A federal indictment revealed that a suburban Cleveland man was in federal prison when he received millions of dollars in fraudulent loans from St. Paul Croatian Federal Credit Union, which helped lead to its collapse in April 2010.
A federal indictment released Thursday accused Gezim Selgjekaj of Avon Lake, Ohio, of illegally receiving more than $11 million, the latest move in the ongoing criminal investigation of the $70 million SPCFCU fraud case in which 24 people have been indicted over the last two years, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio in Cleveland.
The federal indictment charged Selgjekaj with one count of conspiracy, six counts of bribery, six counts of money laundering and 15 counts of financial institution fraud.
The indictment alleged Selgjekaj received $3.6 million between 2004 and 2008, despite the fact that he was in federal prison for unrelated conduct. However, federal law enforcement officials did not specify how Selgjekaj received these funds while in prison.
From March 2003 through July 2004, Selgjekaj also received an additional $5 million in fraudulent loans from SPCFCU. Moreover, even after defaulting on the $8.6 million in loans, Selgjekaj received an additional $2.9 million in loans from SPCFCU between 2008 and 2010, according to the indictment.
Selgjekaj allegedly managed to bilk millions of dollars from the credit union because he conspired with Anthony Raguz, the former chief operating officer at SPCFCU, and others. Raguz was sentenced to 14 years in federal prison in November for his central role in one of the largest fraud cases in U.S. credit union history.
Raguz admitted to approving more than 1,000 fraudulent loans totaling $70 million to more than 300 account holders at the credit union from 2000 to 2010. He also accepted bribes totaling $1 million to approve loans, according to the original indictment.
Selgjekaj allegedly submitted false and fraudulent loan applications to Raguz, including submitting loan requests in nominee’s names when Selgjekaj’s aggregate loan balances reached a level that could have drawn attention from auditors or members of the credit union’s board, according to the indictment.
To influence and reward Raguz for providing him with the fraudulently obtained money from SPCFCU, Selgjekaj allegedly gave Raguz $40,000 in cash and five checks totaling $66,000, according federal authorities.
“This defendant created several fictitious businesses as safe havens for the illegal siphoning of fraudulently obtained loan proceeds,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office, which is investigating the SPCFCU fraud case along with the criminal investigations unit of the Internal Revenue Service.
Federal investigators said Selgjekaj owned, operated and controlled, in whole or in part, several business entities, which were created either primarily as “safe havens” for credit union loans. These companies, however, performed little or no legitimate business operations, according to the indictment.
Additionally, the indictment also charged Arthur Hoxha of Rocky River, Ohio, with one count of financial institution fraud, and Judmir Capoj of North Olmsted with two counts of submitting false statements to a financial institution.
SPCFCU was placed into conservatorship in April 2010, when it served 5,400 members and reported about $238 million in assets. The NCUA discontinued operation of SPCFCU when it was determined to be insolvent, making it one of the largest credit union failures sin American history.