Former Calif. CU CEO sentenced to 14 years in prison for $40 million fraud

In a rare move, the NCUA publicly comments on Edward Rostohar’s 20-year scheme that led to the credit union’s collapse.

The former CBS Employees Federal Credit Union President/CEO Edward Rostohar will spend 14 years in federal prison for his $40 million embezzlement that led to the financial collapse of the Los Angeles-based credit union, nearly $2 million in uninsured losses, lost jobs of long-time employees and a multi-million dollar class action lawsuit against board members.

U.S. Court District Judge Otis D. Wright II in Los Angeles sentenced the 62-year-old Rostohar Monday. The former executive and NCUA examiner who managed to conceal his embezzlement scheme for two decades agreed to forfeit his ill-gotten gains, including bank accounts in his name and the names of his shell companies, luxury cars, homes in Studio City, Reno, Nev. and Mexico, expensive watches, jewelry and cash. Court documents do not estimate the total value of the properties, cars and bank accounts.

“(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 of years, and impress women less than half his age with trips on private jets to international vacation resorts, Tiffany jewelry, and gambling parties,” federal prosecutors wrote in their sentencing memorandum.


continue reading »