But behind the scenes, federal prosecutors in Manhattan said, they orchestrated a bribery scheme to enrich themselves at the expense of their clients. On Thursday, authorities arrested both men, accusing Kaufman of accepting bribes in return for lending money to Georgiton under sweetheart terms.
Prosecutors claim lavish bribes oiled taxi industry corruption
NEW YORK — For decades, Alan S. Kaufman and Tony Georgiton held immense power in New York City’s taxi industry. Kaufman led a major credit union that lent money to thousands of drivers. Georgiton co-owned a fleet that operated 550 cabs. Together, they controlled the fortunes of more cabbies than almost anybody else in the business.
“Lavish vacations, rent-free housing and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme,” William F. Sweeney Jr., an assistant director of the FBI, said in a statement. “Today’s charges highlight a series of fraudulent behaviors that raised red flags along the way.”
Kaufman, 60, the former chief executive of Melrose Credit Union, and Georgiton, 61, the president of Queens Medallion Leasing, did not respond to requests for comment; Kaufman’s lawyer also did not respond to a request for comment. Kaufman denied similar charges during an interview last year with The New York Times, saying he was being used as a scapegoat for problems in the taxi industry.
The men were among the politically connected leaders of the taxi industry who were highlighted in a recent Times investigation. The investigation, published in May, found that the leaders made hundreds of millions of dollars by artificially inflating the price of the permit that allows a driver to own a cab — called a taxi medallion. At the same time, they channeled thousands of immigrant buyers into reckless loans to buy the medallions.
The price of a medallion skyrocketed to more than $1 million in 2014, from $200,000 in 2002, before crashing, leaving thousands struggling to pay off their loans, the investigation found. More than 950 medallion owners have filed for bankruptcy.
Industry leaders have long denied any wrongdoing and blamed problems in the taxi industry on the unexpected emergence of ride-hailing apps, such as Uber and Lyft.
In the wake of The Times’ series, New York Attorney General Letitia James opened an inquiry into the lending practices, and Mayor Bill de Blasio launched an investigation of taxi brokers. Last week, the city arrested a notorious industry debt collector and promised more enforcement action.
Thursday’s charges mirrored allegations that had long been known to at least some authorities. Melrose fired Kaufman in 2016, and last August, the National Credit Union Administration, the federal agency that oversees the nation’s credit unions, closed Melrose and brought civil charges against Kaufman, saying that he accepted bribes and demanding that he pay $3.5 million.
Before that, Kaufman was one of the largest players in the taxi industry. His grandfather founded Melrose in 1922, and for decades thereafter, the nonprofit credit union was among the biggest lenders to New York taxi drivers and medallion owners.
At its height, Melrose’s books included more than $1.5 billion in loans collateralized by thousands of medallions — including some owned by Michael Cohen, President Donald Trump’s former personal lawyer. In 2015, when Melrose made $80 million in interest and fees, Kaufman took home $2.3 million, more than virtually any other credit union leader, financial disclosures show.
Georgiton’s fleet, which he co-owns with Basil Messados, a fellow Greek immigrant, is the third-biggest fleet in the city, according to the latest available government records. In addition to operating cabs, the company provides insurance to drivers and loans that allow some drivers to buy their own medallions. In 2015, Georgiton had a net worth of about $26 million, according to records filed as part of a legal case.
The co-owner of the fleet, Messados, did not respond to requests for comment.
Both Kaufman and Georgiton have had wide connections in the world of New York City politics and contributed to campaigns. Georgiton’s Instagram account features photos of him with de Blasio at four events as well as photos of him posing with Hillary Clinton, a former presidential candidate and secretary of state, and the Queens borough president, Melinda Katz, among others. After The New York Times posted an Instagram post from Georgiton showing him and Kaufman flanking de Blasio, the picture was removed late Thursday.
The indictment accused Georgiton of allowing Kaufman to live rent-free at a home in Jericho, on Long Island, between 2010 and 2012. During that time, the charges claimed, Kaufman personally approved the refinancing of more than $60 million of loans for Georgiton’s firm at terms that were so favorable that the head of the credit union’s lending department refused to sign off on them.
According to the indictment, Kaufman also directed Melrose to spend about $2 million to obtain naming rights to a ballroom owned by Georgiton. While Kaufman sought approval from the credit union’s board of directors for that move, he did not disclose that he was living rent-free in a house owned by Georgiton, the indictment said.
Later, prosecutors claim, Kaufman purchased the home from Georgiton, using an unsecured personal loan provided by Georgiton.
The indictment accused Kaufman of accepting free spa treatments, rounds of golf and trips to Paris, Hawaii and the Super Bowl in exchange for leading Melrose to increase its advertising spending with an unidentified media company. The NCUA charges had identified the company as CBS Radio.
Both men were charged with bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison, and conspiracy to commit bribery, which carries a maximum sentence of five years in prison.
This article originally appeared in The New York Times.
JOIN OUR PULSE COMMUNITY!
Eyewitness? Submit your stories now via social or: