Kam Wong, the former CEO of the New York City Municipal Credit Union, has been sentenced to 5½ years in prison for defrauding the non-profit financial institution of almost $10 million dollars by Federal Judge John G. Koeltl.
Federal prosecutors had asked for 10 years, according to a sentencing memo filed last month in the Southern District.
Last November Mr. Wong, who waived indictment, pleaded guilty to stealing much of the money to play the lottery at two convenience stores near his Long Island home, wagering as much as $60,000 a month over a four-year period.
Judge 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.
He said that he had abused the credit union and “ultimately reduced the money available to municipal workers” whose fiduciary interests Mr. Wong was entrusted to protect.
But before Judge Koeltl pronounced sentence, he cited what he called “mitigating” factors including the defendant’s age, his gambling addiction—for which he was already in therapy—and the “support of his family, which makes recidivism unlikely.”
“Your Honor, a minute does not go by that I don’t regret what I did,” a tearful Mr. Wong told the court. “I threw everything away, but the hardest thing for me is I can’t explain why….I am grateful the government stopped me before I did more damage.”
Won’t Explain Seizure
The issue of just how much damage was never actually answered despite Judge Koeltl asking Federal prosecutors twice during the proceeding whether the decision by Albany banking regulators last month to seize the MCU and turn it over to the National Credit Union Administration for conservatorship was due to management issues or “questions of its financial stability.”
Last year Albany banking regulators dismissed the MCU’s Supervisory Committee and its Board of Directors and in October announced the appointment of Mark A. Ricca to be the MCU’s CEO and President. Last month they abruptly took full control of the $3-billion credit union and turned it over to the National Credit Union Administration for conservatorship.
The NCUA is chartered by Congress and is the credit-union equivalent of the Federal Deposit Insurance Corporation, which regulates the nation’s banking sector and insures the accounts of depositors.
Even though prosecutors and Mr. Wong’s lawyer Jeffrey Lichtman agreed on the basic facts of the case, at the sentencing hearing they offered radically different portraits of the man at the center of it.
Mr. Lichtman called his client a self-made man, who as the oldest of six children overcame “crushing poverty” in Hong Kong by making his way to the United States, working long hours while putting himself through college to get a degree in accounting.
He described how Mr. Wong navigated the MCU through tumultuous times that included fallout from the 9/11 World Trade Center terrorist attacks, the national financial crisis of 2008 and Hurricane Sandy.
Mr. Lichtman cited a mental-health report he had commissioned that linked Mr. Wong’s getting addicted to the lottery as a “stress relief from the stresses of work” which, combined with his use of narcotics, trapped him in his own compulsions. Prosecutors had charged that Mr. Wong was supplied with controlled substances by a then-member of the MCU Supervisory Committee, with the MCU paying hundreds of thousands of dollars to that member's company.
But Assistant U.S. Attorney Eli J. Mark said Mr. Wong ran the MCU without regard for ethics and compliance and promoted a climate of fear so he could enjoy a “luxurious lifestyle” at the expense of the city’s “finest, bravest and boldest” civil servants who saw MCU fees skyrocket during his tenure. “It was not because he was a junkie,” he told the judge.
But Judge Koeltl granted Mr. Lichtman's request for drug treatment over the objection of prosecutors.
Speaking about his quarrel with Mr. Mark after the hearing, Mr. Lichtman said of Mr. Wong, "He was so desperate for drugs that he was...committing a crime to get them at 60 years old because he was addicted."
Mr. Wong has to report to prison at 2 p.m. Aug. 23. His bond has been increased from the $1 million originally posted to $ 5 million.