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News Now

CU System
Man who abused IPO offerings of former CUs sentenced
NEWARK, N.J. (2/22/08)--An Indiana real estate investor was sentenced to 20 months in prison and ordered to forfeit more than $2.8 million in profits from a scheme involving the stock offerings of banks that convert from mutual stock ownerships. Four former credit unions were among the banks whose depositors were defrauded. Mark Ristow, 65, of Indianapolis, Ind., was sentenced in a U.S. District Court in New Jersey. He had pleaded guilty in September to a charge to commit securities fraud (News Now Sept. 26, 2007). Two co-defendants--Andrew Crabb, 41, of Mechanicstown, Ohio, and Susan Gitlin, 49, of Norfolk, Va.--also were ordered to forfeit profits from the scheme. However, they received no jail sentences. Crabb, who is Ristow's cousin, will forfeit more than $98,000 in profits, plus interest and pay a penalty of $100,000. Gitlin, Ristow's sister-in-law, will forfeit nearly $165,000 in profits, plus interest, and pay a $75,000 penalty. According to the Securities and Exchange Commission, which filed the complaint, the former credit unions that were defrauded include:
* First Pactrust Bancorp. Inc. (formerly Pacific First FCU, which converted to a bank in 2002), Chula Vista, Calif.; * Synergy Financial Group Inc. (the former Synergy FCU, which converted in 2002), Crandon, N.J.; * Rainier Pacific Financial Group (Rainier Pacific FCU, which converted in 2003), Fife, Wash.; and * Citizens Community Bancorp Inc. (Citizens Community CU, which converted in 2001), Eau Claire, Wis.
The group deposited funds in the mutual savings banks, which Ristow, Crabb and Gitlin believed would then take the second conversion step from mutual savings organization to a full stock organization. According to SEC, the scheme circumvented limitations on stock purchases and evaded federal and state regulations designed to ensure that when a bank converts to stock ownership, each depositor has a fair chance to purchase stock before other interested investors can. It is illegal for depositors to transfer ownership of their purchase rights or enter into an agreement about the sale or transfer of shares that are bought in the offering.


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