Amid Lingering Corruption Allegations, DC37’s Benefits Fund to be Audited

The new bosses of the scandal-scared Am. Fed’n of State, County & Mun. Employees Dist. Council 37 in N.Y.C. said May 17 that they had ordered a thorough audit of the union’s benefits fund, which will receive $206 million from the city this year.  Lillian Roberts, the district council’s newly elected executive director, said the union wanted an audit because it was time for a fresh review of the fund. Roberts, who took over in Feb. 2002, ordered the audit three weeks after the fund’s longtime director stepped down. The benefits fund helps the union’s 125,000 members pay for prescriptions, optical care, dental visits, and legal help.

Mark Rosenthal, DC37’s treasurer, said: “We want to know that everything’s being done correctly and if anything needs to be changed. If the audit shows we need to do something different, we’ll do it.” Council officials said they had not yet selected an auditor. In Apr., Roslyn Yasser resigned after running the fund since 1978. Roberts replaced her with Rosaria Esperon, who was a DC37 attorney in the late 1980’s and then worked for N.Y.C. Comptrollers Elizabeth Holtzman and Alan G. Hevesi over the last eleven years.

For three years the benefits fund has been defending itself against a suit in which two ex-fund officials claim widespread corruption. The two officials accused the fund of illegally directing money toward the union’s political activities and of fraudulently obtaining overpayments from the city by inflating the union’s membership figures.

DC37 has repeatedly asserted that the allegations are baseless. Yasser reportedly stepped down because she recognized that Roberts might want to install her own fund director. But two unidentified DC37 officials said that Yasser was pushed out.

Rosenthal called for a full audit in 1999 when he led a dissident group called the Committee for Real Change, which repeatedly criticized the fund for not having a bidding process when it awarded its prescription drug contract to Nat’l Prescription Admin. Inc. The benefits fund spends about $100 million a year on prescription drugs. After the dissidents complained, bids were sought for the contract and another company bid $7.5 million less than NPA was charging. NPA was allowed to continue as the prescription manager when it agreed to charge $7.5 million less. [N.Y. Times 5/18/02]