As a Certified Fraud Examiner, Salvatore Armao knew he was in no position to do anything but plead guilty. That’s why he did just that. Last Thursday, August 2, Armao, founder and managing partner of a Long Island, N.Y.-based accounting firm, Armao LLP, pleaded guilty in U.S. District Court for the Southern District of New York to falsifying financial records filed with the Department of Labor to conceal a scheme by an unnamed labor union president to embezzle more than $100,000 over a number of years from a related benefit plan. Armao and a principal officer of his firm, Karen Auer, had been charged on June 1 with aiding and abetting the thefts. Auer, to no surprise, pleaded guilty on August 3. The actions follow a probe by the FBI, and the Labor Department’s Office of Inspector General and Employee Benefits Security Administration.
According to prosecutors, the unnamed president of the union, who also served as a trustee of its benefit plan, during roughly 2010-14 diverted plan funds for his own personal use through a variety of means. During this time, Armao LLP had served as accountant-auditor for the union and the plan. Its managing partner, Salvatore Armao, now 64, a resident of Howard Beach, Queens, booked the stolen money as “loans.” In an interview with Department of Labor investigators, Armao admitted he was aware that the union official was pilfering plan assets to pay for unauthorized expenses. Given his plea of August 2, it didn’t take long for his partner, Karen Auer, to follow suit. One day later, on August 3, she pleaded guilty to misdemeanor document fraud. DOL Office of Inspector General Special Agent-in-Charge Michael Mikulka stated of Armao following the guilty plea: “Salvatore Armao, a CPA and Certified Fraud Examiner for Armao LLP, should have been the first line of defense in protecting the members of a union, and the fund serving members and their families. Instead, he abused his position by filing false documents to conceal a multi-year embezzlement scheme.”