Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, announced that Alan Kaufman and Tony Georgiton were arrested July 11 and charged with bribery of a financial institution officer.
The majority of the text of the indictment follows:
“Kaufman and Georgiton were charged with participating in a scheme in which Kaufman, who was then the chief executive officer of Melrose Credit Union (“Melrose CU”), 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. Kaufman is also charged with accepting lavish vacations, including to Paris and Hawaii, as bribes from a media company, in exchange for Melrose CU purchasing increased advertising with that company. The defendants are expected to be presented before U.S. Magistrate Judge Henry B. Pitman. The case is assigned to U.S. District Judge Lewis A. Kaplan.
“U.S. Attorney Geoffrey S. Berman 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. 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.”
“FBI Assistant Director William F. Sweeney Jr. said: “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, where Kaufman served as chief executive officer. Today’s charges highlight a series of fraudulent behaviors that raised red flags along the way. The FBI will continue to be a major force in confronting those who think they can evade the law in order to make an easy profit.”
According to the Indictment  unsealed in Manhattan federal court:
In 2010, Georgiton purchased a home in Jericho, New York (the “Jericho Residence”), and permitted Kaufman to live in that home rent-free for over two years. While Kaufman was living rent-free at the Jericho Residence, Kaufman personally approved the refinancing of over $60 million worth of loans at Melrose CU held by a company owned by Georgiton with favorable terms. 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.
“In 2011, Kaufman sought approval from Melrose CU’s board of directors for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”). That ballroom was owned by a company owned by Georgiton. Kaufman did not disclose to the Melrose board that he was living rent-free in a house owned by Georgiton at the time he sought board approval for the naming rights acquisition. 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 Residence from Georgiton, with financing that largely came from Georgiton. To purchase the Jericho Residence, Kaufman took out a $200,000 loan from Melrose CU co-signed by Georgiton and secured by Georgiton’s shares in Melrose CU. Georgiton also gave Kaufman a $240,000 unsecured personal loan. Georgiton has never made a demand for payment on that personal loan and Kaufman has never made a payment on that loan.
“In addition, from in or about 2010 through in or about 2015, Kaufman solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from a media company located in New York, New York (“Media Company-1”), in exchange for Kaufman’s approval of increased advertising spending by Melrose CU with Media Company-1. For example, in 2010, Media Company-1 paid for Kaufman and his girlfriend, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris. In 2012, Media Company-1 paid for Kaufman and his girlfriend to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea. In 2013, Media Company-1 paid for Kaufman and his girlfriend to attend the Super Bowl in New Orleans.
“Kaufman did not seek approval for these vendor-paid trips from the Melrose CU board, nor did he disclose these vendor-paid trips to the Melrose CU board, in violation of Melrose CU’s anti-bribery policy.
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 sentence of 30 years in prison.
“Georgiton is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and one count of bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
“Mr. Berman praised the outstanding work of the FBI. He also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case.
“The case is being handled by the Office’s Complex Frauds Unit, and Assistant U.S. Attorney Dina McLeod is in charge of the prosecution.
“The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
“ As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.