AKRON, Ohio (2/6/13)--Akron, Ohio, financier and developer A. Eddy Zai was sentenced Tuesday to seven years and three months in prison for defrauding the St. Paul Croatian FCU out of $10 million and ordered to pay the largest restitution in the history of Northeast Ohio--$23 million.
Zai was part of an extensive loan fraud ring that contributed to the collapse of the Eastlake, Ohio-based credit union in 2010.
Zai, 45, pleaded guilty in November to conspiracy, bank fraud, bank bribery, money laundering and making false statements to a financial institution (The Plain Dealer Feb. 5). Zai allegedly failed to make payments on the fraudulent loans from 2007 to 2010. Before 2007, he used fraudulent loans from other lenders to repay the credit union, prosecutors said. His company was allegedly dependent on loans to survive.
He allegedly admitted to paying thousands of dollars in bribes to St. Paul Croatian FCU CEO Anthony Raguz in exchange for loans. Raguz is serving a 14-year prison term for accepting more than $1 million in bribes, kickbacks and gifts in exchange for issuing over 1,000 fraudulent loans involving 300 accountholders (News Now Nov. 27)
More than 24 people have been indicted for taking out fraudulent loans from the credit union. Several have received prison sentences.
The National Credit Union Administration says the credit union's conservatorship was one of the largest failures in credit union history, costing the National Credit Union Share Insurance Fund more than $170 million.