July 24, 2014

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Avon Lake man indicted in $11M scheme

An Avon Lake man has been indicted on federal charges that he illegally received $11 million as part of a scheme that led to the collapse of St. Paul Croatian Federal Credit Union, one of the largest credit union failures in U.S. history.

Gezim “Jimmy” Selgjekaj, 41, faces one count of conspiracy, 15 counts of financial institution fraud and six counts each of bribery and money laundering, according to a news release from U.S. Attorney for Northern Ohio Steven Dettelbach.

Selgjekaj created fake businesses that were used as “safe havens” for money illegally siphoned off from loans issued by the credit union, an FBI investigation determined, according to the news release.

Selgjekaj allegedly operated several businesses, which were “created either primarily as ‘safe heavens’ for credit union proceeds or that performed little or no legitimate business despite receiving loan proceeds intended for Selgjekaj’s ‘business’ ventures,” the release said.

He is accused of conspiring with the credit union’s chief operating officer, Anthony Raguz, and others to submit false applications to receive the loans.

Between March 2003 and July 2004, Selgjekaj received $5 million worth of loans from the credit union. He received another $3.6 million in loans between 2004 and 2008, even though he was in federal prison at the time on unrelated charges.

He received another

$2.9 million worth of loans between 2008 and 2010, the news release said.

In return for the loans, Selgjekaj would pay Raguz, who is serving a 14-year prison term and was ordered to repay

$72.5 million, the release said. He allegedly gave Raguz $40,000 in cash and another $66,000 worth of checks, the news release said.

At the time it was liquidated in April 2010, St. Paul Croatian Federal Credit Union served 5,400 members and had assets totaling $238.8 million.

The closure cost the National Credit Union Share Insurance Fund more than $170 million, according to a news release issued in the case last year.

According to an affidavit filed by FBI Agent Derek Kleinmann, Raguz admitted that he took bribes from borrowers in exchange for overlooking their lack of creditworthiness.

So far 24 people have been charged in connection with the credit union’s collapse, including Koljo Nikolovski, who received 18 years in prison for the $5.6 million worth of fraudulent loans he received from the credit union.

According to a news release issued at the time Nikolovski was sentenced in 2011, when Raguz tried to disassociate himself from Nikolovski in 2009, the Eastlake man followed the executive to his home and threatened to kill him and his family.

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.