Massachusetts Contractors Indicted for $2M+ LIUNA Double-Breasting Scheme

liuna logoEmployees of Christopher and Kimberly Thompson were being had, even if most weren’t aware of it until the hammer came down. On January 26, the Thompsons, operators of a Boston-area asbestos removal company, were indicted in U.S. District Court for the District of Massachusetts on 18 counts of mail fraud, 18 counts of benefit fraud and one count of embezzlement in a scheme to defraud members of a Laborers local out of more than $2 million in promised benefits. The case has all the appearances of double-breasting. Following their arrest, the couple pleaded not guilty in February and currently are free on bond. As of this writing, the U.S. Attorney’s Office website indicates no subsequent action. The actions follow a joint probe by the U.S. Labor Department’s Employee Benefits Security Administration and Office of Inspector General.

Christopher and Kimberly Thompson, a husband-and-wife couple, now both 52, residents of Windham, New Hampshire, ran an asbestos removal business – actually, two of them: AQE, Inc. and Air Quality Experts, Inc. The second, say federal prosecutors, was established solely for the purpose of avoiding compliance with the terms of a collective bargaining agreement with the Tewksbury, Mass.-based Laborers International Union of North America Local 1421. This practice is known as a “dual shop” or “double-breasting.” Though usually illegal, it is common. This April, for example, Union Corruption Update described the prosecution of Rhode Island-based landscaping and nursery firm owner-operator Steven Pagliarini for shortchanging union benefit plans of around $170,000. In the case of the Thompsons, the defendants had agreed to make required contributions to the Massachusetts Laborers Benefit Fund (MLBF), but realizing that a union-approved company was not in charge of payroll and accounting, created a parallel nonunion company, Air Quality Experts, Inc., for which they hired union workers.

The Thompsons compensated employees of Air Quality Experts with wages and benefits less than those stipulated by the CBA. In particular, the company shortchanged the Massachusetts Laborers Benefit Fund out of more than $2 million worth of ERISA-guaranteed medical and pension benefits for about 8,000 union members and their families in that state. The Thompsons’ remittance reports to the MLBF omitted mention of thousands of hours worked by LIUNA Local 1421 members. The defendants face up to 20 years in prison, three years of supervised release and a $250,000 fine on each of the mail fraud charges alone. It is worth noting that double-breasting, while wrong, occurs mainly in states without Right to Work laws. In other words, Massachusetts, in remaining a non-Right to Work state, effectively grants private-sector unions a blank check to coerce workers into paying dues as a requirement for keeping their jobs. This in turn makes collective bargaining agreements, and compliance with them, expensive. States such as Indiana and Michigan in recent years have enacted Right to Work legislation; Massachusetts should follow their lead.