A 2nd accountant confessed on Aug. 22 to hiding 7 years of massive embezzlement by the Iron Workers hierarchy in Wash. D.C. The latest confession by Francis J. Massey has increased the suspicion surrounding the accounting firm, Thomas Havey LLP, which brags on its web site of “serv[ing] more international and local labor organization clients [700] than any CPA firm in the country.” Massey himself “served as an instructor and lecturer regarding the LM-2 Report…both at Havey Company in-service training and at training and seminars provided by the Havey Company for various labor unions.” On June 24, NLPC petitioned the U.S. Dept. of Labor’s Office of Labor-Mgmt. Standards to begin auditing all those unions using Havey’s services.
Massey pled guilty before Thomas F. Hogan, Chief Judge of the U.S. Dist. Ct. for D.C. (Reagan), to one count of aiding and abetting a conspiracy of fraud and falsification in violation of U.S.C. 18, Sec. 371. With that plea, federal prosecutors submitted a Proffer of Facts laying out the conspiracy by top bosses of the Intl. Assn. of Iron Wrkrs. (IAIW) that began in 1992.
The trail of corruption started early for Jake West, who moved from California to Washington in 1985 to be appointed General Secretary of the IAIW. By 1988, the IAIW president, Juel Drake, had developed an illness that left him mentally unable to handle the office, leaving him dependent on West. In Jan. 1989, acc. to the proffer, West persuaded Drake to reimburse him from the union’s account for $25,555 in four-year-old “moving expenses” that, in fact, West had never incurred. The next day, Drake resigned and West was appointed General President.
By August 1991, West was running for election to the union presidency. His opponent, Ray Corbett, distributed copies of the IAIW’s LM-2 financial form filed with the U.S. Dept. of Labor, and questioned the dramatic change in expense reimbursements reported for West due to his so-called “moving” costs. West still won the race at the Aug. convention, along with the rest of his slate: LeRoy Worley, General Secretary and James Cole, General Treasurer. By this time, West’s longtime friend, Victor Van Bourg, was ensconced as General Counsel, and had faced questions from Corbett about the professional fees paid to him and his law firm by the union.
The Havey firm had been angling for the IAIW’s business since 1989, when their accountants began preparing West’s personal tax returns for free. It seemed to have paid off in early 1992, when the IAIW retained Havey’s services. But when Havey accountants Massey, Alfred Garappolo and Craig Stevens began their first audit in the summer of ‘92, they found numerous and large expenses incurred by the Union officers at the Prime Rib restaurant with no documentation of business purpose.
In Sept., the Havey accountants met with West, Worley, Cole and Van Bourg. According to prosecutors, the officers insisted that their personal dining expenses be left off the LM-2, solely because they didn’t want opponents like Corbett using the report against them. At first the accountants argued that such disbursements had to be reported in detail on the LM-2. Finally, acc. to the proffer, Van Bourg asked the lead accountant what he would say if ever subpoenaed to testify about their meeting. When he replied that he would tell the truth, Van Bourg turned to West and recommended terminating the Havey company’s services.
After that meeting, prosecutors charged, Massey and other Havey accountants counted the Prime Rib dining charges as “Office/Administrative” expenses, for which no schedule detailing the individual expenses was required. According to the proffer, senior partners of the Havey firm knew of Massey’s falsification. Massey continued to place the officers’ dining and entertainment expenses in the “Office/Administrative” category until 1995, when the Dept. of Labor began requiring that those expenses also be detailed in a separate schedule. According to prosecutors, Massey recommended moving the personal expenses into the “Educational/Publicity” category, for which no schedule was required. The Union officers agreed and added two organizers, Fred Summers and Darrell Shelton, to the embezzlement scheme.
By the end of 1998, the Union officers had spent some $460,000 in union money at the Prime Rib alone. The Union had also paid more than $200,000 for golf fees and dining charges at the Manor Country Club and Swan Point Yacht and Country Club, both in Maryland, and the Canyon Country Club in Palm Springs, Calif. According to prosecutors, the officers spent, and Massey covered up, more than $1 million in dining and entertainment expenses from 1992 to the end of 1998.
But in 1998, a fed. investigation of then D.C. Police Chief Larry D. Soulsby turned to West, a frequent dining companion. In April, the Havey company was served with its first subpoena of records relating to the IAIW. Massey began altering and deleting handwritten notes from Havey work papers mentioning the personal expenses.
In the course of the investigation, Summers, Shelton and Cole have pled guilty to embezzlement. Van Bourg died in Nov. 2001. West was forced to resign the IAIW presidency in Feb. 2001, and is awaiting trial, along with Worley. From the Havey firm, Garappolo pled guilty for his role in the falsification of LM-2s in June of this year. Massey is scheduled to appear before Judge Hogan on Oct. 31, for a status report on his promised cooperation with the continuing investigation. [U.S.A.O. Dist. Columbia, 8/22/02]