Former CEO Of Melrose Credit Union Convicted Of Bribery Schemes In Manhattan Federal Court

Press Release Former CEO Of Melrose Credit Union Convicted Of Bribery Schemes In Manhattan Federal Court Wednesday, March 31, 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 the conviction in Manhattan federal court of ALAN KAUFMAN for participating in a scheme in which KAUFMAN, who was then the Chief Executive Officer of Melrose Credit Union (“Melrose CU”), accepted rent-free housing and financing for the purchase of his personal residence from Tony Georgiton as a reward for the approval of 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 a media company and other vendors, as a reward for Melrose CU purchasing increased advertising from those companies. The jury convicted KAUFMAN today following a two-week trial before U.S. District Judge Lewis A. Kaplan. Georgiton pleaded guilty before Judge Kaplan on September 9, 2020. U.S. Attorney Audrey Strauss said: “A unanimous Manhattan jury has found that Alan Kaufman, the former CEO of Melrose Credit Union, accepted luxurious gifts from Georgiton as a reward for favorable loan rates for his companies. In doing so, Kaufman shirked his fiduciary obligation to act in the best interests of Melrose to instead exploit his control of union funds for his own personal gain. Melrose’s members 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 both stand convicted of federal crimes.” According to the Indictment, documents previously filed in the case, and evidence introduced 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 given 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 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 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 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 personal loan and KAUFMAN has never made a payment on that personal loan. Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car for his wife, valued at over $100,000. 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 a media company (“Media Company-1”) and other media vendors, as a reward for KAUFMAN’s approval of advertising spending by Melrose CU. For example, in 2010, Media Company-1 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, Media Company-1 paid for KAUFMAN and his wife to fly to Maui, Hawaii and stay at the Four Seasons in Wailea. In 2013, Media Company-1 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 CU Board, nor did he disclose these vendor-paid trips to the Melrose CU Board, in violation of Melrose CU’s anti-bribery policy. * * * KAUFMAN was found guilty of two counts of bribery of a financial institution officer, which each carry a maximum sentence of 30 years in prison. KAUFMAN was found not guilty of one count of conspiracy to commit bribery of a financial institution officer. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. KAUFMAN is scheduled to appear for sentencing before Judge Kaplan on June 23, 2021. Ms. Strauss praised the outstanding work of the FBI. 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 Nicholas Biase, James Margolin (212) 637-2600 Updated March 31, 2021 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 21-071

Press Release Former CEO Of Melrose Credit Union Convicted Of Bribery Schemes In Manhattan Federal Court Wednesday, March 31, 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 the conviction in Manhattan federal court of ALAN KAUFMAN for participating in a scheme in which KAUFMAN, who was then the Chief Executive Officer of Melrose Credit Union (“Melrose CU”), accepted rent-free housing and financing for the purchase of his personal residence from Tony Georgiton as a reward for the approval of 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 a media company and other vendors, as a reward for Melrose CU purchasing increased advertising from those companies. The jury convicted KAUFMAN today following a two-week trial before U.S. District Judge Lewis A. Kaplan. Georgiton pleaded guilty before Judge Kaplan on September 9, 2020. U.S. Attorney Audrey Strauss said: “A unanimous Manhattan jury has found that Alan Kaufman, the former CEO of Melrose Credit Union, accepted luxurious gifts from Georgiton as a reward for favorable loan rates for his companies. In doing so, Kaufman shirked his fiduciary obligation to act in the best interests of Melrose to instead exploit his control of union funds for his own personal gain. Melrose’s members 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 both stand convicted of federal crimes.” According to the Indictment, documents previously filed in the case, and evidence introduced 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 given 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 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 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 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 personal loan and KAUFMAN has never made a payment on that personal loan. Rather than repay the loan, the following year, KAUFMAN purchased a used Maserati sports car for his wife, valued at over $100,000. 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 a media company (“Media Company-1”) and other media vendors, as a reward for KAUFMAN’s approval of advertising spending by Melrose CU. For example, in 2010, Media Company-1 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, Media Company-1 paid for KAUFMAN and his wife to fly to Maui, Hawaii and stay at the Four Seasons in Wailea. In 2013, Media Company-1 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 CU Board, nor did he disclose these vendor-paid trips to the Melrose CU Board, in violation of Melrose CU’s anti-bribery policy. * * * KAUFMAN was found guilty of two counts of bribery of a financial institution officer, which each carry a maximum sentence of 30 years in prison. KAUFMAN was found not guilty of one count of conspiracy to commit bribery of a financial institution officer. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. KAUFMAN is scheduled to appear for sentencing before Judge Kaplan on June 23, 2021. Ms. Strauss praised the outstanding work of the FBI. 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 Nicholas Biase, James Margolin (212) 637-2600 Updated March 31, 2021 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 21-071