Judge Orders Convicted Credit Union CEO to Begin Prison Sentence in September

A federal judge ordered Alan Kaufman to begin his prison sentence on Sept. 7, following nearly two years of appeals and a final legal effort to get a new trial for his conviction of accepting illegal gratuities while he was CEO of Melrose Credit Union.

U.S. District Court Judge Lewis A. Kaplan at the Southern District of New York issued the new order on July 12, a court filing showed.

Judge Kaplan sentenced Kaufman on Sept. 29, 2021 to 46 months in prison and ordered him to pay $2 million in restitution and a $30,000 fine.

Kaufman was allowed to remain free on bail pending his appeal before The U.S. Court of Appeals for the Second Circuit in New York, which affirmed last February his conviction, sentence and restitution order.

After losing the appeal, Kaufman filed a motion in April for a new trial based on his claims of newly discovered evidence that the 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.

In responding to Kaufman’s motion for a new trial, prosecutors countered that the evidence is “emphatically not newly discovered.”

Judge Kaplan did not render a decision on Kaufman’s motion for a new trial.

When reached Thursday, Kaufman and his lawyer declined to comment.

During a two-week trial held in a Manhattan courtroom in March 2021, a jury found Kaufman guilty of accepting 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.

Former Melrose Marketing Director Robert Nemeroff told Kaufman the ballroom naming rights were worth only $50,000 and of minimal marketing value to the credit union. Kaufman fired Nemeroff who filed a November 2015 whistleblower complaint with the NCUA’s Inspector General. His complaint, which led to Kaufman’s indictment in 2019, accused the former CEO 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 also testified against Kaufman during his trial.

Kaufman was fired by the Melrose 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.