Steelworkers Boss in Northern Ohio Charged with Theft, Fraud

steelworkers-logoFor most union officials, a strike is a last-ditch opportunity to gain bargaining leverage. For David Sager, former president of United Steelworkers Local 5000, it appears to have been an opportunity to increase his personal wealth through a series of illegal schemes. On September 14, Sager was indicted in U.S. District Court for the Northern District of Ohio on nine counts of embezzlement, plus 18 counts of mail fraud, one count of obstruction of justice and one count of making false statements to law enforcement. He then pleaded not guilty and was set free on bond. “This defendant betrayed the union membership he promised to represent,” said U.S. Attorney Carole Rendon. The charges follow a joint investigation by the IRS and the U.S. Labor Department’s Office of Labor-Management Standards.

United Steelworkers Local 5000, based in Middleburg Heights, Ohio, in suburban Cleveland, represents about 100 employees of various Great Lakes shipping companies. David Sager, 58, a resident of Gibsonburg, Ohio (near Sandusky), served as president of the union from 1999 until April of this year. Federal prosecutors say that during 2010-12 he embezzled more than $180,000 from a strike fund created in 2009 in anticipation of a strike, a period in which he no longer was employed. Moreover, they maintain, he extracted well over $200,000 in payoffs to his union from more than one union employer in return for a promise of going easier on them in future negotiations, a common labor-management quid pro quo arrangement outlawed by the Taft-Hartley Act of 1947. The two types of offenses were not unrelated.

Back in 2009, Steelworkers Local 5000 went on strike, though without holding a prior rank and file member vote, after failing to reach a contract with the New York-based American Steamship, an employer identified in the indictment as “Company 2.” During negotiations, American Steamship eliminated the position of contract coordinator, the position held by Sager. Local union leaders, seeking a financial cushion in the event of a walkout, established a strike fund. Sager and two other union officials were signatories to the fund’s bank account. If a union member wanted to claim benefits, that person had to submit a voucher and a copy of the bill. A committee on which Sager served would review the voucher request. If the request met with committee approval, a union official, identified in the indictment as “Labor Official 2,” would issue a check. As the strike dragged on, Sager had vendors and Sandusky County, Ohio issue a total of $182,659.96 worth of checks for a variety of personal expenditures. He used $32,947.68 of that sum to make mortgage payments, property tax payments and home repairs. He and family members also made more than $11,500 worth of retail purchases. The Sager family also used union money for landscaping, salon services, furniture, restaurant meals and concert tickets. If nothing else, the strike seemed a smart short-run career move.

The strike finally ended in 2012. The following year Sager caught a break. American Steamship reinstated him as a wheelman and assigned him to a vessel. For whatever reason, soon after assuming the job, he took a personal leave of absence. And he did not return to work. In response, American Steamship fired him. But Sager still had a job as a union official. Once again, he saw a shady opportunity. He reportedly told certain union employers that if they wanted his cooperation, they would have to make monetary contributions to the union. And for the most part, that meant contributions to him. According to the indictment, on May 16, 2013, an employee of Company 5 sent an e-mail to selected fellow employees that read: “We are on the verge of losing Local 5000 if we can’t come up with an arrangement, and I am afraid (another union) will pick up the pieces and become the sole source of crew manpower on the lakes.” On July 11, 2013, Company 4, Company 5 and Local 5000 signed a joint employment trust agreement, which they renewed a year later. A firm named in the indictment as “Company 3,” however, was a holdout. One or more of its officials told Sager that he was in violation of the Taft-Hartley Act. There was more. On May 28, 2014, an employee of Company 3 sent an e-mail to employees stating: “You will notice that [Local 5000 ] is coming back at us for the Joint Employment Trust [aka Sager’s pay].”

David Sager got paid. In 2013, Companies 4 and 5 allegedly provided about $77,000 to Steelworkers Local 5000. In 2014, Companies 4 and 5 wrote Local 5000 approximately $73,418 in checks. And in 2015, Companies 4 and 5 paid $77,000 to the union. Sager received most of that roughly $230,000. Adding in his embezzlement from the union strike fund, his total take came to roughly $380,000. A spokesman for the U.S. Attorney’s Office has declined to comment on the payoffs. The reason, in the end, will come out whether or not the case goes to trial.