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The legal fallout from Dublin-based Patelco Credit Union’s notorious 2024 cyberattack that saw data from more than one million customers leaked amid a weeks-long system outage appears to be continuing this month, with the former chief auditor tasked with ensuring compliance and preventing future cyberattacks alleging that he was fired from the role for doing just that.
A July 17 lawsuit from from former chief audit executive Ricardo Araujo comes more than a year after the company paid out $7.25 million to settle a class action lawsuit that ensued from the cyberattack on June 29, 2024, data breach, and weeks-long system outage, and amid ongoing announcements from the company about steps being taken to prevent future incidents.
Among those measures was appointing Ricardo Araujo as its chief audit executive last year, who is now alleging that he was fired in retaliation for discovering and reporting compliance issues that he was hired to identify to the company.
Those include what he said were insufficient cybersecurity measures that continued to leave Patelco’s systems vulnerable to further attacks at the time of his abrupt departure at the end of last year.
Neither party had responded to a request for comment as of Tuesday afternoon.
The recent lawsuit alleges wrongful termination and unfair business practices, seeking both economic damages for Araujo’s resulting loss of income and punitive damages that would put a stop to the credit union’s alleged wrongdoing.
“In performing his job, Mr. Araujo identified serious compliance deficiencies and made good-faith audit recommendations to the company and the ARC (Audit Review Committee) of the Board of Directors,” Araujo’s attorneys wrote. “Rather than welcome the critical oversight function for which he was hired, within days of receiving Mr. Araujo’s audit report, Patelco terminated Mr. Araujo — an act that violated California’s robust protections against workplace retaliation.”
Patelco announced Araujo’s appointment to the new role on June 6, 2025, amidst a series of efforts aimed at restoring customers’ trust and complying with regulatory requirements dictated by a consent order between the credit union and the state’s financial protection commission that February.
“Ricardo has a strong track record in reducing corporate risk exposure and fostering a strong culture of risk management,” Patelco CEO Erin Mendez said in an announcement from the company last year. “We are confident that his vision and experience will play a key role in advancing our internal audit function and supporting the long-term success of our organization as a solid foundation for our members.”
Araujo came into the position from his previous role as chief auditor and enterprise officer at Fremont Bank, and with more than 16 years of experience at Ernst and Young, where he established a financial crimes advisory team for the West Coast. He returned to his position at Fremont Bank as of last month, according to his LinkedIn profile.
While Araujo received a warm welcome from Patelco officials in last year’s announcement, he is alleging that the tone shifted drastically following a presentation of his findings and recommendations at the end of the year.
Those recommendations were centered on correcting alleged compliance deficiencies Araujo had identified in the process of the internal audit he conducted that year, as well as alleged ongoing cybersecurity vulnerabilities.
“Mr. Araujo explained it was a problem that the network was still vulnerable to such
simple exploits over a year after the earlier security incident,” Araujo’s attorneys wrote. “Following this IT audit function, Mr. Araujo was contacted by HR to investigate a complaint from management concerning his IT audit. To Mr. Araujo, this appeared to be an attempt to intimidate the independent audit.”
Araujo alleges he was fired just days later, with Patelco citing “poor job performance” despite no documented pattern or evidence according to the complaint.
The company later announced Azher Abbasi — former head of supervision at the Federal Reserve Bank as San Francisco — as its new chief audit executive, one of several new leadership appointments that they said would “strengthen Patelco’s readiness for growth” in a Feb. 5 press release as its assets approach the $10 billion threshold.
“These appointments are the result of deliberate, ongoing leadership development not one-time decisions,” Mendez said in this year’s announcement. “By investing in people who demonstrate the ability to lead with clarity, accountability, and purpose, we are strengthening our organization while staying true to the culture and values our members expect. This philosophy is embedded in Patelco’s year-round talent and succession planning approach.”
With regulations and scrutiny poised to tighten on Patelco as its assets increased, Araujo said he was explicitly directed to conduct the internal audit “to that level of enhanced scrutiny.”
Araujo is alleging that there were other reasons for his termination at play, including a potential merger.
“Mr. Araujo brought integrity and independence to the audit functions he performed for Defendant – which were substandard before his arrival,” Araujo’s attorneys wrote. “Mr. Araujo is informed and believes and, on that basis, alleges Patelco believed Mr. Araujo’s determinations and recommendations would both lead to more regulatory scrutiny and also delay merger/exit plans.”
An initial case management conference is set for Dec. 14 at the Hayward Hall of Justice.
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