CLEVELAND – The victims list in last year’s fraud-induced failure of St. Paul Croatian FCU continues to grow, with tiny Holy Love Ministries in nearby Elyria reporting it is out more than $1.5 million in uninsured deposits.
Holy Love is the second small Ohio church to report loses due to the failure of the one-time $240 million credit union, which has been attributed to a $170 million fraud, one of the biggest ever among credit unions. Earlier, St. Mary of the Assumption Roman Catholic Church in the Cleveland suburb of Eastlake, where the credit union was based, reported a loss of $150,000.
Both churches were among holders of jumbo CDs which NCUA while liquidating St. Paul Croatian agreed to reimburse up to $250,000 per account, even though the depositors structured their holdings to limit them to $250,000 per separate account. Several credit unions also lost uninsured deposits, including Cascade FCU of Kent, Wash., $251,000 in uninsured deposits, Acme FCU of Eastlake, $127,000 in uninsured CDs, and Employees CU of Dallas, a much smaller amount.
NCUA in rejecting appeals from these institutions ruled that legal entities, like Holy Love Ministries, “are not eligible for joint account coverage, as joint accounts are only available to natural persons (individuals).”
“A joint account is a qualifying joint account if each of the co-owners has personally signed a membership or account card,” NCUA said in denying the appeal from the tiny church. “NCUA’s insurance rules require that all of the shares owned by the (church), a nonprofit corporation, be combined and insured up to $250,000.”
NCUA took over the faith-based credit union on April 23, 2010, as evidence of the massive fraud continued to grow, then liquidated the institution just seven days later. Within days NCUA paid all depositors up to $5,000 in deposit insurance to tide them over. Six months later, on October 18, it mailed each depositor the balance of their funds, up to the $250,000 per account federal limit. The agency notified Holy Love Ministries and all the other institutional investors that the balance of their accounts exceeded their coverage so was uninsured.
The failure of St. Paul Croatian has been attributed to a massive loan fraud in which the CEO, Anthony Raquez, allegedly earned bribes by lending funds to ineligible borrowers who had no plans to repay the loans. Among the borrowers was Koljo Nikolovski, a purported international crime figure who allegedly wired $5 million of loan proceeds from the credit union to his native Macedonia. Nikolovski’s wife and nephew also were charged with accepting the bogus loans. Raquez and Koljo Nikolovski are in jail awaiting trial along with seven other individuals charged in the case.
