Bail Withheld For Purported Crime Figure Charged In Massive Cleveland CU Fraud
CLEVELAND – A federal judge yesterday denied bail to a purported head of a Macedonian crime syndicate believed responsible for siphoning tens of millions of dollars from St. Paul Croatian FCU, which was taken over by NCUA seven months ago amid an estimated loss of $170 million.
The judge denied the request by lawyers for Koljo Nikolovski, who maintains homes in the Cleveland suburb of Eastlake, where the ill-fated credit union was based, and Skopje, Macedonia, because Nikolovski is believed to be a flight risk, according to Michael Tobin, spokesman for the U.S. Attorney in Cleveland.
Nikolovski, 48, who is believed to head one of two major syndicates controlling criminal activity in Skopje, last week was charged with stealing as much as $4 million from the credit union through a phony loan scheme. Prosecutors say the credit union loan proceeds were wired through Key Bank to Nikolovski’s account at Kapital Bank AD in Skopje, the capital of the one-time Balkan state.
Nikolovski’s role was disclosed by the former CEO of the one-time $240 million credit union, who is believed to be in hiding under the federal witness protection program. Documents show the CEO, Anthony Raquez, had been accepting kickbacks or bribes for as long as 10 years in exchange for unsecured loans to members who had no intentions to repay the funds. Initially, the kickbacks or bribes were paid in checks drawn on the credit union, but then the conspirators switched to cash to better conceal the scheme, according to an affidavit filed in the case by Derek Kleinman, a special agent for the FBI.
To conceal the scheme, the loans were disbursed through different loan accounts. Checks for the proceeds were made payable to third-party straw borrowers. To further frustrate examiners, the loans were described as “shared secured.” The CEO continued to cover up the scheme by making advances to the various loan accounts or approving new loans, according to prosecutors.
The loan scheme drained so much money from the credit union, NCUA took it over in April. The regulator liquidated it a week later, estimating that as much as $170 million of depositor funds were missing. The loss is one of the biggest ever recorded by NCUA.