Kam Wong, the former chief executive officer and president of the Municipal Credit Union, pleaded guilty in Manhattan Federal Court Nov. 19 to embezzling millions of dollars from its coffers.
Under the plea agreement, he faces a far shorter term than the maximum of 30 years in prison and five years of supervised release if convicted at trial. Under the Federal sentencing-guideline formula, he could get between 78 and 97 months in prison.
Could Go Higher
Mr. Wong entered the guilty plea before U.S. District Judge John G. Koeltl, who advised the former MCU CEO that the court could “depart upward or downward” from the guidelines after he received a pre-sentencing report. “No one, not the government, should give you a sense of what your sentence will be,” he said.
Sentencing is scheduled for April 5.
The latest court filings related to the plea agreement to settle charges in the six-month-old case offered new revelations about what was going on at the MCU during Mr. Wong’s admitted crime wave.
While there was no reference to a criminal conspiracy, government documents describing Mr. Wong’s criminal actions referred to him “agreeing with one or more others to engage” in the actions to which he pleaded guilty.
MCU Drug Connection
In addition, Mr. Wong, 63, disclosed in his plea that he had made “donations to charitable organizations in violation of the credit union’s conflict of interest policy,” and that he had been in “possession and purchased from a former Credit Union Supervisory Committee member and his spouse a controlled substance for personal use.”
After the proceeding, Assistant U.S. Attorney Eli J. Mark had no comment when asked if the investigation was continuing. The documents related to the plea agreement made no reference to Mr. Wong’s cooperation.
When he was first arrested in May, prosecutors offered evidence that he was obsessed with the New York State Lottery, writing checks for $3.3 million at two convenience stores, primarily for lottery tickets. At one store in Elmont, L.I. near his home, investigators said he spent hours at a time on weekends playing the lottery.
The government’s disclosure about his possession of a “controlled substance,” along with confirmation from two other sources close to the case, indicated that Mr. Wong may have been in the throes of a drug addiction in addition to his gambling problem.
Admits His Deceit
During the formal allocution, Mr. Wong admitted that between 2013 and 2018 he had deceived other credit-union employees about the terms and conditions of his employment contract as part of the multi-million dollar fraud aimed at vastly boosting his compensation and fringe benefits.
“I know my conduct was illegal and wrong,” he told the court. He also disclosed that he was undergoing psychotherapy.
The nighttime proceeding was sparsely attended. Present were Mr. Wong’s wife, a handful of MCU-affiliated observers and two reporters from the Chinese press who have closely chronicled his tenure leading the 102-year-old non-profit cooperative.
At one point, sitting at the defense table without the Judge present, Mr. Wong, attired in a crisply pressed dark suit, shook his head back and forth in seeming disbelief at his circumstance, while the lawyers chatted with each other.
Stiff Financial Penalty
As part of the deal with prosecutors, Mr. Wong agreed to forfeit at least $9,890,375 and to pay that same amount in restitution to the MCU.
Credit unions are run as non-profit banking institutions that are owned cooperatively by depositors who vote for other members to serve as volunteers on the Board of Directors and Supervisory Committee overseeing the MCU’s operations. Members’ savings accounts are federally insured up to $250,000, and IRA accounts are separately insured for up to $250,000 by the National Credit Union Association.
While the court filings listed Mr. Wong’s annual salary as $684,137, the MCU’s 990 IRS form for 2016—available through GuideStar, the non-profit rating agency—listed his compensation as $5.88 million for that year.
After he was terminated by the MCU board of directors in June, the state Department of Financial Services dismissed the credit union’s Supervisory Committee and its Board of Directors for failing to fulfill their oversight obligations and for improperly getting compensation.
‘We Were Victims’
Several of the directors, who serve without compensation, filed an unsuccessful court challenge to their removal. “We were the victims here that were swindled,” said one former director who wished to remain anonymous.
While court and tax documents indicate Mr. Wong was the top earner at the MCU by millions of dollars a year, an investigation by this newspaper found that in recent years the credit union had been paying exorbitant salaries to other top executives, three of whom earned in excess of $600,000 in salary and bonuses during 2016.
A survey of the 990 Federal tax filings for several credit unions of comparable, or even slightly larger sizes, indicated that MCU’s executives were unusually well-compensated.
According to the 990 IRS tax forms available from 2016, Norman Kohn, who took the MCU helm after Mr. Wong’s arrest, was making $655,000 in salary and bonus and more than $40,000 in additional compensation.
Thomas Siciliano, the credit union’s general counsel, received more than $611,000 in salary and $40,000 in additional compensation that year.
Still on Payroll
Mr. Siciliano and Mr. Kohn remain employed by the MCU.
On the occasion of MCU’s centennial in 2016, in a profile in this newspaper Mr. Wong recounted how he worked his way through college as a waiter making $200 a week, first attending Bronx Community College and transferring to Baruch College. He had been with the MCU since 1981 and was made president in 2006 and given the CEO’s job in 2007.
During his tenure, the credit union grew to more than 400,000 members, with $2.4 billion in assets. Unlike some credit unions, MCU avoided the financial fallout from the 2008 Wall Street-fueled housing collapse by not purchasing mortgage-backed securities.
“This is a very sad day in Kam’s life that had been lost to a terrible gambling addiction,” said Jeffrey Lichtman, Mr. Wong’s attorney.
‘Abused Position of Trust’
“As he admitted in court today, Kam Wong, the former CEO and president of New York’s oldest credit union, abused his position of trust as a guardian of municipal, state, and Federal workers’ financial accounts to enrich himself,” U.S. Attorney Geoffrey S. Berman said in a statement. “In so doing, Wong stole money from the credit union that could have gone to the credit union’s members, and tried to cover up what he had done by making false statements to Federal investigators and creating false and misleading documents.”
On Oct. 29 the MCU announced that Mark A. Ricca had been appointed as its president and CEO. Mr. Ricca “has extensive experience in the financial sector as an executive and senior leader at various community banks,” according to an MCU press release.
In the absence of a board of directors elected by the credit-union members, the search to fill the top MCU leadership post was conducted by an administrator appointed by the Department of Financial Services after the state takeover.
Ready to Move On
“As your new President & CEO, I wanted you to hear this from me first. Last night, former President & CEO Kam Wong pled guilty and admitted in court that he defrauded our Credit Union,” Mr. Ricca wrote in a Nov. 20 letter to MCU members. “His guilty plea brings us another step closer to moving on from that chapter in our history.”
He continued, “In my role, my focus is twofold. First, ensuring MCU fulfills its mission of being a trusted partner to our members by providing valuable products and services in a manner that provides you financial security and opportunity. Secondly, by strengthening the management team, improving upon our corporate culture and internal controls we can close the door on this period in MCU’s history.”
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