Jonathan Deutsch still may believe he was framed. But his case has been resolved. On June 11, Deutsch, former executive director of the Constructors’ Laborers Council (CLC) of West Virginia, re-entered a guilty plea in U.S. District Court for the Southern District of West Virginia to one count of bank fraud in connection with a false statement he made to obtain an unauthorized $120,000 line of credit. Deutsch had pleaded guilty to mail fraud in May 2011, and then, this past March, asked a judge to set aside the plea and dismiss the remainder of a 32-count superseding indictment. Immediately following his most recent court hearing, he was sentenced to two years in prison and five years of probation, and was ordered to pay $118,429.88 in restitution. That sum likely understated matters.
Deutsch, 58, a resident of Charleston, W.Va., was a busy man in West Virginia’s highly unionized construction industry. In addition to running the Laborers Council during 1995-2007, he also served as a trustee of a nonprofit council affiliate, the West Virginia Heavy and Highway Construction Industry Fund. And he was a trustee of the Operators Labor Management Council. According to federal prosecutors, he misused his power. As executive director of the Constructors Laborers Council, he forged a document – a corporate resolution – to obtain a line of credit for the council with the motive of diverting funds for his own use. Deutsch originally had been indicted by a federal grand jury on September 23, 2010 for fraudulently misappropriating $750,000 in CLC funds. His lawyers challenged the charges. In response, the grand jury months later issued superseding indictments that would drop the forgery charge and amend the original dollar amount.
Deutsch in May 2011 pleaded guilty to mail fraud in connection with obtaining a $120,000 line of credit from SunTrust Bank in September 2004 that had been secured by highway construction industry assets – and then had second thoughts. In a letter this early March to U.S. District Judge Thomas E. Johnston, he requested that the judge set aside his plea and dismiss all other charges cited in the indictment. Deutsch stated the prosecutors’ own investigation contained an interview with a bank president who admitted that a former employee forged the presumably incriminating documents. He wrote: “The court is asked to investigate the basis of the forgery allegation of the first sensationalized and widely published indictment. The forgery allegation is particularly revealing of investigative and prosecutorial misconduct when the government handwriting expert could not confirm the allegation and a lead government witness attempted to recant her grand jury testimony.”
In response, prosecutors offered an alternative plea deal in which Deutsch would admit to seeking a loan without the proper authority of two trustees. Deutsch fired back, saying that as a trustee himself, he did not have to ask permission from fellow trustees. He noted that SunTrust Bank never formally asked him if he had obtained such approval. He also asserted that prosecutors had attempted to silence him for blowing the whistle on certain union policies. “In summary,” wrote Deutsch, “this entire prosecution was false from the start, and then, once crossing the no-return line, became an appropriate ‘win at any cost and by any means’ pursuit by the investigators and government.”
The letter would hurt Deutsch’s case more than help it. Each of his four lawyers subsequently filed a motion to remove themselves from counsel, citing a breakdown in the client-attorney relationship. And the evidence of misappropriation – the product of a Labor Department probe – remained convincing. Not only had Deutsch secured a line of credit under suspicious circumstances, said the government, but starting around in mid 2007, he also created a series of backdated false meeting minutes and presented them to CLC board members for approval in hopes of concealing the line of credit. And the original indictment that he’d stolen $750,000 in CLC funds had plenty of details. Deutsch allegedly had used the money to pay for a variety of personal expenses, including payments on a pair of luxury cars, condo fees for a villa in the Bahamas, and membership dues in a yacht club. The indictment listed 25 instances in which Deutsch transferred funds to personal accounts. In the end, Deutsch decided to not pursue his withdrawal of last year’s plea agreement. It was hard to imagine him doing otherwise.