Feds: Credit Union CEO embezzled, spent $3.5M on lottery tickets

The CEO of New York’s oldest credit union was arrested Tuesday in a fraud and embezzlement scheme that netted him millions of dollars, including $3.55 million he spent on New York Lottery tickets, federal prosecutors said.

Kam Wong, 62, of Valley Stream used “hundreds of thousands of sham expense reimbursements” to steal money from the nonprofit credit union’s earnings that was “intended to reward the credit union’s members, not line Wong’s pockets,” U.S. Attorney for the Southern District Geoffrey S. Berman said in a statement.

Wong is on leave from his position as CEO and president of the Municipal Credit Union of New York, according to the credit union.

Authorities said the credit union has $2.4 billion in member assets and provides bank services to more than 425,000 members, including municipal, state and federal employees in New York City.

Wong was released on a $1 million bail, secured by his Valley Stream home, after his arraignment, according to his Manhattan lawyer, Jeffrey Lichtman.

With U.S. Magistrate Judge James L. Cott presiding over the arraignment Tuesday, Wong was charged with one count of embezzlement from a federally insured credit union, one count of bank fraud and one count of wire fraud, each of which carries a maximum penalty of 30 years in prison, prosecutors said.

Additionally, Wong is charged with one count of aggravated identity theft, which carries a mandatory two-year consecutive term in prison, federal authorities said.

“Kam has been a respected and valuable leader of the credit union, and under his guidance and leadership the credit union has experienced record profits and stability in a not always stable financial environment,” his attorney said by telephone.

“With regard to the allegations, they are just allegations . . . and any monies he’s alleged to have received were done openly and transparently with the full support of the bank’s board of directors,” he continued.

The board of directors placed Wong on leave Feb. 22 “upon the recommendation of a Special Committee overseeing an internal investigation prompted by this criminal investigation,” prosecutors said.

The New York State Lottery could not say whether the defendant ever won any of its games.

The embezzlement and fraud took place “from at least” 2013 through this January, authorities said.

During the five-year period in question, Wong “engaged in a long-running multifaceted scheme to obtain money from the Credit Union to which he was not entitled,” then “took steps to conceal what he had done,” the authorities said.

The scheme involved submission of “sham invoices” by Wong to obtain $440,000 in reimbursement for “nonexistent dental work,” as well as $247,000 for his tax liability for that and “other payments or benefits,” according to the criminal complaint against Wong.

The investigation revealed that Wong also obtained millions in payments from the credit union “under suspicious or questionable circumstances,” prosecutors said.

Authorities said Wong withdrew approximately $1.9 million from ATMs — withdrawals made over the course of more than 2,500 transactions, with withdrawals on a credit union business credit card Wong said was used for “testing” those ATMs — and that he also spent “at least” $3.55 million on lottery tickets.

More than $3 million of that — $3.076 million, according to the complaint — was paid in 131 checks issued by Wong to an unidentified convenience store in Elmont.

That store, the complaint said, is located within a mile of Wong’s Valley Stream home and the complaint charges that the CEO issued another 33 checks “totaling approximately $200,000” to the owners.

“We’ve been cooperating with the federal investigation for months, cooperating with the bank’s internal investigators,” Lichtman said, emphasizing the completeness of Wong’s response.

“We’ve responded to subpoenas from the government, to requests from the bank’s attorneys, provided them with everything with regard to this investigation,” he added.

By John Valenti

john.valenti@newsday.com,joan.gralla@newsday.com

John Valenti, a reporter at Newsday since 1981, has been honored nationally by the Associated Press and Society of the Silurians for investigative, enterprise and breaking news reporting, as well as column writing, and is the author of “Swee'pea,” a book about former New York playground basketball star Lloyd Daniels. Valenti is featured in the Emmy Award-winning ESPN 30-for-30 film “Big Shot.”