CLEVELAND – Authorities said a purported Albanian crime leader charged in last year’s failure of St. Paul Croatian FCU is being held in jail while he awaits trial on the massive fraud that sunk the one-time $240-million credit union.
A federal judge has seized the passport of Koljo Nikolovski, who is being held in the Ashtabula County jail without bond because he is considered a flight risk.
Nikolovski was indicted earlier this year on charges he paid Anthony Raguz, CEO of St. Paul Croatian FCU, $100,000 in bribes to approve more than $6 million in loans Nikolovski never intended to repay. Most of the money was wired to banks in Nikolovski’s native Albania and Croatia, where authorities allege he heads a crime syndicate. None of the funds has been recovered.
Nikolovski has pleaded innocent to the charges.
Raguz, 52, on Tuesday 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. He 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.
As part of a plea deal with prosecutors Raguz agreed to pay $1 million to NCUA, which has projected losses from the failure of St. Paul Croatian at $170 million, the biggest ever loss for a natural person credit union.
Thirteen borrowers, including Nikolovski’s ex-wife and his nephew, have been charged in the case and are awaiting trial.
Immediately after Tuesday’s plea hearing, Raguz surrendered to U.S. marshals to begin serving his prison time. Raguz is scheduled to be sentenced Jan. 4, 2012.
Raguz admitted dispensing millions of dollars worth of loans without requiring any collateral. Raguz knew the borrowers had little or no assets, no employment history, and often provided fictitious names. Most of the borrowers made little or no repayments. To cover his trail of delinquent loans, Raguz and others issued new loans – known as reset loans – in the names of dead people and fictitious companies to cover for the delinquent payments.
