Prosecutors Say Former Credit Union CEO Should Not Be Granted a New Trial

New York federal prosecutors said Alan Kaufman, convicted for accepting illegal gratuities while he was CEO of Melrose Credit Union, should not be granted a new trial based on his claims of newly discovered evidence and asked a federal judge to issue an order for the former executive to begin his 46-month prison sentence.

Although he was ordered to report to prison on Nov. 30, 2021, Kaufman was allowed to remain free on bond pending an appeal. The U.S. Court of Appeals for the Second Circuit in New York affirmed his conviction, sentence and restitution order in February. In March, the appeals court notified U.S. District Court Judge Lewis A. Kaplan, who sentenced Kaufman, that his appeal had been denied, but Kaplan did not issue an order for Kaufman to report to prison.

By April, Kaufman filed a new motion that argued he should be granted a new trial based on his claims of newly discovered evidence that his trial was held in the wrong venue – the Southern District Court in Manhattan. He contended his trial should have been held in the Eastern District Court on Long Island. According to the federal rules of criminal procedure, the government must prosecute an offense in the district where the offense was committed.

Prosecutors, responding last week to Kaufman’s motion for a new trial, countered “the evidence proffered by the defendant is emphatically not newly discovered.”

During a two-week trial held in a Manhattan courtroom in March 2021, a jury found that Kaufman accepted illegal gratuities 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 tens of millions of dollars in Melrose loans with favorable interest rates for Georgiton’s companies. In addition, while he was living rent free at the home, Kaufman used $2 million of the credit union’s funds to pay for the naming rights of a local ballroom that was owned by one of Georgiton’s businesses.

Kaufman claimed newly discovered evidence showed the Jericho, N.Y., residence closing did not take place in Manhattan, but that it occurred in a general office building at Great Neck, a region on Long Island’s north shore, which is in the venue of the U.S. Attorney’s office for the Eastern District of New York and where Kaufman argued his trial should have been held.

According to Kaufman’s court documents, the Manhattan-based attorney who represented the seller of the Jericho residence to Georgiton in November 2010, confirmed in a March 21, 2023 email to Kaufman that the closing took place in Great Neck. Kaufman also produced a Nov. 23 email from former Melrose attorney Mitchell Reiver, who confirmed the Jericho residence closing was scheduled to occur on Nov. 30 in Great Neck.

However, prosecutors pointed out in their June 15 court filing that before his trial Kaufman was aware that the Jericho residence closing was held in Great Neck because he personally attended it. For a new trial to be granted based on new evidence, it must be genuinely new in that the evidence was discovered after the trial, prosecutors said.

“One does not ‘discover’ evidence after trial that one was aware of prior to trial,” prosecutors wrote in court documents. “To hold otherwise stretches the meaning of the word ‘discover’ beyond its common understanding.”

Prosecutors also noted that in 2013, Kaufman bought the Jericho house from Georgiton for $630,000 with a $200,000 Melrose loan, co-signed by Georgiton and secured by his credit union shares, and a $240,000 unsecured personal interest-free loan extended by Georgiton to Kaufman, where no promissory notes were executed. For that transaction, Kaufman retained a Manhattan title agency to facilitate the home purchase, which was a necessary and essential step for Kaufman to receive and accept one of the gratuities, the Jericho residence.

In addition, prosecutors said the Melrose Ballroom naming rights agreement was, in part, negotiated and prepared in Manhattan when Kaufman was living rent-free at the Jericho home and before he purchased it from Georgiton.

Based on this evidence, prosecutors noted, a rational juror could have found by a preponderance of the evidence that the venue for Kaufman’s trial held in Manhattan’s Southern District of New York was proper.

Prosecutors argued Kaufman’s motion for a new trial should be denied and that Judge Kaplan should set a surrender date for the former credit union CEO to begin his prison sentence.

Kaufman’s lawyer on Wednesday, however, filed a new court document in response to prosecutors stating that they did not address whether they knew (or should have known) that the closing took place on Long Island and nonetheless argued to the jury — for the first time in their summation during the trial — that the closing took place in Manhattan and that venue in this district was therefore proper.

“Mr. Kaufman’s venue challenge is not only a constitutional one, but also one of fairness: the government made much of the 2010, $630,000 purchase price of the Jericho residence, an amount that may have been understood as less consequential by a jury that included residents of Long Island,” Kaufman’s attorney, Nelson A. Boxer of New York, wrote. “The value to the credit union of the ‘Melrose Ballroom’ was also hotly contested, and Queens residents on the jury may have better understood the proximity of the taxi industry to the Melrose Ballroom.”

Kaufman was fired by the board in late 2016 after conducting an internal investigation regarding his alleged financial improprieties and policy infractions.

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.