Union pension manager Todd J. LaScola pled guilty in U.S. Dist. Court in Providence, R.I., Feb. 26 to embezzling from his clients to subsidize a lavish lifestyle and to shore up a failing union investment. LaScola admitted defrauding several clients of more than $6 million to pay for a $9,600 diamond engagement ring, among other personal items.
At his peak, the cigar-smoking LaScola pledged $500,000 to his alma mater, St. Raphael’s Academy. His business had an office in Switzerland. At its downtown office, Governor Almond (R) made fundraising calls for his campaign. But his success began to unravel in late 1997, prosecutors said, when he began to invest pension money from Int’l Bhd. of Elec. Workers Local 99 against its investment guidelines.
First, LaScola invested the money in an Argentinean government bond that turned out to be fraudulent, prosecutors said. Then, he violated the union guidelines again by investing in risky Fla. real-estate developments. LaScola reportedly received illegal commissions from the investments. When Local 99 found out its pension fund was performing badly, he diverted $6 million from other investors to cover up the results, then lied to those clients about the performance of their investments.
After a lengthy probe involving several federal agencies, LaScola was indicted on 55 counts of embezzlement and fraud, barred from the investment business and sued by various former investors. Before U.S. Dist. Judge Mary M. Lisi, LaScola pled guilty to one count of embezzlement, three counts of mail fraud and five counts of wire fraud. He acknowledged transferring money from investors without their knowledge. He was released pending his sentencing on May 25, when he faces as much as five years in prison and fines on each of the nine counts.
Joseph J. Rodio, Local 99’s attorney, said the union kept the $6 million that LaScola illegally diverted from other clients and got legal fees under a settlement with an insurer and investment houses last month. Kimberly Zimmer, a SEC attorney, said the agency is seeking to collect from LaScola on a $6 million civil judgment against him in June 2000. [Providence J.-Bull. 2/27/01]