Edward Rostohar, the longtime manager of the CBS Employees Federal Credit Union, was sentenced on Monday to 14 years in prison for embezzling $40 million.
The massive fraud left the credit union insolvent. It was shuttered and taken over by the University Credit Union, which assumed the accounts of 2,800 members.
Rostohar pleaded guilty in May, shortly after his arrest. He admitted to forging checks to himself on the credit union’s books in a scheme that went back 20 years. Much of the money was gambled away, or put into failed business ventures. Prosecutors allege that he also used the money to buy luxury cars, watches, and private jet flights.
Since his arrest, Rostohar has debriefed an investigator with the National Credit Union Administration, helping the oversight agency understand how he got away with the fraud for two decades. He also apologized to the staff, the board, and members of the credit union in a letter to the court.
“I wish I could undo what I have done but I can’t,” he wrote. “I apologize to the members of the credit union who trusted me with their money and I am sorry for breaking that trust and causing them pain and stress about their finances. It was wrong and I am embarrassed and humiliated by my actions.”
The NCUA acts as a FDIC for credit unions, and insures depositors’ funds up to $250,000. At the time Rostohar’s fraud was uncovered, there were 43 credit union members with deposits exceeding $250,000 — who together held $7.3 million that was not covered by insurance. Those depositors were made whole in the course of the UCU acquisition, but prosecutors said in their sentencing memo that Rostohar could not have known that at the time of the fraud.
“He 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 prosecutors wrote.
Rostohar is 62. The government and the defense asked Judge Otis Wright to impose a sentence of 12 1/2 years. Wright imposed a stiffer sentence, tacking on an extra 18 months.