Whistleblower Credited With Blowing Lid Off Melrose CU Scandal

A federal Inspectors General council is singling out a whistleblower with reporting allegations of financial abuse at the now-defunct Melrose Credit Union.

In a new report emphasizing the role whistleblowers play and the need for Inspector Generals to protect them, the Council of the Inspectors General on Integrity and Efficiency cited several examples of people helping federal officials root out wrongdoing.

“As these reports indicate, individuals who step forward to report on waste and misconduct provide valuable and critical assistance to OIGs in our oversight mission,” the reported stated.

The report stated that the NCUA had received allegations from a whistleblower concerning the CEO of a credit union. The whistleblower reported that the CEO and the board of directors created “an environment of financial abuse and mismanagement, which in turn had stifled the natural growth of the credit union.”

And it stated that the person said the mismanagement led to the credit union’s dependence on taxi medallion lending, which jeopardized the health of the credit union.

That report does not name the credit union, but a report by the NCUA’s own Inspector General states that in November 2015, the agency received a whistleblower tip about Melrose, which was in New York City.

The report used much of the language in the IG council’s report, but added, “Specifically, the whistleblower accused the CEO of nepotism, improper uses of Melrose funds, improper favors to friends and family, improper benefits from vendors and members, mistreatment of Melrose employees, and engaging in questionable and risky business practices.”

Melrose has since failed and has been merged into Teachers Credit Union.

Administrative charges have been filed by the NCUA against the credit union’s former CEO, Alan Kaufman. In addition, Kaufman recently was indicted on bribery and related charges.