The former manager of a Brooklyn, N.Y.-based credit union was convicted in federal court Nov. 1 on 41 counts of bank fraud and conspiracy in one of the biggest credit union frauds ever.

The criminal conviction of Vytautas Vebeliunas, who helped found Kasa Lithuanian FCU, is expected to strengthen the National Credit Union Administration's case in a civil suit brought against Mr. Vebeliunas, according to Richard Schulman, an NCUA attorney working on the case.

Mr. Vebeliunas, 68, was found guilty in U.S. District Court for the Eastern District of New York of a scheme to siphon funds from the New York credit union to finance a Florida real estate development company he controlled.

Contributed to Failure

Two other credit union insiders were also convicted of criminal charges in the case. Losses on the loans to the company helped force the failure of the $80 million-asset credit union.

Kasa Lithuanian, which had offices in four states, was liquidated by the NCUA in August 1991 at a cost of more than $8 million to the National Credit Union Share Insurance Fund.

The agency is trying to recoup some of the losses through a civil suit.

Hearings on the civil suit have yet to be scheduled. Action on the suit was stayed until resolution of the criminal case, Mr. Schulman said.

But, he said the agency will reinstate its motion for a summary judgment in its suit based on the criminal convictions.

"We could argue that the issue has already been decided by the criminal convictions," Mr. Schulman said.

Funding a Real Estate Venture

Federal prosecutors charged Mr. Vebeliunas with operating a "straw" borrowing scheme, under which be used nominees to borrow funds earmarked for him. Prosecutors said more than $12 million in credit union funds were used to finance purchases of Florida real estate by a development firm know as Litas Group, which was controlled by Mr. Vebeliunas.

Mr. Vebeliunas was convicted on 41 of 44 criminal charges and ordered to make $4 million in forfeitures. Sentencing is scheduled for Jan. 10.

The case is one of the biggest credit union frauds ever, rivaled only by the recent criminal convictions of four insiders related to Barnstable (Mass.) Community FCU on bank fraud and conspiracy charges, and the 1989 conviction of Larry King, the former manager of Franklin Community FCU in Omaha, Neb.

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