Brooklyn Supreme Court Justice & Former MCU Board Member Charged With Obstruction

Sylvia Ash, a judge of the Kings County Supreme Court and former chair of the board of directors for the $3 billion Municipal Credit Union, was charged in U.S. District Court in Manhattan Friday with conspiracy to obstruct justice and obstruction of justice, stemming from a scheme to seek to influence and impede a federal investigation into fraud and corruption at the New York City-based credit union.

What’s more, Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a retired New York City cop and former member of MCU’s supervisory committee, was charged separately with embezzlement, fraud, and controlled substance offenses arising from abuse of his position as a member of the supervisory committee, Geoffrey S. Berman, United States Attorney for the Southern District of New York, said.

Guagliardo was arrested in Brooklyn Thursday afternoon and appeared before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court. Ash was arrested at LaGuardia Airport Friday morning and was expected to appear before Magistrate Judge Wang in Manhattan federal court this afternoon.

“The charges announced today reflect the latest in our ongoing work to uncover criminal conduct at the highest levels of MCU,” Berman said. “As alleged, Sylvia Ash, a sitting state court judge, took repeated steps to obstruct a federal investigation into significant financial misconduct at MCU during Ash’s tenure as chair of the board of directors. Joseph Guagliardo allegedly abused his position as an MCU supervisory committee member to enrich himself and his family.”

These federal felony charges come after former Municipal Credit Union CEO Kam Wong was sentenced in June to five and a half years in prison for embezzling nearly $10 million from New York City’s largest and oldest financial cooperative. Wong was ordered to pay $9,890,375 million in restitution and serve three years of supervised release after his prison term ends.

Court documents revealed that Wong had been using drugs and that a supervisory committee member was the former CEO’s supplier.

In January 2018, after Wong had been approached by federal agents investigating financial misconduct by the former CEO and in an attempt to protect Wong, Ash agreed to and signed a false and misleading memo purporting to explain and justify millions of dollars in payments that Wong had received from MCU, which was then provided by Wong to federal investigators.

Subsequently, Ash agreed to continue to seek to influence and impede the federal investigation in multiple ways by concealing and deleting relevant text messages and email messages and wiping her MCU-issued Apple iPhone in a further effort to destroy and impair the availability of evidence that had been sought by federal grand jury subpoenas, and making false and misleading statements to federal investigators in interviews conducted as part of a criminal investigation.

From 2012 through 2016, Ash received tens of thousands of dollars in reimbursements and other benefits from MCU annually, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences domestically and abroad, as well as payment for phone and cable bills and electronic devices.  Even after her resignation from the board, Wong continued to provide Ash with benefits, according to federal prosecutors.

In addition, Guagliardo allegedly engaged in a long-running scheme to defraud MCU with the agreement and assistance of Wong and others who were not identified by federal prosecutors.

The former New York City cop allegedly embezzled more than $250,000 via purported security company created and controlled by Guagliardo, which was operated in the name of another person, not identified, who did little or no real work for MCU, according to federal prosecutors.

Guagliardo also stole from MCU by over-billing for more than $200,000 for purported web advertising services provided by a non-profit organization that he also controlled.

While the former law enforcement officer was committing and concealing these offenses, Guagliardo allegedly participated in a scheme to unlawfully provide prescription drugs to Wong. Some of the drugs were obtained from Guagliardo’s spouse who worked as a doctor affiliated with a public hospital. Moreover, some of the drugs were obtained from a doctor affiliated with the New York City Police Department, according to federal prosecutors.

Ash, 62, of Brooklyn, was charged with one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; and two counts of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.

Guagliardo, 62, of Brooklyn, was charged with one count of conspiracy to embezzle from a federal credit union, which carries a maximum penalty of five years in prison; one count of embezzlement, one count of conspiracy to defraud a financial institution, and one count of defrauding a financial institution, each of which carries a maximum penalty of 30 years in prison; and one count of conspiracy to distribute controlled substances, and one count of distribution of controlled substances, each of which carries a maximum penalty of 20 years in prison.