Avon Lake Man Indicted in $11 Million Fraud That was Part of Massive Credit Union Collapse
|U.S. Attorney’s Office January 03, 2013|
An Avon Lake man was charged today with 28 criminal counts for illegally receiving more than $11 million from the St. Paul Croatian Federal Credit Union, actions which played a role in the credit union’s collapse, law enforcement officials said.
Gezim Selgjekaj, 41, was charged with one count of conspiracy, six counts of bribery, six counts of money laundering, and 15 counts of financial institution fraud.
Also charged were Arthur Hoxha, 40, of Rocky River (one count of financial institution fraud); and Judmir Capoj, 36, of North Olmsted (two counts of submitting false statements to a financial institution).
St. Paul Croatian Federal Credit Union (SPCFCU) was placed into conservatorship in April 2010, when it served 5,400 members and was believed to have assets of more than $238 million. The National Credit Union Association discontinued operation of SPCFCU when it was determined to be insolvent, making it the largest credit union failure in American history.
“This case is yet another sad chapter in the story of the demise of an important community institution,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “The credit union’s leader and his associates enriched themselves on the backs of thousands of honest and hard-working members.”
“This defendant created several fictitious businesses as safe havens for the illegal siphoning of fraudulently obtained loan proceeds,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Field Office. “The FBI will continue to seek justice for the shareholders that placed their trust and faith in the management of this lending institution.”
Selgjekaj owned, operated, and controlled, in whole or in part, several business entities, which were created either primarily as “safe havens” for credit union proceeds or that performed little or no legitimate business despite receiving loan proceeds intended for Selgjekaj’s “business” ventures, according to the indictment.
Those business included: Jimmy’s Trucking; Top Quality Produce; RGV Enterprises; Alba Logistics; GPA Transport; J&F Properties; Lake County Farmers Market; Albkos Properties LLC; G&M Truck Repairs; Produce Inc.; Fresh Fruit; Fresh Start Co.; East Side Farmers Market; RGA Enterprises LLC; and Ristorante Luciano, according to the indictment.
From 2003 through April 2010, Selgjekaj conspired with Anthony Raguz, who at the times was chief operating officer at SPCFCU, and others, to defraud the credit union, according to the indictment.
Selgjekaj submitted false and fraudulent loan applications to Raguz, including submitting loan requests in nominee’s names when Selgjekaj’s aggregate loan balances reached a level that could have drawn attention from auditors or members of the credit union’s board, according to the indictment.
From March 2003 through July 2004, for example, Selgjekaj received approximately $5 million in fraudulent loan proceeds from SPCFCU. Selgjekaj received another $3.6 million between 2004 and 2008, despite the fact that Selgjekaj was in federal prison for unrelated conduct. Even after defaulting on the $8.6 million in loans, Selgjekaj received an additional $2.9 million in loans from SPCFCU between 2008 and 2010, according to the indictment.
To influence and reward Raquz for providing him with the fraudulently obtained money from SPCFCU. Selgjekaj gave Raguz $40,000 in cash and five checks totaling $66,000, according to the indictment.
Overall, Selgjekaj’s conduct resulted in a loss to the credit union of more than $11 million, according to the indictment.
To date, 24 people have been indicted for criminal activity related to the credit union. Raguz was sentenced to 14 years in prison and ordered to repay $72.5 million last year. Koljo Nikolovski was sentenced to 18 years in prison for his role in the credit-union collapse.
This case is being handled by Assistant United States Attorneys Bridget M. Brennan and Justin E. Herdman following an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations.
An indictment is merely an accusation. All defendants are presumed innocent of the charges until proven guilty beyond a reasonable doubt in court.