Alan Kaufman, former CEO of the troubled Melrose Credit Union, was indicted by a federal grand jury in New York City, on charges of accepting bribes from a taxi medallion broker who was member of the credit union.

Kaufman, whose family founded the credit union, was charged with accepting free housing and financing for the purchase of his personal residence from businessman Tony Georgiton, owner of a taxi medallion brokerage company, who also was indicted.

Kaufman also was charged with accepting gifts and trips from an unnamed media company in exchange for increased advertising with the media company.

Melrose, which made millions of dollars in loans to taxi drivers in New York City, was taken over by the NCUA in October. Many drivers who took out the loans could not repay them as the value of their taxi medallions plunged as a result of competition from ride-sharing companies.

About a month before the credit union was taken over, the NCUA filed administrative charges against Kaufman, alleging the bribery scheme. At the time, the other party in the supposed scheme was not unveiled.

When the administrative charges were unveiled last year, Kaufman provided the CU Times with a statement.

“I will not be a scapegoat for the regulatory failures and technological disruptions that have destroyed the taxi medallion industry and those who financed it,” Kaufman wrote. “I worked for Melrose for over 30 years as did my father and grandfather. My family and the loyal board of directors have always done business with integrity for the best interest of the Melrose members.”

In the indictment in the U.S. District Court for the Southern District of New York, Kaufman is charged with two counts of bribery of a financial institution officer, each of which carries a maximum sentence of 30 years. He also is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years.

Georgiton is charged with one count of conspiracy to commit bribery and one count of bribing an officer of a financial institution.

Specifically, the indictment alleges that between 2010 and about 2015, Kaufman accepted bribes from Georgiton in exchange for millions of dollars in loans from the credit union.

The charges state that sometime in late November 2010, Georgiton purchased a residence in Jericho, N.Y. for about $630,000. The residence had been selected by Kaufman, who lived in it rent-free for two years.

The indictment states that around February 2013, Kaufman purchased the residence from Georgiton for $630,000—the same price that Georgiton had purchased it for.

The purchase was financed through a $200,000 loan that Georgiton co-signed at Melrose and a $240,000 loan he made to Kaufman. Kaufman never made a payment on the loan.

In June 2010, Kaufman personally approved the refinancing of more than $60 million in Melrose loans that had been made to a company owned by Georgiton, as well as an additional cash loan of $5 million, according to the indictment.

In October 2012, Kaufman personally approved the refinancing of $26 million in loans that had been made to a Georgiton company, as well as an additional loan of about $2.5 million, the indictment states.

It goes on to say that the head of Melrose's loan department refused to sign off on the loans because the interest rates were too low and because the loans violated the credit union's policies.

As a result, Kaufman personally approved the loans.

The charges also state that in September 2011, Kaufman presented a plan to the credit union's board to purchase the naming rights to a ballroom that Georgiton was building in Queens, N.Y for $2 million.

The board agreed but said that no payments could be made until the ballroom was built. Nonetheless, Kaufman approved the first payment before the ballroom was built.

At the time, Melrose's marketing director said the naming rights were only worth about $50,000 a year.

The Melrose Ballroom boasts that it is the “ultimate choice for concert goers, event planners, booking agents and event planners” all over New York City. It describes the ballroom as a 25,000 square-foot multi-level venue.

The indictment also states that between 2010 and 2015, Kaufman accepted “lavish vacations and other gifts worth tens of thousands of dollars” from a media firm in exchange for his approval of advertising with the media company.

For instance, the indictment states, the unnamed media company paid for Kaufman and his girlfriend, who also worked at Melrose, to travel to Paris, Hawaii and the 2013 Super Bowl.

Kaufman also is charged with accepting a trip from a professional sports team.

The indictment states that the Justice Department will ask that Kaufman be required to forfeit all property he obtained as a result of the bribery scheme.

In announcing the indictment, FBI Assistant Director William F. Sweeney Jr. said, “Lavish vacations, rent-free housing, and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme.”

He added, “Today's charges highlight a series of fraudulent behaviors that raised red flags along the way.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, praised the cooperation of the NCUA in the investigation.

Instant Insights /

Alan Kaufman, Former Melrose CEO, Indicted on Bribery Charges

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