In 2011, an NCUA examiner-in-charge reviewed a 2010 state examination of the $23.6 million Taupa Lithuanian Credit Union and said it sounded all too familiar.
"[M]BLs, policy updates, investment and record keeping errors, NO delinquency and NO charge offs in over 10 years, this credit union looks, sounds and acts like St. Paul Croatian waiting to happen all over again," wrote the EIC, according to the NCUA Office of Inspector General's material loss report released on March 28.
About two dozen people, including former president/CEO Anthony Raguz, were convicted for embezzling more than $71 million from the Saint Paul Croatian Federal Credit Union, another Cleveland-area cooperative that was shuttered by NCUA in 2010.
As for Taupa Lithuanian, the material loss report concluded that a lack of management integrity, inaccurate financial reporting and inadequate board oversight led to its collapse in July 2013. But the 24-page report was also critical of examiners, noting they could have mitigated an estimated $33.5 million loss to NCUSIF.
The report said examiners failed to adequately identify transaction risks and address multiple red flags, such as excessive amounts of cash on deposit, the discovery of an unaccounted for bag of coins, an overdrawn employee account for an extended period, an overdrawn line of credit at the corporate credit union and an evasive CEO.
The $33.5 million hit to the share insurance fund was caused by former Taupa Lithuanian CEO Alex Spirikaitis overstating assets by $15.5 million, erroneously reported as cash on deposit at Corporate One Federal Credit Union in Columbus, Ohio.
On July 12, 2013, Ohio State Supervisory Authority and NCUA examiners went to Taupa Lithuanian CU to confront the CEO and discovered numerous items, including Corporate One stamps and software that produced phantom fonts to generate statements.
"Through our review of examination working papers, and later corroborated in interviews, we determined NCUA and Ohio SSA examiners agreed that the falsified statements allegedly prepared by Taupa management looked convincing," according to the report.
Moreover, the OIG, after conducting a comparative documents review, agreed with examiners that the faked financial statements looked genuine.
The report also said Taupa Lithuanian's board of directors failed in their duties to adequately oversee the activities of management.
Spirikaitis pleaded guilty in February to one count of conspiracy to commit bank fraud and could face up to 30 years in federal prison when he is sentenced on May 9. Three others have been charged and three more are expected to be charged, authorities said.
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