A $1.1 billion New York City-area credit union — hobbled by the collapse of the taxicab medallion market in which it had been heavily involved, as well as charges by the agency of executive misconduct — was closed by the federal regulator of credit unions Friday.
The National Credit Union Administration (NCUA) said Friday in a release that it had liquidated Melrose Credit Union of Briarwood, N.Y. The agency said it made the decision to liquidate the credit union and discontinue its operations after “determining the credit union was insolvent and had no prospect for restoring viable operations.”
The New York State Department of Financial Services placed Melrose into conservatorship on Feb. 10, 2017, and named the NCUA as conservator.
Earlier this month, NCUA said it was seeking a prohibition order against the former CEO of the now-closed credit union, Alan S. Kaufman, as well as restitution of at least $3.5 million, and a $1 million penalty. Kaufman had also served as treasurer and board member, according to the agency.
The agency filed the administrative charges – which it called “infrequently used authority” seeking the prohibition, the restitution and civil money penalty (CMP) – in a seven-count notice alleging that Kaufman breached his fiduciary duties at the credit union 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.”
NCUA’s notice further alleged Kaufman benefitted from his actions and that he caused “severe financial loss” to Melrose, the agency said.
In its release Friday, the credit union regulator said $6.1 billion Teachers Federal Credit Union, of Hauppauge, N.Y, (which has about 300,000 members) had assumed all of Melrose’s members and shares as well as some loans and other assets.
Melrose, according to NCUA, counted about 20,000 members and held $1.1 billion in assets (based on the credit union’s most recent call report). The credit union was originally chartered in 1922, NCUA said, and served “eligible members subject to the provisions of its bylaws, which could include any person upon approval for membership.”
The credit union has also been linked to Michael D. Cohen, former attorney to President Donald Trump, for loans made to Cohen related to taxicab medallions. Cohen pleaded guilty in federal court last week to federal charges of making false statements to a financial institution (although it was not clear the charges were related to Melrose CU loans, but another financial institution).