Long Island Accounting Executives Sentenced for Records Fraud

Sometimes union corruption cases merge in unexpected ways. That was the case in the sentencings of Salvatore Armao and Karen Auer, respectively, the managing partner and principal officer of a Long Island accounting firm. On February 26, Armao was sentenced in U.S. District Court for the Southern District of New York to two years of supervised release, including six months of home confinement, to making false statements related to aiding and abetting embezzlement by a union president. He also was ordered to pay $9,592 in restitution, $18,700 in asset forfeiture and a $3,000 fine. A little over a week later, on March 8, Auer was sentenced to one year of supervised release and ordered to pay $7,194 in restitution. Each had pleaded guilty last August following a joint probe by the FBI and the U.S. Department of Labor.

Salvatore Armao, founder and managing partner of the Garden City (Long Island), N.Y.-based accounting firm of Armao LLP, was a Certified Fraud Examiner. There was a certain irony here in that he used the tools of his trade to perpetrate fraud and not just investigate it. Court records show that Armao falsified financial records that he filed with the Labor Department to conceal a scheme by an unnamed area labor union president to embezzle more than $100,000 over several years from a union-sponsored benefit plan. He and Auer logged embezzled funds as “loans” and then concealed these entries by making false statements to investigators from the Labor Department’s Office of Inspector General and Employee Benefits Security Administration. The pair were charged early last June, and pleaded guilty two months later.

Here is the twist in the storyline: The unnamed union leader turned out to be another individual known to readers of Union Corruption Update, Rocco Fazzolari, former president of the Long Island-based United Industrial and Service Employees Union Local 122. Fazzolari pleaded guilty last September to ripping off his union to the tune of more than $1.3 million, aided by an unnamed co-conspirator who headed a benefits consulting firm. Fazzolari in late January was sentenced in Manhattan federal court to 37 months in prison, and ordered to pay restitution and forfeit assets. Small world, indeed.