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Long Island resident Alan Kaufman, age 62, of Jericho, the former CEO of the now-defunct Melrose Credit Union, has been sentenced to 46 months in prison after being convicted in a scheme with Long Island businessman Tony Georgiton.
US Attorney Audrey Strauss said that Kaufman accepted free housing and hundreds of thousands of dollars in financing for the purchase of his personal residence, after approving millions of dollars in loans to Georgiton’s companies at favorable terms.
Kaufman was also convicted for accepting lavish vacations, including trips to Paris and Hawaii from CBS Radio after he increased the Melrose Credit Union’s advertising purchases with the station.
“Alan Kaufman accepted lavish gifts from Tony Georgiton as a reward for favorable loan rates for Georgiton’s companies,” Strauss stated. “In addition, Kaufman accepted luxury travel and hotel accommodations in return for approval of advertising spending by Melrose Credit Union at CBS Radio and elsewhere.
“Kaufman shirked his duty to act in the best interests of the credit union and its account holders, exploiting his position for personal gain,” Strauss continued. “Now, thanks to the work of the FBI, Kaufman will spend time in federal prison for his crimes.”
In 2010, Georgiton purchased a home in Jericho, and allowed Kaufman to live there rent-free for more than two years. 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, Strauss 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. 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.
Prosecutors also made note that between 2010 and 2015, Kaufman solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from CBS Radio and other media vendors.
Vacations included trips for Kaufman and his wife to Maui, Hawaii, Paris, France, and the Super Bowl in New Orleans, none of which were disclosed.
In addition to his prison term, Kaufman was sentenced to two years of supervised release, ordered to forfeit certain property, and he agreed to pay the National Credit Union Administration $2 million and a fine of $30,000.
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