A former top official with the scandal-plagued Municipal Credit Union has pleaded guilty in Federal court in Manhattan to embezzling more than $450,000 over nine years from that institution serving primarily public employees and their families.
Joseph Guagliardo, 62, a retired NYPD police officer, admitted on Jan. 10 before U.S. District Judge Denise Cote that between 2009 and 2018 he stole $250,000 from the MCU by charging the credit union for phantom field inspections of MCU ATMs and selling the nonprofit $200,000 in advertising on a non-profit website he controlled, the National Council of Columbia Associations, which promoted Italian-American culture.
Watchdog ‘Betrayed Trust’
He was elected to the MCU’s Supervisory Committee in 1993 and served for nearly 25 years in that capacity. Elected positions with the non-profit credit union are supposed to be voluntary. The Supervisory Committee is responsible for ensuring that the nonprofit financial institution complies with all applicable laws and regulations.
“As he has now admitted, Joseph Guagliardo betrayed the trust of MCU’s members, who elected him to supervise and protect MCU, by abusing his position to steal hundreds of thousands of dollars,” U.S. Attorney for the Southern District Geoffrey Berman said in a statement. “Today’s plea is yet another step forward in this office’s efforts to fully investigate and prosecute those who abused positions of authority at MCU, a multibillion-dollar, nonprofit, Federally insured credit union, to enrich themselves and their families at the expense of its hard-working members.”
The one count of embezzlement that Mr. Guagliardo pleaded guilty to carries a maximum penalty of 30 years in prison. In his plea agreement, he agreed to forfeit at least $425,514, and to pay at least $468,189 in restitution.
He is due back in court April 10 for sentencing.
In November 2018, Kam Wong, the former CEO of the MCU, admitted to stealing almost $10 million from the institution, much of which he spent playing the lottery at two convenience stores near his Long Island home. He wagered as much as $60,000 a month over a four-year period.
Given 5 ½ Years
Last June, he was sentenced to 5½ years in prison.
At his sentencing, Judge John Koeltl called Mr. Wong’s crimes “atrocious” and particularly “egregious because he obstructed the investigation and enlisted others” in efforts to cover his tracks after he was confronted by Federal investigators in January 2018.
In August of that year, the state Department of Financial Services, which regulates the MCU, removed its Board of Directors and members of its Supervisory Committee “due to severe deficiencies” in their oversight of the institution.
Last October, FBI agents arrested Mr. Guagliardo and State Supreme Justice Sylvia G. Ash, who was on the MCU’s board from May 2008 until Aug. 15, 2016. She was also a trustee of the MCU pension plan, a post she resigned from on Oct. 31, 2016. From May 2015 until her resignation, she chaired the MCU board.
She was suspended with pay from her $210,000 a year job as the presiding judge of Brooklyn Supreme Court’s Commercial Division.
Justice Ash was charged with obstructing the probe into Mr. Wong’s crimes by lying to investigators and destroying evidence in the case. She was also accused of improperly getting tens of thousands of dollars from the MCU to cover personal expenses. Prosecutors allege that she violated the state judiciary’s code of conduct requiring disclosure of income from extra-judicial activities.
Lived Large on MCU Tab
They claimed that from 2012 through 2016 Ms. Ash “received annually tens of thousands of dollars in reimbursements and other benefits from the credit union, including airfare, hotels, food and entertainment expense for her and a guest to attend conferences both domestically and abroad, as well as payment for phone and cable bills, and electronic devices.”
Their complaint continued, “For example, in 2015 the Credit Union spent approximately $63,408 for the benefit of or at the direction of Ash, the most of any Board Director that year.” That covered conferences she attended in Cancun, San Juan, Las Vegas, Cuba and the Greek Isles.
In October 2016, the MCU paid for her trip to a credit-union conference in Las Vegas with a guest, covering $3,800 in hotel, airfare, food and entertainment expenses, including three tickets to a Britney Spears Concert at Planet Hollywood.
In a statement to the New York Times at the time of her arrest, her lawyer, Roger Archibald, said she maintained her innocence. He said that the reimbursements she received were legal and that nothing she received was “above and beyond what every other board member received.”
Fighting the Charges
Her trial is scheduled to start in May.
At the time of Mr. Guagliardo’s arrest, FBI agents discovered approximately $41,000 in cash in his Brooklyn bedroom closet.
The government also alleged that from 2001 through January 2018, Mr. Guagliardo “and others known and unknown” conspired “to violate the narcotics laws of the United States” by illegally distributing the opioid hydrocodone. The government disclosed that some of Mr. Guagliardo’s drug inventory came from his spouse, who worked as a dermatologist at a public hospital.
NYPD Drug Connection?
In addition, prosecutors charged that he obtained hydrocodone and codeine for Mr. Wong from “another doctor who maintained a practice in Staten Island and was affiliated with the New York City Police Department.”
Even as Federal investigators were closing in, prosecutors alleged that Mr. Guagliardo conspired with Mr. Wong, stating in their complaint, “On or about January 18, 2018, the next morning, before Kam Wong was first interviewed by investigators, Mr. Guagliardo texted Wong, ‘I’m always loyal to you, but people have to start responding so we can protect ourselves from more than regulators.’”
After Mr. Wong was placed on administrative leave from the MCU, Mr. Guagliardo “made efforts to attempt to impede the internal investigation, including seeking to terminate the outside counsel that was overseeing the internal investigation, at the request of Wong,” the court documents charged.
Last May, state regulators turned over the $3-billion credit union to the National Credit Union Administration for conservatorship
The NCUA insures credit union depositors’ accounts up to $250,000
‘Finally Figured Him Out’
More than a decade ago, a group of reform-minded credit-union activists were locked in an internal battle over the MCU’s nominating process with Mr. Guagliardo and his supporters. Robert J. Croghan, chairman of the Organization of Staff Analysts, was one of those civil servants involved in the controversy.
“They finally figured out what he was doing,” he said in a phone interview when the charges first surfaced. “I was disturbed by his behavior years ago, and that was why we had a very large fight for a couple of years over this.”
The OSA chairman said that the integrity of any credit union relies on three levels of oversight: the professional workforce in the institution, volunteer board members, and the regulators. “Here, you really have the failure of all three,” he said.
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