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gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: NewtonMP2100
Date: March 29, 2019 09:14PM
....uh, I guess credit unions are not as safe as you might think.....


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

......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.

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.



credit unions don't seem that safe........?!



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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: wave rider
Date: March 29, 2019 09:43PM
[www.mycreditunion.gov]

Fed and State insured CU accounts to $250K.

Quote
Federal Government
Deposits at all federal credit unions and the vast majority of state-chartered credit unions are covered by NCUSIF protection. Not one penny of insured savings has ever been lost by a member of a federally insured credit union.



=wr=
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: JoeH
Date: March 29, 2019 11:36PM
As for safe, just how often have you heard about one going under like this one? Compared to the number of banks over the years, not that many credit unions have. This is being reported because it is unusual and also because it was connected to a major corporation's employees.
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: Speedy
Date: March 29, 2019 11:36PM
Pretty impressive that that level of fraud would go unnoticed for so long.



Saint Cloud, Minnesota, where the weather is wonderful even when it isn't.
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: freeradical
Date: March 29, 2019 11:42PM
Why exactly is there a credit union just for CBS employees?
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: NewtonMP2100
Date: March 29, 2019 11:44PM
....from the description.....he just wrote checks to himself......could you do this in a bank.....undetected for so long......???


.....seems like there was no oversight in the credit union......



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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: C(-)ris
Date: March 30, 2019 12:21AM
Quote
NewtonMP2100
....from the description.....he just wrote checks to himself......could you do this in a bank.....undetected for so long......???


.....seems like there was no oversight in the credit union......

He used to be an auditor. He knew what to do and what not to do to avoid detection.



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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: JoeH
Date: March 30, 2019 12:42AM
Quote
freeradical
Why exactly is there a credit union just for CBS employees?

That used to be a strict requirement for setting up a credit union, members needed to be affiliated with some defined community, organization or company. The regulations have been relaxed some from those days, but there are many credit unions that chose to still limit membership to specific groups.
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: RAMd®d
Date: March 30, 2019 04:15AM
As for safe, just how often have you heard about one going under like this one?

Exactly.

The 'don't seem so safe' is just clickbate.


Pretty impressive that that level of fraud would go unnoticed for so long.

Just like when you know where the surviellance cameras are, it's easy to avoid detection.


Why exactly is there a credit union just for CBS employees?

Why shouldn't there be?

There are credit unions for all kind of business' employees, even branches of miltary service. A credit union for everybody would be a defacto bank and require the appropriate infrastructure.

As Joe mention, over the years those rules have been relaxed to some degree and tangental connections, such as family members of members can qualify for some credit unions. Some military credit unions allow that, as well as if a parent served, a son, daughter, or wife could join a CU even though the parent hadn't.

And if I recall correctly, some CUs allowed anyone to join if they were 'sponsored' by a current member.




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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: cbelt3
Date: March 30, 2019 08:55AM
Back in the 80's I banked at a credit union associated with my employer. Same thing happened... the director embezzled a cool $1M. Took his own life when he was found out.
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: graylocks
Date: March 30, 2019 09:42AM
Quote
RAMd®d

And if I recall correctly, some CUs allowed anyone to join if they were 'sponsored' by a current member.

Delta Community Credit Union used to be for employees of Delta Airlines. over the years it's opened up to anyone residing in a metro atlanta zipcode. they are pretty much a bank with branches all over the area.



"Success isn't about how much money you make. It is about the difference you make in people's lives."--Michelle Obama
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: Racer X
Date: March 30, 2019 09:48AM
BECU, Boeing Employees Credit Union, opened its doors to ANY Washington State resident long ago. (for example) I became a member as my ex-InLaws were Boeing employees, so that made me a family member of an employee.

Also a member of USAA, as my father was USAF reserve.

One component of Credit Unions as they are usually part of an ATM network where they allow each other free access to their ATM machines. And BECU will NOT charge you a fee to use other ATMs from banks, and will refund up to $6 a month in for profit bank fees for using a bank's ATM.



Edited 1 time(s). Last edit at 03/30/2019 09:53AM by Racer X.
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Re: gone in 60 seconds?!....CBS Employees credit union shut down, manager charged with embezzling $40m...
Posted by: testcase
Date: March 30, 2019 11:37AM
Quote
freeradical
Why exactly is there a credit union just for CBS employees?

ANY "affinity" group can start their own Credit Union. I'm a member of a County Federal Credit Union and a State CU. Residents of the county (or state) are eligible to join. I know there are several CUs for teachers, fire districts, health care organizations, factories etc, etc, etc. Each CU member is an "owner" of said CU. Rates on loans are often better for CU members because CUs don't have to make a profit. old fogey smiley

The article explains that because the crook was a former CU auditor / examiner, he knew how to "game the system". I'm sure addition safeguards will soon be put in place.



Edited 1 time(s). Last edit at 03/30/2019 11:39AM by testcase.
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