New Details on $144,900 Ohio Embezzlement

As reported in the Feb. 18 issue of the UCU, Richard Adams, ex-treasurer of Int’l Ass’n of Fire Fighters Local 639 in Parma, Ohio, pled guilty Jan. 28 to a federal bank fraud charge for schemes that deprived the local of approximately $144,939.46. Sentencing is scheduled for Apr. 10 before U.S. Dist. Judge Donald C. Nugent (N.D. Ohio, Clinton).  The U.S. Atty.’s Office for the N. Dist. of Ohio in Cleveland has provided the UCU with Adams’ plea agreement, which details the ex-boss’ outrageous conduct.

From Aug. 1987 to Oct. 2000, Adams devised several fraudulent schemes to obtain funds belonging to Local 639 involving accounts (on which he was the sole signatory) at three federally-insured banks. Without authorization, Adams wrote union checks payable to his personal creditors to cover money he personally owed. He wrote the checks in a manner to give the false appearance that the payments were authorized union purposes by using the creditors names instead of his own and by  including memo notations reflecting the customer account numbers without indication the personal benefit he was obtaining.

Additionally, without authorization, Adams obtained cash for personal use from the local’s bank accounts by writing various checks payable to himself or cash. He wrote and cashed the checks under the false pretense that he was authorized to the full amount of the checks for union business, when in fact he was authorized to only receive a small portion of the total check proceeds.

In total, Adams admitted to 316 fraudulent checks amounting to $149,945.78 of which he was only entitled to $7,230.00 for salary and legitimate union expenses. Thus, he used the local’s bank accounts to steal $142,715.78. Adams further concealed his embezzlements by making periodic statements and reports at union meetings falsely representing that union funds were being properly spent solely on union business.

In exchange for the guilty plea, prosecutors agreed to file only a one-count information charging Adams with bank fraud. Because of a loophole in federal labor law, a federal union embezzlement charge could not be brought since Local 639 is a public sector union. However, the plea agreement does not bind other jurisdiction; thus, local prosecutors could bring state theft charges against Adams. Nevertheless, the specific federal charge was that in Oct. 1993, Adams, knowingly and without authorization, wrote a check on the local’s general fund checking account in the amount of $3,139.25 in payment of his home mortgage loan. Bank fraud, under 18 U.S.C. § 1344(2), carries a maximum sentence of 30 years and a $1,000,000 fine.

Further, to help guide Nugent in the sentencing of Adams, prosecutors included, and Adams admitted to, “additional relevant criminal conduct” in the plea agreement. Reportedly, Adams stole more funds by diverting a portion of certain union revenues to his personal use instead of depositing them into the union’s bank accounts. In one scheme, the diverted revenues consisted of dues check-off payments, which Adams obtained by making split deposits into a union checking account and keeping the rest in cash. He took $1,598.68 through portions of nine checks.

Even more shocking, Adams kept cash receipts collected by and from union members as donations toward a union contribution to a fund for a slain police officer’s family. In Sept. 2000, a union member provided Adams $625 in cash which had been collected by and from union members through donations and other fund-raising efforts to help the Wayne Leon Fund. The local had decided to make at least $1,000 contribution, with a portion from members’ fundraising efforts and the balance to be paid by the local.  Adams gave the member a pre-signed union check, which, at Adam’s direction, the member completed and sent to the Fund in the amount of $1,000. Instead of depositing the $625 into the local’s account, Adams kept the cash for personal use.

Thus, the total loss to the local from the three sets of schemes was $144,939.46. According to the plea agreement Adams has already made $64,000 in restitution, leaving $80,939.46 outstanding. However, Nugent will set the final restitution amount.  Given the size of the embezzlement and the despicableness of the schemes, hopefully the the restitution order will be for the full amount, and the prison term and the fine will be on the high end of the sentencing guideline range. [USAO N.D. Ohio 2/19/02]