More than a year after St. Paul Croatian Federal Credit Union was conserved and liquidated because of losses from fraud, there have been indictments, federal and international investigations and money hunts, and a lawsuit against the NCUA.
On May 13, a federal grand jury in Cleveland indicted seven more individuals–in addition to the nine already indicted–on criminal counts related to a fraud against the credit union, which was located in Eastlake, Ohio, and at one point had assets of $240 million. The loss cost the NCUSIF $170 million.
So far investigations by the U.S. Justice Department and Interpol have found almost $6 million in fraudulent loan proceeds transferred to Macedonian and Albanian bank accounts. A federal court last month ordered the Kapital Bank in Skopje, Macedonia, to return $2.3 million of funds that were purportedly proceeds from credit union loans.
The federal grand jury in Cleveland indicted Arben Alia on 11 counts of bank fraud, one count of bank bribery and five counts of money laundering. The indictment alleges he used the $4.5 million in fraudulent loans he received to fund gambling excursions and to purchase and renovate a bar and grill in suburban Cleveland. Alia was also indicted for giving the credit union’s former Chief Operations Officer Anthony Raguz a $100,000 bribe for approving and issuing the loans. Raguz was one of nine people indicted for bank fraud in March in connection with the credit union’s collapse.
When Raguz was indicted, prosecutors alleged he rewrote the loans with new repayment terms and made up names and used the names of credit union members without their knowledge.
Other persons indicted on May 13 were Qerim Ahmetaj, one count of bank fraud and one count of money laundering; Zoge Ahmetaj, one count of bank fraud and two counts of money laundering; Ilir Marku, three counts of bank fraud and two counts of money laundering; Vaso Shani, one count of bank fraud and two counts of money laundering; and Alban Sulkaj, one count of bank fraud and one count of money laundering.
In a related case, Skender Demiri was charged with one count of financial institution fraud, one count of bribery in connection with the business dealings of a financial institution, and one count of money laundering. He is accused of obtaining loans totaling $1.6 million by making false promises and giving Raguz $50,000 to approve and facilitate the approval of the loans.
“Federal and local investigators continue to peel away the layers of fraud and corruption that were visited upon this financial institution, “This investigation is ongoing, and will not stop until we have run down every lead,” Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, said in a statement.
On the same day the indictments were announced, two former members of St. Paul Croatian FCU filed suit against the NCUA saying the agency’s insurance coverage level isn’t adequate.
Steve Skertic and his wife, Marija, contend that the agency owes them an additional $165,000 in addition to the $865,000 it has already paid them for five accounts they had at the credit union when it was conserved and liquidated last year.
The suit was filed in U.S. District Court in Cleveland where the Skertics live. The couple contended that none of their individual accounts had more than $250,000–the maximum amount that is insured in any one account–and they carefully set up the accounts to comply with the law.
However, when it turned down the request for additional money in an administrative procedure, the NCUA said the Skertics added friends as joint accountholders to extend coverage but the friends have to share the $250,000 payout for the account.