Damian Williams, United States Attorney for the Southern District of New York, announced that SYLVIA ASH, former Justice of the Supreme Court of the State of New York and Chair of the Board of Directors of the Municipal Credit Union (“MCU ), was sentenced today in Manhattan Federal Court to 15 months in prison for conspiracy to obstruct justice, obstruction of justice and making a false statement to a federal official. These charges stemmed from a scheme to obstruct the federal criminal investigation into fraud and corruption at the MCU, a multibillion-dollar nonprofit financial institution, including misconduct by Kam Wong, the former CEO (“CEO”), and Joseph Guagliardo, a former New York Police Department officer and MCU Oversight Committee member. Wong and Guagliardo were charged separately and had previously pleaded guilty to embezzlement from the MCU. ASH was sentenced in December 2021 after a two-week jury trial before U.S. District Judge Lewis A. Kaplan, who handed down today’s sentence.
US attorney Damian Williams said: “While serving as a state judge, Sylvia Ash took repeated action, over several months, to seek to obstruct the federal criminal investigation into misconduct at the MCU that took place during Ash’s tenure as chairman of its board of directors. Ash agreed to do so with the now-imprisoned former credit union CEO, who provided him with a steady stream of MCU benefits, including after she was asked to resign from the MCU board Today’s sentencing sends a clear message that those who attempt to thwart a federal investigation face serious consequences for this corrosive conduct.
In passing sentence, Judge Kaplan said “ASH’s crimes struck at the heart of the criminal justice system.”
According to the complaint, the indictment, superseding indictment, publicly available information, court filings, and evidence presented during the trial in Manhattan federal court:
Municipal credit union
MCU is a not-for-profit financial institution headquartered in New York, New York, which is federally insured by the National Credit Union Administration (“NCUA”). MCU is New York State’s oldest credit union and one of the oldest and largest in the nation, providing banking services to more than 590,000 members and with more than $4.2 billion in member accounts, each of which is 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 the City of New York and its agencies, employees of the federal and New York State governments who work in New York City, and employees of hospitals, nursing homes nurses and similar facilities located in New York State.
At all relevant times, MCU was overseen by a Board of Directors (the “Board”) and an Oversight Committee, each composed of MCU members, who were not intended to be compensated. Following serious deficiencies in the oversight of the credit union by the board of directors and the oversight committee, which were revealed during the federal investigation, the New York Department of Financial Services (“DFS ”) removed the members of the oversight committee in May 2018 and the board of directors in June 2018. Subsequently, DFS appointed NCUA as custodian of the credit union. In or around February 2022, the MCU successfully emerged from conservatorship under new management.
ASH served as a judge in the New York State court system from approximately 2006 to March 2022, first as a Kings County Civil Court Judge and then, beginning in 2011, as a Kings County Supreme Court. On or about January 2016, ASH was appointed Presiding Judge of the Commercial Division of the Kings County Supreme Court. After the charges in this case came to light, ASH was suspended from her job. On or about March 2022, following ASH’s conviction, she left court.
ASH served on the MCU Board of Directors from or around May 2008 until or around August 15, 2016, when she resigned. From or about May 2015 until her resignation, ASH served as Chair of the Board. ASH resigned after a complaint was filed against her by the New York State Commission on Judicial Ethics due to a conflict of interest between her position as a state judge and her membership on the board of judges. administration of the MCU. More than a year before her resignation, ASH had been ordered to resign from the MCU’s board by the Judicial Ethics Advisory Committee, an instruction she ignored.
From at least 2012 until 2016, when he was a member of MCU’s board of directors and Wong was CEO, ASH received tens of thousands of dollars in reimbursements and other benefits from MCU each year, many of which were of a nature personal and not professional. -related, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences both at home and abroad, annual birthday parties in a minor league baseball stadium, payment of telephone and cable bills and electronic devices. Even after his resignation from the board, Wong continued to provide or arrange for MCU to provide ASH with perks, such as Apple devices and sports tickets. As a sitting state judge, ASH was required to report both her service on the board and the gifts and benefits she received from outside sources on an annual state disclosure form. . But between at least 2012 and 2018, ASH never reported his service to the board or any gifts or benefits from the MCU.
Obstruction of justice by ASH
In January 2018, after then-MCU CEO Wong was approached by federal law enforcement agents investigating apparent financial misconduct by Wong, in an effort to protect Wong, ASH agreed and signed a false and misleading memorandum purporting to explain and justify millions of dollars Wong had received from the MCU. Wong then provided this false and misleading memorandum to federal agents in an attempt to demonstrate that the millions of dollars had allegedly been orally approved for him by ASH in June 2015, when she was chair of the board of directors. However, in truth, neither ASH nor the Council had approved the disbursement of these funds.
On March 1, 2018, shortly after Wong was placed on administrative leave by the MCU, ASH was asked about the memorandum she signed for Wong. During this interview, ASH admitted that the memorandum was not accurate, but attempted to justify the money Wong received by stating that the then-serving MCU General Counsel told him that the employment contract de Wong gave him the opportunity to receive this money. This assertion was false.
On March 13, 2018, ASH received a federal grand jury subpoena (the “First Subpoena”), which required the production of documents related to various matters, including Wong’s compensation, and any communications with Wong until on the date of the first subpoena. . On April 6, 2018, in a telephone interview with a federal agent, ASH falsely stated that she had no documents responding to the first subpoena.
On June 8, 2018, after Wong was charged with embezzlement from the MCU and the government executed a court-authorized search of Guagliardo’s residence, ASH was interviewed by phone for the second time about the first subpoena. During this interview, ASH again erroneously stated that she had no documents responding to the first subpoena.
On June 18, 2018, ASH received a second federal grand jury subpoena (the “Second Subpoena”), which demanded the production of, among other things, all correspondence with Wong and Guagliardo; all documents relating to any criminal investigation, internal investigation or audit related to Wong; and any documents regarding valuables that ASH received from MCU, Wong, or Guagliardo. Shortly after, ASH went to an Apple store and erased an iPhone X that Wong had provided to her in January 2018. Additionally, ASH deleted emails from her Gmail account, including all of her emails. emails with Guagliardo, none of which were produced in response to either of the two federal grand jury subpoenas issued to him. ASH also later erased two MCU-issued iPads she had received.
On July 6, 2018, on behalf of ASH, his then attorney filed documents with the government in response to the second subpoena. This production was materially incomplete and did not contain text messages, emails and other materials in ASH’s possession or had in his custody or control that responded to the second subpoena.
On July 9, 2018, ASH participated in a voluntary interview with the U.S. Attorney’s Office. During this interview, while accompanied by her attorney at the time, ASH made several false statements, including repeating false statements regarding her alleged conversations with the former MCU general counsel about receiving of cash payments by Wong and falsely claiming that she and her aunt took a trip to Las Vegas paid for by MCU, including airfare, accommodations and entertainment expenses, after her resignation because all of his travel arrangements were paid for by MCU prior to his resignation, when in truth all expenses were paid for after his resignation.
On or about October 11, 2019, ASH was arrested and her cell phone seized. After obtaining a court-authorized search warrant, ASH’s phone was searched, which revealed, among other things, numerous text messages, including with Wong and Guagliardo, which were concealed in response to the first and second subpoenas.
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In addition to her prison sentence, ASH, 64, of Brooklyn, New York, was sentenced to an $80,000 fine and two years of probation, including a special condition of twenty hours of community service. general per week while on probation. The court reserved the restitution decision to the MCU.
On June 4, 2019, Wong was sentenced to 66 months in prison for embezzlement from the MCU and was ordered to confiscate $9,890,375 and pay restitution of the same amount to the MCU.
On July 23, 2020, Guagliardo was sentenced to 27 months in prison for embezzlement from the MCU and was ordered to forfeit $425,514 and pay $468,189 in restitution to the MCU.
US Attorney Williams hailed the outstanding work of the US Attorney’s Office Special Agents. Mr. Williams also thanked the New York County District Attorney’s Office and the DFS for their assistance.
The case is being handled by the Bureau’s Public Corruption Unit. Assistant U.S. Attorneys Eli J. Mark, Daniel C. Richenthal and Jonathan Rebold are leading the prosecution, with assistance from Special Assistant U.S. Attorney Alona S. Katz of the New York County Attorney’s Office.