CBS Employees Credit Union Shuts Down As Manager Charged With Embezzling $40 Million

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The longtime manager the CBS Employees Federal Credit Union has been arrested and charged with embezzling more than $40 million from his employer over the past 20 years. Edward Rostohar faces felony counts of bank fraud and aggravated identity theft.

In conjunction with the arrest, the National Credit Union Administration — a federal agency that regulates credit unions — announced Friday that it has liquidated the CBS Employees Federal Credit Union and shut down its operations. University Credit Union immediately assumed CBS Employees’ assets.

CBSEFCU via Twitter

Rostohar, 62, of Studio City, was arrested two weeks ago and remains in custody because he is considered a flight risk and an economic threat to the community, according to Nic Hanna, U.S. Attorney for the Central District of California, who announced the charges today. If convicted on both counts, Rostohar faces a maximum of 32 years in federal prison and a $1 million fine.

An arraignment is set for April 18.

According to an affidavit filed with the criminal complaint, beginning before 2000 and continuing until this month, Rostohar used his position as a manager at the federally insured  credit union to make online payments to himself or forged the signature of another employee on checks to himself. The feds allege that Rostohar spent the money on gambling, expensive cars and watches and travel by private jet.

The case is being investigated by the FBI and the Los Angeles Police Department. Here are the details laid out in the indictment, per Hanna:

The alleged scheme was exposed beginning on March 6 when a credit union employee found a $35,000 check made payable to Rostohar, and the check did not include the reason for the high dollar amount, according to court documents. The employee conducted an audit of the credit union checks issued since January 2018 and discovered $3,775,000 in checks made payable to Rostohar and which contained the forged signature of another employee without the employee’s knowledge or consent. On March 12, the credit union informed Rostohar that he had been suspended from his job after an internal investigation uncovered “irregularities in the performance of your job duties,” according to court documents. Later that day, Rostohar’s wife called 911 and told the dispatcher that her husband had stolen money from work and was leaving the country, court papers state. Rostohar was taken into custody and admitted that he stole money from the credit union for 20 years, beginning by paying the monthly balances on his personal credit cards with funds from the credit union’s online accounts or by forging checks, and later by forging his coworker’s signature on credit union checks and depositing them into his personal accounts, court papers state. Rostohar allegedly estimated he stole $40 million from the credit union. An NCUA examination up to February 28 revealed a potential loss to the credit union of $40,541,130.

Prior to his 30 years of employment at the CBS Employees credit union, Rostohar was an examiner at NCUA, court documents state. Rostohar allegedly told law enforcement that this background gave him knowledge of what NCUA examiners look for when examining credit unions and allowed him to avoid detection, the affidavit states. Rostohar allegedly said 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. He also said he purchased two cars – a Porsche and a Tesla – with money he stole from the credit union, court papers state. Rostohar allegedly also admitted to starting a 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 cost as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased.

Hanna said the charges against Rostohar were made in conjunction with Friday’s announcement by the National Credit Union Administration that it has liquidated CBS Employees Federal Credit Union and discontinued its operations after determining CBS Employees was insolvent with no prospect of restoring viable operations on its own. University Credit Union, located in Westwood, immediately assumed CBS Employees’ assets, loans and all member shares.

Here is a statement posted today on the credit union’s website:

IMPORTANT CREDIT UNION UPDATE

On March 29, 2019, University Credit Union, with approval from the National Credit Union Association (NCUA), agreed to purchase and assume the assets and liabilities of CBS Employees Federal Credit Union. Effective March 29, 2019 CBSEFCU member-owners became member-owners of UCU.

Your credit union account(s) will remain unchanged until the full systems conversion on May 1, 2019 and limited effects are projected at that time as well. Your account number, direct deposits, debit cards, credit cards and terms will remain the same until May 1. You will be notified of any product specific changes closer to the conversion date as necessary. Your accounts remain insured by the National Credit Union Share Insurance Fund.

University Credit Union (UCU) was selected because of the safety and soundness of the institution, the robust product offerings for members, and the credit union’s ability to provide the best possible member experience through this transition.

This article was printed from https://deadline.com/2019/03/cbs-employees-credit-union-manager-charged-embezzling-40-million-ed-roshotat-1202585395/