Cleveland entrepreneur A. Eddy Zai will spend more than sevenyears in federal prison for defrauding $16.7 million from thenow-defunct St. Paul Croatian Federal Credit Union.
|U.S. District Judge John Adams in Akron on Tuesday also orderedZai to pay more than $23 million in restitution to the NCUA.
|Zai pleaded guilty in November to nine counts of bank fraud,bribery, money laundering for his participation in the $70 millionfraud case that led to the collapse of SPCFCU in suburban Eastlakein April 2010.
|Authorities said Zai, 44, of suburban Pepper Pike, conspiredwith others, including Anthony Raguz, the former CEO of SPCFCU, to submit false loandocuments and defraud the credit union of more than $16 millionfrom December 2003 to March 2010.
|“Mr. Zai held himself out to the community as a successfulentrepreneur, when in reality he was part of a conspiracy thatresulted in one of the largest credit union collapses in history,”said Steven M. Dettelbach, U.S. Attorney for the Northern Districtof Ohio in Cleveland.
|Zai also paid bribes to Raguz to use his position toapprove numerous loans to Zai and the companies he controlled, thegovernment said.
|More than 15 companies were created to operate as a safe havenfor credit union funds. These companies performed little or nolegitimate business operations, according to court documents. What's more, even when these companies discontinued operations, Zaisought to obtain loans and directed that no loan payments be madeto the credit union. This scheme resulted in a $13.7 million loss,according to court records.
|Zai gave Raguz numerous cash payments totaling $5,000 in $100bills that were concealed in envelopes and hand-delivered to Raguzat the credit union's offices.
|Raguz was sentenced to 14 years in federal prison in Novemberfor his central role in one of the largest fraud cases in U.S.credit union history.
|NCUA discontinued SPCFCU's operations in April 2010 afterdetermining the credit union was insolvent. The credit union servedabout 5,400 members and had about $239 million in assets.
|The credit union's failure cost the NCUSIF $170 million and ledto a lawsuit from the NCUA.
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