Former Melrose CU CEO Asks Judge for Acquittal or New Trial

Former Melrose Credit Union President/CEO Alan Kaufman who was found guilty on two counts of bribery in March is asking a federal judge for an acquittal or a new trial.

Kaufman’s legal action delayed his sentencing hearing from June 23 to September 13 in U.S. District Court in New York.

Kaufman accepted bribes from Tony Georgiton, owner of a taxi medallion brokerage company and other businesses.

After Georgiton bought a $630,000 home in Jericho, N.Y., where Kaufman lived rent free for more than two years, the former credit union CEO repeatedly approved favorable refinancing of tens of millions of dollars in Melrose loans with favorable interest rates for Georgiton’s companies. What’s more, Kaufman, while he was living rent free at the home Georgiton purchased for him, also paid $2 million for the naming rights of a local ballroom that was owned by one of Georgiton’s companies.

He pleaded guilty to one felony count of conspiracy to commit bank bribery and was sentenced in January to three years of probation, which included nine months of home confinement, for his role in a multi-million-dollar bribery scheme.

In addition, Kaufman directed about $850,000 in credit union funds annually to media vendor CBS radio for advertising. In exchange, he received luxury trips to Paris and Hawaii for him and his wife. The former CEO did not disclose to Melrose CU’s board of directors that he accepted, and in one case, demanded first-class vacations from CBS Radio.

In his motion arguing for an acquittal or new trial for Kaufman, attorney Nelson A. Boxer wrote that letting the guilty verdicts stand against his client would be a “manifest injustice.”

He argued that the luxury trips were paid by CBS Radio in the ordinary course of business and fell within a safe harbor provision because the trips were attended by numerous CBS Radio sales executives and clients at part of a CBS Radio-sanctioned sales incentive program. A safe harbor provision protects someone against legal liability or penalty if certain conditions are met.

However, federal prosecutors, who recently filed court papers opposing Kaufman’s request for an acquittal or new trial, contended that the safe harbor provision applies to legitimate compensation or expense reimbursement paid to the employee by the employer, not a vendor, and in this case, CBS Radio. Prosecutors also noted that Kaufman accepted the lavish trips despite having received training on bank bribery laws and in contravention to the credit union’s policies that prohibited such conduct.

Kaufman’s lawyer also argued that the federal judge who presided over the trial erroneously excluded an expert witness who was relevant and critical to negating the government’s evidence about the favorable refinancing of loans with favorable interest rates.

Prosecutors argued the expert witness testimony was irrelevant and misleading and that the judge was well within his discretion to exclude it.

The $1.1 billion Melrose Credit Union, 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.

The $8.7 billion Teachers Federal Credit Union in Hauppauge, N.Y., acquired the estimated $412 million consumer, residential and commercial loan portfolio of Melrose CU. The portfolio purchase did not include Melrose’s troubled tax medallion loans.

In 2019, Kaufman was indicted on bribery charges, which were based in part on a November 2015 whistleblower complaint filed with the NCUA’s Inspector General by former Melrose Marketing Director Robert Nemeroff. He was fired by Kaufman.

He accused Kaufman 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.

Nemeroff testified against Kaufman during his two-week trial in March.