Former St. Paul Croatian FCU President/CEO Anthony Raguz, whose actions helped trigger one of the largest credit union failures in history, pleaded guilty on Sept. 29 to six criminal counts, including bank fraud, money laundering and bank bribery in federal court in Cleveland.
Raguz, one of 16 people charged by federal prosecutors in connection with last year’s collapse of the credit union, issued more than 1,000 fraudulent loans totaling more than $70 million to over 300 accountholders at St. Paul from 2000 to 2010.
According to the plea agreement, Raguz admitted that he made the loans without requiring collateral and knew the borrowers had few assets, no employment history and often used fictitious names. He accepted bribes totaling $1 million to approve the loans, according to the original indictment.
The NCUA conserved and then closed the $240 million credit union, located in the Cleveland suburb of Eastlake, Ohio, last year. The failure cost the NCUSIF $170 million.
“People ought to know that senior bank officials are being held accountable,” Steven M. Dettelbach, United States Attorney for the Northern District of Ohio said in a statement. “Not every bank failure over the last five years is the result of criminal conduct, but when we find criminal conduct, we are absolutely dedicated to investigating and prosecuting those offenses.”
According to court filings, Raguz authorized the fraudulent repayment of old loans with new loans. Raguz also issued checks drawn on his credit union account payable to The Vanguard Group, which is where the money laundering indictment stemmed from.
Raguz’s attorney, John Pyle, told The Plain Dealer that his client has forfeited $1 million.
“He’s a good man and he made a mistake,” Pyle said of Raguz.
One of the largest recipients of the loans was Koljo Nikolovski, who has been charged with 10 counts of bank fraud, three counts of bank bribery and five counts of money laundering.
Nikololovski, who has been described in media reports as an organized crime figure in Macedonia, is the leading co-defendant and has been accused of fraudulently obtaining loans totaling $5.6 million. He has pleaded not guilty and is in jail awaiting trial.
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.
Raguz is scheduled to be sentenced on Jan. 4, but he surrendered to authorities to begin serving time in prison immediately.
Shortly after the agency placed the credit union into conservatorship, Region III Director Alonzo Swann was transferred to another position and subsequently retired from the agency.