CLEVELAND – Real estate developer A. Eddy Zai on Monday pleaded guilty to bribing the CEO of St. Paul Croatian FCU to obtain $19 million in fraudulent loans, helping precipitate the 2010 collapse of the $240-million credit union.
As part of his plea, Zai must forfeit $16.7 million – the largest restitution ever handed down in Northeast Ohio – which will go to NCUA. NCUA has projected losses for the credit union failure will cost the National CU Share Insurance Fund $170 million, making it the biggest credit union fraud ever.
Sentencing for the 44-year-old Zai has been scheduled for Feb. 5.
In return for the loans, Zai paid thousands of dollars in cash bribes to the former head of the credit union, Anthony Raguz. Raguz pleaded guilty to bank fraud, money laundering and bank bribery, and is scheduled to be sentenced Nov. 20.
Two of Zai’s co-defendants, father-in-law Ted Vannelli, 66, of Willoughby, and accountant Zrino Jukic, 41, also have pleaded guilty. Vannelli admitted conspiring to commit bank fraud and aiding and abetting Zai in the bribery of Raguz.
Jukic pleaded guilty to fraud and money-laundering charges, for which he could receive up to three years in prison and be required to pay more than $1 million in fines and $1 million in restitution.
At Monday’s hearing, Zai pleaded guilty to one count of conspiracy to commit bank fraud and bank bribery, two counts of bank fraud, three counts of money laundering, one count of bribery and two counts of making false statements of financial institutions.
Vannelli, Zai, Zai’s wife and the group of businesses Zai operated also face a civil lawsuit from NCUA, which has been delayed until the resolution of the criminal case against Zai.
Zai once was the leader of the Cleveland International Fund and raised millions of dollars for development in Northeast Ohio. This included a unique foreign-investment effort that attracted $20 million to the Flats East Bank project.
More than two dozen credit union members have been convicted in the scheme, including Koljo Nikolovski, a purported Croatian crime figure, who in May was found guilty of obtaining more than $6 million in fraudulent loans, most of which was wired to banks in Croatia and Albania. Nikolovski, who allegedly paid other members to obtain loans that were redirected to him, is appealing his conviction.