>           3.     <B>Source of Repayment.</B>  Again, the credit union must make sure that the fund source to which it is looking for repayment matches the party obligated on the loan.  If the trust wants a loan in its own name, it must have the income in its own right to support the loan. Most Living trusts will not have any assets and therefore should not be granted loans as they have no income to repay.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>SAMPLE</B></div> <bR> <div> <B>DECLARATION OF SUCCESSOR TRUSTEE</B></div> <bR> <div>      Name of Trust:<U>                                        </U></div> <div>      </div> <div>      Account Number:<U>                                        </U></div> <bR> <div>      I,<U>                                                                      </U>, do hereby declare that I am the duly appointed successor trustee for the above-named trust.  Attached to this declaration are copies of pages from that trust which show me as the next appointed successor, and the conditions under which I am to assume the duties of trustee for this trust.  I have assumed the duties of trustee for this trust because of the following reason:</div> <bR> <div>      <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     Death of the prior trustee.  Attached to this Declaration is a certified copy of that trustee's death certificate.</div> <bR> <div>      <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     Incompetence of the prior trustee.  Attached to this Declaration is a certified copy of the Declaration of Incompetence issued by a court of competent jurisdiction for that prior trustee.</div> <bR> <div>      <FONT SIZE="2" COLOR="#000000" FACE="WP TypographicSymbols" >!</FONT>     Other:</div> <bR> <div>           <U>                                             </U></div> <bR> <div>           <U>                                             </U></div> <bR> <div>           <U>                                             </U></div> <bR> <div>      I hereby agree to indemnify this credit union for any amounts which the credit union expends in any action relating to the disbursement of funds from this account to me or any other person in connection with this trust's account.  Furthermore, I agree to reimburse the credit union for any transfers made to me or for my benefit, in whatever capacity or name, that are subsequently determined to not have been proper or authorized from this trust's account.  For purposes of this Declaration, amounts expended include any damages paid or determined to be owing from the credit union to other claimants on this account's funds, and attorneys' fees and costs as incurred by this credit union in resolving any action regarding the disbursement of funds from this trust's account.</div> <bR> <div> <U>               </U></div> <div> Date</div> <div>                                         </div> <DIV ALIGN="LEFT"></DIV> <div> Trustee</div> <bR> <bR> <bR> <bR> <div> <B>CERTIFICATION OF TRUSTEE</B></div> <bR> <div> <U>                                                                          </U> Credit Union is hereby requested to establish an account for the following described Trust.  The information contained below is provided to enable the Credit Union to properly document the establishment and nature of the account(s) for the Trust.  If the Trust is changed then the Credit Union is not bound until it is advised in writing by the trustee.</div> <bR> <div> <B>NAME OF THE TRUST:</B>      </div> <bR> <div> <B>DATE OF TRUST: </B></div> <bR> <div> <B>NAMES OF THE TRUSTORS (Creators of Trust):</B> </div> <bR> <div> <B>NAMES OF THE TRUSTEES:</B></div> <bR> <div> <B>NUMBER OF TRUSTEES AUTHORIZED TO ACT</B></div> <div>      <FONT SIZE="1" COLOR="#000000" FACE="Times New Roman" >Please check the appropriate line:</FONT></div> <bR> <div> <U>        </U>     Any one trustee is authorized to act independently in order to transact business involving the trust.</div> <bR> <div> <U>        </U>     All trustees must act together to transact any business on behalf of the trust.</div> <bR> <div> <B>MAILING ADDRESS FOR TRUSTEES:</B></div> <bR> <div> <B>TAXPAYER IDENTIFICATION NUMBER (TIN):</B> </div> <bR> <div> If you are unsure which TIN to use, contact your tax advisor or attorney.  The Credit Union cannot advise you on this issue.</div> <bR> <div> <B>NAMES OF SUCCESSOR TRUSTEES:</B></div> <bR> <div> <B>SHARE DRAFT/ATM CARD AUTHORIZATION</B></div> <bR> <div> ATM cards and share drafts shall be ordered in the following name: </div> <bR> <div> <B>VOTING DESIGNATION</B></div> <bR> <div> The trustee named below is authorized to vote at all credit union elections on behalf of the trust.</div> <bR> <bR> <bR> <div> <B>HOLD HARMLESS AGREEMENT</B></div> <bR> <div> The undersigned trustees hereby agree on behalf of the Trust and its beneficiaries to hold the Credit Union harmless from any loss incurred by the Trust or its beneficiaries resulting from the Credit Union's good faith reliance upon any of the information set forth herein or upon any instruction regarding the account received by the Credit Union from the trustees of the Trust.</div> <bR> <div> <B>MEMBERSHIP ELIGIBILITY</B></div> <bR> <div> For the Trust to be a member, all parties to the Trust (the trustors, trustees and beneficiaries) must be eligible for membership in the Credit Union.  The trustees confirm that all parties are eligible for membership.</div> <bR> <div> <B>CERTIFICATION OF TRUSTEE(S)</B></div> <bR> <div> The undersigned is/are the trustee(s) of the Trust referred to above.  I/we am/are authorized to open an account of the type referred to above and certify that all of the information provided is true and correct.</div> <bR> <div> <U>                                        </U>     <U>     </U></div> <div> Trustee                                        Date</div> <bR> <div> <U>                                        </U>     <U>     </U></div> <div> Trustee                                        Date</div> <bR> <bR> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B> <A NAME="sexual_harassment"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></B><B>SEXUAL HARASSMENT</B></div> <bR> <bR> <div>      No topic is more emotionally charged in the work place than that of sexual harassment.  Sexual harassment is both a violation of Federal law and State law.  Title VII of the Civil Rights Act of 1964 is the Federal law under which these actions are brought and the Law Against Discrimination is the New Jersey statute.  The Equal Employment Opportunity Commission is the federal agency charged with enforcing Title VII.  Its regulations define sexual harassment as:</div> <bR> <div> “Unwelcome sexual advances, requests for sexual favors and other verbal or physical conduct of a sexual nature when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.”</div> <bR> <div>      There are generally two recognized types of sexual harassment:</div> <bR> <div>      1.     Quid Pro Quo (this for that); and</div> <bR> <div>      2.     Hostile Environment.</div> <bR> <div>      The Supreme Court in the summer of 1998 issued three sexual harassment decisions that helped us in defining the different types of harassment.  Quid Pro Quo harassment is unwelcome conduct that is engaged in by a supervisor or manager or other agent of the employer that involves requiring the employee to grant or tolerate sexual favors or behavior whether it results in denial of employment or benefits for refusing to grant or tolerate sexual favors or behavior.  When there is a tangible job loss, the company is automatically liable regardless of its knowledge or attempts to prevent the harassment.  The offending individual may also be liable.  The problem for the company is that when there has been a tangible employment action, such as discharge, demotion or an undesirable reassignment, then the company has no affirmative defense to the charge of sexual harassment on the part of its management employee even if the company did not know it was occurring.</div> <bR> <div>      The second type of sexual harassment is hostile environment harassment.  This is defined as unwelcome conduct of a sexual nature that a reasonable person of the same gender as the complainant would consider sufficiently severe or pervasive so as to alter the conditions of employment and create an abusive working environment.  Note that the hostile environment is that which a reasonable person of the same gender as the complainant would consider hostile.  Therefore, a man may have a different feeling about what is hostile than a woman.  The Supreme Court went on to say that Federal law does not prohibit genuine but innocuous differences in the ways men and women routinely interact with members of the same sex and the opposite sex.  Simple teasing, offhand comments and isolated incidents, unless extremely serious, will not amount to discriminatory changes in the terms and conditions of employment.  If these standards are properly applied by the courts, they will filter out complaints attacking the ordinary tribulations of the work place such as the sporadic use of abusive language, gender related jokes and occasional teasing.  </div> <bR> <div>      In a hostile environment case, the company can raise affirmative defenses to the claim of the employee.  The defense is comprised of two necessary elements: (a) that the employer exercise reasonable care to prevent and correct promptly any sexually harassing behavior; and (b) that the employee claiming harassment unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer, or to avoid harm otherwise.  It is this language that is seen to require the employer to adopt a policy against sexual harassment which contains a provision requiring the employee to report the incident to a responsible party.  This gives the company the ability to take preventive or corrective actions to stop the hostile environment.  Keep in the mind that it is the person complaining who decides whether or not the conduct is unwelcome.  Therefore, the company will want to undertake a fair and impartial investigation and determine whether preventive or corrective action is warranted.  Since all of these situations depend on the facts of the individual case, it is impossible to give advice as to what actions should be taken by the company.</div> <bR> <div>      Sometimes, the company’s investigation will result in the discharge of the person against whom the complaint has been alleged.  The company may then be placed in the unenviable position of facing a wrongful discharge suit by the fired employee.  The question for the jury then becomes what is the rule that should be applied in deciding whether misconduct occurred.  Do they decide whether the acts that led to the decision to terminate actually happened?  Or is their role to decide whether the employer had reasonable grounds for believing that they happened and otherwise acted fairly?  A recent decision by the Supreme Court of California, while not binding on our New Jersey courts, is instructive in holding that the proper inquiry for the jury is not “did the employee in fact commit the act leading to dismissal”.  It is “was the factual basis on which the employer concluded a dischargeable act had been committed reached honestly, after an appropriate investigative and for reasons that are not arbitrary or unreasonable”.  Therefore, even if, in the course of the wrongful discharge suit, it becomes apparent that the discharged employee did not commit sexual harassment, the company would not automatically be liable if it had reached its decision to terminate honestly, and after an appropriate investigation  that was not arbitrary or unreasonable.</div> <bR> <div>      The key here appears to be the “golden rule”.  If you are involved in a situation like this, make sure your investigation is conducted in a fair and reasonable manner.  The employment at will doctrine is still alive and well in New Jersey, but these cases are decided by juries who look at whether or not the employer’s actions were fair and reasonable.  If you always try to conduct such investigations according to the golden rule, the juries will be more likely to follow the employment at will rule.</div> <bR> <bR> <DIV ALIGN="LEFT"></DIV> <div> <B>CHECKING ACCOUNT TIPS</B></div> <bR> <div>   There are certain simple procedures that you can implement to help prevent check fraud.  Many of the bad guys take advantage of two basic facts with regard to the check processing system: 1) check processors just read the MICR line and no human reviews the checks; and 2) there are certain time limits required by Reg CC for a credit union to make funds available to its members.</div> <bR> <div>   Try these tips to cut down on the potential for losses:</div> <bR> <div>      <B>Have your check processor notify the depository bank if a check is being dishonored by the credit union and the amount is $2,500 or greater.</B>  Reg CC requires that large dollar checks which are dishonored do not only have to be sent back through the Federal Reserve but that the maker’s credit union must notify the depository bank by telephone, email, fax or other immediate method, that the check has been dishonored.  Make sure that you have an agreement with your check processor that it will handle the notification if you dishonor a check.  Also, don’t forget this rule if you are the depository credit union that took a large check.  If the maker’s bank doesn’t call you, and you are notified too late to stop the withdrawal by your member, then the maker’s bank is liable.</div> <bR> <div>      <B>Get a daily printout of all checks from your check processor and review it.</B>  Pay particular attention to large dollar checks, especially your own checks.  Desktop publishing and color copying technologies are very advanced and affordable.  Your credit union checks can be duplicated.  If they are you have to be able to catch the fraud immediately because financial institutions are held to a higher standard when it comes to forgeries.  Members have a period of time after they receive their statements (usually 60 days) to advise you of a forgery.  You have no such luxury.  Obtaining a daily printout will enable you to confirm that the checks being returned that day were actually issued by your credit union.  You may check for a year and find no fraud, but the one time you catch it the check will undoubtedly be for a large amount and you will be able to prevent a loss.</div> <bR> <div>      <B>Set a threshold amount over which you want your check processor to fax you copies of checks so that you can examine the signature. </B> Your check processor will charge you for the service but it is money well spent.  The bad guys do not forge maker’s signatures on checks for $20.  They deal in large sums.  If a bad guy has obtained a blank check of your member and forged her signature, your member will not be able to tell you that until after she has received her monthly statement.  By then it is too late to dishonor the check.  If a maker’s signature is forged on a check the credit union suffers the loss because it is the only financial institution that has the ability to check the maker’s signature.</div> <bR> <div>      <B>Don’t allow members immediate availability with regard to deposits.</B>  Reg CC mandates an availability schedule for checks deposited by your members.  However, some credit unions allow members immediate availability for all deposits.  The bad guys would love to take advantage of this situation.  They open a checking account at the credit union, deal with it in a normal way for several months and then deposit a large, bad check from another bank and withdraw the money before the other bank notifies you that it is NSF.  In that situation the credit union suffers the loss.</div> <bR> <div>      <B>Extend the check hold period if the credit union has “reasonable cause to doubt collectability” of any check.</B>  Reg CC allows you to utilize this exception if there is any suspicious activity regarding an account that would cause a well-grounded belief in the mind of a reasonable person that a check will not be collectible. Local checks can be held for an additional 5 business days and non-local checks can be held for an additional 6 business days.  The member must be notified in writing of the reason for the extended hold.  This extension is especially helpful if you suspect that a member is kiting checks.</div> <bR> <div>      Combating check fraud requires constant vigilance.  Hopefully you will find some of these suggestions helpful.  </div> <bR> <div>      If you have any questions, please contact me at 973-361-9900.</div> <bR> <bR> <bR> </td> </tr><tr> <td valign="top" colspan=2 height=27 BGCOLOR="#996666" TEXT="#080000" bgproperties="fixed" background="04a64643.gif"> <div> <A HREF="id76.htm" TARGET="_top" TITLE="Forms Directory"><U><IMG SRC="04c0d120.gif" border=0 width="13" height="18" ALT="previous" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A>   <A HREF="id77.htm" TARGET="_top" TITLE="Seminars"><U><IMG SRC="04d0d120.gif" border=0 width="13" height="18" ALT="next" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A>      <IMG BORDER="0" SRC="1x1.gif" HEIGHT="18" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="18">  <A HREF="id52.htm" TARGET="_top" TITLE="Current Topic"><U><IMG SRC="04f12120.gif" border=0 width="18" height="18" ALT="up" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <bR> </td> </tr></table></body>