NCUA FILES $19 MILLION CLAIM IN ST. PAUL CROATIAN FAILURE
CLEVELAND-NCUA filed suit last week against a leading Cleveland developer and his partner to recover almost $19 million in fraudulent loans they obtained through St. Paul Croatian FCU, the biggest credit union fraud ever.
The suit, filed in U.S. District Court for the Northern District of Ohio, names as defendants well-known developer A. Eddy Zai, his wife, his partner and father-in-law Ted Vannelli, and the group of businesses the two operated in the wake of the failure of the one-time $240 million credit union.
Both men have been charged in criminal indictments with paying Anthony Raguz, the CEO of St. Paul Croatian, with cash bribes to obtain the loans, and Vannelli has pleaded guilty and agreed to testify in the case.
The NCUA suit charges the group with opening credit union share accounts, taking out loans for their benefit or the benefit of nine companies led by Zai, and then failing to repay the bulk of the loans.
Already more than 16 people have pleaded guilty to bribing Raguz to obtain fraudulent loans, including Koljo Nikolovski, an international crime figure who was sentenced to 18 years in prison last week for arranging almost $6 million in loans, much of it siphoned to his overseas accounts.
NCUA has filed civil suits against more than 20 borrowers for restitution of the fraudulent loan proceeds.
Raguz has pleaded guilty to his role in the scheme and is cooperating with federal in the case against Zai, as he did in the Nikolovski case.
The 2010 failure of St. Paul Croatian cost NCUA 170 million to resolve.
NCUA ISSUES CEASE & DESIST ORDER IN PROPOSED MERGER
ROCKVILLE, Md.-NCUA last week issued a supervisory order to Montgomery County Teachers FCU, a troubled, one-time $468-million credit union in the process of merging with nearby Educational Systems FCU-which will create one of Maryland's largest credit unions.
Under NCUA's cease and desist order, the ailing credit union must comply with requirements to rebuild its declining net worth ratio, which was just 4.3% at March 31, ensure the financial statement audit is completed and all accounts are reconciled by May 31, and address operational deficiencies and strengthen internal controls.
It is not clear what effect the NCUA directive will have on the merger, which will create a credit union spanning six Maryland counties from the Washington suburbs to the Eastern Shore. The new credit union would have almost $800 million in assets, more than 95,000 members and 10 branches.
MCT FCU, which is based in the D.C., suburb of Rockville, Md., reported losses for four years in a row, before eking out a $68,000 net for the first quarter of 2012. Its assets declined from a high of $458 million in 2008 to $384 million.
Educational Systems is based in the nearby town of Greenbelt, Md., and also serves teachers in Maryland's Prince George's, Charles, St. Mary's, Calvert and Talbot counties. It reported a $472,000 net for the first quarter and net worth of 9.5%.
SENATE INTRODUCES OWN BILL ON DUAL ATM FEE DISCLOSURES
WASHINGTON-The Senate has introduced its own bill that would end the requirement for dual fee disclosures at the ATMs, which would leave only the on-screen disclosure.
The bill is similar to one introduced in the House last month and comes as a growing number of consumers are taking advantage of the dual disclosure requirement of the Electronic Funds Transfer Act and suing credit unions and banks that fail to post a physical disclosure notice on the outside of the machine, as required under the EFTA.
"This legislation will eliminate a superfluous placard notice requirement contained in the Electronic Funds Transfer Act," said NAFCU President Fred Becker. "Eliminating this single requirement will help put a stop to frivolous lawsuits that drive up the cost of maintaining ATMs and, in turn, lead to higher costs and less convenience for consumers."
NCUA SLASHES RATES IN PUSH FOR COMMUNITY DEV. LOANS
ALEXANDRIA, Va.-NCUA announced it has lowered the rates on its community development to just 0.4%, from an already-low of 1%, in order to entice lending in its moribund Community Development Revolving Loan Fund.
Despite the 1% rate the $18 million fund has not made a loan in more than a year and NCUA says it now has a new high of $11 million available for the low-interest loans.
NCUA said more than 1,100 credit unions are now designated as "low-income" and are eligible to participate in the program, which will also award $1.3 million of small grants for technical assistance. Grants go up to $25,000 with an application deadline of June 29.
