Ex-Credit Union Manager Sentenced to More Than 14 Years in Federal Prison for $40 Million Embezzlement that Made Institution Insolvent
LOS ANGELES – The former manager of CBS Employees Federal Credit Union was sentenced today to 169 months in federal prison for a two-decade-long embezzlement that caused the credit union a loss of $40 million – a scheme that ultimately led to the financial cooperative being forced into insolvency.
Edward Martin Rostohar, 62, of Studio City, was sentenced by United States District Judge Otis D. Wright II.
Rostohar pleaded guilty on May 20 to one count of bank fraud. He used his position as a manager at the credit union, a federally insured financial institution, to make online payments from the credit union to himself or by forging the signature of another credit union employee on checks made payable to himself.
Prior to his three decades of employment at the credit union, Rostohar was a trained accountant and an examiner at the National Credit Union Administration (NCUA), a federal agency that regulates credit unions. During his approximately 20 years of embezzling from CBS Employees FCU, he used his senior position at the institution to falsify its records to hide his fraud and make credit union appear to be profitable despite it suffering more than $40 million in losses as a direct result of his scheme.
The scheme was exposed in March when a credit union employee, after discovering a $35,000 check payable to Rostohar, conducted an audit and discovered approximately $3.8 million in checks made payable to Rostohar between January 2018 and March 2019. Rostohar told law enforcement he gambled away much of the money and spent the rest on traveling by private jet, buying expensive watches, and giving his wife a weekly allowance of $5,000. Rostohar also started a coffee business in Reno, Nevada in December 2018, and he wrote tens of thousands of dollars’ worth of checks to himself to cover the business’s costs as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased.
“(Rostohar) has the moral culpability of someone who was willing to leave as many as 43 depositors with deep losses so that he could wear $100,000 watches, buy a new vehicle every couple years, and impress women less than half his age with trips on private jets to international vacation resorts, Tiffany jewelry, and gambling parties,” the government wrote in the prosecution’s sentencing memorandum.
Rostohar has agreed to forfeit his ill-gotten gains, including bank accounts in his name and the names of his shell companies, four automobiles, including a Porsche, a Tesla and a Lexus, homes in Studio City, Reno, and Mexico, luxury watches, and jewelry.
Rostohar’s long-running fraud resulted in the decision by the NCUA to liquidate the credit union and discontinue its operations after determining the Studio City-based CBS Employees was insolvent with no prospect of restoring viable operations on its own. In March, University Credit Union of Westwood assumed CBS Employees’ assets, loans, and all member shares. At the time of its liquidation and sale, CBS Employees served 2,798 members and had assets of $21,037,558, according to the credit union’s most recent Call Report.
Rostohar has been in federal custody since his arrest on March 13.
This case was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.
This matter is being prosecuted by Assistant United States Attorneys Andrew G. Brown of the Major Frauds Section and Victor A. Rodgers, deputy chief of the Asset Forfeiture Section.