NYC Painters President Arrested, Indicted for Kickbacks and Thefts

Hector Lopez increased his wealth by cutting deals with union contractors. Members of his union bore the cost. On September 18, Lopez, formerly president of Metal Polishers Local 8A-28A, an affiliate of the International Union of Painters and Allied Trades (IUPAT), was arrested at his home and indicted in Brooklyn, N.Y. federal court on charges of enriching himself over several years through various illegal activities, the most serious of which was his acceptance of nearly $750,000 from an unnamed firm in exchange for the firm retaining control over the union benefit plan. At his arraignment, Lopez pleaded not guilty to all 15 charges, which include embezzlement, mail fraud, wire fraud, money-laundering and tax evasion. Magistrate Judge Marilyn Go released Lopez on $1 million bond, subject to electronic monitoring.

Metal Polishers Local 8A-28A, based in Queens, N.Y., has been a union awash in turmoil and red ink. The local’s current leaders believe its problems have everything to do with its ex-leader, Lopez. For the last few years the 1,400-member union has been in a court battle with its parent organization, IUPAT. The dispute was triggered by Lopez’s attempt at disaffiliation; IUPAT had responded by ordering an audit of local finances. The probe, as it turned out, was overdue. Auditors concluded the local ran a $329,910 deficit by the end of 2008 and barely had enough cash to cover a week’s expenses. The boss’s apparently unorthodox methods of financing his lifestyle had much to do with this shortfall. That’s why the international union went to court to seek – eventually successfully – his removal from his post.

Hector Lopez, 54, lives in a 3,600-square-foot colonial home in Oakland, N.J., in western Bergen County. He drives a Cadillac Escalade. The audit indicated he owes much of his good fortune to arrangements of questionable ethics and legality. His dwelling is owned by a Linden, N.J. window washing company and Local 8A-28A contractor, Total Building Services Inc. Lopez claimed in court papers filed in May 2009 that he had been planning to buy the house. Yet a probe by the New York Daily News published over a year later, based on audit records submitted to the U.S. Department of Labor, could not find any evidence of a deed transfer. That wasn’t the only red flag. Lopez also footed at least $20,000 of the cost of the Escalade by dipping into the union strike fund. He also used his union-issued American Express card to charge numerous items unrelated to union business – in January 2008 alone the tab was nearly $4,400. His $148,000 annual salary, while not outlandish, was $40,000 more than allowed by local by-laws. And his weekly $445 per diem expense limit was $200 above the by-law ceiling. It was hard to avoid concluding that Lopez had been ripping off his union.

The U.S. Department of Justice, after reviewing evidence of a joint IRS-Labor Department investigation, came to the same conclusion. On the morning of September 18, federal agents arrested Lopez at his New Jersey home. Later that morning a 15-count, 29-page indictment was unsealed in U.S. District Court for the Eastern District of New York charging him with a variety of offenses. Most seriously, Lopez had accepted over $740,000 in kickbacks over a seven-year period from a third-party administrator of the union’s health and welfare benefit fund in return for assurances that the administrator’s contract would be retained. While prosecutors did not specify any names of accomplices, they are certain he received the payments and then laundered much of the money. If convicted on the kickback charges alone, Lopez faces up to 20 years in prison.

There was more. Lopez allegedly accepted kickbacks from an employer trustee of the benefit fund in exchange for authorizing the fund to pay fraudulent invoices related to renovation of the union hall; the work had been performed by a company owned by a plan trustee. He also allegedly accepted a kickback from the trustee in exchange for rigging bids to ensure the awarding of a sprinkler installation contract to a company controlled by the trustee. Moreover, he allegedly violated the Taft-Hartley Act by living rent-free with his family in his home whose company had a collective bargaining agreement in force with Local 8A-28A. Were that not enough, Lopez also allegedly structured more than $82,000 in cash deposits at local banks to evade federal reporting requirements.

Lopez has pleaded not guilty to all charges. But given his central role in the local’s affairs, he’ll have a tough time convincing a jury. Not only was he president, but he also was chairman of the union health and welfare fund’s board of trustees. Having amassed that kind of authority with so little oversight, pilferage would have been easy for him. U.S. Attorney Loretta Lynch believes as much. At a press conference announcing the indictment, she stated: “Hector Lopez was entrusted with ensuring the sound management of the welfare fund for the benefit of union members. Instead, he turned the fund into a personal piggy bank, lining his pockets with the fruits of their labors.” Neither the union nor Lopez’s lawyer, Margaret Shalley, were available for comment.


Contractor Pleads Guilty to Defrauding NYC Painters Local Benefit Fund