Texas Businessman Charged with Stealing $4.5M from California IUOE Local

Scott A. Wilson was a man of many disguises – especially when it came to the enterprises that he pretended to run. Now there is nothing left to disguise. Last Friday, June 26, Wilson, former director of the information technology department for International Union of Operating Engineers Local 3 and also a Texas-based businessman, was charged in Oakland federal court with defrauding the Alameda, Calif.-based union out of more than $4.5 million over a six-year period and diverting the funds to at least three front companies that he owned. Of that sum, he allegedly received about $2.5 million in kickbacks through a variety of schemes. He had been arrested in Texas and arraigned in Dallas federal court that day. The charges follow a joint investigation by the FBI and the Labor Department’s Office of Labor-Management Standards and Office of Inspector General.

Wilson, now 52, a resident of Corsicana (south of Dallas), Texas, served as director of information technology for IUOE Local 3. And he was well-paid, too. According to union financial records for the year 2015, his annual compensation exceeded $150,000. Apparently, that sum wasn’t sufficient. Starting in 2011, he used his union position to set up a front company called OST through which he allegedly enriched himself at union expense. According to prosecutors, Wilson used OST to receive funds from the union, at first directly and then indirectly through two other front companies set up by a friend and a relative at Wilson’s direction. For six years, he allegedly sent fake invoices to the union for IT-related goods and services that never were provided. In some instances, he extracted funds through OST. In others, he received kickbacks paid by his friend and relative.

In addition, prosecutors charge, Wilson also used his front companies to conceal payments taken out of union funds and sent to family members, mostly for work never done. In at least one instance, he arranged for union funds to be withdrawn from the accounts of the front companies and delivered to him at various San Francisco Bay Area restaurants in the form of cash. Often the cash came wrapped in the shape of bricks and placed in silver bags. All told, Wilson diverted around $4.5 million in union funds to these business fronts of which about $2.5 wound up in his pockets. He used a good portion of that money to buy real estate, most notably, a parcel of vacant land in Corsicana on which to build a dream home.

Operating Engineers Local 3, if belatedly, caught onto Wilson’s schemes by 2018. According to court records, the union’s finance department learned that he was the principal individual behind one of the firms with which the union IT department was doing business. He was arrested in Corsicana last Wednesday, June 26 and made an appearance in Dallas federal court. Wilson was ordered to appear in Oakland federal court on July 13. If convicted, he faces a sentence of up to 20 years in prison, a fine of up to $250,000, and a restitution and forfeiture order.