Ex-CBS Credit Union Manager Pleads Guilty to $40M Embezzlement

LOS ANGELES -- The former manager of the CBS Employees Federal Credit Union pleaded guilty Monday to bank fraud for embezzling $40 million from his former Studio City-based employer.

Edward Martin Rostohar, 62, of Studio City entered his plea before U.S. District Judge Otis D. Wright II, who scheduled a sentencing hearing for Sept. 16. Rostohar is facing up to 30 years in federal prison, according to the U.S. Attorney's Office.

Rostohar has been in federal custody since he was arrested March 12 and ordered detained as both a flight risk and an economic danger to the community. In his plea, he admitted that over two decades he used embezzled funds to gamble, buy homes in California, Nevada and Mexico and travel by private jet.

His actions ultimately led to the credit union becoming insolvent, as long-running fraud resulted in the decision by the NCUA to liquidate CBS Employees FCU and discontinue its operations after determining the credit union was insolvent with no prospect of restoring viable operations on its own.

At the time of its liquidation and sale, the credit union served 2,798 members and had assets of $21.03 million, according to the credit union financial data.

According to his plea agreement, Rostohar used his longtime 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.

Prior to his three decades working for the credit union, Rostohar was a trained accountant and an examiner at the National Credit Union Administration, a federal agency that regulates credit unions.

During his 20 years of embezzling from CBS Employees FCU, he used his senior position at the institution to falsify records to hide his fraud and make the credit union appear to be profitable, when in reality it suffered more than $40 million in losses as a direct result of his scheme, the plea agreement states.

Rostohar sometimes disguised his unauthorized payments, and hid the proceeds of the fraud, by directing the stolen funds to shell companies he controlled, court papers state. Rostohar also admitted to submitting credit union checks to make personal credit card payments.

The scheme was exposed in March when a credit union employee, after discovering a $35,000 check payable to Rostohar, conducted an audit and discovered $3.8 million in checks made payable to Rostohar between January 2018 and March 2019, federal prosecutors 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, according to an affidavit filed with the criminal complaint in the case.

Rostohar also started a coffee business in Reno, Nevada, in December and he wrote 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, according to court documents.

Rostohar has agreed to 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, expensive watches, and Tiffany jewelry, according to federal
prosecutors.

City News Service contributed to this report.