CLEVELAND – The CEO of defunct St. Paul Croatian FCU on Tuesday pleaded guilty to orchestrating a huge loan scheme that sunk the one-time $240-million credit union at a cost of $170 million,
Anthony Raguz pleaded guilty to six counts, including bank fraud, money laundering and bank bribery, for his role in the 2010 failure of the credit union, considered the biggest credit union fraud ever.
“The St. Paul Federal Credit Union collapse resulted in one of the largest credit union failures ever investigated in U.S. history. This complex, large-scale investigation transcended international borders and will continue until all those involved are brought to justice,” said Stephen Anthony, special agent for the FBI, who helped investigate the case.
Raguz, 52, confessed to approving more than 1,000 loans from 2000 to 2010 to more than 300 unqualified borrowers who had no plans to pay them back. The credit union CEO was paid more than $1 million in bribes to approve the loans.
As much as $6 million was lent to a purported crime figure from the Balkan country Croatia, Koljo Nikolovski, who sent millions of it back to his native land. The funds have never been recovered.
Nikolovski and as many as 14 other borrowers are awaiting trial in the case. Authorities said Nikolovski gave Raguz $100,000 in exchange for approving and facilitating the fraudulent loans. None of the loans were ever repaid.
NCUA took over St. Paul Croatian, based in the Cleveland suburb of Eastlake, in April 2010, then liquidated it just days later after the scope of the fraud was discovered. An internal report by NCUA projects the failure to cost the National CU Share Insurance Fund $170 million.
Raguz oversaw the issuing of loans to hundreds of account holders with little or no assets, income or employment history, according to court documents. He also oversaw scores of “loan resets” in which older loans were fraudulently repaid with new loans in the names of false nominees, including “Auto Truck Company” and “B.S. Construction,” according to court documents.
The money laundering counts stem from Raguz issuing checks totaling $371,800 drawn on his St. Paul account payable to The Vanguard Group, according to court documents.
Raguz is scheduled to be sentenced Jan. 4, 2012.
