CLEVELAND-The CEO of defunct St. Paul Croatian FCU last week pleaded guilty to orchestrating a huge loan scheme that sunk the one-time $240-million credit union at a cost of $170 million to the insurance fund.
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 credit union's
Meanwhile, the purported Albanian crime leader also charged in last year's failure of St. Paul Croatian FCU is being held in jail while he awaits trial for his alleged role in the failure. A federal judge has seized the passport of Koljo Nikolovski, who is being held in the Ashtabula County (Ohio) jail without bond because he is considered a flight risk.
Raguz, 52, pleaded guilty to accepting $1 million in bribes to approve more than 1,000 loans totaling $70 million to 300 people who never intended to repay them.
As part of a plea deal with prosecutors Raguz agreed to pay $1 million to NCUA.
Thirteen borrowers, including Nikolovski's ex-wife and his nephew, have been also been charged in the case and are awaiting trial. As much as $6 million was allegedly lent to Nikolovski, who sent millions of it back to his native land. The funds have never been recovered.
Nikolovski allegedly gave Raguz $100,000 in exchange for approving and facilitating the fraudulent loans. None of the loans were ever repaid.
"The St. Paul FCU 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.
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. A report by NCUA's Inspector General on the failure was deeply critical of the agency for missing numerous red flags, including the fact the credit union continued to report a 0.000% delinquency rate even as its loan portfolio showed significant growth.
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.
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.
