Former CEO Of Melrose Credit Union Sentenced To Nearly 4 Years In Prison For Violating Bank Bribery Statute

Press Release Former CEO Of Melrose Credit Union Sentenced To Nearly 4 Years In Prison For Violating Bank Bribery Statute Wednesday, September 29, 2021 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that ALAN KAUFMAN, who at the time of the offense was the chief executive officer of Melrose Credit Union (“Melrose CU”), was sentenced today to 46 months in prison. KAUFMAN was previously convicted, following a three-week jury trial, of participating in a scheme in which he accepted from Tony Georgiton free housing and hundreds of thousands of dollars in financing for the purchase of his personal residence, after approving millions of dollars in loans to Georgiton’s companies at favorable terms. KAUFMAN was also convicted for accepting lavish vacations, including to Paris and Hawaii, from CBS Radio after increasing Melrose CU’s advertising purchases at CBS Radio. KAUFMAN’s sentence was imposed by United States District Judge Lewis A. Kaplan. U.S. Attorney Audrey Strauss said: “Alan Kaufman accepted lavish gifts from Tony Georgiton as a reward for favorable loan rates for Georgiton’s companies. In addition, Kaufman accepted luxury travel and hotel accommodations in return for approval of advertising spending by Melrose Credit Union at CBS Radio and elsewhere. Kaufman shirked his duty to act in the best interests of the credit union and its account holders, exploiting his position for personal gain. Now, thanks to the work of the FBI, Kaufman will spend time in federal prison for his crimes.” According to the Indictment, documents previously filed in the case, and evidence presented at trial: In 2010, Georgiton purchased a home in Jericho, New York (the “Jericho Residence”), and permitted KAUFMAN to live in that home rent-free for over two years. While KAUFMAN was living rent-free at the Jericho Residence, KAUFMAN personally approved the refinancing of over $100 million worth of loans at Melrose CU held by a company owned by Georgiton with favorable terms. The head of Melrose CU’s loan department did not sign off on the loans made to Georgiton because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy. In 2011, KAUFMAN sought approval from Melrose CU’s board of directors (the “Melrose Board”) for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”). That ballroom was owned by a company that was in turn owned by Georgiton. KAUFMAN did not disclose to the Melrose Board that he was living rent-free in a house owned by Georgiton at the time he sought Melrose Board approval for the naming rights acquisition. Over the next five years, Melrose CU paid $2 million to Georgiton’s company for the naming rights to the Melrose Ballroom. KAUFMAN also directed that payment for the naming rights be paid a year in advance of the Melrose Ballroom’s actual opening for operations. In 2013, KAUFMAN purchased the Jericho Residence from Georgiton, with financing that largely came from Georgiton. To purchase the Jericho Residence, KAUFMAN took out a $200,000 loan from Melrose CU, co-signed by Georgiton and secured by Georgiton’s shares in Melrose CU. Georgiton also gave KAUFMAN a $240,000 unsecured personal “loan.” Georgiton has never made a demand for payment on that purported loan and KAUFMAN has never made a payment on that purported loan. Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car valued at over $100,000 for his wife. In addition, from in or about 2010 through in or about 2015, KAUFMAN solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from CBS Radio and other media vendors, after KAUFMAN approved advertising spending by Melrose CU. For example, in 2010, CBS Radio paid for KAUFMAN and his wife, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris. In 2012, CBS Radio paid for KAUFMAN and his wife to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea. In 2013, CBS Radio paid for KAUFMAN and his wife to attend the Super Bowl in New Orleans. KAUFMAN did not seek approval for these vendor-paid trips from the Melrose Board, nor did he disclose these vendor-paid trips to the Melrose Board, in violation of Melrose CU’s anti-bribery policy. * * * In addition to the prison term, KAUFMAN, 62, of Jericho, New York, was sentenced to two years of supervised release and ordered to forfeit specified property, pay restitution to the National Credit Union Administration in the amount of $2 million, and pay a fine of $30,000. On January 11, 2021, Georgiton was sentenced to three years’ probation, a fine of $95,000, forfeiture of $286,663.65, and a special condition of nine months’ home confinement. Ms. Strauss praised the outstanding work of the Federal Bureau of Investigation. She also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case. The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Dina McLeod, Michael McGinnis, and Nicholas Chiuchiolo are in charge of the prosecution. Contact [email protected] [email protected] (212) 637-2600 Updated September 29, 2021 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 21-261

Press Release Former CEO Of Melrose Credit Union Sentenced To Nearly 4 Years In Prison For Violating Bank Bribery Statute Wednesday, September 29, 2021 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that ALAN KAUFMAN, who at the time of the offense was the chief executive officer of Melrose Credit Union (“Melrose CU”), was sentenced today to 46 months in prison. KAUFMAN was previously convicted, following a three-week jury trial, of participating in a scheme in which he accepted from Tony Georgiton free housing and hundreds of thousands of dollars in financing for the purchase of his personal residence, after approving millions of dollars in loans to Georgiton’s companies at favorable terms. KAUFMAN was also convicted for accepting lavish vacations, including to Paris and Hawaii, from CBS Radio after increasing Melrose CU’s advertising purchases at CBS Radio. KAUFMAN’s sentence was imposed by United States District Judge Lewis A. Kaplan. U.S. Attorney Audrey Strauss said: “Alan Kaufman accepted lavish gifts from Tony Georgiton as a reward for favorable loan rates for Georgiton’s companies. In addition, Kaufman accepted luxury travel and hotel accommodations in return for approval of advertising spending by Melrose Credit Union at CBS Radio and elsewhere. Kaufman shirked his duty to act in the best interests of the credit union and its account holders, exploiting his position for personal gain. Now, thanks to the work of the FBI, Kaufman will spend time in federal prison for his crimes.” According to the Indictment, documents previously filed in the case, and evidence presented at trial: In 2010, Georgiton purchased a home in Jericho, New York (the “Jericho Residence”), and permitted KAUFMAN to live in that home rent-free for over two years. While KAUFMAN was living rent-free at the Jericho Residence, KAUFMAN personally approved the refinancing of over $100 million worth of loans at Melrose CU held by a company owned by Georgiton with favorable terms. The head of Melrose CU’s loan department did not sign off on the loans made to Georgiton because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy. In 2011, KAUFMAN sought approval from Melrose CU’s board of directors (the “Melrose Board”) for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”). That ballroom was owned by a company that was in turn owned by Georgiton. KAUFMAN did not disclose to the Melrose Board that he was living rent-free in a house owned by Georgiton at the time he sought Melrose Board approval for the naming rights acquisition. Over the next five years, Melrose CU paid $2 million to Georgiton’s company for the naming rights to the Melrose Ballroom. KAUFMAN also directed that payment for the naming rights be paid a year in advance of the Melrose Ballroom’s actual opening for operations. In 2013, KAUFMAN purchased the Jericho Residence from Georgiton, with financing that largely came from Georgiton. To purchase the Jericho Residence, KAUFMAN took out a $200,000 loan from Melrose CU, co-signed by Georgiton and secured by Georgiton’s shares in Melrose CU. Georgiton also gave KAUFMAN a $240,000 unsecured personal “loan.” Georgiton has never made a demand for payment on that purported loan and KAUFMAN has never made a payment on that purported loan. Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car valued at over $100,000 for his wife. In addition, from in or about 2010 through in or about 2015, KAUFMAN solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from CBS Radio and other media vendors, after KAUFMAN approved advertising spending by Melrose CU. For example, in 2010, CBS Radio paid for KAUFMAN and his wife, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris. In 2012, CBS Radio paid for KAUFMAN and his wife to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea. In 2013, CBS Radio paid for KAUFMAN and his wife to attend the Super Bowl in New Orleans. KAUFMAN did not seek approval for these vendor-paid trips from the Melrose Board, nor did he disclose these vendor-paid trips to the Melrose Board, in violation of Melrose CU’s anti-bribery policy. * * * In addition to the prison term, KAUFMAN, 62, of Jericho, New York, was sentenced to two years of supervised release and ordered to forfeit specified property, pay restitution to the National Credit Union Administration in the amount of $2 million, and pay a fine of $30,000. On January 11, 2021, Georgiton was sentenced to three years’ probation, a fine of $95,000, forfeiture of $286,663.65, and a special condition of nine months’ home confinement. Ms. Strauss praised the outstanding work of the Federal Bureau of Investigation. She also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case. The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Dina McLeod, Michael McGinnis, and Nicholas Chiuchiolo are in charge of the prosecution. Contact [email protected] [email protected] (212) 637-2600 Updated September 29, 2021 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 21-261