The CBS Employees Federal Credit Union was shut down in May, two months after its longtime manager was arrested and charged with embezzling more than $40 million from it over two decades. Now, with Edward Rostohar having pled guilty and set to be sentenced next month, CBS is facing a class action by its employees to recover that money.
In an 18-page complaint filed in Los Angeles Superior Court (read it here), the workers led by named plaintiff Victor Webb are suing over “the failure of the Board of Directors and the Supervisory Committee of CBS Employees to exercise reasonable oversight of the Credit Union’s management and allowing former Manager and CEO Edward Martin Rostohar to embezzle more than $40 million from the Credit Union.”
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According to an affidavit filed with the original criminal complaint, beginning before 2000 and continuing until his March 15 arrest, Rostohar used his longtime position as a manager at the federally insured credit union to make online payments to himself or forged the signature of another employee on checks to himself. The feds had alleged that Rostohar spent the money on gambling and expensive cars and jewelry. Read more details of the case here.
Prosecutors are seeking up to 15 years in prison for Rostohar, who has admitted to the theft. He is set to be sentenced September 16 in Los Angeles federal court
“Had Defendants exercised reasonable oversight of CBS Employees management, Rostohar’s embezzlement scheme would have been discovered before he was able to steal more than $40 million from CBS Employees and cause the Credit Union to be liquidated,” according to the suit filed Friday.
Attorneys Richard D. McClune and Michele M. Vercoski of McCune Wright Arivalo LLC in Irvine, CA, are representing the class in the suit, which seeks at least $40 million damages and a jury trial.