Former Melrose CEO Guilty in Federal Corruption Case | Central / Mid / Western Queens News
The former CEO of the now-defunct Melrose Credit Union in Briarwood was found guilty of corruption by federal court in Manhattan on Thursday after a two-week trial.
Alan Kaufman has been convicted of two counts of bribing an agent of a financial institution, according to a statement from the office of Audrey Strauss, US lawyer for the Southern District of New York.
The case evolved around Kaufman’s acceptance of gifts and other considerations from businessman Tony Georgiton in return for favorable interest rates on millions of dollars in loans to Georgiton. He was acquitted of one count of conspiracy to bribe an agent of a financial institution.
Each guilty charge carries a potential maximum sentence of 30 years, although no other details were included in Strauss’s statement. Kaufman to be sentenced by U.S. District Judge Lewis Kaplan on June 23.
Georgiton agreed to a plea deal in September.
“A unanimous Manhattan jury found that Alan Kaufman, the former CEO of Melrose Credit Union, had accepted luxurious gifts from Tony Georgiton as a reward for favorable lending rates for his businesses,” Strauss said in a statement on his office website.
“In doing so, Kaufman shirked her fiduciary duty to act in Melrose’s best interests and instead exploited her control of union funds for her own personal gain,” she added. “The members of Melrose certainly deserved better representation than Alan Kaufman, who placed his own selfish needs above theirs – and thanks to the work of the FBI, Kaufman and Georgiton are both convicted of federal crimes.
Melrose’s main office was on Queens Boulevard. Kaufman’s grandfather was one of the institution’s co-founders in 1922. He and Kaufman’s father were its CEO.
Prosecutors in the case showed that Georgiton allowed Kaufman to live rent-free in a house he bought in Jericho, LI, in 2010. While living there, Kaufman personally approved the refinancing of more than $ 100 million in loans from Melrose to a company owned by Georgiton.
“The head of the Melrose CU lending department did not approve the loans to Georgiton because, among other things, he found the terms too favorable and was not in line with Melrose CU’s lending policy,” the statement said. from the US attorney.
In 2011, Kaufman also sought approval from Melrose’s board of directors to purchase the naming rights to a ballroom being built by a company owned by Georgiton. He did not reveal to the council that he was living in a house owned by Georgiton at the time. Over the next five years, Melrose paid Georgiton’s company $ 2 million for the rights.
Kaufman eventually bought the Jericho house with a loan from Melrose co-signed by Georgiton and secured with Georgiton’s shares in Melrose. He also gave Kaufman an unsecured loan of $ 240,000 on which prosecutors say Kaufman never made a payment.
Between 2010 and 2015, Kaufman also solicited travel and vacations from an anonymous media company and other vendors in return for approval of Melrose’s ad.
These included trips for Kaufman and his wife to Paris in 2010; in Hawaii in 2013; and to the Super Bowl in New Orleans in 2013. The trips were not disclosed or approved by Melrose’s board of directors.
Kaufman was removed from his post by the MCU’s board of directors in 2016. In 2017, Melrose was placed under trusteeship by the New York State Department of Financial Services.
The company is said to have around 80% of its loan portfolio tied up in taxi lockets, and the emergence of Uber, Lyft and other app-based car-sharing services has hit its customers and business interests hard.
Teachers Federal Credit Union obtained Melrose, its accounts and the ownership of Briarwood in August 2018.