ALEXANDRIA, Va.–NCUA has filed suit against the former CEO and others previously involved with Melrose Credit Union.
The credit union, formerly headquartered in New York, was a taxi medallion lender that was one of several that failed as ride sharing apps drove down the value of the collateral. In total, the failure of the taxi medallion-lending CUs cost the National Credit Union Share Insurance Fund (NCUSIF) approximately $750 million in losses.
Melrose CU was involved in $185 million of what have been called “questionable” loans.
In the lawsuit, filed in the U.S. Easter District of New York, Wilson Elser filed a breach-of-contract action on behalf of NCUA as the liquidating agent for Melrose Credit Union, According to Law.com, the suit accuses two former Melrose officers, including former CEO Alan Kaufman, and board members of breaching their fiduciary duties to Melrose by establishing and operating Briarwood Transfer Services (BTS), a broker in the sale of taxi medallions, using Melrose resources without approval from the board.
Commissions Allegedly Earned
According to the complaint cited by Law.com, BTS earned commissions primarily from the transfer of taxi medallions secured by loans from Melrose. Counsel have not yet appeared for the defendants, Law.com said.
As CUToday.info reported here, an appeal by Kaufman of his 46-month prison sentence was recently denied.
In response to an inquiry from CUToday.info, NCUA declined comment, citing the pending litigation.
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