NY Businessman Gets Probation for Melrose Credit Union Bribery Scheme

A federal judge sentenced New York businessman Tony Georgiton Monday to three years of probation, which includes nine months of home confinement, for his role in a multi-million-dollar bribery scheme involving the former Melrose Credit Union President/CEO Alan Kaufman.

U. S. District Court Judge Lewis A. Kaplan in Manhattan also ordered Georgiton, 62, to pay a $95,000 fine and to forfeit $286,633, which represents the value of the bribe Georgiton made to Kaufman, who pleaded not guilty to bribery charges that may be heard before a jury later this year.

“Mr. Georgiton is grateful that the judge agreed that probation was appropriate here, and he looks forward to spending time with his family and moving forward,” New York Attorney Paul Krieger, who represents Georgiton, said.

Last year, Georgiton pleaded guilty to one felony count of conspiracy to commit bank bribery. The second felony charge of bribing an officer of a financial institution was dropped by federal prosecutors when Georgiton agreed to a publicly undisclosed plea deal.

Federal prosecutors asked Judge Kaplan to impose a prison sentence of 24 to 30 months, which was based on federal sentencing guidelines. Krieger argued for probation.

“A lenient sentence would diminish respect for the law and undermine general deterrence as it would be seen as a slap on the wrist for a defendant who repeatedly bribed the Chief Executive Officer of New York City’s (then) largest credit union,” prosecutors wrote in court documents. “A lenient sentence would have a particularly negative effect here because it would send a message to entrepreneurs and businessmen and businesswomen more generally, that they can engage in criminal conduct without facing the most serious consequences, which would in turn infect entire business cultures.”

Federal prosecutors declined to comment on the sentence when reached Monday.

While Kaufman was living in a $630,000 home in Jericho, N.Y., rent free after Georgiton agreed to buy it for him, Kaufman repeatedly approved the refinancing of tens of millions of dollars in Melrose loans for Georgiton’s companies, including a taxi medallion brokerage business and other firms.

Prosecutors also noted in court documents that when Georgiton purchased the home in 2010 for Kaufman, the former CEO agreed to buy back the home from Georgiton for $630,000 in 2013.

The former CEO obtained the money to buy back the home from Georgiton with a $200,000 loan from Melrose, which was co-signed by Georgiton and secured by his credit union shares, and a $240,000 unsecured personal loan extended by Georgiton to Kaufman for which no promissory note was executed and which was never repaid, according to prosecutors.

Although Georgiton acknowledged and regretted that the “benefits” he provided to Kaufman were meant to influence the former executive, Georgiton’s lawyer asked Judge Kaplan to consider that his client had several other benign motivations.

“Having been a friend of Mr. Kaufman for many years – and feeling deeply indebted to and grateful toward Mr. Kaufman’s family for his very first medallion loan -Tony was compelled partially by generosity and loyalty to Mr. Kaufman,” Krieger wrote in court documents. “At the same time, given the substantial loans and money that Tony then had at MCU, both through his businesses and his personal accounts, Tony – in the somewhat awkward position of having Mr. Kaufman able to see his wealth and his ability to provide the funds – felt pressure to avoid Mr. Kaufman potentially taking adverse action against him or his business if he declined.”

The $1.1 billion Melrose, founded by Kaufman’s family, was liquidated in September 2018 after posting more than $745 million in taxi medallion loan losses. Many drivers who took out Melrose loans could not repay them as the value of their taxi medallions plunged because of competition from ride-sharing companies.

By July 2019, Kaufman pleaded not guilty in federal court to two counts of bribery of a financial institution officer and one count of conspiracy to commit bribery.

New York lawyer Nelson A. Boxer, who is representing Kaufman, said his client’s relationship with Georgiton had “no bearing whatsoever” on Kaufman’s decision-making at Melrose and noted that Georgiton closed all of his deposits and loans at the credit union in 2013 for better rates at another bank.

In 2020 and in 2019, Judge Kaplan denied attempts by Kaufman’s lawyers to dismiss the charges against the former credit union executive.

Kaufman’s jury selection for his trial is scheduled to begin in March.