Fraudulent Loan Scheme Probed In Failure Of Croatian CU
CLEVELAND – Authorities are investigating what they believe was a major real estate loan fraud that bankrupted a one-time $250 million credit union here serving the local Croatian-American population, one of the biggest credit union failures in recent years.
NCUA liquidated St. Paul Croatian FCU on May 1, just days after taking the credit union, which claimed some 13% capital as of March 31, under conservatorship. The quickness in which NCUA liquidated a credit union it had just taken over was unusual.
Authorities believe the reported capital was non-existent and that as much as $25 million may have been siphoned through a real estate scheme, sources told Credit Union Journal. “We think there was a big fraud involved,” said one law enforcement representative.
The collapse of St. Paul’s Croatian came weeks before the failure of a Canadian credit union serving Toronto’s Croatian immigrant population that authorities attributed to a real estate scheme known as “the Oklahomas” for its origin. The fraud cost members of the Croatian CU some $9 million. Under the Oklahomas scheme four individuals working through the credit union were able to obtain fraudulent mortgages on undeveloped parcels of land, located in rural Ontario, according to charges against the four.