CLEVELAND – Lawyers representing NCUA are putting the finishing touches on a restitution agreement with local financier A. Eddy Zai in the big fraud at St. Paul Croatian FCU that would pay the agency $21.3 million, the biggest restitution deal ever for the credit union regulator.
As part of last month’s guilty plea to loan fraud, Zai has agreed to repay the $20 million in fraudulent loans he arranged from the $240 million credit union and interest owed by assigning payment Zai’s company is owed on several downtown Cleveland properties.
NCUA estimates the massive fraud cost the National CU Share Insurance Fund $185 million in losses, making it the biggest credit union fraud ever.
Zai, the 44-year-old president of the Cleveland International Fund, will direct monthly payments due his fund from the Flats East Office and Retail buildings, Westin Hotel, American Greetings Headquarters and University Hospitals Healthcare Systems, into an escrow account that will eventually be paid to NCUA, according to the restitution agreement filed with the U.S. District Court for the Northern District Of Ohio. The total payments due NCUA will amount to $21.3 million.
Zai paid thousands of dollars in cash bribes to the former head of the credit union, Anthony Raguz. Raguz pleaded guilty to bank fraud, money laundering and bank bribery and was sentenced last month to 14 years behind bars.
Zai pleaded guilty to one count of conspiracy to commit bank fraud and bank bribery, two counts of bank fraud, three counts of money laundering, one count of bribery and two counts of making false statements of financial institutions and is scheduled to be sentenced in February.
Zai once was the leader of the Cleveland International Fund and raised millions of dollars for development in Northeast Ohio. This included a unique foreign-investment effort that attracted $20 million to the Flats East Bank project.
More than two dozen credit union members have been convicted in the scheme, including Koljo Nikolovski, a purported Croatian crime figure, who in May was found guilty of obtaining more than $6 million in fraudulent loans, most of which was wired to banks in Croatia and Albania. Nikolovski, who allegedly paid other members to obtain loans that were redirected to him, is appealing his conviction.
