Former MCU Board Chair Pleads Not Guilty as CU Reports Drastic Membership & Revenue Loss

Sylvia Ash, a New York judge and former board chair of the $2.9 billion Municipal Credit Union, pleaded not guilty to three obstruction of justice charges in U.S. District Court in Manhattan Monday.

However, she may have another problem —- her lawyer.

During the court hearing, federal prosecutors alleged that her Brooklyn-based lawyer, Roger Archibald, signed off on documents prosecutors say contain false statements allegedly made by Ash, the New York Post reported. No decision was reportedly made about this alleged conflict of interest issue. Archibald did not return a phone call and email messages sent by CU Times seeking comment by a Tuesday morning deadline.

Prosecutors filed an indictment against Ash that charges her with one felony count of conspiracy to obstruct justice, a second felony count of obstruction of justice for falsifying records during a federal investigation and a third felony count of obstruction of justice to tampering with a witness, victim or informant.

These charges stem from an alleged scheme to influence and impede a federal investigation into fraud and corruption at the credit union that led to the conviction of former MCU CEO Kam Wong who was sentenced in June to more than five years in prison for stealing nearly $10 million.

The corruption scandal has apparently affected MCU’s performance results. The credit union has lost more than 17,000 members —- 581,533 in June 2018 to 563,956 in September 2019 — since the massive embezzlement scheme was publicly exposed in May 2018. Moreover, MCU posted a net income loss of $113 million at the end of the third quarter compared to a $19.6 million income gain at the end of last year’s third quarter. In the same time frame, the credit union’s net worth has plummeted from 8.26% to 3.87%, making it significantly undercapitalized according to the credit union’s Call Reports and financial performance reports filed with the NCUA.

Ash allegedly attempted to cover up Wong’s wrongdoing and her involvement by concealing and deleting relevant text messages and email messages and wiping all of her information from a MCU-issued Apple iPhone, which was sought as evidence by federal grand jury subpoenas. She also allegedly made false and misleading statements to federal investigators.

Ash joined the MCU board in May 2008 and resigned in August 2016 after the New York State Commission on Judicial Conduct filed a complaint against her for serving on the board because MCU was regularly engaged in “adversary proceedings” in the New York courts, which was an alleged violation of rules governing a judge’s extra-judicial activities. Ash has been serving as a as a judge of the Kings County Supreme Court, Commercial Division. She was placed on paid leave and receives an annual wage of $210,900.

In May 2015, prior to Ash becoming MCU’s board chair, she sought advice from the New York State Advisory Committee on Judicial Ethics as to whether she could serve as the credit union’s board chair. The advisory committee said Ash could not serve on the MCU board. Even though Ash told the board she would resign, she didn’t do so until a year and three months later in August 2016, according to court documents.

Federal investigators said Ash failed to report that she served on the MCU board and to report reimbursements, gifts or compensation she received from the credit union, which all New York judges are required to disclose annually to the New York State Office of Court Administration. In 2015, MCU spent more than $63,000 for the benefit of and at the direction of Ash, which was the most spent by any board member in that year. Those credit union funds paid for Apple devices, airfare and hotels for her and a guest while attending conferences in Cancun, San Juan and the Greek Isles.

Ash’s trial has been tentatively scheduled for May.

Joseph Guagliardo, a retired New York City cop who served on MCU’s supervisory committee, was also accused by federal investigators with the distribution of controlled substances, fraud, embezzlement and conspiracy.

Starting in 2011 and continuing through January 2018, Wong texted and emailed Guagliardo and his spouse, a doctor at a New York public hospital, numerous times whenever the former CEO needed refills for his addiction to opiate prescription drugs such as Vicodin, Hydrocodone and Codeine, court documents show.

What’s more, he allegedly embezzled more than $250,000 via a purported security company created and controlled by Guagliardo. The company was operated in the name of another person, not identified, who did little or no real work for MCU, according to a criminal complaint. The former supervisory committee member also allegedly stole from the credit union by over-billing for more than $200,000 for purported web advertising services provided by a non-profit organization that he also controlled.

Although Guagliardo has been arrested and charged with allegations detailed in a criminal complaint, federal prosecutors have not yet filed an indictment against him.