Anthony Raguz, a former credit union CEO who played a central role in one of the largest fraud cases in U.S. credit union history, was sentenced Monday to 14 years in federal prison and ordered to pay $71.5 million in restitution by U.S. District Court Judge Christopher A. Boyko in Cleveland.
Raguz pleaded guilty in September 2011 to six criminal counts, including bank fraud, money laundering and bank bribery that led to the collapse of St. Paul Croatian Federal Credit Union in Eastlake, Ohio, in 2010.
He admitted to approving more than 1,000 fraudulent loans totaling $70 million to over 300 account holders at St. Paul Croatian FCU from 2000 to 2010. Raguz said he issued loans without requiring collateral and knew the borrowers had few assets, no employment history and often used fictitious names. He also accepted bribes totaling $1 million to approve loans, according to the original indictment.
In a letter to Boyko, Raguz wrote there was no excuse or justification for the crimes he committed.
“I hurt a lot of innocent people,” Raguz said in the letter to the judge. “In regard to some of the loans, I took outright bribes. I was gambling with other people's money in order to recoup my losses for the foolish decisions that I had made. When my deceit was uncovered, I tried to do everything I could do to make amends.
“Within days of the disclosure, I starting [sic] meeting with the agents and the accountants in order to unravel the web of my deceit. I hope that my efforts at least achieved an accurate accounting of what had happened. I also paid the government every dollar that I had. I agreed to testify against everyone who was involved, and in doing so, I put my family and my friends at risk.”
Fifteen relatives and friends wrote character reference letters, asking Boyko for leniency in Raguz’s sentencing.
Raguz forfeited $1 million, cooperated with federal prosecutors and agreed to testify against 20 people who have also been indicted on various bank fraud charges in the SPCFCU case. Some have already been sentenced; others have pleaded guilty or are awaiting trial.
However, Boyko rejected a request from prosecutors that Raguz receive a punishment in the mid-range of federal sentencing guidelines, which presumably would have given him a lighter sentence, according to The Plain Dealer, a Cleveland daily newspaper.
Boyko compared Raguz to a Jekyll and Hyde character – “an Anthony Raguz who crept out from the dark, pulled this off and continued to do this for a long time – an Anthony Raguz your family thought never existed," Judge Boyko was quoted in the Plain Dealer.
NCUA has recently reported its projected loss in the SPCFCU case is now at $186.4 million, down slightly from its initial projected loss of $186.8 million. NCUA’s liquidation of the credit union has so far netted $22.6 million in recoveries from all areas including loan payments and liquidation of cash accounts.
NCUA has filed 61 lawsuits against SPCFCU-related parties claiming monetary damages of more than $44 million. To date, NCUA has recovered $1.2 million.
NCUA is working with the U.S. Attorney’s Office to recover more than $2 million that had been deposited into bank accounts in the Balkan Republic of Macedonia by Koljo Nikolovski.
He was another pivotal figure in the SPCFCU fraud case who pleaded guilty earlier this year to 18 counts of bribery, bank fraud and money laundering. He was sentenced to 18 years in prison in April.
The NCUA also is expected to recover $16.7 million from A. Eddy Zai who pleaded guilty in U.S. District Federal Court in Cleveland on Nov. 5 to nine counts of bank fraud, bribery, money laundering for his involvement in the credit union case.
Zai, 44, of suburban Pepper Pike, conspired with others, including Raguz, to submit false loan documents to defraud the credit union of approximately $16.7 million. Zai also paid bribes and kickbacks to Raguz for using his position at the credit union to approve numerous loans to Zai and more than a dozen businesses he controlled and operated.
Federal prosecutors said some of these companies were created primarily to operate as a “safe haven” for credit union proceeds, while others performed little or no legitimate business.