New York Laborers Benefits Manager Melissa King Sentenced for $42 Million Ripoff

Melissa King is going to spend six years in prison. For union members, that can’t be long enough. Their anger is understandable. King, formerly benefits consultant for Laborers International Union of North America Local 147, aka “the Sandhogs,” received her prison sentence in Manhattan federal court on June 21 for embezzling what prosecutors said was more than $42 million from various local benefit funds. Dozens of members of the New York City-based underground construction workers union were on hand for the occasion. It was the largest instance of one-person embezzlement in American organized labor history. Ms. King, who aspired to the life of a queen, proved as adept at spending money as she was at stealing it. The main concern among rank and file now is how much of their retirement benefits they will see – assuming they can afford to retire.

Union Corruption Update has covered this story several times since it broke nearly three years ago. On December 1, 2009, King, now 61, was charged in federal court following her arrest the previous day for illegally diverting about $42.6 million during 2002-08 from three union benefit funds to one or more bank accounts she controlled through her company, King Care LLC. The following February a grand jury indicted her. It was a staggering sum, made possible by employer contributions. Initially, on the advice of her attorneys, King denied all charges. But in the end, with the evidence overwhelming, she pleaded guilty in October 2011 to embezzling funds and filing false personal income tax returns. The union already had severed her service contract in 2008.

On the surface, the four-times-divorced Ms. King had little incentive to steal. Having handled Sandhog benefits since 1980, her official annual compensation eventually reached $540,000. That’s right up there with the best-paid union presidents in the country. But she coveted a lifestyle that her salary couldn’t cover. And with apparently nobody looking, she treated the LIUNA local as a personal slush fund. King bought a $2 million home in Irvington-on-Hudson, in Westchester County, N.Y. She spent $25,000 a month on a Park Avenue penthouse so her daughter could live near college. She also bought and maintained high-end automobiles, plus a summer home up in Maine. Courtesy of unsuspecting union members, King also spent: $7.2 million on American Express charges; more than $3 million on horses and related services for her daughter’s equestrian career; at least $1 million on jewelry; $800,000 a year on her retired parents in Florida; $300,000 on purchases at Neiman-Marcus; $278,000 on architect’s fees for home remodeling; nearly $100,000 on private jet travel; and $32,000 on dog grooming. That’s not including what she spent to maintain her housekeeping staff, wine cellar and swimming pool.

Union members were less than impressed by these displays of affluence. “I planned my life to be retired at 65,” testified John Donohue, 71, who lost his $50,000 life savings to King. “Now I get up every day at 3:30 in the morning. I’m forced to do that because of a thief.” Another Sandhog, James McCluskey, stated: “Melissa King showed no respect for how hard we work underground. She is arrogant in her denials and even the maximum (eight-year) sentence is not enough.” U.S. District Judge John Koeltl ordered King’s Westchester County and Maine residences, along with her four luxury cars and daughter’s show horses, seized and sold off. As it turned out, her sentence of six years wasn’t even the maximum.

Melissa King has apologized…sort of. At sentencing, her attorney, Alice Frontier, read from a prepared statement on her behalf: “It pains me very deeply to know that I was unable to protect the very people that I meant to serve, and that they are now suffering when they worked so hard for their benefits.” Frontier added that though her client was guilty, so likely were others. It “defies logic,” she said, that nobody in the union was aware of what was happening. Federal prosecutor Joseph Facciponti, however, denies this was the case. He stated that his staff conducted a thorough investigation of the thefts and concluded that King was the only person involved. Still, there is no denying that accountability at the more than 1,000-member union had broken down. Had benefit fund trustees been more forthright in demanding financial records for review, the benefits would be going to the workers who earned them.