Former CEO of Melrose Credit Union charged in bribery scheme
Alan Kaufman, former CEO and board member of the now-defunct Melrose Credit Union, was indicted for accepting bribes from a Long Island businessman and an unidentified media company.
Kaufman, who had been the CEO of Melrose since 1998 before being ousted from his position by the board in 2016, entered a plea of not guilty on Thursday. The charges were filed in Manhattan Federal Court.
Between 2010 and 2015, Kaufman allegedly accepted free housing and financing for the purchase of his own residence from Tony Georgiton, the owner of a taxi medallion brokerage company and shareholder of Melrose, according to the U.S. Attorney's Office for the Southern District of New York. That was done in exchange for the favorable refinancing of over $60 million in pre-existing loans for Georgiton's companies, according to the indictment.
In addition, arranged by Kaufman, Melrose could have paid over $2 million to a company owned by Georgiton for the naming rights to a ballroom in Queens, N.Y.
Kaufman also allegedly solicited and accepted lavish vacations and gifts worth tens of thousands of dollars from a media company based in New York, in exchange for increased advertising spending by Melrose with the company, according to the U.S. attorney.
In violation of the credit union's anti-bribery policy, he took multiple vendor-paid trips without seeking approval from the Melrose board, according to the indictment.
According to the indictment, Kaufman faced two counts of bribery of a financial institution officer, each of which carries a maximum sentence of 30 years in prison. He is also charged with one count of conspiracy to commit bribery.
The National Credit Union Administration filed administrative charges against Kaufman in early August. The NCUA board alleged that Kaufman breached his fiduciary duties and violated regulations by engaging in “unsafe or unsound practices” that could cause severe financial loss to Melrose.
But even before regulators sought a prohibition order against Kaufman, Melrose was already troubled. The credit union relied heavily on taxi medallion lending, which suffered significant delinquencies and losses as competition from ride-hailing services such as Uber and Lyft drove borrowers to default.
Melrose was placed into conservatorship in early 2017 and liquidated by the NCUA on Aug. 31. Teachers Federal Credit Union in Hauppauge, N.Y., assumed the $1.2 billion-asset Melrose’s members and shares as well as some of its loans.