Tuesday, November 27, 2012

Corruption: Credit union executive sentenced to 14 years in $72 million fraud scheme

U.S. Attorney’s Office 
Northern District of Ohio

CLEVELAND—Anthony Raguz, the former chief operating officer of the St. Paul Croatian Federal Credit Union, was sentenced to 14 years in prison and ordered to pay more than $72.5 million for his role in one of the largest credit union failures in American history, federal law enforcement officials said today.

Raguz, 53, of Mentor, Ohio, issued more than 1,000 fraudulent loans totaling more than $70 million to over 300 account holders at St. Paul from 2000 to April 2010, according to court documents. He accepted more than $1 million worth of bribes, kickbacks, and gifts in exchange for the fraudulent loans, according to court documents.

He pleaded guilty last year to six counts, including bank fraud, money laundering and bank bribery.

U.S. District Judge Christopher Boyko sentenced Raguz to 14 years in prison and ordered him to pay more than $71.5 million in restitution, in addition to the $1 million he previously forfeited.

St. Paul Croatian Federal Credit Union in Eastlake, Ohio, went into conservatorship and then forced liquidation in April 2010. That resulted in a $170 million loss to the National Credit Union Share Insurance Fund.

“Leaders of financial institutions such as this must be held accountable for their actions,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “As COO, Mr. Raguz’s corrupt actions cause enormous hardship for innocent depositors, and Mr. Raguz will spend more than a decade in prison for those actions.”

Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Field Office, said, “The St. Paul Federal Credit Union collapse resulted in one of the largest credit union failures ever investigated in U.S. history. This complex, large-scale investigation transcended international borders and will continue until all those involved are brought to justice.”

Raguz oversaw the issuing of loans to hundreds of account holders with little or no assets, income, or employment history, according to court documents. He also oversaw scores of “loan resets” in which older loans were fraudulently repaid with new loans in the names of false nominees, including “Auto Truck Company” and “B.S. Construction,” according to court documents.

The money laundering counts stem from Raguz issuing checks totaling $371,800 drawn on his St. Paul account payable to The Vanguard Group, according to court documents.

This case is being prosecuted by Assistant U.S. Attorneys John D. Sammon and Bridget M. Brennan, following an investigation by the Cleveland Field Offices of the FBI and the Internal Revenue Service-Criminal Investigation Division, with the assistance of the Eastlake Police Department.