The former CEO of a defunct Briarwood-based credit union has been sentenced to 46 months in federal prison for accepting bribes related to loans and advertising.
Alan Kaufman, 62, the former head of Melrose Credit Union, was convicted of two counts of bribery of a financial institution officer back in April. He was sentenced Sept. 29 by U.S. District Judge Lewis Kaplan, according to a press release from the office of Audrey Strauss, U.S. attorney for the Southern District of New York.
“Alan Kaufman accepted lavish gifts from Tony Georgiton as a reward for favorable loan rates for Georgiton’s companies,” Strauss said. “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.”
Strauss said 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,” she added.
Kaufman’s grandfather was one of the co-founders of Melrose back in 1922. Both he and Kaufman’s father served terms as CEO.
In 2010 Kaufman began living rent-free in a home purchased by Georgiton in Jericho, LI. While living there he personally approved the refinancing of more than $100 million in loans from Melrose to a company owned by Georgiton.
The head of Melrose’s loan department did not clear the agreement because he felt the terms were too favorable to Georgiton and did not comply with company policy.
Kaufman also approved $2 million over five years to pay for the naming rights to a ballroom built by a Georgiton company without telling the MCU board he was living in the house.
Kaufman eventually purchased the house with a loan from Melrose that was co-signed by Georgiton and secured with Georgiton’s shares of MCU.
Georgiton agreed to a plea deal with prosecutors back in September 2020.
In addition, according to Strauss’ office, from 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 he approved advertising spending by Melrose CU.
CBS Radio in 2010 paid for Kaufman and his wife, who also worked at Melrose, to fly to Paris, 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 those vendor-paid trips from the Melrose Board, nor did he disclose them to the board, in violation of Melrose CU’s anti-bribery policy.
The MCU Board of Directors removed Kaufman in 2016.
In 2017, Melrose was taken into conservatorship by the New York State Department of Financial Services at the depths of the crash in the yellow taxi medallion market.
Melrose had about 80 percent of its outstanding loans tied up in taxi medallions, which at one time were selling for well over $1 million when they had a monopoly in the business. But the rise of Lyft, Uber and other app-based ride-sharing services made it much harder for medallion owners to repay their loans.
Teachers Federal Credit Union obtained Melrose, its accounts and its offices on Queens Boulevard in Briarwood in August 2018.