NEW YORK –A state court judge and a former New York City cop–both of whom served on the board of Municipal Credit Union–have been arrested on different charges by federal prosecutors that range from deleting text messages to help cover up misuse of funds, abuse of controlled substances, and, ironically, fraud related to anti-fraud security.
Federal prosecutors have accused Justice Sylvia Ash, who at one point was chairman of Municipal Credit Union, of destroying evidence and misleading investigators who are looking into the alleged multi-million embezzlement at Municipal CU.
Former New York City police officer and MCU Supervisory Committee member Joseph Guagliardo has been charged in a separate scheme for billing the credit union for hundreds of thousands of dollars for work that was never done and other schemes.
Ash, 62, served on the board of Municipal Credit Union from 2008-2016, with prosecutors saying she received tens of thousands of dollars in travel and other benefits each year as a board member, including some that continued after she resigned.
As CUToday.info reported here, the credit union’s former CEO, Kam Wong, has already pleaded guilty to embezzling more than $10 million. Wong was sentenced in June to five years in prison. The $3-billion credit union was placed into conservatorship in 2018 and continues to be managed by NCUA.
Conspiracy Alleged
According to U.S. Attorney for the Southern District of New York Geoffrey S. Berman, Ash, the presiding judge of the Kings County Supreme Court, Commercial Division, and former chair of the board of directors of Municipal Credit Union, conspired to obstruct justice and impede the ongoing federal investigation into fraud and corruption at MCU, a non-profit, multibillion-dollar financial institution.
In addition, Berman said Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a former New York City Police Department officer and former member of MCU’s supervisory committee, has been charged separately with embezzlement, fraud, and controlled substance offenses arising from abuse of his position as a member of the supervisory committee.
Guagliardo was arrested in Brooklyn and presented before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court. Ash was arrested at LaGuardia Airport.
“The charges announced today reflect the latest in our ongoing work to uncover criminal conduct at the highest levels of MCU, a multibillion-dollar, federally insured credit union,” said Berman. “As alleged, Sylvia Ash, a sitting state court judge, took repeated steps to obstruct a federal investigation into significant financial misconduct at MCU during Ash’s tenure as chair of the board of directors. Joseph Guagliardo allegedly abused his position as an MCU supervisory committee member to enrich himself and his family.”
According to the allegations contained in the two complaints, both Ash and Guagliardo had received MCU’s written conflict of interest policy, which was regularly distributed to board members, supervisory committee members, and others, with that policy stating, among other things, that members of MCU’s “Board of Directors and Supervisory Committee may not do business with the Credit Union, either individually or as representative of any business entity.”
Fraudulent Fraud Activity
According to the U.S. Attorney’s Office, Ash resigned from the MCU board on August 15, 2016. She also served as a trustee of MCU’s pension plan, a position from which she resigned on or about Oct. 31, 2016. From in or about May 2015 until her resignation from the board, Ash served as board chair, investigators said.
Guagliardo, 62, retired from the NYPD in 1989 and joined the MCU Supervisory Committee in 1993 until being removed from the position in May of 2018, when Municipal Credit Union was placed into conservatorship.
“While he was a Supervisory Committee member, Guagliardo sought to and did use his position to oversee aspects of MCU’s security and fraud department, including serving in the role of vice president of MCU’s security and fraud department while that position was vacant,” the complaint reads.
Prosecutors are alleging that from 2012 through 2016, while serving as an MCU board member and while Wong was CEO, Ash received annually tens of thousands of dollars in reimbursements and other benefits from MCU, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences domestically and abroad, as well as payment for phone and cable bills, and electronic devices. Even after her resignation from the board, Wong continued to provide or cause MCU to provide ASH with benefits, such as Apple devices, prosecutors additionally allege.
Text Messages Deleted
“In or about January 2018, after Wong had been approached by federal law enforcement agents investigating potential financial misconduct by Wong involving MCU and in an attempt to protect Wong, Ash agreed to and did sign a false and misleading memorandum purporting to explain and justify millions of dollars in payments that Wong had received from MCU, which was then provided by Wong to law enforcement officers,” the complaint reads. “Subsequently, Ash agreed to and did continue to seek to influence and impede the federal investigation in multiple ways, including by (i) concealing and deleting relevant text messages and email messages and wiping her MCU-issued Apple iPhone in a further effort to destroy and impair the availability of evidence that had been sought by federal grand jury subpoenas, and (ii) making false and misleading statements to federal law enforcement officers in interviews conducted as part of a federal criminal investigation.”
Long-Running Scheme
Meanwhile, Guagliardo is alleged by prosecutors to have engaged in a long-running scheme to defraud MCU, with the agreement and assistance of, among others, Wong.
“Among other things, Guagliardo defrauded and embezzled from MCU by causing it to direct more than $250,000 to a purported security company created and controlled by Guagliardo, but operated in another’s name, which did little to no real work for MCU,” the complaint reads. “Guagliardo also defrauded and embezzled from MCU by over-billing for more than $200,000 for purported web advertising services provided by a non-profit organization that Guagliardo also controlled.”
Prosecutors also allege that during substantially the same period in which Guagliardo was committing and concealing these offenses, he participated in a scheme to unlawfully distribute controlled substances to Wong, in the form of prescription drugs, some of which were obtained from Guagliardo’s spouse, who worked as a doctor affiliated with a public hospital, and some of which were obtained from a doctor affiliated with the New York City Police Department, the complaint states.
Ash has been charged with one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; and two counts of obstruction of justice, each of which carries a maximum penalty of 20 years in prison, the U.S. Attorney’s Office said.
Separate Charges
Guagliardo is separately charged with one count of conspiracy to embezzle from a federal credit union, which carries a maximum penalty of five years in prison; one count of embezzlement, one count of conspiracy to defraud a financial institution, and one count of defrauding a financial institution, each of which carries a maximum penalty of 30 years in prison; and one count of conspiracy to distribute controlled substances, and one count of distribution of controlled substances, each of which carries a maximum penalty of 20 years in prison.
The case is being prosecuted by the Office’s Public Corruption Unit.