LOS ANGELES–Edward Rostohar, the former CU CEO who pleaded guilty from stealing more than $40 million from a $21-million credit union over two decades, has been sentenced to 169 months in prison.
Documents released as part of the sentencing also revealed for the first time that more than 40 depositors have suffered “deep losses” they will not recover.
Rostohar, 62, was CEO of C B S Employees FCU in Studio City, was sentenced by U.S. District Judge Otis D. Wright II to also forfeit his ill-gotten gains, including bank accounts in his name and the names of his shell companies, four automobiles, including a Porsche, a Tesla and a Lexus, homes in Studio City, Reno, and Mexico, luxury watches, and jewelry.
In May, Rostohar pleaded guilty to one count of bank fraud.
As CUToday.info reported extensively here, here and here, Rostohar’s embezzlement from the credit union eventually led to its liquidation and eventual merger into University Credit Union.
Useful Experience for Fraud
After his arrest, Rostohar told police his training and experience as an accountant and former examiner with NCUA helped him to keep his misdeeds hidden for 20 years.
The alleged embezzlement began sometime before 2000 and continued until March 6, 2019, when prosecutors say a credit union employee found a $35,000 check made out to Rostohar without a reason listed for the high-dollar amount. An employee who conducted an audit found $3.7 million in checks had been made out to Rostohar since January 2018, the U.S. Attorney said. Rostohar was suspended shortly afterward.
As CUToday.info reported, according to a complaint filed with the U.S. District Court for the Central District of California, Lysa Simon, an attorney representing C B S Employees Federal Credit Union contacted the FBI National Threat Operations Center to report an embezzlement by Edward Rostohar. Rostohar was to be suspended as CEO of C B S Employees Credit Union by the board the next day, the complaint states.
Court documents state officers from the Los Angeles Police Department arrested Rostohar on March 12 at his home in Studio City, Calif., with Det. Oscar Garza saying that when Rostohar was arrested he was driving a car that contained more than $200,000 in cash, and was also carrying his passport. Although he was later released on bond, police said they believed Rostohar to be a flight risk.
Situation ‘Snowballed’
One day later, the FBI went to Rostohar’s residence where he was read his Miranda rights before being interviewed. According to investigators, during that interview Rostohar said he had been embezzling funds from the credit union for approximately 20 years. “He kept going as it snowballed as he tried to cover his activity,” the documents read.
The U.S. Attorney’s Office for the Central District of California said Rostohar told law enforcement 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. Rostohar also started a coffee business in Reno, Nev. in December 2018, and he wrote tens of thousands of dollars’ worth of checks to himself to cover the business’s costs as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased.
“(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 years, and impress women less than half his age with trips on private jets to international vacation resorts, Tiffany jewelry, and gambling parties,” the government wrote in the prosecution’s sentencing memorandum.
At the time of its liquidation and sale, CBS Employees served 2,798 members and had assets of $21,037,558, according to the credit union’s most recent Call Report.