Federal Investigation of GBEN Pump-and-Dump Scheme Results in Conviction of Eight Men and Recovery of over $400,000 for Victim Restitution
An Avon Lake man was sentenced to 25 years in prison for fraudulently obtaining more than $10.6 million in loan proceeds, bribing the chief operating officer of the credit union to receive those loans, and laundering the proceeds, conduct which contributed to the collapse of the St. Paul Croatian Federal Credit Union, law enforcement officials said.
Gezim Selgjekaj, 44, was ordered to pay $16 million in restitution. A jury earlier this year found him guilty of one count of conspiracy, 15 counts of financial institution fraud, five counts of bribery and six counts of money laundering.
Selgjekaj received more than $10.6 million in fraudulent loanproceeds from the credit union between 2003 and 2010. Selgjekaj obtained the fraudulent loan proceeds using personal loan accounts, loan accounts he created in business names, including businesses that had previously ceased to exist or never existed at all, and loan accounts he created in the names of friends and family members who were unaware of Selgjekaj’sconduct, according to trial testimony and court documents. Notably, between 2004 and 2008, Selgjekaj was incarcerated in a federal correctional institution on unrelated criminal charges. According to court records and trial testimony, Selgjekajcontrolled others who went to the credit union and obtained loans on his behalf during his incarceration. Some of the loan proceeds were then deposited into his prison account.
Also during this time, and in order to obtain the loan proceeds after defaulting on previously obtained loans and being incarcerated, Selgjekaj provided more than approximately $200,000 in cash and check bribes to Anthony Raguz, the credit union’s then-chief operating officer.
Most of those loans were never repaid, causing a loss to the credit union, according to trial testimony and court documents.
“This defendant is the latest in a line of people who abused the trust of a credit union members and an entire community,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “This defendant contributed to the pain, stress and hardship of thousands of families, and will not be held accountable for his crimes.”
“This sentence should send a message to those who would steal from others,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office.
“Gezim Selgjekaj and his co-conspirators built a house of cards laced with a web of financial lies. The underlying structure fell apart and exposed these individuals for what they really are --thieves,” said Guy A. Ficco, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. “Combining the financial investigative expertise of the IRS with the skills and resources of the FBI and the U.S. Attorney’s Office makes a formidable team for combating major, greed-driven crimes.”
Selgjekaj is the latest of more than two dozen people convicted of crimes related to the collapse of St. Paul Croatian Federal Credit Union. The credit union was closed and then liquidated in 2010 after sustaining approximately $170 million in total losses,with approximately $72.5 million of those losses tied to individual criminal fraud schemes, making it the largest credit union failure in American history.
A subsequent investigation and prosecutions revealed that more than two dozen people received fraudulent loans, some totaling millions of dollars, that were never repaid in exchange for cash bribes and other kickbacks to Raguz. Trial testimony revealed that Raguz received the most number of and the largest total amount of bribes from Selgjekaj. Raguz is currently serving a 14-year prison sentence.
This case is being prosecuted by Assistant U.S. AttorneysBridget M. Brennan and Robert W. Kern following an investigation by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigations.