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Few Answers in How One Ohio CU's Failure May Cause Largest-Ever Loss to the NCUSIF

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EASTLAKE, Ohio-The Croatian community here is still trying to sort through the alleged criminal wrongdoing that brought down a credit union that had been a trusted presence in the community for 67 years and whose shutdown has left a void, confusion and anger.

Credit unions across the country, meanwhile, are still trying to figure out how a credit union that exhibited so many red flags for so long could have gone almost unnoticed by regulators until near the very end.

Even 14 months after it was placed into conservatorship by NCUA, indictments and arrests continue to be made as regulators and law enforcement probe deeper into the credit union's operations.

Some dozen people have now been arrested and charged with a variety of crimes related to St. Paul Croatian Federal Credit Union. As a result, St. Paul Croatian may cause the National Credit Union Share Insurance Fund (NCUSIF) a loss of as much as $170-million-the largest-ever loss for a natural-person credit union.

The deception would last until the very end. At its annual meeting just six weeks prior to being taken over, another large crowd of 655 members turned out at the American Croatian Lodge in which SPCFCU had a branch to celebrate their credit union's success at its annual meeting. Minutes note that Board President Bob Calevich read the President's Report in which he "spoke of the challenging times we are facing and congratulated the membership on their determination to see the crisis through using the Credit Union as a financial tool. He reassured the membership that the Credit Union was financially sound and that we are ready to help with their financial needs."

In this special report, Credit Union Journal provides a deeper glimpse into how the alleged wrongdoing at St. Paul Croatian FCU could have gone unnoticed for so long, using interviews, a report from the NCUA's Office of Inspector General, board minutes and other news reports to assemble a bigger picture.

A Critical Report

The $170-million in potential losses from St. Paul Croatian FCU are galling for many reasons, not the least of which is that at the time it closed, SPCFCU had $240-million in assets. NCUA's own Inspector General has already issued one critical report of the agency's oversight of the credit union.

A separate review by Credit Union Journal of those board minutes and other documents, released as part of a Freedom of Information Act request, has found there was little to no discussion of any potential problems at the credit union during the board's relatively short meetings. Indeed, minutes show one such board meeting in January 2008 was called to order at 5:30 p.m. and it concluded less than a half-hour later at 5:55.

The story of much of St. Paul Croatian FCU's life is a familiar one in credit union history. Immigrants, many fleeing turmoil in central and southeastern Europe and seeking to start over in America in the years leading up to and after World War II, settled in the Cleveland area, with many putting down new roots in Eastlake, Ohio, a town of 6.5 square miles to the northeast of Cleveland along Lake Erie that today is home to about 20,000 people.

Not surprisingly, few had come to America with much money, and what retail banks there were at the time the credit union was founded in 1942 did not make many loans to consumers, especially the kind of poor and lower-middle-class working families who belonged to the Catholic Church that would lend its name to the little financial cooperative formed by those immigrants. Even today, some masses at the church are still conducted in Croatian, and until the day it closed St. Paul Croatian FCU still offered brochures in Croatian.

Lifestyle Change

For much of its life the credit union remained small, operating out of an office in the church, but it grew steadily as it helped new generations of members and immigrants. It eventually added a second office in the American-Croatian Lodge in Eastlake, and became a trusted presence in its community. More than a decade ago it hired Tony Raguz, who would become a respected CEO until the very end. Members and residents knew Tony by name and that they could count on him and the credit union.

All of that changed on April 23, 2010. When federal regulators take over an institution it is almost always on a Friday evening, and NCUA was true to form. As the weekend began, the credit union's 5,400 members, the community and even other credit unions were shocked to learn that federal regulators had arrived and placed SPCFCU into conservatorship. There had been no rumors, no signs of trouble. Those same groups got an even bigger shock just a week later when NCUA said it would be liquidating the 68-year-old credit union. There would be no turnaround CEO brought in, no merger partner to take over the operation. In the year to follow, a steady stream of developments would be revealed, almost none of them good.

Regulators allege that Raguz was involved with a Russian crime figure, Koljo Nikolovski, and doled out fraudulent loans that ultimately led to the enormous losses. FBI investigators allege Raguz made more than 1,000 fraudulent loans.

The crime has left many in the Croatian-American community in Eastlake hoping investigators can track down where all the money has gone, and those in the CU movement perplexed as to why NCUA missed the scam for 10 years.

Raguz is alleged to have helped create and approve fraudulent loans with no collateral to 300 account-holders, many of them in the name of phony businesses, even though St. Paul Croatian was never approved to make business loans. This warning sign was largely missed by regulators during their regular exams, although it was flagged in some reports. According to indictments, to conceal the scheme and prevent the loans from appearing on the books as delinquent, Raguz is alleged to have rewritten the loans with new repayment terms using fictitious names and names of credit union members without their knowledge. Investigators say the scheme even included using the names of dead people as borrowers. When NCUA began to liquidate the remnants of the credit union, thousands of members said they knew nothing of the loans taken out in their names.

Awaiting Trial

Both Raguz and Nikolovski are awaiting trial on charges of bribery, bank fraud and money laundering. Nikolovski is in federal prison in Cleveland and Raguz is rumored to be in the federal government's witness protection program.

The credit union, too, it has since been alleged, was involved in an $8-million real estate Ponzi scheme that NCUA claims further bilked dozens of parishioners at St. Paul Croatian Church. The CU was one of the major lenders for Integrity Financial AZ, LLC, which raised millions of dollars in 2008 and 2009 to purportedly fund speculative real estate developments in Tonopah, Arizona, a town 55 miles west of Phoenix-and 2,125 miles from the credit union.

While there were numerous red flags in the credit union's own books that should have been caught, Raguz, according to investigators, gave nothing away with his lifestyle that would have indicated things had changed, even though it is alleged he received some $500,000 in kickbacks from Nikolovski and others.

Nikolovski, an Albanian national who maintains homes in Macedonia and in Eastlake, according to authorities, however, wasn't as modest. Investigators have alleged he showed some of the benefits of his relationship with the CEO, spending more than $180,000 on two Mercedes and a BMW. The criminal activity allegedly extended, too, to family members of Nikolovski and to Raguz' ex-wife, who are among the 16 indicted so far on a list that is growing. Three other CU employees were named, as well.

Funds Transferred Overseas

Investigators have alleged that fraudulent loan proceeds were transferred to Macedonian and Albanian bank accounts by Nikolovski, a purported head of a Macedonia crime syndicate. Money was also deposited into banks in Germany and the Balkans. The foreign transfers were typically laundered through a local bank, either Cleveland's Key Bank, or Cincinnati's Fifth Third Bank or Charter Bank, according to authorities.

Investigators have traced $70 million of the fraudulent loans so far, but the rest remains unaccounted for. While consumers and members are perplexed over the phony loans, the bigger mystery for the leaders of federally insured credit unions is how NCUA's examiners, and their supervisors working out of the agency's Region III office in Atlanta, missed much of the wrongdoing at St. Paul Croatian FCU until 2010. And then it took a tip from the FBI and IRS to draw NCUA's attention to the credit union.

Examiners did question a number of practices and required explanations and resolutions. But as an internal report at NCUA would note, the examiners' concerns died in the bureaucracy of the federal agency.

Routine exams failed to uncover the scam that indictments say started in 2001. The credit union's CAMEL rating was 1 until December 2004, and then CAMEL 2 up to the December 2009 exam, after which the CU was downgraded to CAMEL 4. By then it was too late.

Among the sharpest of criticisms of the agency's oversight has come from NCUA's own Office of Inspector General. In its material loss review following the shutdown of SPCFCU, the Inspector General stated that that numerous red flags were present for many years-including those spotted by examiners--yet no strong actions were taken.

Perhaps the most glaring red flag was the fact the credit union reported zero delinquencies and charge-offs from at least 2004 through 2009. For instance, a review of St. Paul Croatian FCU's board minutes from 2008 and 2009 by Credit Union Journal, obtained through a Freedom of Information Act request, found only the slightest of attention paid to the issue of delinquencies. In nearly every copy of the monthly minutes, the delinquency ratio appears as just another line-item piece of data. This despite the fact the same report indicated St. Paul Croatian FCU was nearly 100% loaned out.

Delinquency Ratio: 0.0000%

Consider this example from the February 2008 board minutes:

"The treasurer made his monthly report...The Portfolio Yield Spread was reported to be 2.4309%. The Capital Ratio was reported at 12.1912%. The Loan Ratio was reported at 97.58%. The Delinquency Rate was reported at 0.0000%. The Expense Ratio was reported at 11.023%."

In other words, even though a financial crisis and recession were approaching, not a single borrower at St. Paul Croatian had missed a payment.

The same holds true over the next 24 months of board reports reviewed by Credit Union Journal. Board minutes each month note zero delinquencies and charge-offs, yet there is no record of any director commenting on the situation or raising a concern over that time. As credit unions, regulators and investigators would learn, the books upon which those ratios were based were allegedly being cooked by Raguz, who was moving money around to cover the scheme.

The last time the board of St. Paul Croatian FCU would meet would be on Thursday, April 22, 2010, the night before it would be placed into conservatorship. The board meeting minutes have been heavily redacted by NCUA, leaving, for instance, just the last half of one sentence that reads, "into the CU for up to $16M?"

Those same minutes also have another odd note: "Board considered the request of (names redacted) for relief on their mortgage rates. We will consult with CUNA. If CUNA approves, we are willing to lower the interest rates on these loans by 1/2%." It is likely the CUNA reference is actually meant to be NCUA. The board wouldn't have to wait long to meet with the agency, and what might have been discussed isn't recorded, but it seems likely the board had to have some inkling of trouble at this point. The minutes note a "Special meeting with the NCUA" had been scheduled for "April 23, 2010, at 5:00 p.m."

Board minutes from February were never prepared, according to the NCUA.

Where Were The Directors?

Not only are the regulators' oversight skills in question, but as those board minutes make clear, so are those of the credit union's board of directors and supervisory committee. During NCUA's April 29, 2010, closed board meeting, Ross Kendall, at the time an NCUA trial attorney, dismissed the idea any St. Paul board members were aware of or involved in the crime, stating the credit union's board was "in shock and great disbelief" as to how the fraud could have occurred and how they missed it. "Unless they were good actors, I did think they did miss it," he said in the meeting.

Lack of board education could have been the reason directors failed to spot the fraud, as indicated in the Office of Inspector General's report, which stated the credit union's directors lacked sufficient training. Board minutes show Raguz was in attendance at the board meetings.

The poor oversight-by examiners and St. Paul's board and supervisory committee--was underscored by how quickly Raguz' scheme unraveled once the FBI and NCUA began looking into the matter in January 2010, when NCUA hired an independent certified public accounting firm to perform a fraud audit.

The OIG, in its summary, faulted the St. Paul board, supervisory committee, and NCUA examiners for performing only "their required minimum procedures."

Specifically, the OIG called out the credit union's board and supervisory committee for "failing to meet their required obligations to implement proper internal controls and oversight... As a result, the CEO was able to conduct the suspected fraud for an undetermined amount of time."

One culprit was the credit union used a single auditor who primarily specialized in much smaller credit unions. In 2008 and 2009, the audit was conducted by George R. Hanks of G.L.G. Company, Credit Union Accounting and Audits, in Mentor Ohio. The OIG, agreeing with NCUA's assessment of St. Paul's supervisory committee audits, emphasized that the reviews were more in line with audits for a $10-million CU than a $240-million credit union. It should be noted that no allegations of improprieties by the auditor(s) have been alleged.

The review of board minutes by Credit Union Journal found only brief mentions of anything related to the supervisory committee.

St. Paul Croatian FCU's rapid growth was another potential red flag of concern that went unheeded. In 1985, St. Paul Croatian FCU had $5.3 million in assets; by 1995 it had grown to $22 million. Under Raguz' guidance, the credit union's assets grew much more rapidly, from $44 million in 2000 to $144 million in 2005 to $240 million by 2010. Loan outstandings tracked asset growth. In 2004, SPCFCU reported $110 million in loans outstanding. By 2008 that had grown to $189 million, even though its Visa portfolio shrunk over the same time. Over the same time period, its capital grew from 6.3% to 12.779%.

Startling Inadequacies

The OIG's material loss review revealed many startling inadequacies of NCUA exams. Looking at CU records and examiner reports from December 2004 through April 2010, the OIG stated: "NCUA examiners did not adequately evaluate the risks to St. Paul operations. Specifically, examiners did not thoroughly evaluate the credit union's internal controls when assessing transaction risk, ensure credit union management took corrective action on repetitive DOR issues, and expand examination procedures when red flags indicated higher risks to the credit union. As a result, NCUA missed opportunities to mitigate the loss to the NCUSIF caused by St. Paul's failure."

Examiners did cite some failures, which were recorded in the board minutes. For instance, in July of 2009, examiners had noted that the "amount of recoveries on loans charged off (account 551) is greater than the amount of loans charged off (account 550)." The examiner had made a note to "please check these figures for accuracy."

Question is 'Unanswerable'

Dan Clark, CEO of Dan Clark Associates in Tallahassee, Fla., has more than seven years of experience regulating credit unions, having worked as a Florida state examiner from 1971 to 1975, and then as the state's CU administrator for more than two years. During his tenure, Clark said he never encountered a credit union with issues close to what occurred at St. Paul. "How this went on for so long is simply not answerable," Clark told Credit Union Journal.

Multiple red flags dating back to 2004 were not followed up on by the credit union or examiners, who failed to elevate Documents of Resolution (DOR) to a supervisory examiner for stronger action, such as a regional director's letter or a Letter of Understanding and Agreement. The OIG also questioned why the Region III Division of Supervision was not required to review St. Paul's written examination reports and did not select any of St. Paul's examinations for a random review, stating that NCUA's quality control review was ineffective. The OIG noted that through 2009, NCUA supervisory examiners conducted three evaluations of St. Paul examinations, yet these evaluations failed to address any of the multiple red flags called out by examiners. And for each supervisory evaluation, supervisory examiners agreed with the examiner's risk assessments and CAMEL ratings.

"It is apparent that the examiners did not report the level of risk inherent in the operation," noted Clark, who at the request of Credit Union Journal reviewed the St. Paul Croatian OIG report. "For example, we are talking about tens of thousands of dollars in wire transfers not posted-holy mackerel! What else does NCUA need to take up residence in this credit union's office?"

Had DORs been elevated and the regional office in Atlanta scrutinized St. Paul Croatian FCU's exams, what the regional office would have spotted, at a minimum according to the OIG, was that the credit union failed to obtain an annual audit that adhered to GAAP and GAAS, it did not address liquidity and asset/liability management issues, and it did not freeze shares used as collateral.

"We believe the delay in issuing a DOR, the multiple instances of repeat DORs, and the failure to take more stringent supervisory actions resulted in missed opportunities to uncover the suspected loan fraud," the OIG said.

Secret To Scheme

It was the move by the credit union not to freeze shares issued as collateral that may have been key to the success of Raguz' alleged scheme, say analysts. Investigators found that St. Paul Croatian FCU did not have a system in place to ensure shares used to secure loans were frozen, which would have prevented the same shares from being used to secure other loans, or being withdrawn.

What was perplexing to the OIG, according to its report, is that in a Dec. 31, 2007 examination, a DOR item required Raguz to contact the CU's software provider to determine the procedure necessary to show that funds were frozen as collateral on loans and to ensure that they were not accidentally used twice. The examiners again flagged this very same issue a year later in a DOR item for the Dec. 31, 2008 examination, and again in the March 31, 2009 supervision contact, yet it was never resolved.

Yet that problem goes back even further. The OIG stated "we found examiners were aware of the issue as far back as the Dec. 31, 2002, examination. In a summary report, NCUA staff determined that during the Dec. 31, 2002, examination, the examiner noted St. Paul's management was in the process of ensuring that shares securing loans were properly identified in the data processing system to prevent withdrawals. However, there was no formal requirement in the examiner findings or a DOR to correct the issue until 2007."

A Perfect Storm

Clark said that those attempting to determine how the fraud went undetected for so long might come to two conclusions, one being a perfect storm of incompetence-examiners doing half their job, supervisory examiners doing half their job, regional directors not following up, and a board paying no attention and lacking in establishing internal controls of any kind.

Or, Clark proposed, outside forces put pressure on all of the parties-credit union and supervisory-to leave things alone. "There has to be something outside of what we can surmise from the facts we can now see. There likely are aspects of this total collapse of a credit union that we currently don't know but will turn up through the FBI's investigation."

Credit Union Journal contacted the Cleveland office of the FBI, which declined to comment on the St. Paul Croatian FCU matter since the investigation is ongoing.

NCUA's response as to why the fraud went on for so long is that "St. Paul Croatian insiders acted in collusion to create fictitious loans and prevent the detection of fraud for an extended period of time," said spokesperson David Small. "NCUA continues to re-evaluate its examination and supervision processes, incorporate lessons learned from all credit union failures, and conduct examiner training to minimize future losses to the NCUSIF" (see related story).

Little Documentation

Share-secured loans require less documentation and had little or no loan underwriting, which helped Raguz to allegedly hide the fraud. According to the OIG report, which drew on testimony from credit union employees, Raguz allegedly controlled a list of loans he regularly refinanced. When examiners asked for files for some of those loans, according to the OIG's interviews with NCUA staff, Raguz explained the records were at the credit union's other branch and that he would produce the documents the next day. Staff, at the direction of Raguz, allegedly then created documents to support the requested loans. Since the loans were supposedly share secured, they were then tied to accounts that had enough money to cover the pledged shares and staff forged signatures.

Credit union employees even had members with large share balances sign blank share pledge agreements in the event credit union members needed a loan in a hurry.

Raguz also allegedly maintained a list of loans that employees were often instructed to refinance or advance sufficient funds on the loan to make up to three monthly payments, masking any loan delinquency.

"Zero delinquencies is incomprehensible," observed Clark. "To my knowledge there has never been a credit union that makes loans of any kind to have zero delinquencies. It's not possible."

A Happy Face

While all of that was allegedly going on behind the scenes, the public face of St. Paul Croatian remained happy. At the credit union's annual meeting in March of 2009 at the American Croatian Lodge in Eastlake, some 675 members turned out to celebrate its success.

Board minutes record at least some of what members were told. "Board member (Bob) Calevich provided highlights of the financial condition of the credit union and the current state of the economy," the minutes state. "He spoke of the conservative lending practices of the credit union, as well as the fiscal responsibility in day-to-day operations. He also pointedly stated the success of the credit union was only the result of the continued support and confidence of the membership."

The minutes go on to state, "Vice President Nikoa Franic gave a brief summary of the president's remarks in Croatian. He pointed out the bonus paid at the end of the fourth quarter. The vice president also spoke on the pride that all members should take in belonging to such a successful organization."

CEO Tony Raguz then addressed the assembled members at the 2009 meeting. After noting how well the credit union was doing in what was a tough, northern Ohio economy, Raguz said, "Your credit union utilizes the services of an independent outside auditor to ensure the accuracy and validity of credit union records, fund balances and transactions by the staff and board. The auditors (sic) report to our supervisory committee states that there are no outstanding issues regarding credit union operations.

"The board of directors, the supervisory committee and staff thank you for the confidence you have shown in us and pledge to always do what is right and best for our valued credit union members," Raguz concluded.

The annual meeting included board elections, but there would be no new blood who might have probed deeper into the numbers. "The chairman of the nominating committee announced that the present board members were the only nominations received," the minutes report.

There was one question from member Bridgette Welter, according to the minutes, who wanted to know about "funds invested outside the credit union." This question was answered by Tony Raguz. How Raguz responded is not recorded in the minutes. The annual meeting, which had started at 3:35 p.m., wrapped up by 4:10. "Door prizes and dinner followed," the minutes report.

Loan Ratio High, Credit Risk Low

While other credit unions were struggling to get loans made, the numbers, at least, made St. Paul Croatian FCU look like a national success story in lending. It's loan-to-share ratio was reported as remaining above 90% for many years, and examiners rated credit risk low prior to the Dec. 31, 2009 examination. But that clearly was not the case, and the OIG stated that examiners failed to perform "sufficient testing and analysis when risks were readily apparent," saying no tests were conducted for hidden delinquency or to "expand examination procedures when unusual financial performance ratios, abnormal real estate trends, and inappropriate member business loans existed."

Dating back to 2004, some of the delinquency/loan file red flags the examiners found but failed to expand examination procedures included:

• Eight of 23 paid-ahead loans reviewed were technically delinquent since monthly loan payments were not made.

• Very few loans had income verifications in the loan file.

• Numerous credit reports had scores in the 400 to 600 range.

• Two loans had old credit reports, one loan showed several accounts in collection, and two contained credit reports obtained after the loan was approved, of which one also showed several accounts in collection.

• Minor exceptions existed mostly for high-risk loans with no explanation on poor credit reports.

• Loan review work papers were full of Wite-Out and cross-out corrections, and it was difficult to determine what the corrections signified.

• Three loans with balances between $416,000 and $658,000 appeared to be delinquent. Specifically, one showed no payment on the principal, one had accrued interest of four months, and the third had five months of accrued interest.

• Four loan files had credit quality issues, such as a credit report showing delinquent loans and the loan amount greater than the secured collateral.

• Three real estate loans were listed as loan exceptions.

• Four loan security agreements were corrected without member approval.

• Three loans files showed bad credit history. Two members had bankruptcies and one member had a past due real estate loan.

• One loan document disclosed the wrong payment.

• One car loan security agreement did not list the vehicle identification number.

• A large number of share loans were secured by shares from accounts other than the loan recipient.

Throughout its report, the Office of Inspector General questioned the ability of the independent auditors used by St. Paul. Auditor issues extend beyond just the general ledger. In a Feb. 27, 2009 letter to the credit union's board from "Z. Jukic of Shaker Heights, Ohio," for instance, who conducted a BSA and ALM compliance program review, it was stated that the review had certified that risk was low and the credit union had "various policies and procedures in place to provide a good level of internal controls to create an effective BSA/ALM program."

In a little noticed irony, the Jukic letter shows an address for his firm on "Chagrin Boulevard."

Clark said it is not unusual that when a financial institution wants to hide something it hires an outside auditor who may lack the skill set and experience needed to uncover fraud. "That suggests deliberateness on the part of the CEO and all else who were involved."

Financial performance issues, too, which ran dramatically counter to CU industry trends, should have drawn regulator's attention, observed the OIG. With the economy in a severe recession, St. Paul's financial performance appeared to be excellent. It's ROA was over 2%, and member loan yields were higher than peer credit unions, and then there was that ongoing matter of zero loan delinquency and charge-offs.

Despite what was going on behind the scenes at the credit union, what members continued to see was a growing CU with a confident CEO who, in his 2008 report, emphasized how well St. Paul was performing in a down economy. "We are very fortunate to have weathered the storm so far," said Raguz. "Our business model of moderate growth, preservation of capital and low expense ratio, coupled with our outstanding record of dividends paid to shareholders, has proved to be successful and sustainable."

Dealing with 'Rumors'

There are some small signs that member confidence in the credit union may have been questioned by at least a few people. The credit union's September 2009 board minutes suggested the membership had issues with the way the CU was being run. It was noted that the board--after hearing "rumors" from the membership regarding the credit union's operations--had discussed options, such as an "e-mail box on the credit union's website for members to submit their concerns to the board chairman."

No Worries Are Expressed

Less than six months before the credit union was placed into conservatorship, minutes from its October 2009 planning meeting, again at the Clarion Hotel, show board members still had almost no concerns over the robust numbers the CU was reporting. There is a brief note that states only that "liquidity discussed," and other bullet points show the credit union talked about a secondary line of credit and chewed over the idea of a merging with another credit union at "some future point." The name of that credit union was redacted in documents provided to Credit Union Journal by NCUA.

"Future direction of the credit union was discussed and all board members had a chance to offer direction and vision for the next few years," the minutes state. "Some suggestions: credit card rewards, future staffing requirements for downtown branch, all new volunteers to fill out NCUA form 4012, expansion of supervisory committee to 5-7 members, name change, continue with organic growth."

Like the planning session one year earlier, the 2009 session was equally brief, lasting just three hours and 20 minutes.

Although board minutes provide no reason, at the Dec. 17, 2009 meeting it is noted that board member Joe Plavac, seconded by board member Nick Babic, voted to appoint "Flowers CPA" as the independent auditor at the request of the audit committee.

All's Well At Last Annual Meeting

At the credit union's last annual membership meeting in 2010, there again is no indication that in a short six weeks it will be no more. Interestingly, the board minutes from the 2010 meeting are almost identical to those of 2009. After the Board President "reassured the membership that the credit union was financially sound," Vice President Nikoa Franic, "gave a brief summary of the presidents' (sic) remarks in Croatian. Mr. Franic pointed out the bonus paid at the end of the fourth quarter. The vice president also spoke on the pride that all members should take in belonging to such a successful organization."

The entry for the "VICE PRESIDENTS COMMENTS" in the 2010 minutes is exactly the same as that in the 2009 report. In those minutes, a Treasurer's Report from Secretary-Treasurer Philip Dzanko and a Supervisory Committee Report from Joe Ritzler are both noted as having been provided and are "accepted as read."

One final, subtle contributor to the troubles at St. Paul Croatian FCU can be found near the end of those March 2010 Annual Meeting minutes: Elections were held, and as was the case in previous meetings, it was noted, "the present board members were the only nominations received."

The two board members up for reelection kept their seats without a challenge.

The Unfolding Story

The story of what happened at St. Paul Croatian will unfold over time, as more is learned about Raguz' alleged scheme, NCUA's performance, and the total number of victims-which include a number of members who had deposits in accounts well above the $250,000 insurance limit (see realted story).

More than St. Paul individual members have been affected. So far two churches and three credit unions have had their appeals to cover uninsured deposits refused by the NCUA. St. Mary of the Assumption Roman Catholic Church requested that the NCUA cover $151,000 of uninsured deposits it had with St. Paul; Holy Love Ministry asked NCUA to cover $1.5 million that was not insured (see related story); Cascade Federal Credit Union of Kent, Wash., sought payment for $251,000; local Acme Federal Credit Union is out $127,000, and Employees Credit Union of Dallas has been denied a smaller amount.

The board minutes for St. Paul Croatian FCU show that every meeting was called to order with a prayer. For many members of the credit union and community, prayers are all they have left.

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