Credit/AdobeStockTwo and a half years after a federal jury found him guilty of accepting illegal gratuities while he was CEO of Melrose Credit Union, Alan Kaufman, 64, has finally begun his 46-month prison sentence.
The Federal Bureau of Prisons listed the former credit union executive last week at a medium security federal correctional institution with an adjacent minimum security satellite camp and detention center in Otisville, N.Y., about 80 miles northwest of New York City. The FBOI listed the prison’s inmate population of 1,070, which is actually larger than the village of Otisville’s population of 969, the U.S. Census Bureau showed.
In August, Kaufman’s request to remain free on bail pending a second appeal was rejected when U.S. District Court Judge Lewis A. Kaplan ruled the appeal would present no substantial question. Kaufman’s appeal is seeking a new trial based on what he claims is newly discovered evidence.
After a jury found Kaufman guilty in March 2021, Judge Kaplan sentenced the former credit union executive to 46 months in prison and ordered him to pay $2 million in restitution and a $30,000 fine, and to forfeit his Jericho, N.Y., home. The 2,162-square-foot house is worth an estimated $716,000, according to Realtor.com.
Following the sentencing hearing in September 2021, Kaufman remained free on bail pending this first appeal before the U.S. Court of Appeals for the Second Circuit in New York. Last February, the Appeals Court upheld his conviction, sentence and restitution order.
By April, Kaufman filed a motion for a new trial based on what he claimed was newly discovered evidence. He argued for a new trial because new evidence showed his trial was held in the wrong venue, in the Southern District Court in Manhattan, and that his trial should have been held in the Eastern District Court on Long Island. Federal prosecutors, however, contended they met the burden to prove that Kaufman’s trial was held in the proper venue by the preponderance of the evidence.
Judge Kaplan agreed with prosecutors and in August denied Kaufman’s request to remain free on bail pending the second appeal for a new trial based on his new evidence claims. That appeal has been filed with the U.S. Court of Appeals for the Second Circuit in New York.
During a two-week trial held in a Manhattan courtroom in March 2021, a jury found Kaufman guilty of accepting illegal gratuities from Tony Georgiton, owner of a taxi medallion brokerage company and other businesses. After Georgiton bought the Jericho, N.Y., home, where Kaufman lived rent free for more than two years, the former credit union CEO repeatedly approved tens of millions of dollars in Melrose loans with favorable interest rates for Georgiton’s companies. Kaufman purchased the home with an unsecured loan from Georgiton and a $200,000 loan from Melrose co-signed by Georgiton.
In addition, while he was living rent free at the home, Kaufman used $2 million of the credit union’s funds to pay for the naming rights of a local ballroom that was owned by one of Georgiton’s businesses.
Former Melrose Marketing Director Robert Nemeroff told Kaufman the ballroom naming rights were worth only $50,000 and of minimal marketing value to the credit union. Kaufman fired Nemeroff, who filed a November 2015 whistleblower complaint with the NCUA’s Inspector General. His complaint, which led to Kaufman’s indictment in 2019, accused the former CEO of nepotism, improper uses of Melrose funds, improper favors to friends and family, improper benefits from vendors and members, mistreatment of Melrose employees, and engaging in questionable and risky business practices.
Nemeroff also testified against Kaufman during his trial.
Kaufman was fired by the Melrose board in late 2016 after conducting an internal investigation regarding his alleged financial improprieties and policy infractions.
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.
Kaufman’s release date from federal prison is scheduled for New Year’s Day 2027.
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