CLEVELAND (11/8/12)--Businsessman A. Eddy Zai pleaded guilty to nine counts and agreed to forfeit $16.7 million for his participation in a fraud against St. Paul Croatian FCU, Eastlake, Ohio, law enforcement officials said Monday.
Zai, 44, of Pepper Pike, Ohio, 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 to financial institutions.
Zai conspired with others, including Anthony Raguz, the defunct credit union's former CEO, to submit false loan documents to St. Paul Croation FCU, defraud the credit union of about $16.7 million, and pay bribes and kickbacks to Raguz for using his position at the credit union to approve numerous loans to Zai and the entities and companies he controlled, according to the indictment.
"Mr. Zai thought he could take a shortcut to success," said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. "But by bribing a bank executive and defrauding investors, his shortcut trampled over the rights of others He will now have to begin the long path to repay society."
Raguz previously pleaded guilty to issuing more than 1,000 fraudulent loans, for more than $70 million, to about 300 accountholders. He also pleaded guilty to accepting more than $500,000 in bribes, kickbacks and gifts from the borrowers. His sentencing is set for Nov. 20 (News Now Aug. 9).
Nineteen people have been charged in the scheme. The alleged ringleader in the fraud, Koljo Nikolovski of Eastlake and Skopje, Macedonia, was sentenced in May to 18 years in prison for his role in the fraud (News Now May 14).
St. Paul Croatian FCU was one of the largest credit union failures in history, costing the National Credit Union Share Insurance Fund about $170 million.
The credit union was placed into conservatorship by the National Credit Union Administration (NCUA) on April 23, 2010. One week later, the NCUA liquidated St. Paul Croation and discontinued its operations after determining the credit union was insolvent. At that time, the credit union served about 5,400 members and was believed to have assets of roughly $239 million.