A. Eddy Zai pleaded guilty in U.S. District Federal Court in Cleveland this week to nine counts or bank fraud, bribery, money laundering and agreed to forfeit $16.7 million for his participation the $70 million fraud case of the St. Paul Croatian Federal Credit Union in Eastlake, Ohio.
Authorities said Zai, 44, of suburban Pepper Pike, conspired with others, including Anthony Raguz, the former chief operating officer of SPCFCU, to submit false loan documents to the credit union to defraud the credit union of approximately $16.7 million, and pay bribes and kickbacks to Raguz for using his position to approve numerous loans to Zai and the companies he controlled. This criminal activity occurred between December 2003 through March 2010.
SPCFCU was placed into conservatorship in April 2010 by the NCUA, which discontinued its operations after determining the credit union was insolvent. At that time, SPCFCU served about 5,400 members and had about $239 million in assets.
“This case is the result of a lengthy joint investigation between the FBI and the IRS. Zai was the single largest recipient of fraudulent loans and significantly contributed to one of the largest collapses of a credit union in U.S. history,” said Stephen D. Anthony, Special Agent in Charge of the FBI's Cleveland Field Office.
Raguz was accused of approving more than 1,000 fraudulent loans totaling more than $70 million to more than 300 account holders from 2000 to 2010 while chief operating officer of the credit union. He accepted more than $500,000 in bribes, kickbacks and gifts from St. Paul customers who fraudulently obtained loans, according to U.S. attorneys.
Raguz, who previously pleaded guilty to six charges, is scheduled to be sentenced Nov. 20 in U.S. District Federal Court in Cleveland.
The credit union's failure cost the NCUSIF $170 million and led to a lawsuit from the NCUA.
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