NEW YORK–The former president of a defunct credit union that specialized in taxi medallion loans, as well as a member of the credit union, have been arrested and charged with committing one of the largest and long-lasting frauds in credit union history, with allegations including the personal approval of more than $185 million in questionable loans, free luxury trips and other travel for himself and his wife from the New York Jets and other vendors, a free residence, a fraudulent naming rights deal, and even free limousine rides for himself and family members.
Arrested were Alan Kaufman, the former CEO of Melrose Credit Union, and Tony Georgiton, a business owner and member. Both were arrested by the FBI. Melrose CU was a prominent lender in the taxi medallion business––the credit union was founded by Kaufman's grandfather in 1922–while Georgiton owned a fleet of more than 550 cabs. Melrose CU was also profitable up until the point the taxi medallion crash began, earning more than $80-million in interest and fees in 2015, as CUToday.info reported earlier. That same year Kaufman was paid $2.3 million as CEO.
As CUToday.info reported extensively here, in August of 2018 NCUA laid out in administrative charges many of the same alleged criminal activities for which Kaufman was arrested. At the time the agency requested he be ordered to pay restitution of at least $3.5 million. In addition, the NCUA board assessed Kaufman with a civil money penalty of $1 million.
According to the U.S. Attorney’s Office for the Southern District of New York, the two mean are alleged to have participated in a scheme where Kaufman accepted free housing and financing to purchase a condo in Jericho, N.Y. in exchange for approval of millions of dollars in loans to Georgiton’s companies at favorable terms.
Authorities said the Georgiton bought the condo in Jericho in 2010 for $630,000, and then allowed Kaufman to live there rent-free for more than two years. During that time, the U.S. Attorney’s Office alleged Kaufman personally approved refinancing of more than $60 million worth of credit union loans held by one of Georgiton’s companies.
Additional Details
According to authorities:
- In 2011, Kaufman sought approval from the credit union’s board of directors for it to purchase the naming rights to a ballroom under construction in Astoria, Queens owned by a Georgiton-owned company. The credit union paid about $2 million to Georgiton’s company for the naming rights to the Melrose Ballroom.
- In 2013, Kaufman purchased the condo from Georgiton for $630,000, according to public records, with financing that largely came from Georgiton. Kaufman also took out a $200,000 loan from the credit union co-signed by Georgiton and secured by his shares in the Melrose Credit Union, prosecutors said. Georgiton also gave Kaufman a $240,000 unsecured personal loan, a loan Kaufman never made a payment on, authorities said.
‘Lavish Vacations’
The U.S. Attorney further alleged Kaufman “solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from a media company”in exchange for Kaufman’s approval of increased advertising spending by Melrose Credit Union.
The complaint alleges the unnamed media company paid for Kaufman and his girlfriend, who also worked at the credit union, to fly to Paris and stay at the Four Seasons George V Paris in 2010. In 2012, the media company paid for Kaufman and his girlfriend to fly to Hawaii and stay at the Four Seasons in Wailea and a year later, it paid for Kaufman and his girlfriend to attend the Super Bowl in New Orleans, according to the statement.
The Charges
Kaufman has been charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and two counts of bribery of a financial institution officer, each of which carries a maximum sentence of 30 years in prison, according to Long Island Business News.
Georgiton is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and one count of bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison.
As CUToday.info reported here, the then $1.8-billion Melrose Credit Union was conserved in February of 2017 and was eventually merged into Teachers FCU.