CEO of failed credit union says examiner past helped fuel fraud
Edward Rostohar, the former CEO of the failed CBS Employees Federal Credit Union in Studio City, Calif., has been accused of embezzling $40 million from the institution over two decades.
Rostohar, who is in federal custody, is facing charges of bank fraud and aggravated identity theft, both felonies, according to a press release from the U.S. Attorney’s Office for the Central District of California. Rostohar, 62, allegedly used the money for gambling and to pay for expensive cars and watches and traveling by private jet.
According to the press release, Rostohar, a former National Credit Union Administration examiner, made online payments to himself or stole funds by forging the signature of another worker at the credit union on checks payable to himself.
The press release also stated that Rostohar told authorities that his experience as an NCUA examiner enabled him to avoid detection for a long time since he knew what examiners looked for when studying the finances at credit unions.
CBS Employees Federal Credit Union was liquidated by the NCUA on Friday.
It wasn’t immediately clear whether Rostohar had legal representation.
On March 6, his conduct was discovered when an employee at CBS Employees found a $35,000 check made payable to Rostohar but the check did not include the reason for such a payment. That employee then did an audit of checks issued by the credit union since January 2018 and uncovered checks totaling about $3.8 million made payable to Rostohar, according to the U.S. attorney. These checks also included the forged signature of another employee without the employee’s knowledge.
On March 12, the credit union suspended Rostohar from his job after an internal investigation. Later on that date, the press release said Rostohar’s wife called 911 to inform the dispatcher that he stole money from work and was preparing to flee the country. Rostohar was then arrested. He subsequently admitted to authorities that had been embezzling money from CBS Employees for 20 years, according to the U.S. attorney.
Rostohar is scheduled to be arraigned on April 18.
If convicted, Rostohar faces a maximum sentence of 30 years in federal prison and a $1 million fine on the bank fraud charge and a mandatory consecutive term of two years in federal prison on the aggravated identity theft charge.
At the time of liquidation, CBS Employees had about 2,800 members and $21 million in assets. University Credit Union of Los Angeles has assumed all assets, loans and shares of the failed institution. It was the first credit union failure of the year.