Admitted $40 Million CU Embezzler Faces September Sentencing

Edward Rostohar, 62, the former president/CEO of the $21 million CBS Employees Federal Credit Union, is scheduled to be sentenced in September after he pleaded guilty to one count of bank fraud Monday in U.S. District Court in Los Angeles.

In a plea deal he signed with federal prosecutors on May 10, Rostohar admitted to stealing more than $40 million from the Studio City, Calif. credit union over two decades, one of the industry’s largest embezzlements in recent years.

The former executive also agreed to forfeit millions of dollars in assets and properties in California, Nevada and Mexico that he purchased with the stolen credit union funds.

Before 2000 and continuing through March 2019, he falsified records to make it appear that the credit union was profitable when in fact it was losing millions. Rostohar told investigators he managed to conceal his fraud because he had an insider’s knowledge as a trained accountant and as a former NCUA examiner.

He sometimes disguised his fraud by directing unauthorized payments from the credit union to shell limited liability companies he controlled. The stolen funds were then transferred to other LLCs he managed, according to the plea agreement documents. He also submitted credit union checks to make payments on his credit cards.

His fraud was finally detected on March 6 when a credit union employee found a $35,000 check made out to Rostohar, which led the employee to uncover $3.7 million in checks made payable to the former CEO. The checks had forged signatures of another credit union employee, a federal investigation revealed.

He had been suspended by the credit union on March 12. On that day, his wife called LA police because he was planning to leave the country and threatening to take his life, according to reports. When police arrested Rostohar at his home, they found more than $275,000 in cash and precious metal coins and bars stashed in the trunk of his Porsche.

Rostohar has agreed to forfeit homes in Studio City and Reno, Nev., estimated to be worth at least $3.5 million.

He also agreed to hand over a café, additional properties in Washoe County, Nev., resort property in Mexico, luxury cars and watches, jewelry, and at least eight bank accounts, three retirement accounts and one annuity account. Court documents do not disclose the total value of these assets.

The NCUA liquidated CBS Employees FCU in March after determining that it was insolvent.

The $720 million University Credit Union in Los Angeles assumed the credit union’s assets, loans and member shares. Chartered in 1961, CBS Employees FCU served 2,798 members.