Vincas Urbaitis, a former board director of the now-shuttered Taupa Lithuanian Credit Union, said he has been doing a lot of thinking lately about how he and six board members were double-crossed by Alex R. Spirikaitis, their former CEO.
Spirikaitis, wanted on an embezzlement-related charge, has been on the run from the FBI for more than three weeks following the July 12 collapse and liquidation of the $23.6 million Cleveland cooperative.
“Everybody accepted the financial statements Alex provided us, and everybody appeared to be happy with them,” said Urbaitis, who was a founding member of the credit union and sat on its board for more than 25 years until he resigned in 2011. “I guess everybody just got duped by the clever finagling of Mr. Spirikaitis. The big questions are why did he do it, how did he do it and where is he hiding?”
Court forfeiture documents in U.S. District Court in Akron indicate Spirikaitis, who earned $50,000 annually, allegedly used credit union funds to pay for his $1.5 million Solon house, about 25 miles southeast of Cleveland.
The home’s 400-foot concrete driveway, flanked by two large “no trespassing” signs, leads to a circle with a water fountain at its center, according to a neighbor who declined to identify himself. Sitting on a five-acre lot and surrounded by thick stands of trees and wild shrubs, the neighbor told Credit Union Times the large, rustic-sided home has a wrap-around porch, an indoor pool and an elevator.
Former TLCU Board Director Ricardas Sirvinskas said he didn’t know Spirikaitis had built a new home, and other board members, including Urbaitis, were not aware of it either.
“I don’t think anybody from the board of directors knew or anyone within the Lithuanian community knew he was building a house, because his earnings were not that substantial,” Urbaitis said. “I think he was getting pretty close to $50,000, not enough for building a $1.5 million mansion.”
The two men also said they did not know Spirikaitis personally.
“He was not very social,” Urbaitis said. “But he was not antisocial. He would talk to you about the business aspects of the credit union, but I don’t even know who his close friends were.”
Urbaitis said he couldn’t remember when Spirikaitis was hired by credit union, but his first position was that of a clerk, and he was later promoted to assistant manager before taking on the role of CEO. However, despite the promotions, Urbaitis said Spirikaitis was a mediocre manager.
“He was not interested in promoting the credit union and getting more loans,” he said. “He was just maintaining the credit union.”
Sirvinskas said Spirikaitis was a quiet person who did not attend local Lithuanian social events. Taupa means “save” in Lithuanian. The credit union was chartered in 1984 by Lithuanian Americans and immigrants who settled in Cleveland. There are more than 16,000 Lithuanian Americans who live throughout Northeast Ohio, according to the Encyclopedia of Cleveland History.
Sirvinskas also said because Spirikaitis speaks Lithuanian fluently, he was well liked by older members who are closer to their Lithuanian roots.
“The older generation of Lithuanians…they really liked Alex very much,” he said. “But the younger generation of Lithuanians didn’t know him.”
Next Page: The Feds Allege
How Spirikaitis carried out his fraudulent scheme was detailed in forfeiture documents filed July 26 by Cleveland federal prosecutors who aim to take legal possession of the home. A forfeiture hearing before U.S. District Court Judge John R. Adams in Akron, Ohio has not yet been scheduled.
In November 2012, Spirikaitis moved into the new home with his wife and their two children. Court documents show the construction of the home, which took a year, was first paid for with two checks totaling $100,000 from Spirikaitis’ personal account at the credit union.
“All remaining checks—totaling approximately $1,555,132—came from Spirikaitis in the form of Taupa Lithuanian Credit Union official checks,” court documents said. “While working at the Taupa Lithuanian Credit Union, Spirikaitis never made in excess of $50,000.”
However, TLCU’s IRS Form 990 for 2011 shows that while Spirikaitis made $49,000, he also received an estimate $15,890 from the credit union or related organizations that was not reportable on a W-2 or 1099-MISC tax form. The 990 form also revealed the former CEO had a TLCU real estate loan totaling $113,198 with a balance due of $105,620. The credit union had not yet filed its Form 990 for 2012.
Soon after TLCU was placed into NCUA conservatorship, court documents state that NCUA examiners discovered Spirikaitis had used a software program, “Phantom Font,” to alter his credit union’s deposit statements from the $4.5 billion Corporate One Federal Credit Union of Columbus, Ohio. “Spirikaitis printed out numbers he wanted to report to auditors and the NCUA, and (then he) taped them over the real numbers from the true Corporate One Federal Credit Union account statement,” court documents said. “Spirikaitis then photocopied the altered document resulting in a document that mimicked the appearance of the statement coming directly from Corporate One Federal Credit Union.”
Court documents are not clear regarding exactly how much money is missing. As of Jan. 1, 2012, Corporate One’s statement sent to TLCU showed balances of $229,984, $10,000 and $319,574 in three accounts, for a total of $559,468.
However, the authorities said, TLCU’s December 2011 Call Report falsely listed $16,165,288 in assets deposited with correspondent credit unions. The court documents did not reveal if that means $15.6 million is missing, or if TLCU had accounts at other corporates that were left untouched.
TLCU’s December 2011 call report, available on the NCUA’s website, said the credit union had $229,894 in Nonperpetual Capital Accounts but no Perpetual Capital Account investments. The call report also revealed the credit union to be what many would call a saver’s club, a sign older members were more active than younger ones. As of Dec. 31, 2011, TLCU had $4.8 million in share drafts, $3.1 million in regular shares, and a whopping $14.2 million in certificates. Total shares also included nearly $2 million in IRAs.
The credit union’s financial performance reports as of Dec. 31, 2011 also support that notion. Total loans to shares was just 36.92% compared to a peer average of 56.98%, while cash and short-term investments to assets were 62.17%, far higher than the 26.81% peer average. Additionally, regular shares and share drafts represented just 33.02% of total assets, much lower than the 61.63% peer average.
Paul Hixon, vice president of marketing at Corporate One, said he couldn’t comment on the investigation other than to say that the NCUA was onsite.
Urbaitis questioned why examiners didn’t verify the statements.
“They never went to the bank, Corporate One, and asked independently as to how much money was in the accounts,” he said.
The Ohio Department of Commerce, which regulates Ohio’s state-chartered credit unions, conducts a “look-back review” whenever it takes action against an institution, said ODC Spokesperson Brian Hoyt. However, unlike the NCUA’s Material Loss Reviews, Hoyt said the state does not make those investigations available to the public.
NCUA Public Affairs Specialist John Fairbanks would not comment on how often or if examiners check credit union statements against corporate credit union accounts or the nature of the NCUA’s investigation at Corporate One.
Sirvinskas said Vytautas Kliorys, TLCU’s board president, went to the credit union’s office after it was seized to get more information but no one would talk to him.
“All the information we are getting is from the paper,” Sirvinskas said.