Arizona Boss Pleads Guilty, Concealed Embezzlement

U.S. Customs Inspector Gregory B. Floto, who is the ex-president of Nat’l Treasury Employees Union Chapter 116 in Nogales, Ariz., pled guilty Mar. 15 to filing a false report with the Dep’t of Labor to conceal his embezzlement of union funds, according to the Dep’t of Justice’s Office of Public Affairs. According to DOL’s Office of Labor-Mgmt. Standards, Floto pled guilty to one count of making false statements in violation of 18 U.S.C. § 1001. The specific amount of the embezzlement was not disclosed.

Floto, who has been president of NTEU Chapter 116 since 1989, admitted to stealing thousands of dollars in union funds for his personal benefit between 1994-97. Floto confessed to using union checks to pay balances due on his credit cards bills for personal charges unrelated to union business, including charges for clothing, jewelry, and a family vacation. He also admitted using union checks to pay directly for painting his home and other home improvements.  Further, he admitted double billing the union and the U.S. Customs Service for identical official travel expenses.

He concealed the theft by falsifying Chapter 116’s check register and filing false audit documents with NTEU. He also filed false financial reports with DOL in which he grossly understated the amount of union funds received and claimed an audit had been conducted of the Chapter 116 records. As part of the plea agreement, Floto will resign his position with the U.S. Customs Service, as well as any position as an officer of NTEU. U.S. Dist. Judge Frank R. Zapata (D. Ariz., Clinton)  scheduled sentencing  for May 24. No agreement on a restitution amount was disclosed.

The case was prosecuted by the Dep’t of Justice’s Public Integrity Section, not the U.S. Attorney’s Office in Ariz., and was investigated by OLMS and the U.S. Customs Serv.’s Office of Internal Affairs. Initially, Floto was reportedly indicted on Jan. 17, 2001, in the U.S. Dist. Court in Washington, D.C., on 7 counts of mail fraud/deprivation of honest services (3 counts), making false statements (3 counts), and obstruction of justice (1 count). [DOJ 3/15/02; DOL 3/15/02, 1/17/01]

New York Boss Accused of Abusing Pension & Health Plan
The Dep’t of Labor filed suit Mar. 19 against the pension and health plan officials of the Int’l Union of Indus. Serv., Transport & Health Employees Dist. 6 in N.Y.C. for allegedly paying excessive administrative expenses and improperly administering the plans. The suit, filed in federal court in Manhattan, names as defendants: William Perry, administrator and trustee of the plans and union president; trustees Jerome Vuoso, Ludovic Marcovici and Francis Winn; and the union itself.

Perry allegedly violated his fiduciary duties under the Employee Retirement Income Security Act of 1974 by issuing, endorsing, and cashing 1,100 health plan checks made payable to others during the period 1993-99. He allegedly failed to collect rent for the health plan from the union for occupying a building substantially owned by the health plan through a holding company known as District 6 Realty Corp. Perry also allegedly used pension and health plan assets to reimburse the union for expenses not incurred in the  administration of the plans. Further, Perry allegedly failed to diversify plan investments by investing over 90% of health plan’s assets in the building occupied by the union. DOL accused the remaining trustees of failing to monitor, or to take steps to correct the improper actions of, Perry. DOL is asking the court to require the plan officials to restore to the plans all losses with interest or lost opportunity costs and to permanently bar them from serving any plan governed by ERISA. In addition, the suit seeks to require that the union and Perry undo any prohibited transactions with the plans. [DOL 3/21/02]