Businessman Zai Gets 7+ Years for $23M Credit Union Heist

CLEVELAND, OH – A. Eddy Zai, 44, of Pepper Pike, Ohio, is headed to federal prison after being sentenced to 87 months for his role in the catastrophic collapse of the St. Paul Croatian Federal Credit Union (SPCFCU). Zai was also ordered to forfeit more than $23 million in restitution for a brazen scheme that ripped off members and ultimately led to the credit union’s demise. He pleaded guilty last year to a slew of charges including conspiracy to commit bank fraud and bank bribery.

The Justice Department revealed that Zai, masquerading as a successful entrepreneur, conspired with Anthony Raguz, the former Chief Operating Officer of SPCFCU, to submit falsified loan applications. From December 2003 through March 2010, Zai and his network of shell companies siphoned off approximately $16.7 million from the credit union, using the funds for personal enrichment and sham business ventures. Raguz, in turn, received bribes and kickbacks for abusing his position to approve the fraudulent loans.

“Mr. Zai held himself out to the community as a successful entrepreneur, when in reality he was part of a conspiracy that resulted in one of the largest credit union collapses in history,” stated United States Attorney for the Northern District of Ohio, Steven M. Dettelbach. The fallout from the SPCFCU failure was devastating, leaving approximately 5,400 members without access to their savings when the National Credit Union Administration stepped in and liquidated the institution in April 2010. At the time, SPCFCU held roughly $239 million in assets.

Court documents paint a picture of a complex web of companies created by Zai – including Cleveland Flooring & Designs, Ltd.; Alpina, Inc.; and a dozen others under “The Cleveland Group” umbrella – designed to serve as “safe havens” for the stolen funds. Many of these entities were essentially fronts, performing little to no legitimate business despite receiving millions in loan proceeds. Zai’s scheme involved submitting bogus documentation and engaging in blatant money laundering to conceal the illicit activity.

Federal investigators were scathing in their assessment of Zai’s actions. Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland office, emphasized that Zai’s sentence and the massive restitution order “reflect his extensive involvement in bribing loan officials…and obtaining millions of dollars in loans for numerous non-operational businesses.” Darryl Williams, Special Agent in Charge of the IRS-Criminal Investigations’ Cincinnati Office, warned that the convictions should serve as a deterrent, sending a clear message that “whether you are the main perpetrator of a fraud, or merely assist in its facilitation, the law will hold all guilty parties accountable.”

Zai’s 87-month sentence is followed by five years of supervised release. While the sentence provides some measure of justice for the victims of the SPCFCU collapse, the financial devastation wrought by Zai’s greed will likely be felt for years to come. The investigation remains ongoing, and authorities have not ruled out the possibility of further charges or convictions related to this case.