Speculators Disgorge Ill-Gotten Gains from CU Conversions

NEW YORK – Three speculators charged with a multi-million dollar scheme to profiting from credit union and mutual savings bank conversions agreed to repay more than $3.5 million in illegal profits and fines. The leader of the scheme, the third group charged in the last year with illegally profiting from mutual savings bank conversions, agreed to plead guilty to criminal fraud charges and to repay $2.85 million in ill-gotten profits. Prosecutors charged 62-year-old Mark Ristow, a real estate entrepreneur in Indianapolis, his cousin Andrew Crabb, 41, and Ristow’s sister-in-law Susan Gitlin, 49, with using phony addresses and other schemes to qualify for depositor status in dozens of mutual savings banks, and dozens of credit unions that were rumored to be converting to MSBs, in order to gain preferential access to lucrative initial public offerings. At one point, the group had more than $1 million in deposits spread across 150 MSBs. Those included: First Pactrust Bancorp (Pacific First FCU), which went public in August 2002; Synergy Financial Group (Synergy FCU) which went public in September 2002; Rainier Pacific Financial Group (Rainier Pacific CU) October 2003; and Citizens Community Bancorp (Citizens Community FCU), which issued stock twice in a so-called two-step conversion (2004 and 2006). Many of the same stocks were also targeted in a scheme disclosed this summer by which a former Wall Street executive and his life-long buddy earned more than $12 million in MSB offerings. Another group was convicted last year of illegally earning millions of dollars in the 2004 IPO of New Haven Savings Bank, a lucrative stock acquired by all three groups. Prosecutors allege Ristow put up the money for the scheme and had Crabb and Gitlin set up nominee accounts at the institutions in their own names to enable him to exceed the maximum allowable shares to be purchased in an IPO.