Kam Wong's Employees 'Were Afraid to Challenge Him,' Court Documents Show

Former Municipal Credit Union CEO Kam Wong got away with his $10 million fraud for years by managing New York’s oldest financial cooperative by forewarning employees to follow his demands without question or risk termination and to address him as Mr. Wong or risk public reprimand, according to newly filed court documents.

On Tuesday, federal prosecutors will ask U.S. District Court Judge John G. Koeltl in Manhattan to sentence Wong, 63, to at least six to 10 years in prison because his criminal activity was so extensive that MCU continues to work “to uncover and unwind the damage he wrought.” Just two weeks ago, the New York State Department of Financial Services took possession of the credit union that serves more than 580,000 members because of unsafe and unsound conditions. The NCUA was appointed the credit union’s conservator.

Wong’s workplace intimidation enabled him to run MCU to support a lavish lifestyle, to enrich himself, his family, friends, loyal employees and to satisfy his gambling addiction and drug habit. Wong’s lawyer, however, paints a different picture of his client saying he is not a sociopath but a recovering addict who has taken responsibility for his crimes and will do everything in his power to atone for them.

Attorney Jeffrey H. Lichtman is pleading for leniency, saying Wong cracked under the pressures and mental stresses from managing MCU through 9/11, Hurricane Sandy and the Great Recession. The gambling addiction and drug use somehow worked as a coping mechanism to deal with his workplace stresses, Lichtman argued in court documents. Wong spent $5.5 million on New York lottery tickets and consumed a daily cocktail of what Lichtman described as judgement-suppressing opiates, popping hydrocodone pills, which he swallowed sipping from a bottle of codeine-laced syrup at his desk.

Wong received those illegal drugs from an unidentified supervisory board member in exchange for funneling hundreds of thousands of dollars to that committee member’s company in violation of the credit union’s conflict of interest policy, according to federal prosecutors.

Former MCU administrator Stella M. Mendes, who was appointed to oversee the general management of the credit union by state regulators after Wong was fired, is not buying that gambling addiction and drug use argument.

“Many employees of the credit union revered the defendant, and among those employees, he cultivated an atmosphere of trust, benevolence and altruism throughout the credit union,” Mendes wrote in a letter to Judge Koeltl. “Yet during my tenure, I have discovered that this culture of benevolence and selflessness was, instead, calculated manipulation, intentionally designed to shield employees from questioning the defendant’s criminal actions, intentions, and flawed policies. Indeed, the defendant also set a tone at the top that failed to value compliance, ethics and morals, and instead rewarded those who traded favors, kept their heads down and did not raise concerns about his conduct or any other irregularities.”

Mendes also noted that she was shocked by the number of employees who became visibly shaken when asked about some of the activity that occurred during Wong’s tenure.

Carole A. Porter, MCU’s former chief retail banking officer who knew and worked with Wong for more than 20 years, witnessed his hunger for power and money. She also watched him lie about how he saved the credit union during 9/11, bragged about his expensive cars and boasted how much smarter he was than everyone, including regulators and members, which he characterized as ignorant, according to Porter’s letter to Judge Koeltl.

“But so many people, including myself, were afraid to challenge him because he punished those who were disloyal in his eyes,” Porter wrote.

The former CEO stole from MCU by submitting sham invoices for dental work never performed on him or paid by him and millions of dollars in payments made by the credit union to Wong in lieu of purported long-term disability insurance, and for taxes owed on these and other employment benefits, according to court documents.

In addition to lottery tickets, he also spent millions to purchase and lease luxury cars and apartment rentals, rooms at five-star hotels, real estate, lavish meals at the city’s high-end restaurants, box seat tickets for all of New York’s professional teams, including the U.S. Open, TVs, tablets, watches, shopping sprees, private transportation services and gift cards. Mendes noted this was not an exhaustive list of what Wong bought with credit union funds for family, friends and select MCU employees who were loyal to him.