The National Credit Union Administration board has filed administrative charges against Alan Kaufman, former CEO, treasurer and board member of Briarwood, N.Y.-based Melrose CU, and is requesting he be ordered to pay restitution of at least $3.5 million.
In a release, the NCUA said that under an "infrequently used authority," it is seeking a prohibition order against Kaufman and has assessed him with a civil money penalty of $1 million. The seven-count notice of charges was filed with the Office of Financial Institution Adjudication.
The New York State Department of Financial Services took possession of the credit union and appointed the NCUA as conservator in February 2017.
The NCUA alleges that Kaufman breached his fiduciary duties to Melrose by placing his own interests above those of the credit union, that he engaged in unsafe or unsound practices and that he violated applicable laws and regulations. The notice further alleges that Kaufman benefited from his actions and that he caused "severe financial loss" to Melrose.
Kaufman joined Melrose in 1984, and in 1998 he became CEO, treasurer and a member of the board. On July 5, 2016, the Melrose board removed Kaufman from his position as CEO, and later that year Kaufman was removed as a board member and secretary for Melrose.
Despite recent issues with its taxi medallion loans, Melrose had the largest portfolio of commercial loans at the end of the first quarter of 2018 among U.S. credit unions.