Edward Rostohar, CEO of the CBS Employee Credit Union, was sentenced to 14 years in prison for embezzling 40 million dollars over a period of twenty years. Rostohar left the credit union insolvent, and it was absorbed by University Credit Union, taking over all 2,800 accounts.
Rostohar claimed that most of the money was either gambled away or put into failed business ventures. Prosecutors told a different story and said that Rostohar also spent a large sum on cars, watches and private jets to exotic locations, where the married Rostohar wined and dined women who were half his age.
The fraud was perpetrated in two ways, through online payments Rostohar set up, which directed money into his accounts, or by forging the signature of an employee at the credit union on checks payable to himself. An employee discovered the fraud when she saw a check made out to Rostohar for $35,000. The employee then went back a few months and discovered payments made to Rostohar for nearly four million dollars in that time frame.
Before joining the CBS Credit Union, Rostohar was an administrator for the National Credit Union Administraton, a position he says enabled him to avoid detection for a long time because he knew what examiners looked for when examining a credit union’s finances. The judge gave Rostohar a longer sentence than both the government and the defense had requested.