Problems Continue at DC 37: $15 Million Stolen from Credit Union ATMs

Some 4,000 govt and health workers took advantage of electronic breakdowns after Sept. 11 to loot ATMs operated by the credit union used by members of District Council 37 of the Amer. Fed. of State, Cnty. & Municipal Employees Union (AFSCME), acc. to an indictment announced on Aug. 6 by NYC Dist. Attny. Robert Morgenthau.

The indictments come as AFSCME officials struggle to restore DC 37’s reputation after dozens of union officials “convert[ed] DC37’s assets into their own personal ATM,” acc. to dissident member and now Secy.-Treasurer Mark Rosenthal. A string of rigged votes on contracts and officers, and nearly $6 million in kickbacks and financial thefts, led to the conviction of more than 30 union officials in the late 90s. According to Morgenthau, 62 people were arrested on the 6th, while 39 were still being sought. Those defendants stole more than $7,500 each from the Municipal Credit Union (MCU), and have made little or no effort to repay the money. Additionally, 439 others exceeded their acct. balances by at least $5,000; more than 1,700 overdrew their accts. by at least $3,000; and more than 4,000 people overdrew at least $1,500. The employees involved are fed., state, city  and heath care workers in NYC, many of whom are members of DC 37.

The opening for the ATM thefts was created on Sept. 11, when the terrorist attack on the World Trade Center damaged a nearby bldg. that housed the credit union’s computers. As a result, the MCU’s computer link to the New York Cash Exchange, which ensured that there were sufficient funds to cover ATM withdrawls, was lost. Credit union officials allowed ATM withdraws without the normal electronic safeguards out of deference to those affected by the tragedy. “This is a prime example of no good deed goes unpunished,” said Morgenthau. Among the most egregious overdrafts: a nurse overdrew her acct by $18,111 from Sept. 18 to the end of Oct., and has never repaid any of the money: a Housing Authority worker used his credit union card for purchases at Foot Locker, Bronx BBQ, Hot Booz Liquor and the 126th St. Motel.

According to Morgenthau, the workers stole some $15 million from the credit union until the computer safeguards were restored in Nov., and credit union officials were able to trace the illicit withdraws. Reportedly, a mere “handful” of the people confronted with the evidence agreed to take out loans to repay the overdrafts. Acc. to Morgenthau, the investigation is continuing because many of the workers who overdrew their accts by less than those sought in the original indictment have also made little or no repayments. [NY County DA, 8/5/02: New York Post, 8/5/02]