Saturday, May 15, 2021

Former CEO of Melrose Credit Union charged in bribery scheme


A Long Island businessman and the former CEO of Melrose Credit Union were arrested and charged for their roles in an alleged bribery scheme involving free housing in exchange for millions of dollars in loans.

Alan Kaufman, the former CEO of the now-defunct credit union, has been charged with accepting bribes from Tony Georgiton, a client who provided him with free housing In exchange for $60 million worth of loans and favorable rates for his companies.

United States Attorney for the Southern District of New York Geoffrey Berman announced the charges on Thursday, July 11, after the two were arrested and charged in Manhattan federal court.

According to the indictment, in 2010, Georgiton purchased a home in Jericho, and allowed Kaufman to live there rent-free for more than two years.

- Advertisement -

In exchange, Kaufman personally approved refinancing of more than $60 million, despite the fact that the head of Melrose Credit Union’s refused to sign off on the loans, believing that the terms were too favorable and did not comply with the company’s loan policies.

The following year, Berman said, Kaufman sought approval from Melrose’s board of directors for the company to purchase a ballroom under construction in Astoria.

That building was owned by a company owned by Georgiton, and Kaufman never disclosed to the board that he had been living in Georgiton’s home rent-free.

Over the next four years, Melrose Credit Union paid approximately $2 million to Georgiton’s company for naming rights to the Melrose Ballroom.

Kaufman purchased the home in Jericho from Georgiton with financing that largely came from Georgiton himself, the indictment alleges.

- Advertisement -

Kaufman allegedly took out a $200,000 loan from his company that was co-signed by Georgiton and secured by Georgiton’s shares in Melrose Credit Union.

Berman noted that Georgiton also gave Kaufman a $240,000 loan. Georgiton has never demanded payment on the personal loan and Kaufman has never made a payment on it.

Kaufman is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison and two counts of bribery of a financial institution officer, each of which carries a maximum term of 30 years in prison if he is convicted.

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

“As alleged, Alan Kaufman conspired to take bribes from Tony Georgiton in exchange for favorable refinancing of millions of dollars of Melrose Credit Union loans to Georgiton’s companies,” Berman said.

“In addition, Kaufman is alleged to have accepted Paris and Hawaii vacations in exchange for directing increased advertising payments to a media company. Now, both Kaufman and Georgiton face criminal charges for their alleged self-dealing.”

- Advertisement -


Get our daily notification on the latest financial crimes news around the World



This Week