CLEVELAND – Anthony Raguz, the CEO of St. Paul Croatian FCU, was sentenced this morning to 14 years in prison and ordered to pay $72 million restitution for masterminding the biggest fraud in credit union history that led to the 2010 collapse of the $240 million credit union.
Raguz, 52, received a more lenient sentence than at least one other participant in the huge fraud, even though he confessed to accepting more than $1 million in bribes to approve over 1,000 loans totaling more than $70 million between 2000 and 2010, including $19 million of loans to local financier A. Eddy Zai, who is awaiting sentencing for his role in the scheme.
As part of a plea bargain with federal prosecutors, Raguz testified against Zai and other “straw borrowers,” including international crime figure Koljo Nikolovski, who wired more than $6 million in fraudulent credit union loan proceeds to bank accounts in Macedonia and Albania. Nikolovski was convicted in May and is currently serving an 18-year prison term, one of 26 individuals now convicted in the fraud. Five of the individuals were relatives of Nikolovski, including his ex-wife, who borrowed funds from the credit union with no intention of repaying the loans, then siphoned the proceeds to Nikolovski.
NCUA estimates the fraud will cost the National CU Shares Insurance Fund $184 million to resolve, making it the biggest credit union fraud ever, by far. The massive fraud has left a tangle of unpaid depositors, with a tiny church, Holy Love Ministries, suing NCUA over $1.5 million for recovery of uninsured deposits, and several other depositors claiming large losses on uninsured deposits. The agency has filed civil suits against 61 borrowers in the case in an attempt to recover $44 million.
U.S. District Judge Christopher Boyko rejected a request from prosecutors that Raguz receive a punishment in the mid-range of federal sentencing guidelines, ruling that the damage he caused outweighed his contribution to the prosecution of other defendants. Judge Boyko compared Raguz to a Jeckyl and Hyde character – “an Anthony Raguz who crept out from the dark, pulled this off and continued to do this for a long time -- an Anthony Raguz your family thought never existed," he said.
Before being led out of the federal courtroom in handcuffs, Raguz expressed remorse for his crimes. “I apologize to the victims and the good members of the credit union, especially those who suffered any losses," Raguz said. “And I apologize to the 10 employees who lost their jobs because of my crimes. I humbly ask for their forgiveness."
In a letter to the judge requesting leniency Raguz said he began the scheme as an effort to boost lending at the credit union but the scheme spiraled out of control as he earned increasing bribes in exchange for the loans. He told the Judge by forfeiting the $1 million in bribe proceeds he had impoverished him and his family.