Embezzlement plagues union offices

Millions siphoned from locations across USA

As the UAW, Fiat Chrysler and federal investigators unravel a scandal over the misappropriation of millions of dollars meant for worker training, federal records show embezzling from union offices is endemic around the country.

U.S. Department of Labor documents obtained by the Detroit Free Press reveal embezzlement from hundreds of union offices nationwide over the past decade. In just the past two years, more than 300 union locations have discovered theft, often resulting in more than one person charged in each instance, the records show.

Two UAW incidents uncovered in 2017, one in Michigan and the other in New Jersey, exceed the $1 million mark, among the biggest labor theft cases in a decade.

Cases involved unions representing nurses, aerospace engineers, firefighters, teachers, film and TV artists, air traffic controllers, musicians, bus inspectors, bakery workers, roofers, post- al workers, machinists, ironworkers, steelworkers, dairy workers, plasterers, train operators, plumbers, stagehands, engineers, electricians, heat insulators, missile range workers and bricklayers.

For the UAW, its two biggest cases involved members working hand-in-hand with corrupt auto industry executives. The UAW says that illustrates its constitution provides the intended checks and balances that essentially require two keys and conspiracy to steal.

In the Fiat Chrysler case in Detroit, money provided by auto companies for worker training was embezzled from 2009 to 2015 by men who were supposed to be working together to negotiate a labor contract rather than divvying

“Unions are not unique. ... You can’t train people to be ethical. It’s just access to money.” Peter Henning former federal prosecutor, now law professor at Wayne State University

up hundreds of thousands of dollars in personal gifts.

The case is working its way through the court system, so far resulting in charges against four people.

In the other multimillion-dollar case, charges were filed on Jan. 9, 2017, against a former UAW president in New Jersey accused of hatching a scheme with a health insurance broker to steal $1 million from the union’s self-insured health plan and defraud Horizon Blue Cross Blue Shield of about $5.5 million.

In addition to the UAW, federal records show the biggest embezzlement cases resulting in criminal charges during the past decade have unfolded in the court system over the past three years:

Laborers Local 657 in Washington, D.C., saw its business manager sentenced to four years in prison in February 2017 for embezzlement and was ordered to pay $1,632,000 in restitution. Two contractors were sent to prison and ordered to pay restitution, too.

The International Brotherhood of Boilermakers Local 154 in Pittsburgh saw its former business manager plead guilty in September 2017 to embezzling about $1.5 million, along with tax evasion.

A former financial secretary for the International Longshoremen’s Association Local 970 in Norfolk, Va., was sentenced in February 2017 to 41 months in prison after stealing

$1,072,669 from the union by making cash withdrawals and using money to buy gas, food, clothing, shoes, toys, entertainment and home improvement supplies.

A former executive director of the Hawaii Painting & Decorating Contractors Association pleaded guilty in May 2016 to embezzling approximately

$1,483,800 from the Hawaii Painters Trade Promotion & Charity Fund, which comes out of the hourly wages of Painters District Council 50 in Honolulu.

A former union business manager for Allied Novelty and Production Workers Local 223 in New York and former president of Teamsters Local

810 in August 2016 pleaded guilty to soliciting and receiving kickbacks to influence the operation of an employee benefit plan and commit theft of

$1 million.

The founder of Prim Capital Corp., who managed as much as $250 million for the National Basketball Players Association, was sentenced in June 2014 to 18 months in prison for trying to defraud the union of $3 million.

Embezzlement cases are often discovered by unions or during routine audits. The situation may be as simple as a bookkeeper going on vacation and leaving an attentive part-timer in charge who notices irregularity.

Dennis Williams, president of the UAW, said the 415,000-member union takes fraud and wrongdoing seriously. He conceded that the cases hurt the organization’s image internally and externally.

“The UAW has weathered many storms over the years, and through bad economic times, long strikes, relentless and vicious organizing drives,” Williams said. “We have also at times withstood investigations that have tested our goodwill.”