Melrose Credit Union CEO Alan Kaufman’s legal woes began when his former chief marketing officer whistled
“I was concerned about the safety and soundness of the credit union”, Nemeroff testified in court on Wednesday.
This is an understatement. The National Credit Union Administration reported that a hitherto anonymous informant approached in November 2015, accusing Kaufman and the Melrose board of directors of “perpetuating an environment of financial exploitation and mismanagement.”
The whistleblower described a $ 2 billion-asset institution plagued by “nepotism, improper use of Melrose funds, improper favors to friends and family, improper benefits from suppliers and members … and questionable and risky business practices. “
Several of the allegations found their way into the Department of Justice’s 2019 indictment, accusing Kaufman of accepting rent-free accommodation from Tony Georgiton, owner of a fleet of Queens taxis and large borrower of Melrose. Kaufman also reportedly paid $ 2 million to a Georgiton-owned company for naming rights to a ballroom in Astoria. In return, Kaufman is said to have personally approved more than $ 85 million in loans to Georgiton at attractive rates.
Melrose collapsed in 2017 and was liquidated. Its failure cost the Federal Credit Union Insurance Fund approximately $ 700 million.
Georgiton pleaded guilty to corruption and was sentenced to three years’ probation in January. Manhattan U.S. District Court Judge Lewis Kaplan spared 63-year jail because Covid-19 was rampant.
In court on Wednesday, Nemeroff testified that he believed the Melrose Ballroom naming rights were only worth $ 50,000 because the facility had a capacity of only 2,100 and the credit union logo was not not visible from major arteries or the metro.
“It’s a sign on a tertiary street,” he said in an email to Kaufman, who replied, “You‘you miss the big picture. “
Nemeroff joined Melrose in 1993, when the company was run by Kaufman’s father. Nemeroff was a friend of the Kaufman family growing up in Merrick, LI, according to someone who knows the two and close to Kaufman’s brother. Nemeroff dismissed those links on Wednesday, saying on the booth that he had met Kaufman through “mutual acquaintance,” and he denied being friends with the CEO’s brother.
Kaufman’s attorney, Nelson Boxer, pressed Nemeroff on his reasons for reporting, noting that his lawyers have checked with regulators about some sort of financial reward for the information provided. Nemeroff replied that he was not aware of his lawyers’ request.
The injuries caused by his sudden shots still seem to hurt six years later. Nemeroff, who is unemployed, said he was taken to a room and said his job was unsatisfactory and the credit union could no longer afford his department, which in happier days , spent $ 1 million a year on advertising and promotions.
The former marketing director then asked Kaufman why he got the ax.
“He said, ‘I can’t do anything,’” Nemeroff said.