Wednesday, August 8, 2018

NCUA Files Charges Against Former CEO of Melrose CU

The National Credit Union Administration Board has filed administrative charges against Alan S. Kaufman, former chief executive officer, treasurer, and board member of Melrose Credit Union (Briarwood, NY).

Melrose Credit Union was the largest taxi medallion lending credit union.

The NCUA is seeking a prohibition order against Kaufman and is requesting he be ordered to pay restitution of at least $3.5 million. In addition, the NCUA Board assessed Kaufman with a civil money penalty of $1 million.

Kaufman is accused of breaching his fiduciary duties by putting his own interest above those of the credit unions.

For example,
  • Kaufman is alleged to have solicited and accepted free luxury trips from vendors for himself and his wife. 
  •  Kaufman is further charged with soliciting and accepting for more than two years an exclusive rent-free residence from a vendor, member, and borrower of the credit union.
  • Kaufman is further accused of approving loans with special terms that were not available to other members, including loans for $60,250,000 and $26,400,000 to a borrower, while he was living in a residence rent-free owned by the borrower.
  • Kaufman is charges with misleading the credit union's board with respect to a $2 million naming rights agreement.
NCUA alleges that Kaufman's actions amounted to unsafe and unsound practices and violated applicable laws and regulations.

Read the press release.

Read the notice of charges.


  1. Here's the "derelict Astoria property" that was turned into a 1200 seat entertainment venue (p. 8)

    And what do you know, it's owned by two of the biggest medallion owners in NYC Basil Messados and Tony Georgito:

  2. When will the NCUA file administrative charges against its own agency staff? Where were the NCUA examiners these past 20+ years? 20+ years of annual NCUA examinations and the NCUA did not see, detect or uncover any fraud? 20+ years of quarterly 5300 reports and the NCUA did not see, detect of uncover any criminality? Today, Melrose remains over 100% loan to share ratio? Did the NCUA miss the concentration risk? Where are the NCUA pseudo-Capital Market Specialists? Dec, 2017 net income is: (-$290 million); Mar, 2018 net income is: -($111 million). Melrose has a Note Payable of $191 million. June, 2017 net worth is $31 million, less than 1 year later in Mar, 2018 net worth is: -($3.1 million) and yet NCUA keeps the lights on. The NCUA held back refunds to the credit unions - they failed to tell you they will need it to cover up this mess. Where is the claw back and work prohibition orders on the crack NCUA examination teams assigned to Melrose CU? When will the EIC (Examiner In Charge) be held to account. When will the NCUA be held to account? When will the NCUA be held responsible for incompetent examinations? Not shocked. Just disappointed. When will the NCUA file administrative charges against its own? Don't hold your breath. The taxi medallion bubble has popped and the NCUA acts with utter and complete surprise. The NCUA mascot is the CAMEL - one of the dumbest animals. The NCUA bird should be the Swallow - because they expect the credit union community to drink the Kool-aid, & swallow the assessments - even if it leaves a bad taste in their mouth.

  3. What a bunch of damn hypocrites at the NCUA. Without virtue, moral authority or ethics they file a criminal complaint against Melrose CU. NCUA needs to clean house and file the same complaint against those very folks on Duke Street responsible for 20+ years of incompetent examinations. 80 quarterly FPReports - what the heck took them so long? The lights are on at Duke Street. Is anybody home? And with no net worth who is going to cover the $191 Million Note Payable? Of course the NCUSIF covers the default. The credit unions pay. NCUA plays! Where is the OIG report?

  4. king alan kaufman, is born into a gravy train and screws it up.
    now hes trying to blame ncua.
    what a clown.
    his grandfather starts Melrose and passes it down to his father who passed it to him.
    first of all, why is that allowed?
    all he had to do was diversify and not keep 75% of assets in one loan type (taxi loans).
    he had, with just a few others, a monopoly on taxi loans GIFTED TO HIM and screwed it up by not diversifying.
    stupid and lazy, but somehow its ncua's fault.
    ncua and ny state should be brought before congress to explain how they allowed an idiot to run a federally insured institution and while allowing a 75% concentration of one loan type.
    the board of Melrose should go with kaufman to jail and pay maximum civil money penalties.
    there is plenty of blame to go around on this and major media should jump the story.
    in the end, cab drivers got screwed by new York city but the regulatory oversight was terrible.
    but kaufman, he and the Melrose board should be jailed.
    enjoy Rikers kaufman, lets see how your big mouth does in lock up.

  5. Not surprised. CU's have no governance. Additionally, volunteer board members don't know, or care what's going on.



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