CHARLES CITY, Iowa --- Motions approved by members of the Family Community Credit Union of Charles City dismissing its board of directors, suspending the CEO, reinstating former staff and appointing a new board Feb. 16 were illegal, according to a state official.

JoAnn Johnson, superintendent of credit unions with the Iowa Department of Commerce, sent a letter Monday stating the actions taken during Feb. 16's annual meeting "were not in compliance with the bylaws of the credit union or with the Iowa Credit Union Act."

Five employees walked off the job Feb. 13, protesting new CEO Dawn Swaningson's alleged treatment, according to the Charles City Press. At Feb. 16's meeting, the membership voted to reinstate the five employees, to suspend Swaningson and rehire former CEO Mike Schear, who resigned recently.

The credit union membership also voted to dismiss the board --- including three individuals elected earlier during the meeting to fill openings on the board.

The credit union provided a copy of Johnson's letter to the Globe Gazette, a sister publication of The Courier.

In it, Johnson stated Iowa law allows the majority of state credit union members present at any meeting to vote to modify, amend or reverse any act of the board of directors. Members can also instruct the board to take action consistent with bylaws and state law.

However, a motion to dismiss the board does not fall under those provisions, according to Johnson. And even if the motion were legal, for the action to be binding would require a vote of all eligible credit union members, not just those present at the meeting, Johnson added.

Attempts to reinstate former employees, suspend Swaningson and reinstate Schear "are also legally insufficient," according to Johnson.

Iowa law gives the authority to suspend a credit union officer with the auditing committee subject to a vote of the entire membership.

As for former employees, Johnson noted they resigned.

"Because they were not suspended by the auditing committee, no vote of the membership was ever triggered," she wrote.

The same holds true for Schear, according to Johnson.

Three new board members chosen during the meeting were also legally elected by ballot, according to Johnson.

Swaningson remains manager, according to Johnson, and the previously elected board and three new members elected during the annual meeting are the recognized directors.

Swaningson and Schear did not return calls from the Globe Gazette.

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