CLEVELAND – A local businessman was sentenced to nine years in prison Tuesday for his role in a fraud ring that led to the 2010 failure of St. Paul Croatian FCU, one of the largest credit union collapses in history.
Arben “Benny” Alia, 35-year-old owner of Milano’s Bar and Grill, also was ordered to pay $3.5 million in restitution to the estate of the Eastlake credit union, which was liquidated by NCUA at a cost of $170 million.
The Albanian immigrant is one of 16 individuals charged in the historic fraud, in which the CEO of the credit union approved tens of millions of dollars in loans the borrowers had no plans to repay in exchange for kickbacks. The CEO, Anthony Raguz, has pleaded guilty to charges in the massive fraud and is testifying against other defendants in the case while he awaits sentencing.
Alia, who previously pleaded guilty to money laundering in the case, claimed that Raguz was the kingpin of the plan.
Authorities allege another leader of the scheme was Koljo Nikolovski, a purported crime kingpin from the Balkans, who induced as many as a dozen family members and friends to take out phony mortgages from the one-time $240-million credit union. Nikolovski was sentenced to 18 years in prison in May.
Also charged in the case is well-known Cleveland real estate developer E. Eddy Zai, who authorities say borrowed more than $16 million from the credit union. Zai is awaiting trial on fraud charges in the case.
Alia had no prior criminal record. He was born and raised in Albania and is not a U.S. citizen. After his prison term, the divorced father of two school-age children will be deported. Alia agreed to forfeit his bar, liquor license and 2007 Mercedes.
In 2005, Alia got his first loan from St. Paul to buy Grande’s Italian Cuisine, a South Euclid restaurant. He sold Grande’s the following year, but continued to work there until be bought Milano’s in 2009.
Raguz is scheduled to be sentenced Nov. 20 for accepting more than $500,000 in bribes, kickbacks and gifts from St. Paul members in exchange for loans. Raguz told prosecutors he issued more than 1,000 fraudulent loans totaling more than $70 million to more than 300 account holders from 2000 to 2010 while CEO of St. Paul Croatian.