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New York businessman Tony Georgiton pleaded guilty to one felony count of conspiracy during a U.S. District Court phone conference in New York City Wednesday for his role in a multi-million dollar bribery scheme involving the former Melrose Credit Union President/CEO Alan Kaufman, according to court documents.
Soon after Georgiton pleaded guilty, New York lawyer Nelson A. Boxer, who is representing Kaufman, said his client's relationship with Georgiton had "no bearing whatsoever" on Kaufman's decision-making at Melrose. Boxer also said Georgiton closed all of his deposits and loans at the credit union in 2013 for better rates.
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In July 2019, a federal indictment alleged Kaufman accepted bribes from Georgiton in exchange for millions of dollars in loans from the credit union and favorable financing for more than $60 million in pre-existing loans. Court documents showed Georgiton signed a plea deal with federal prosecutors on Aug. 13, though the plea agreement has not been made publicly available.
Georgiton's sentencing hearing is scheduled for January.
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.
According to an indictment, the bribery scheme is alleged to have begun on Nov. 30, 2010 when Georgiton, an owner of a taxi medallion brokerage business and other companies, purchased a residence for $630,000 in Jericho, N.Y. The residence had been selected by Kaufman, who lived in it rent-free for two years.
While Kaufman was living in the Jericho residence rent-free, he allegedly approved the refinancing of more than $60 million worth of Melrose loans for a company owned by Georgiton, including an additional cash loan of $5 million in 2011. And in the next year, Kaufman also allegedly approved the refinancing of an additional $26 million in loans that had been made to a Georgiton company, as well as an additional loan of about $2.5 million.
In 2013, Kaufman purchased the residence from Georgiton for $630,000. The purchase was financed through a $200,000 loan that Georgiton co-signed at Melrose and a $240,000 loan he made to Kaufman. But Kaufman never made a payment on the loan, according to the indictment.
"Ten years ago, Mr. Kaufman's friend of over three decades, Tony Georgiton, bought a house where Mr. Kaufman lived and paid for all of the expenses and upkeep, and after two years purchased from Mr. Georgiton," Boxer said. "This had no bearing whatsoever on Mr. Kaufman's decision-making at MCU and, in fact, in 2013 Mr. Georgiton and his companies moved nearly all of their deposits and loans out of MCU for better rates, without any loss to MCU. Mr. Kaufman looks forward to clearing his good name."
In July 2019, Kaufman pleaded not guilty to two counts of bribery of a financial institution officer and one count of conspiracy to commit bribery, and Georgiton pleaded not guilty to one count of conspiracy and one count of bribing an officer of a financial institution.
Earlier this year and in 2019, a federal judge denied two attempts by Kaufman's lawyers to dismiss the charges against the former credit union executive.
Kaufman's jury trial may be held next year.
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
