CLEVELAND (9/12/12)--A motion to stay the lawsuit filed by the National Credit Union Administration (NCUA) against A. Eddy Zai, a developer indicted for allegedly providing kickbacks for loans that contributed to the collapse of St. Paul Croatian FCU, has been granted by a federal court in Ohio, pending the outcome of the criminal case against Zai.
U.S. District Judge John R. Adams granted the stay on Aug. 31 in the U.S. District Court for the Northern District of Ohio Eastern Division. "The court recognizes that continuing in this civil matter will directly implicate Zai's Fifth Amendment rights. Furthermore, given the court's actions in seizing substantial portions of the funds that plaintiff (NCUA) seeks to attach, there is no risk that the funds will be dissipated at any time during the course of the criminal proceedings," said Adam's order.
The court noted that NCUA's "rights in the property will remain protected throughout those proceedings."
Zai was indicted on Feb. 7 on 34 counts related to allegedly obtaining $16.7 million in fraudulent loans from June 2009 until the Eastlake, Ohio-based credit union was liquidated on April 30, 2010.
NCUA, in its role as liquidating agent for St. Paul Croatian FCU, sued Zai; Tina Zai of Pepper Pike, Ohio; former Trumbell County Commissioner Ted M. Vannelli of Kirtland, Ohio; and The Cleveland Group and nine related entities. Vannelli, who is Zai's father-in-law, pleaded guilty to participating in the loan scheme (News Now May 31).
The defunct credit union's former CEO, Anthony Raguz, pleaded guilty to issuing more than 1,000 fraudulent loans, totaling 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.