Public Employees Ex-President in Cincinnati Sentenced for $750K+ Embezzlement

cincinnati-at-nightxDiana Frey wasn’t surprised at the sentence she received for embezzling from the public-sector union she had set up years before. Those thefts, after all, nearly put the union out of existence. On June 7, Frey, former president of Cincinnati Organized and Dedicated Employees (CODE), was sentenced in U.S. District Court for the Southern District of Ohio to 51 months in prison and three years of supervised release, and was ordered to pay $758,056 in restitution plus a $100 assessment. Last September she pled guilty to one count of wire fraud. For more than six years Frey, an ex-employee with the Cincinnati Metropolitan Sewer District, obtained union funds through a variety of illegal means. Whether the union gets its money back depends on whether the federal government can seize properties she bought with the stolen funds.

Union Corruption Update provided extensive coverage of this story last year. CODE is an 800-member independent union consisting of Cincinnati-area public-sector middle managers, professionals, technicians and nurses. Diana Frey founded the union in the middle part of the last decade and ran it until last summer. Unfortunately, she also nearly ran it into the ground. Last July 20, federal prosecutors charged that Frey, now 52 and a Cincinnati resident, during 2005-11 transferred $757,009 in member dues (a figure since slightly upped to $758,056) for use by her and family members. She obtained the funds by writing unauthorized union checks, and making unauthorized union wire transfers, ATM withdrawals and credit card purchases. An anonymous tip to the U.S. Department of Labor led to a departmental investigation and an indictment by a grand jury. Frey initially pleaded not guilty at her arraignment on July 28, but the evidence of guilt became so compelling that she changed her plea to guilty on September 21.

Federal sentencing guidelines had recommended Frey serve between 33 and 41 months in prison. But U.S. District Judge Susan Dlott exercised her discretion to extend that period to 51 months, citing the defendant’s “blatant pattern” of deceit and theft. “In white-collar crime, a person can do with a pen what a drug dealer is doing with his gun,” said Dlott. “It’s not really any different.” Most of the stolen money went into Frey’s purchase, sale or improvements of six residential properties during 2007-09 on behalf of family members. Toward that end, the judge issued a preliminary forfeiture order under which the government could seize her interest in three homes plus several cars. Without such recourse, CODE might not cover mounting bills. Frey, for her part, is remorseful. At sentencing, she apologized to her family, CODE members and the city “for the shame and embarrassment I’ve caused all of them.” The union might be relieved at her display of contrition, but it still wants its money back.