The Fall of an Empire

“There was no reason that this had to be done,” the 72-year-old Goldenbroit, who also worked as an NCUA examiner for more than 18 years, said. “The credit union was solvent. Its recordkeeping was up to date. There was something very, very wrong in what they did. I am so completely devastated by what they did to me with [their] lies that I don’t know what to do.”

But what Goldenbroit did or did not do while managing the $3 million, 343-member credit union may have contributed to the NCUA’s decision to conserve the New York, N.Y.-based cooperative in May to “resolve operational problems” that could affect its safety and soundness.

The former CEO claimed in interviews with CU Times that the independent federal agency targeted the credit union for conservatorship because he ignored its directive not to issue Paycheck Protection Program (PPP) loans, which Goldenbroit argued he was allowed to do based on NCUA guidelines. But it appeared that Goldenbroit approved a PPP loan for his own credit union consultancy company, which the NCUA said is not allowed. Goldenbroit denied he violated this prohibition.

He also said he believes the NCUA conserved the credit union in part because he allegedly failed to file currency transaction reports (CTRs) and suspicious activity reports regarding the deposit of millions from a courier company. According to Goldenbroit, the courier business, owned by one of Empire Financial’s board members, collected cash from cryptocurrency ATMs. He vehemently insisted that he did file CTRs, and claimed he has the documents to prove it, though he did not supply them when requested by CU Times.

The NCUA did not answer CU Times’ request for comment regarding Goldenbroit’s claims.

Shortly after the NCUA conducted an examination of Empire Financial in fall 2019, the federal agency issued a Document of Resolution (DOR) that included a net worth restoration plan, Goldenbroit said.

DORs typically list one or more action items, including corrective actions credit union management needs to perform and/or address when an examiner has concerns related to a specific risk area or risk factor. But when asked what specific directives were listed in Empire Financial’s DOR, Goldenbroit’s answer was elusive.

“It’s more than I could just rattle off now,” he said. “A lot of them [the directives were], do this, do that, don’t do this, don’t do that.”

He also said he would provide CU Times with the DOR and net worth restoration plan and other documents to back up his claims, but he later declined after talking to his lawyer.

Nonetheless, the credit union’s financial performance reports indicated why the NCUA may have had concerns about Empire Financial. In 2019, after posting a meager net gain of $17 in the first quarter, Empire Financial posted five-figure net losses in the second, third and fourth quarters. The credit union’s net worth, which was 7.27% at the end of 2019’s first quarter, plunged to 2.86% and 3.36% in the second and third quarters, respectively. By year’s end, the credit union’s net worth was 4.18%.

Nonetheless, since Goldenbroit was named president/CEO in 2012, the credit union’s loans and assets grew through to 2018, but its bottom-line financial results were mixed and showed the credit union made meager net gains and losses. In addition, the credit union posted zero delinquencies from 2012 to 2016. In 2017, Empire Financial’s delinquency rate inched up to 0.16%, but jumped to 2.36% in 2018 and fell to 1.34% in 2019. However, by the end of 2020, the credit union’s delinquency rate soared to 43%. Empire Financial’s Dec. 31, 2020 Call Report showed the total amount of reportable delinquency of “other loans” was $1,059,740. There were zero charge-offs. Its delinquency rate dropped to 10.42% at the end of this year’s first quarter, according to NCUA financial performance reports. Its total amount of delinquencies was $179,616, the March 31, 2021 Call Report showed, and there were zero charge-offs.

Goldenbroit claimed the delinquency rate increased because businesses did not file applications to have their PPP loans forgiven by the SBA.

In 2020, the credit union’s financials rapidly improved, but solely because of the 77 PPP loans valued at $3,702,967 that Empire Financial approved last year, during the first quarter of 2021 and in part of the second quarter. According to an SBA database that listed the credit union’s PPP loans, $1,075,340 of the $3.7 million was not disbursed as of May 28.

Goldenbroit said he received a letter from the NCUA directing him not to issue any PPP loans because it could impact his net worth restoration plan. According to him, the NCUA noted that for the credit union to make PPP loans, it would need to borrow from the Federal Reserve, which in turn would increase the credit union’s assets and reduce its net worth.

But the former executive brushed aside the NCUA’s letter, arguing he was allowed to make PPP loans because of the NCUA’s No. 6 Letter to Credit Unions on April 20, 2020 regarding member business lending. The letter stated that a federally-insured credit union that is not an approved 7(a) SBA lender can receive approval by submitting a CARES Act Sections 1102 Lender Agreement. The SBA will automatically approve lenders that are not designated to be in troubled condition by the NCUA or subject to a formal enforcement action by the federal agency to address unsafe or unsound lending practices, the letter stated.

According to Goldenbroit’s interpretation of that NCUA letter, it gave him the authority to issue PPP loans.

“I can tell you they [the NCUA] were becoming more and more enraged, and I know their mindset: ‘Who does this little credit union think they are that they can completely ignore our instructions not to do the PPPs?’” he said. “Well, do you know how many people I helped? Nobody dares to disagree with the NCUA. You either listen to them or you suffer the consequences. The end result is that we’re out of business. We’re conserved. Now the problem doesn’t exist anymore.”

The PPP loans increased Empire Financial’s total loans from $377,554 at the end of the first quarter of 2020 to $2.4 million at the end of the fourth quarter of 2020, while its net income shot up from a net loss of $10,371 to a net gain of $143,759 in the same time frame. By the end of the first quarter of this year, the credit union’s loans totaled $1.7 million, and its net income was $52,349, according to NCUA financial performance reports.

Goldenbroit approved PPP loans for small companies and sole proprietors. He also approved a $317 PPP loan for his company, Credit Union Financial Corp., which he owns and operates from his home. However, according to the NCUA’s No. 11 Letter to Credit Unions from April 2020, “Credit unions are still prohibited from making SBA loans, including PPP loans, to small businesses owned in part, or in whole, by officers and key employees of the credit union.”

When confronted with this fact, Goldenbroit denied it.

“Just to clarify, a key employee is a person who got a high salary or who owns the company,” he said. “I wasn’t an officer of the credit union. I wasn’t president. I wasn’t secretary, treasurer. Any decision making was done by the board in total. I [didn’t] make any decision without the board.”

However, Empire Financial’s profile report dated March 31, 2021 and filed with the NCUA lists Goldenbroit as the “Manager or CEO, Board Treasurer.” What’s more, the NCUA considers the manager or CEO of any credit union to be a key employee.

Another issue that Goldenbroit collided with the NCUA on was when he transacted about $4 million in cash that came from cryptocurrency ATMs, he claimed. The courier company, which collected, transported and delivered the funds for deposit at an Empire Financial account, was owned by Evan Almeida, a former board member, Goldenbroit said. Those funds were wired out of the account.

Evan and his brother Mike Almeida are founders and executives of the Empire ATM Group in Jackson, N.J. Empire Financial also was based in Jackson until the NCUA moved it to New York City.

When the credit union was conserved, Goldenbroit claimed he was shown an affidavit that listed the reasons why Empire Financial was being conserved. He also claimed that one of the reasons listed on the affidavit was that he failed to file currency transaction reports and suspicious activity reports for the $4 million deposited with the credit union.

He asserted that he did file CTRs, but did not file SARs because he didn’t find anything suspicious and all of the $4 million was accounted for by him.

According to Empire ATM Group’s website, the company operates thousands of ATMs across the nation, but most of its cash machines are throughout the New York-New Jersey metro area. The brothers are also founders of EmpireBIT. Its website indicated that through Empire ATM Group’s cash machines, consumers will be able to buy and sell cryptocurrencies.

The Almeida brothers did not respond to several email and telephone requests for comments.