Fraud lawsuit settled

LIHUE — A Wisconsin-based insurance company recently reached an out-of-court settlement with a former credit union employee who, according to a federal lawsuit, intentionally approved dozens of loans to unqualified borrowers.

Thomas Vallatini was a senior loan manager for Kauai Government Employees Federal Credit Union until July 2014, when he was fired after six years. A credit union representative declined to explain why Vallatini was let go, but a document he signed days before his termination may offer some clues.

Vallatini was fired almost immediately after signing a five-page “Fraud Agreement” that listed over a dozen grounds for termination or suspension. Many of the “unacceptable acts” spelled out in the contract describe conduct the credit union’s insurance carrier would later sue Vallatini over.

In 2017, Cumis Insurance Society filed a lawsuit in U.S. District Court in Honolulu, alleging that Vallatini defrauded his employer and its insurance company, citing 71 examples of fraudulent misrepresentations from 2008 to 2014, including improper reposessed car sales, approving loans to ineligible members, providing inaccurate information on loan applications, failing to obtain proper documentation for loans and approving loans despite disqualifying factors, “among other things.”

Cumis later filed an amended complaint in the lawsuit, further describing the alleged fraud, detailing dozens of loans approved by Vallatini — many issued to his personal friends or associates — that were eventually defaulted on, forcing the company to pay out over $500,000 in insurance claims.

Vallatini repeatedly denied the allegations in court documents filed on his behalf during two years of litigation before the lawsuit was settled prior to trial in August of this year.

Attorneys on both sides refused to talk about the details of the settlement, and Vallatini declined to comment.


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