Former New York City Police Department Officer and Supervisory Committee Member Also Charged With Embezzlement, Fraud, and Controlled Substance Offenses
Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that SYLVIA ASH, presiding judge of the Kings County Supreme Court, Commercial Division, and former chair of the board of directors of Municipal Credit Union (“MCU”), was charged in Manhattan federal court with conspiracy to obstruct justice and obstruction of justice, arising from a scheme to seek to influence and impede an ongoing federal investigation into fraud and corruption at MCU, a non-profit, multibillion-dollar financial institution. U.S. Attorney Berman also announced today that Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a former New York City Police Department Officer and former member of MCU’s supervisory committee, was charged separately with embezzlement, fraud, and controlled substance offenses arising from abuse of his position as a member of the supervisory committee. Guagliardo was arrested in Brooklyn, New York, yesterday afternoon and was presented before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court. ASH was arrested at LaGuardia Airport this morning and is expected to appear before Magistrate Judge Wang in Manhattan federal court this afternoon.
U.S. Attorney Geoffrey S. Berman said: “The charges announced today reflect the latest in our ongoing work to uncover criminal conduct at the highest levels of MCU, a multibillion-dollar, federally insured credit union. As alleged, Sylvia Ash, a sitting state court judge, took repeated steps to obstruct a federal investigation into significant financial misconduct at MCU during Ash’s tenure as chair of the board of directors. Joseph Guagliardo allegedly abused his position as an MCU supervisory committee member to enrich himself and his family.”
According to the allegations contained in the two Complaints unsealed today in Manhattan federal court, publicly available information, and prior court filings:[1]
Municipal Credit Union
MCU is a non-profit financial institution headquartered in New York, New York, which is federally insured by the National Credit Union Administration (“NCUA”). MCU is the oldest credit union in New York State and one of the oldest and largest in the country, providing banking services to more than 500,000 members, and with more than $2.9 billion in member accounts, each of which is federally insured for at least $250,000 by the National Credit Union Share Insurance Fund, which is administered by the NCUA. Membership in MCU is generally available to employees of New York City and its agencies, employees of the federal and New York state governments who work in New York City, and employees of hospitals, nursing homes, and similar facilities located within New York State.
At all relevant times, MCU was supposed to be overseen by a board of directors (the “Board”) and a supervisory committee (the “Supervisory Committee”), each of which was composed of volunteer members of MCU, who were not to be compensated. According to New York banking law, the Supervisory Committee’s duties included supervision of the actions of MCU’s Board and officers. MCU’s written conflict of interest policy, which was regularly distributed to Board members, Supervisory Committee members, and others, provided, among other things, that members of MCU’s “Board of Directors and Supervisory Committee may not do business with the Credit Union, either individually or as representative of any business entity.”
ASH
ASH is a New York State Supreme Court Justice in Kings County. ASH has served as a judge in the New York State court system since at least approximately 2006, first as a Kings County Civil Court Judge, and, commencing in 2011, as a Kings County Supreme Court Justice. In or about January 2016, ASH was appointed to be the presiding judge in the Kings County Supreme Court’s Commercial Division.
ASH served on MCU’s Board from in or about May 2008 until on or about August 15, 2016, when she resigned. ASH also served as a trustee of MCU’s pension plan, a position from which she resigned on or about October 31, 2016. From in or about May 2015 until her resignation from the Board, ASH served as the chair of the Board.
Guagliardo
GUAGLIARDO is a former officer with the New York City Police Department, who retired in or about 1989. In or about 1993, GUAGLIARDO joined the Supervisory Committee of MCU, a volunteer position, and remained in that position until he was removed from that position by the New York State Department of Financial Services on or about May 24, 2018, except for a brief period of time when he served as a member of MCU’s Board in or about 2008. While he was a Supervisory Committee member, GUAGLIARDO sought to and did use his position to oversee aspects of MCU’s security and fraud department, including serving in the role of vice president of MCU’s security and fraud department while that position was vacant.
Kam Wong
From on or about at least 2007 until on or about June 12, 2018, Kam Wong served as MCU’s chief executive officer (“CEO”) and president. On or about May 8, 2018, Wong was charged and arrested by the United States Attorney’s Office for the Southern District of New York, and, on or about June 12, 2018, Wong was terminated by MCU. On or about December 2, 2018, Wong pled guilty to a multimillion-dollar embezzlement from MCU, and acknowledged, in his written plea agreement, among other things, endeavoring to obstruct and impede and obstructing and impeding the administration of justice with respect to the criminal investigation into this matter, and agreeing with one or more others to do the same.
ASH’s Alleged Obstruction of Justice
From at least in or about 2012 through 2016, while serving as an MCU Board member and while Wong was CEO, ASH received annually tens of thousands of dollars in reimbursements and other benefits from MCU, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences domestically and abroad, as well as payment for phone and cable bills, and electronic devices. Even after her resignation from the Board, Wong continued to provide or cause MCU to provide ASH with benefits, such as Apple devices.
In or about January 2018, after Wong had been approached by federal law enforcement agents investigating potential financial misconduct by Wong involving MCU and in an attempt to protect Wong, ASH agreed to and did sign a false and misleading memorandum purporting to explain and justify millions of dollars in payments that Wong had received from MCU, which was then provided by Wong to law enforcement officers.
Subsequently, ASH agreed to and did continue to seek to influence and impede the federal investigation in multiple ways, including by (i) concealing and deleting relevant text messages and email messages and wiping her MCU-issued Apple iPhone in a further effort to destroy and impair the availability of evidence that had been sought by federal grand jury subpoenas, and (ii) making false and misleading statements to federal law enforcement officers in interviews conducted as part of a federal criminal investigation.
GUAGLIARDO’s Alleged Embezzlement, Fraud, and Unlawful Provision of Controlled Substances to Wong
GUAGLIARDO engaged in a long-running scheme to defraud MCU, with the agreement and assistance of, among others, Wong. Among other things, GUAGLIARDO defrauded and embezzled from MCU by causing it to direct more than $250,000 to a purported security company created and controlled by GUAGLIARDO, but operated in another’s name, which did little to no real work for MCU. GUAGLIARDO also defrauded and embezzled from MCU by over-billing for more than $200,000 for purported web advertising services provided by a non-profit organization that GUAGLIARDO also controlled.
In addition, during substantially the same period in which GUAGLIARDO was committing and concealing these offenses, GUAGLIARDO participated in a scheme to unlawfully distribute controlled substances to Wong, in the form of prescription drugs, some of which were obtained from GUAGLIARDO’s spouse, who worked as a doctor affiliated with a public hospital, and some of which were obtained from a doctor affiliated with the New York City Police Department.
ASH, 62, of Brooklyn, New York, is charged with one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; and two counts of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.
GUAGLIARDO, 62, of Brooklyn, New York, is separately charged with one count of conspiracy to embezzle from a federal credit union, which carries a maximum penalty of five years in prison; one count of embezzlement, one count of conspiracy to defraud a financial institution, and one count of defrauding a financial institution, each of which carries a maximum penalty of 30 years in prison; and one count of conspiracy to distribute controlled substances, and one count of distribution of controlled substances, each of which carries a maximum penalty of 20 years in prison.
The maximum potential sentences in these cases are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.
U.S. Attorney Berman praised the outstanding work of the Special Agents of the United States Attorney’s Office. Mr. Berman also thanked the New York County District Attorney’s Office, the New York State Department of Financial Services, and the New York City Police Department Internal Affairs Bureau for their assistance.
The charges contained in the Complaints are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Complaints, and the description of the Complaints set forth herein, constitute only allegations, and every fact described therein should be treated as an allegation.
