Union Lost $4.1 Million to Corruption in 1999

On Jan. 21, the New York Times reported that an Am. Fed’n of State, County & Mun. Employees’ internal report details “extensive corruption” with the union.  It listed $4.6 million in claims that AFSCME made to its insurance company, seeking reimbursement under a policy that covers boss’ fraud. The report was leaked by a union official eager to have AFSCME take a tougher stance on corruption.

It describes how 35 bosses forged checks, made unauthorized withdrawals, siphoned union dues into their personal accounts and used union credit cards for personal expenses. More than half the claims arise from N.Y.C.’s Dist. Council 37 in which two dozen officials have been indicted.  Other corruption claims involved locals in Ind., Mass., Minn., Mont., N.J., Ohio, Pa., Wis. and D.C.  In Milwaukee, Robert Gordon, apparently embezzled $96,000 by writing 208 checks to himself. In Elkart, Ind., Steven K. Grubb, wrote $13,500 in union checks for his personal benefit.

AFSCME has a fidelity bond insurance policy that reimburses it if a boss commits “dishonest acts” that cause the union to lose money. The insurance company paid $605,000 of $2.6 million in claims that were pending in Nov. 1999. The reason the company paid less than the amount requested was that AFSCME claimed $2.2 million for money it said was stolen by Charles Hughes, ex-boss of DC37 Local 372. The policy covering Hughes was only for $500,000. [N.Y. Times 1/21/00]

Reportedly, federal law enforcement wants to investigate AFSCME. [Wall. St. J. 1/24/00]  The only problem is that many AFSCME locals, such DC37, are exempt from the Landrum-Griffin Act which imposes fiduciary duties in union bosses and criminalizes union embezzlement.

Ex-New York Boss Gets 1 to 3 Years
N.Y. Judge George Daniels in Manhattan sentenced Connie Lango, ex-treasurer DC37 Local 384, Jan. 24 to 1 to 3 years in prison for stealing union funds. She pled guilty in Aug. to two counts of grand larceny and admitted to  taking over $50,000. Prosecutors believed she took as much as $190,000. She stole the money from May 1994 to Sept. 1995, by asking the local’s bank to issue checks payable to herself, credit-card companies and car leasing firms. [Newsday 1/25/00]