Charles Juska, former president/CEO of the $22.2 million Tazewell County School Employees Credit Union in Pekin, Ill., was sentenced Friday to three years in prison for bank fraud.
U.S. District Court Chief Judge James E. Shadid in Peoria, Ill., also ordered the former 17-year chief executive to serve five years of supervised release. Judge Shadid said he would issue a ruling over the disputed restitution amount in March 2017.
Juska is scheduled to begin his sentence on April 4, 2017.
His fraudulent scheme led to a substantial financial hardship for the credit union that serves 1,614 members. According to court documents, Tazewell County School Employees CU lost about 1,000 accounts while loans dropped by 75%. What’s more, the cooperative has not turned a profit in five years. While the credit union continued to post net losses in the first and second quarter of this year totaling $9,523, it posted a net income gain of $119,767, according to NCUA financial performance reports. The credit union’s ROAA is 0.7% as of September 2016, up from -0.46% in September 2015.
However, the cooperative has also been required to undergo special exams because it was placed on the State of Illinois Department of Financial Regulation’s watch list and remains on that list. Additionally, the credit union is not able to pay competitive dividends or interest rates, according to court documents.
Kevin Freeman, president/CEO of Tazewell County Schools Employees CU, did not respond to CU Times’ messages seeking comment Friday. Juska’s lawyer, Joel E. Brown of Peoria, also did not respond to a message from CU Times seeking comment.
In May, after a four-day trial and four hours of deliberation, a federal jury found the 53-year-old Juska guilty of bank fraud and other felonies.
He was indicted in May 2014 on 18 felony counts of bank fraud, making false entries and misapplying funds of approximately $550,000.
Federal prosecutors said Juska executed a loan scheme that benefitted members with bad credit and falsely minimized the institution’s loan delinquencies.
The jury found Juska guilty of 11 felony counts of bank fraud, making false entries and misapplying credit union funds. However, the jury also found Juska not guilty on seven felony counts of bank fraud, making false entries and misapplying credit union funds.
Juska’s lawyer argued that his client did not profit from his conduct and wanted to help credit union members who fell into hard times. Federal prosecutors countered that Juska did so at the cost of hundreds of thousands of dollars to the credit union, according to local media reports.
At the end of the trial, however, prosecutors convinced the jury that the evidence proved Juska forged members’ signatures, created numerous fraudulent loans, shifted money between accounts and falsified the books over a five-year span.
For members who were not eligible for a loan or having trouble making loan payments, Juska created loans in the names of other members by forging their signatures. He then used those funds to cover other members’ loans and delinquencies, prosecutors said.
In addition, Juska created new loans for members with delinquent loans and used those funds to make payments on the delinquencies. He also concealed some delinquencies by writing loan advances on existing loans, allowing members to use the advances to make payments on the same loans.
In loan applications, he entered false information such as listing collateral that did not exist. He also failed to verify the value of other collateral. Federal prosecutors also said Juska used the same collateral for multiple loans, resulting in unsecured or under-secured loans.
The former CEO also concealed delinquent loans from the board of directors and loan committee by adjusting loan rates to lower the payments while not revealing the lower rate to the board.
Juska served as the credit union’s president for 17 years before his departure in December 2010.
