Fmr. Municipal CU Board Chair Sentenced to 15 Months in Federal Prison

U.S. District Court Judge Lewis A. Kaplan sentenced former Municipal Credit Union Board Chair and ex-state judge Sylvia Ash to 15 months in prison on Wednesday.

Judge Kaplan said Ash’s “crimes struck at the heart of the criminal justice system” during a hearing held in Manhattan’s federal court.

Ash also was ordered to pay an $80,000 fine and received two years of supervised release, including a special condition of 20 hours of community service per week following her prison term.

Judge Kaplan reserved a decision on whether MCU is entitled to restitution for costs it incurred because of Ash’s crimes.

Prosecutors said the case was about a coverup because Ash deleted and hid evidence from a federal grand jury and repeatedly lied to federal agents to protect herself and the former CEO, who was at the center of a multimillion-dollar fraud and corruption investigation that rocked New York’s oldest financial cooperative.

A jury found Ash, 64, guilty in December on one felony count of obstruction of justice, one felony count of conspiracy to obstruct justice and one felony count of making false statements to federal officers. She was acquitted on a second felony count of obstruction of justice.

Kam Wong, MCU’s former president/CEO, had become the focus of a federal investigation in 2018 for embezzling millions of dollars from MCU. He pleaded guilty to stealing nearly $10 million and was sentenced to five and a half years in prison in 2019. Wong, 66, is scheduled to be released from prison in April 2024, according to the Federal Bureau of Prisons.

In their sentencing memo to Judge Kaplan, federal prosecutors revealed that MCU’s attorney believes that the credit union is “entitled to full and timely restitution of eligible costs incurred” as a result of Ash’s criminal actions.

However, Judge Kaplan reserved the decision on restitution to MCU.

Prosecutors also revealed that Ash owns $2.2 million in assets and that her net worth is $2 million. And while the criminal case was pending over two years, she collected more than $210,000 annually, which was her salary as a state judge. She resigned from her post in March.

In a five-page letter to Judge Kaplan, MCU President Kyle Markland wrote that during Ash’s board tenure from May 2008 to May 2015, and long after she resigned, she received tens of thousands of dollars in reimbursements and other benefits because of her close relationship with Wong. The credit union paid for her airfare around the world for conferences, all expenses paid to the Greek Islands, England and the Caribbean. MCU also reimbursed her personal internet, cable and phone bill. Wong gave her the latest Apple devices, and, whenever she asked, tickets to all the sports games, even prime seats at the U.S. Open. Ash also regularly used the MCU suite at a baseball stadium to host her birthday parties, billing all the food and alcohol to the credit union.

“It is clear that Ms. Ash was loyal to Mr. Wong because of their quid-pro-quo relationship: He funded her lifestyle, even long after she resigned from her position with MCU and she ultimately covered up his malfeasance,” Markland wrote. “It is not surprising, although it is almost unbelievable, that when questioned by federal law enforcement agents about Mr. Wong’s activity in 2018, Ms. Ash provided false statements and undertook unlawful activities to protect her benefactor.”

For example, prosecutors said Wong turned to Ash during the investigation to help him sell his cover story to federal agents.

When federal investigators pressed Wong about the millions he had taken from MCU, he wrote a memo. That memo claimed in 2015, Ash, while serving as MCU’s board chair, had told Wong that it was OK to take millions of dollars – that he was permitted to take cash from MCU instead of an insurance policy.

Wong asked Ash to sign this phony memo, and after she did, Wong gave it to federal investigators, claiming it proved his innocence. But when federal agents confronted Ash with her signature on the memo, she confessed that she knew the memo wasn’t true.

Defense attorney Carrie H. Cohen said even though her client signed the fake memo, it was undisputed during the trial that Ash had no knowledge of Wong’s embezzlement, which was why the jury acquitted her on the second obstruction of justice charge. Prosecutors argued, however, that Ash “knew about or reasonably should have known” about Wong’s embezzlement because she signed a memo, and later signed a second memo, that falsely stated she approved $3.7 million that Wong had received purportedly in lieu of a life insurance policy.

Markland’s letter pointed out that because of Ash’s crimes, MCU had to spend significant time and funds to hire attorneys, forensic accountants and other specialized vendors to respond to requests from the grand jury and federal investigators, Ash’s attorney and to prepare MCU employees to testify for trial. What’s more, MCU hired outside lawyers, consultants and vendors to correct questionable policies, procedures and practices implemented during Ash’s board tenure.

“MCU was directly harmed by Ms. Ash’s conspiracy and obstruction,” Markland wrote. “The investigative cost incurred by the credit union – both financial and intangible – would have been avoided if Ash cooperated with both the federal and internal investigations in the first place.”

On April 8, MCU’s attorney informed federal prosecutors that it was the credit union’s position that it was entitled to “full and timely restitution of eligible costs incurred” as a result of Ash’s criminal actions.

However, Ash’s attorney wrote in a letter to Judge Kaplan that MCU is not a victim of her client’s crimes and that any restitution is unwarranted.

Cohen noted that the Crime Victims’ Rights Act defines a victim as “a person directly and proximately harmed as a result of the commission of a federal offense.” She argued that MCU did not suffer a “direct and proximate harm” because of Ash’s obstructive conduct.

“The obstruction crimes of which Ms. Ash was convicted, however, did not in any way prolong Wong’s embezzlement scheme as Ms. Ash’s underlying conduct post-dated the scheme and did not enable Wong’s embezzlement scheme in any way,” Cohen wrote. “And, to the extent the MCU was required to respond to numerous subpoenas, that fact neither was a result of Ms. Ash’s conduct nor does it render the MCU a crime victim.”

Moreover, prosecutors said in court documents that they have not yet determined whether MCU may be appropriately considered a victim and entitled to restitution.

The MCU investigation also convicted former supervisory committee chair and head of the MCU Fraud and Security Department, Joseph Guagliardo. The retired New York City police officer and certified fraud examiner was sentenced to 27 months in federal prison in July 2020 after he pleaded guilty to embezzling more than $400,000 from the credit union.

The MCU case revealed allegations of rampant fraud and corruption that not only involved Wong, Guagliardo and Ash, but at least five top executives, another supervisory committee member and 13 former board members, which led to more than $18 million in financial losses and $109 million in write-down losses, according to civil lawsuit court documents.

New York regulators placed the credit union into conservatorship in May 2019 and released it from conservatorship in March.