A long-time manager at the CBS Employees Federal Credit Union in Studio City faces arraignment April 18 on federal charges for allegedly embezzling $40 million from his employer over two decades, leading the financial cooperative to be declared insolvent Friday by a government agency.
Edward Martin Rostohar, 62, of Studio City, spent the money on gambling, expensive cars, watches and travel by private jet, federal prosecutors allege.
Rostohar faces between two and 30 years in federal prison and a $1 million fine if convicted of one felony count each of bank fraud and aggravated identity theft, according to the U.S. Attorney’s Office.
Rostohar was arrested on March 12 and ordered detained pending trial by a federal magistrate judge as both a flight risk and an economic danger to the community, according to the U.S. Attorney’s Office.
The charges against Rostohar were made in conjunction with an announcement Friday by the National Credit Union Administration, a federal agency that regulates credit unions, that it has liquidated CBS Employees Federal Credit Union and discontinued its operations after determining it 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, according to the U.S. Attorney’s Office.
Beginning before 2000 and continuing until this month, Rostohar used his position as a manager at the credit union, a federally insured financial institution, to make online payments from the credit union to himself or by forging the signature of another credit union employee on checks made payable to himself, federal prosecutors allege.
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, according to court papers.
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 allege.
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 co-worker’s signature on credit union checks and depositing them into his personal accounts, court papers allege. Rostohar allegedly estimated he stole $40 million, according to the U.S. Attorney’s Office.
Prior to his 30 years of employment at the CBS Employees credit union, Rostohar was an examiner at NCUA, court documents state. He told law enforcement that his background with that agency 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, according to court documents.
He also said he purchased two cars — a Porsche and a Tesla — with money he stole from the credit union, according to court papers.
Rostohar allegedly also admitted to starting a business in Reno, Nevada, in December, and writing tens of thousands of dollars’ worth of checks to himself to cover the business’ costs as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased, federal prosecutors said.
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