CLEVELAND – NCUA has begun filing what is expected to be a series of civil suits seeking repayment from members engaged in the massive fraud at St. Paul Croatian FCU, the one-time $240 million credit union that went under last year.
In a suit filed in federal court Friday, NCUA is seeking $2.2 million from two of the more than 300 St. Paul Croatian members who paid bribes to the credit union’s CEO in exchange for loans they had no plans to repay. The CEO, Anthony Raguz, pleaded guilty last month to accepting $1 million in bribes to approve $70 million in fraudulent loans over a ten-year period.
In the new suit NCUA is asking the court to block an attempt by the members, Sinisa Baros and his wife Simona Baros, from discharging the loan under a Chapter 7 bankruptcy petition, with NCUA claiming federal bankruptcy laws prevent the discharge of debts owed by fraud or criminal intent.
NCUA claims the two small business owners arranged the loans from St. Paul Croatian between 2002 and 2010 by paying Raguz $30,000, even though they were unqualified for the loans and had not made payments and did not have adequate security. Sinisa Baros, according to NCUA, was unemployed on several occasions (for as much as two years at a time), having no income, at times when he obtained loans from St. Paul Croatian, yet was still able to obtain more than $2.2 million in loans.
Baros, according to the suit, admitted to signing blank loan applications, as many as two at a time, to be completed by Raguz, to obtain future loans and refinancing. Baros admitted that he and his wife never made one payment on the loans from St. Paul, dating back to 2002 and extending to 2010.
After discovering the ten-year loan fraud, NCUA took over the credit union in April 2010, then liquidated it a week later when the extent of the fraud was revealed. NCUA estimates the failure of St. Paul Croatian will cost $170 million, making it the biggest credit union fraud ever.
