More than 20 people have either been indicted or imprisoned for their involvement in the St. Paul Croatian FCU case, one of the largest fraud cases in credit union history.

Anthony Raguz, the former credit union CEO, was sentenced last November to 14 years in federal prison after he admitted to approving more than 1,000 fraudulent loans totaling $70 million to about 300 account holders at the credit union from 2000 to 2010. Several other account holders also were convicted and are now serving prison terms.

When SPCFCU was placed into conservatorship by the NCUA in April 2010, Holy Love Ministry held $1.7 million in two different accounts with the credit union. The NCUA board determined Holy Love Ministry was entitled to the maximum $250,000 in insurance coverage.

In the lawsuit, however, Holy Love claimed the two accounts had multiple members who were designated as signers on each account, which entitled the church to an additional $250,000 deposit insurance payment. The accounts were set up by Joseph Plavac, an officer of the church and a former CEO of SPCFCU, court documents show. Plavac also served on the credit union's board of directors.

However, the NCUA argued that legal entities, including non-profit corporations such as Holy Love Ministry, are not eligible for joint account coverage because it is only available to natural persons.

“Based upon a thorough review of the record in this matter, the NCUA Board's financial determination as to insurance coverage on Holy Love's accounts was supported by substantial evidence and was not arbitrary, capricious, an abuse of discretion or contrary to law,” Nugent wrote in his dismissal ruling.

However, Holy Love Ministries filed a second federal lawsuit in August claiming that the NCUA and the federal government violated the Federal Tort Claims Act. The FTCA allows anyone to sue for “money damages….that were caused by the negligent and wrongful acts and omissions of employees of the U.S. government.” A court hearing for this lawsuit is scheduled for November.

The lawsuit claims that NCUA was allegedly negligent and breached its fiduciary duty before and during the federal regulator's liquidation of SPCFCU by allegedly:

• Misrepresenting to Holy Love that it needed to keep its money in St. Paul's;
• Helping other members of St. Paul's restructure their accounts for maximum coverage, but failing to provide Holy Love with the same service;
• Failing to properly monitor St. Paul's in the months leading up to conservatorship, and
• Denying Holy Love's hardship request for money in excess of the $5,000 limit.

According to the lawsuit, the NCUA sent a letter to account holders during the SPCFCU liquidation that it would consider “exception” requests on a case-by-case basis to the $5,000 withdrawal limit. An exception would include an “emergency to meet a previously established commitment for a home purchase,” according to court documents.

Holy Love requested such a “hardship exception” on many occasions because its $1.7 million accounts supported the church's building fund. According to court documents, the church made significant changes to its facilities as part of a two-year building project costing more than $12 million.

“The loss (of these funds) had rendered Holy Love's situation desperate,” the lawsuit states.

Attorneys from the U.S. Department of Justice who are representing NCUA and the U.S. government were unavailable for comment Wednesday because of the government shutdown.

John Fairbanks, NCUA spokesperson, said the NCUA does not comment on pending litigation.

The NCUA has projected its loss in the SPCFCU case t0 be $186.4 million. The 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.

The agency has filed 61 lawsuits against SPCFCU-related parties claiming more than $4 million in damages and said late last year that it had recovered $1.2 million so far.