The widow of Edwin F. Rachleff, the New London stockbroker accused in a massive fraud against a local credit union, has been denied restitution of $1.4 million that she alleges her husband transferred from their joint bank account without her knowledge.The National Credit Union Administration, which paid out nearly $10 million in claims after the New London Security Federal Credit Union failed last year, denied last month Naomi Rachleff's appeal of an earlier decision by the financial institution's liquidation agency that she was not entitled to the money.

The National Credit Union Administration, which paid out nearly $10 million in claims after the New London Security Federal Credit Union failed last year, denied last month Naomi Rachleff's appeal of an earlier decision by the financial institution's liquidation agency that she was not entitled to the money. The NCUA said the funds, transferred from the Rachleffs' personal account to the credit union over an unspecified period, likely were used to cover up a multimillion-dollar embezzlement scheme.

The NCUA said the funds, transferred from the Rachleffs' personal account to the credit union over an unspecified period, likely were used to cover up a multimillion-dollar embezzlement scheme."Even if Mrs. (Rachleff) was unaware of the decades-long fraud and claimed neither she nor (her husband) benefited from the fraud, the credit union and its members have an equally or more compelling equitable claim to the funds due to the losses and hardship suffered," the NCUA board wrote in its decision, posted within the past few days to the agency's Web site.

"Even if Mrs. (Rachleff) was unaware of the decades-long fraud and claimed neither she nor (her husband) benefited from the fraud, the credit union and its members have an equally or more compelling equitable claim to the funds due to the losses and hardship suffered," the NCUA board wrote in its decision, posted within the past few days to the agency's Web site.The NCUA is apparently alluding to the approximately $800,000 in losses that credit union members sustained because they had accounts exceeding the $100,000 insurance limit that existed when the fraud was discovered. The insurance maximum has since been raised to $250,000 per account.

The NCUA is apparently alluding to the approximately $800,000 in losses that credit union members sustained because they had accounts exceeding the $100,000 insurance limit that existed when the fraud was discovered. The insurance maximum has since been raised to $250,000 per account.The NCUA decision, redacted of all names, nevertheless contains enough information to pinpoint Mrs. Rachleff as the person who filed the claim. It calls her the widow of the credit union's investment broker, who was known to be Rachleff and who the NCUA, in a report released to the public last month, accused of stealing about $12 million from the financial institution.

The NCUA decision, redacted of all names, nevertheless contains enough information to pinpoint Mrs. Rachleff as the person who filed the claim. It calls her the widow of the credit union's investment broker, who was known to be Rachleff and who the NCUA, in a report released to the public last month, accused of stealing about $12 million from the financial institution.Mrs. Rachleff's attorney, Jim Glasser of New Haven, said his client filed the claim with NCUA to preserve her right to the missing $1.4 million.

Mrs. Rachleff's attorney, Jim Glasser of New Haven, said his client filed the claim with NCUA to preserve her right to the missing $1.4 million."Mrs. Rachleff was unaware of any conduct that was inappropriate," Glasser said. "One thing that's crystal clear is that Mrs. Rachleff had absolutely no knowledge of what was going on with the credit union, if anything was going on."

"Mrs. Rachleff was unaware of any conduct that was inappropriate," Glasser said. "One thing that's crystal clear is that Mrs. Rachleff had absolutely no knowledge of what was going on with the credit union, if anything was going on."Rachleff had been placed under criminal investigation in June 2008 after a routine NCUA examination turned up discrepancies in the financial institution's investment accounts, according to the agency. Rachleff committed suicide the next month, on the same day the NCUA declared the credit union insolvent.

Rachleff had been placed under criminal investigation in June 2008 after a routine NCUA examination turned up discrepancies in the financial institution's investment accounts, according to the agency. Rachleff committed suicide the next month, on the same day the NCUA declared the credit union insolvent.As the NCUA denied Mrs. Rachleff's claim for $1.4 million, it also revealed some details about its investigation into the credit union's demise.

As the NCUA denied Mrs. Rachleff's claim for $1.4 million, it also revealed some details about its investigation into the credit union's demise. For instance, the decision stated that when Rachleff joined the brokerage firm A.G. Edwards, where he worked for two decades, he "opened an A.G. Edwards account, purportedly on New London (Security)'s behalf, using $4.8 million of New London (Security)'s funds." The account, according to the NCUA, "contained no information related to New London (Security)," and forms to open the account (previously identified as under the name of the Elmore Shoe Co.) were signed by Mrs. Rachleff's family, which owned the long-defunct New London shoe store.

For instance, the decision stated that when Rachleff joined the brokerage firm A.G. Edwards, where he worked for two decades, he "opened an A.G. Edwards account, purportedly on New London (Security)'s behalf, using $4.8 million of New London (Security)'s funds." The account, according to the NCUA, "contained no information related to New London (Security)," and forms to open the account (previously identified as under the name of the Elmore Shoe Co.) were signed by Mrs. Rachleff's family, which owned the long-defunct New London shoe store.Rachleff, according to the NCUA, controlled the account.

Rachleff, according to the NCUA, controlled the account.The NCUA said that between March 1988 and June 2008, nearly $1.8 million in credit union funds were deposited in the account with checks written to A.G. Edwards.

The NCUA said that between March 1988 and June 2008, nearly $1.8 million in credit union funds were deposited in the account with checks written to A.G. Edwards. "To conceal the alleged fraud Mr. (Rachleff) provided the credit union with forged A.G. Edwards account statements that listed the credit union as the account holder," according to the NCUA. "He provided the credit union with trade and transaction confirmations that appeared as though trades and transactions were made on behalf of the credit union."

"To conceal the alleged fraud Mr. (Rachleff) provided the credit union with forged A.G. Edwards account statements that listed the credit union as the account holder," according to the NCUA. "He provided the credit union with trade and transaction confirmations that appeared as though trades and transactions were made on behalf of the credit union."Rachleff's statements indicated on June 30, 2008, that the account purportedly set up for the credit union held $11.8 million, according to the NCUA. But, according to a previous report, when regulators checked the account it was found to be phony and no money actually existed.

Rachleff's statements indicated on June 30, 2008, that the account purportedly set up for the credit union held $11.8 million, according to the NCUA. But, according to a previous report, when regulators checked the account it was found to be phony and no money actually existed.The NCUA is still investigating where the money went, but its decision to deny Mrs. Rachleff's $1.4 million claim proves enlightening in detailing the way Rachleff may have operated.

The NCUA is still investigating where the money went, but its decision to deny Mrs. Rachleff's $1.4 million claim proves enlightening in detailing the way Rachleff may have operated.The credit union would request money from the phony A.G. Edwards account - more than $5 million in requests were received by Rachleff over a 20-year period - and the investment broker would transfer funds to a credit union account at Fleet Bank (later Bank of America) by check or wire transfer, according to the NCUA.

The credit union would request money from the phony A.G. Edwards account - more than $5 million in requests were received by Rachleff over a 20-year period - and the investment broker would transfer funds to a credit union account at Fleet Bank (later Bank of America) by check or wire transfer, according to the NCUA."These transferred funds came from personal accounts that were under the control of Mr. (Rachleff), one of which was at People's United Bank under Mr. and Mrs. (Rachleff's) names," said the NCUA. "Transfers from the People's United account, and possibly other personal accounts, concealed Mr. (Rachleff)'s fraud since there was no operational investment account in the credit union's name."

"These transferred funds came from personal accounts that were under the control of Mr. (Rachleff), one of which was at People's United Bank under Mr. and Mrs. (Rachleff's) names," said the NCUA. "Transfers from the People's United account, and possibly other personal accounts, concealed Mr. (Rachleff)'s fraud since there was no operational investment account in the credit union's name."Mrs. Rachleff, according to the NCUA, submitted a claim last year that listed 18 checks written to the credit union, ranging from $9,000 to $250,000 but holding out the possibility that other transfers would be found. After the liquidation agency denied her $1.4 million claim for lack of proof, Mrs. Rachleff in July of this year requested a review of the case.

Mrs. Rachleff, according to the NCUA, submitted a claim last year that listed 18 checks written to the credit union, ranging from $9,000 to $250,000 but holding out the possibility that other transfers would be found. After the liquidation agency denied her $1.4 million claim for lack of proof, Mrs. Rachleff in July of this year requested a review of the case.But the NCUA said Mrs. Rachleff, who made the appeal on behalf of herself and her husband's estate, did not submit any additional evidence or any grounds for objecting to the initial decision. Under Connecticut law, according to the agency, "coholders of a joint account are considered owners of the entire account and either may withdraw."

But the NCUA said Mrs. Rachleff, who made the appeal on behalf of herself and her husband's estate, did not submit any additional evidence or any grounds for objecting to the initial decision. Under Connecticut law, according to the agency, "coholders of a joint account are considered owners of the entire account and either may withdraw.""Mr. (Rachleff)'s estate has no claim in equity as Mr. (Rachleff) was the alleged fraud's perpetrator," according to the NCUA.

"Mr. (Rachleff)'s estate has no claim in equity as Mr. (Rachleff) was the alleged fraud's perpetrator," according to the NCUA.The NCUA said Mrs. Rachleff also would have no legal claim, as an individual or as executrix of her husband's estate, if any additional funds were found to have been transferred from the joint account with her husband to the credit union.

The NCUA said Mrs. Rachleff also would have no legal claim, as an individual or as executrix of her husband's estate, if any additional funds were found to have been transferred from the joint account with her husband to the credit union.l.howard@theday.com

l.howard@theday.com