Millions In Looted CU Funds Traced To The Balkans
SKOPJE, Macedonia – U.S. authorities are working through legal channels for the return of millions of dollars of loan proceeds from St. Paul Croatian FCU they believe was siphoned from the one-time $240 million credit union to local banks as part of the biggest credit union fraud ever.
The U.S. Department of Justice is working with NCUA and numerous international law enforcement agencies, including Interpol, for the repatriation of the U.S. credit union funds as the scope of the international criminal case expanded with seven more individuals indicted on Friday, making a total of 16 charged in the case.
So far, authorities have traced almost $6 million in fraudulent loan proceeds transferred to Macedonian and Albanian bank accounts by Koljo Kikolovski, a purported head of a Macedonia crime syndicate who is in federal prison in Cleveland awaiting trial in the case. Nikolovski, an Albania national who maintains homes in Skopje and in the Cleveland suburb of Eastlake where the credit union was based is among those charged with bribing the CEO of St. Paul Croatian to obtain millions of dollars in loans they had no intention of repaying. A federal court last month ordered the Kapital Bank in Skopje to return $2.3 million of funds Nikolovski wired there that were purportedly proceeds from credit union loans.
“Federal and local investigators continue to peel away at the layers of fraud and corruption that were visited upon this financial institution,” Steven Dettelbach, U.S. Attorney for the Northern District of Ohio, said Friday after seven more individuals were charged in the case. “This investigation is ongoing, and will not stop until we have run down every lead.”
Authorities are also tracing almost $4 million in St. Paul Croatian FCU funds they believe Nikolovski wired to the Balkans, including $670,000 to Eurostand Bank in Skopje, according to court documents in the case.
The records also show that Marko Nikoli, another individual indicted in the case, wired $442,500 from a credit union loant to Komerceijalna Bank Ad in Skopjie and $495,000 to Eurostandard Bank in Skopje.
According to Friday’s indictments, one borrower, Skender Demeri, obtained 17 loans totaling $1.6 million from the credit union, some of which he wired to an account in a German bank, Volksbank Goppingen eG.
The foreign transfers were typically laundered through a local bank, either Cleveland’s Key Bank Cincinnati’s Fifth Third Bank or Charter Bank, according to authorities.
Six others were charged in the case Friday: Arben Alia, 34, of Eastlake, who allegedly obtained $4.5 million in St. Paul Croatian loans, Ilu Marku, 34, of Willowick, Vaso Shani, 36, of Eastlake, Alban Sulkaj, 35, of Clinton Township, Mich., Zoge Ahmetaj, 68, of Eastlake, and Qerim Ahmetaj, 74, of Eastlake.
The loans were approved by the credit union’s CEO, Anthony Ragucz, who is awaiting trial on charges of bribery, bank fraud and money laundering in the case. Authorities say Ragucz approved more than 1,000 fraudulent loans with no collateral to 300 account holders. Many of them in the name of phony businesses, even though St. Paul Croatian was never approved to make business loans.
To conceal the scheme and to prevent the loans from appearing on the books as delinquent, Ragucz rewrote the loans with new repayment terms using fictitious names and names of credit union members without their knowledge, the indictment said. He even rewrote loans in the names of dead people, according to the charges. When NCUA undertook to liquidate the remnants of the credit union thousands of members said they knew nothing of the loans taken out in their names.
Investigators have traced $70 million of the fraudulent loans so far but believe the fraud is much bigger. NCUA estimates the fraud will cost the National CU Share Insurance Fund as much as $170 million in losses, making it the biggest credit union fraud ever.
The impact of the massive fraud scheme is broadening, according to authorities, who believe the credit union was used to finance an $8 million real estate investment scheme that bilked dozens of parishioners at Sp. Paul Croatian Church. In addition, at least two local churches and three credit unions as far away as Oregon lost hundreds of thousands of dollars in uninsured deposits after NCUA liquidated the credit union.