A Cleveland business owner was sentenced last week to 30 months in prison for pilfering nearly $1 million from the fraud-ridden St. Paul Croatian Federal Credit Union, which was liquidated by the NCUA in 2010.

Joe Spaqi, 61, of Cleveland, pleaded guilty to four counts of financial institution fraud and two counts of money laundering in May.

U.S. District Court Judge Christopher A. Boyko of Cleveland also ordered Spaqi on Aug. 13 to pay $965,423 in restitution, according to court documents.

Spaqi aided and abetted Anthony Raguz, the former chief operating officer of St. Paul Croatian FCU in Eastlake, Ohio, and a relative identified only as P.S., in a scheme to defraud the credit union between 2005 and 2009.

Spaqi carried out the fraud by requesting loans from the credit union through Raguz. The Cleveland business owner did not follow established procedures and made false statements to obtain these loans, according to court documents.

Raguz approved multiple loans to Spaqi, Eclipse Bar and Grill (which Spaqi owned) or Luke Nue, an alias he used, for a total of approximately $965,422. These funds were paid in checks to Spaqi, Eclipse, Nue, P.S. and other unrelated third parties.

Spaqi also deposited fraudulent loan funds from Eclipse Bar and Grill into his personal share accounts, according to court records.

Raguz began serving a 14-year federal prison sentence after he admitted to approving more than 1,000 fraudulent loans totaling $70 million to approximately 300 account holders at the cooperative from 2000 to 2010. He also accepted bribes totaling $1 million to approve loans.

Federal authorities have said the collapse of St. Paul Croatian FCU has led to a complex, large-scale, international investigation that will continue until all those involved are brought to justice.

So far, approximately 30 people involved in the St. Paul Croatian FCU collapse have been charged, convicted or sentenced.

In May 2011, about a year after the NCUA placed the credit union in conservatorship, the U.S. Justice Department and Interpol uncovered nearly $6 million in fraudulent loans that were transferred to Macedonian and Albanian bank accounts. A federal court in April 2011 ordered the Kapital Bank in Skopje, Macedonia to return $2.3 million in funds that were purportedly proceeds from credit union loans.

The NCUA said it lost $186.4 million because of the credit union's collapse.

Instant Insights /

Business Owner Sentenced in St. Paul Croatian Case

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