Credit Union CEO And LI Businessman Nailed In Bribery Scheme: DOJ

MANHATTAN, NY — A former credit union CEO and a Long Island businessman were arrested and charged in Manhattan federal court for their involvement in a bribery scheme, the Department of Justice announced on Thursday.

Alan Kaufman, the former CEO of Melrose Credit Union, and Tony Georgiton, a businessman who owned multiple companies, were charged with participating in a scheme in which Kaufman accepted free housing and financing for the purchase of his personal residence from Georgiton in exchange for the approval of millions of dollars in loans to Georgiton's companies at favorable terms, the DOJ said.

Kaufman is also charged with accepting lavish vacations, including to Paris and Hawaii, as bribes from a media company in exchange for Melrose Credit Union purchasing increased advertising with that company, the DOJ said.

"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," U.S. Attorney Geoffrey S. Berman said in a press release. "Now, both Kaufman and Georgiton face criminal charges for their alleged self-dealing.”

FBI Assistant Director William F. Sweeney Jr. added, "Lavish vacations, rent-free housing, and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme. All of this was made possible through a series of illegal business dealings negotiated with Georgiton and a New York City-based media company – both of whom independently sought financial benefits of their own from Melrose Credit Union."

According to Berman, Georgiton purchased a home in Jericho in 2010 and allowed Kaufman to live there rent-free for over two years. During that time, Kaufman personally approved the refinancing of more than $60 million worth of loans at Melrose CU held by a company owned by Georgiton with favorable terms, Berman said. The head of Melrose CU’s loan department refused to sign off on the loans given to Georgiton because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy, the indictment read.

In 2011, Kaufman sought approval from the credit union's board of directors for it to purchase the naming rights to a ballroom under construction in Astoria, Queens. Georgiton owned the company that owned the ballroom. Kaufman didn't tell the board that he was living rent-free in a house owned by Georgiton when he sought board approval for the naming rights acquisition, Berman said. Over the next four years, Melrose CU paid approximately $2 million to Georgiton's company for the naming rights to the Melrose Ballroom.

In 2013, Kaufman purchased the Jericho home he was living at from Georgiton with financing that mostly came from Georgiton. In order to purchase the home, Kaufman took out a $200,000 loan from Melrose CU co-signed by Georgiton and secured by Georgiton's shares in the credit union, Berman said.

Georgiton also provided Kaufman with a $240,000 unsecured personal loan, Berman said, and that Georgiton never demanded payment on that personal loan, nor had Kaufman ever made a payment on it.

Between 2010 and 2015, Kaufman solicited and accepted expensive vacations and other gifts worth tens of thousands of dollars from a media company located in New York City, Berman said. In return, Berman said that Kaufman approved increased advertising spending by Melrose CU on the media company. For example, in 2010, the media company paid for Kaufman and his girlfriend, who also worked at Melrose CU, to fly to Paris and stay at the Four Seasons George V Paris, Berman said, and in 2012, the company paid for Kaufman and his girlfriend to fly to Maui and stay at the Four Seasons in Wailea. In 2013, the company paid for Kaufman and his girlfriend to attend the Super Bowl in New Orleans, said Berman.

Kaufman failed to seek the Melrose CU board's approval for the vendor-paid trips, nor did he disclose the vacations to the Melrose CU board, violating Melrose CU’s anti-bribery policy, said Berman.

Kaufman was 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, which each carry a maximum sentence of 30 years in prison. Georgiton was charged with one count of conspiracy to commit bribery and one count of bribery of a financial institution officer.