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Massive Fraud Alleged in DC Teacher Union
The Heartland Institute ^ | 03/01/2003 Edition | Mike Antonucci

Posted on 02/20/2003 4:11:04 PM PST by Remedy

Officials charged with diverting $5 million in member dues


Just before Christmas last year, federal officials raided the homes and offices of former officials of the Washington Teachers' Union (WTU) in search of goods allegedly purchased with more than $5 million in union funds.

The items listed in an FBI affidavit include $500,000 in custom-made clothing, a 288-piece antique Tiffany sterling silver set, a $6,800 ice bucket, furs, alligator shoes, jewelry, artwork, wine, wigs, a 50" plasma television, and computer equipment. Agents were investigating expenditures on a Bahamas vacation and bar and nightclub tabs.

Police also found a double-barrel shotgun in the home of former WTU President Barbara Bullock, a firearm for which she had no permit. Washington City Paper reporter David Morton wrote the booty seized "reads like the manifest of a pirate ship."

The investigation, conducted by the FBI, the IRS, the Department of Labor, and the District of Columbia inspector general, began last Fall following union member complaints about being overcharged for dues. Subsequently, Bullock, Treasurer James Baxter, and Bullock's assistant, Gwendolyn Hemphill, all resigned or were dismissed when an American Federation of Teachers (AFT) audit discovered "financial improprieties."

A month later, the parent AFT filed a racketeering lawsuit against the former officials, charging an illegal diversion of at least $5 million in member dues. Then, just before a board meeting to consider a rank-and-file proposal to dissolve the WTU executive board, the AFT's Executive Council appointed an administrator over the local union. This action effectively dissolved WTU's governing bodies, placing day-to-day operations in the hands of AFT Northeast Regional Director George C. Springer, former president of AFT's Connecticut state affiliate.


"Breathtaking" Misappropriation

The extent of the multi-million dollar misappropriation is striking when considered against the union’s annual budget of $4.2 million. "How could such an allegedly massive misappropriation of union funds occur over such a long period of time and under the noses of so many people, including the union's board of directors, the union's members, and the American Federation of Teachers, which is the parent organization?" asked the editors of The Washington Post, calling the $5 million misappropriation "breathtaking."

But everyone, from the AFT to the WTU vice president to the executive board and staff, all claim to have had no knowledge of the massive spending. Over the same period, health care premiums on behalf of retirees went unpaid, staff pension fund contributions went unpaid, rent and utilities went unpaid, dues reimbursements to site reps never happened, payroll taxes were paid late, and WTU failed to pay its national dues to AFT for more than a year.

AFT claims it threatened to disaffiliate WTU in February 2002 if it did not pay its national dues, but members were not told anything about this at the time.

The FBI reviewed scores of union documents and discovered that meetings minutes, tax returns, and Labor Department disclosure forms contained no mention of the profligate spending. The WTU treasurer and the outside accountant falsified the IRS and Labor Department reports they prepared.

"It's a culture that is just unbelievable--of financial secrecy, of manipulation of information," was how union activist George Parker described the atmosphere at WTU headquarters to The Washington Post. "The problem is that everybody just let it happen," he added.


AFT Audit

In support of its racketeering lawsuit, the AFT released the report of forensic investigators hired to follow the WTU money trail. The audit revealed details unmentioned even in the FBI affidavit:

The auditors also confirmed the obvious: The union's LM-2 report to the U.S. Department of Labor "does not accurately depict the true nature and amount of the transactions that we discovered during our investigation." Also, the accountant who helped prepare and file the reports did so knowing they "were not accurate and, at a minimum, were grossly misleading." The auditors could locate only one LM-2, although they are supposed to be filed annually.

The U.S. Department of Labor has a proposal that would create new reporting requirements for union finances. Not only will unions be required to provide more detailed accounting of their spending, but, for the first time, they also will have to disclose details of the financial trusts they operate. (See sidebar: "Unions to Face Increased Federal Regulation.")

Whatever the outcome for Bullock, Baxter, and Hemphill, AFT members will be footing the bill for their misdeeds. The WTU's fidelity bond covers losses only up to $100,000.

 

 


TOPICS: Crime/Corruption; Culture/Society; News/Current Events; US: District of Columbia
KEYWORDS: aft; educationnews; nea; unionbosses; wtu
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1 posted on 02/20/2003 4:11:05 PM PST by Remedy
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To: EdReform
ping
2 posted on 02/20/2003 4:15:24 PM PST by Remedy
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To: Remedy
Fraud and corruption in a union? Fraud and corruption in a teacher's union? Fraud and corruption in a teacher's union in Washington, DC? Why am I not surprised?
3 posted on 02/20/2003 4:17:56 PM PST by FreePaul
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To: Remedy
so the membership's health care premiums and pension fund contributions went unpaid, at least the DNC and Hitlery Klinton got theirs
4 posted on 02/20/2003 4:18:48 PM PST by Texas_Jarhead
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To: Remedy
One of my favorite subjects.

I don't understand this part:

Also, the accountant who helped prepare and file the reports did so knowing they "were not accurate and, at a minimum, were grossly misleading." The auditors could locate only one LM-2, although they are supposed to be filed annually.

Are they referring to an outside accountant? If so, in what capacity was the accountant functioning-- auditing, rendering bookkeeping services, or something else? Why doesn't the article name the accountant?

5 posted on 02/20/2003 4:18:48 PM PST by independentmind
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To: Remedy
Fine upstanding moral leaders our kids have!
6 posted on 02/20/2003 4:18:52 PM PST by livius
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To: Remedy
Where is it that you need a permit for a shotgun? Is that for real? The booty sounds like Mosely Braun on a binge.
7 posted on 02/20/2003 4:20:42 PM PST by blackdog ("But that's what I do" A quote from my Border Collie)
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To: Remedy
Cue the Claude Rains quote...
8 posted on 02/20/2003 4:21:28 PM PST by william clark
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To: Remedy
Gwendolyn Hemphill was one of the heads of D.C. Mayor Anthony Williams's reelection campaign. Her husband is one of Williams's chief aides. I understand some of the embezzled money went to Williams's campaign.
9 posted on 02/20/2003 4:22:50 PM PST by aristeides
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To: Remedy
The NEA's crimes must be super-huge.
10 posted on 02/20/2003 4:23:06 PM PST by Lexington Green
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To: Remedy
Scores of checks had the names of legitimate payees crossed out and the name of Bullock's chauffeur written in, yet the bank cashed each one without incident.

The casual reference to her chauffeur is enough to raise my eyebrows.

11 posted on 02/20/2003 4:24:49 PM PST by Old Professer
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To: dd5339; Vic3O3
Sort of makes you wonder what the NEA has gotten away with, besides the minds and morals of our country's children....
12 posted on 02/20/2003 4:29:40 PM PST by cavtrooper21 ('bout time for some mounted saber practice....)
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To: Remedy
Union officials living high on the hog while they were screwing their fellow "brother and sister" union members.

Are there any pics of the perps available?

13 posted on 02/20/2003 4:31:44 PM PST by csvset (Willie Brown, Bill Clinton without the body count)
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To: Texas_Jarhead
Why were Washington officials contributing to Hilary's New york campaign? It makes no sense at all.
14 posted on 02/20/2003 4:34:38 PM PST by boop
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To: Remedy
I'm glad you had sense enough not to post this under "breaking news".
15 posted on 02/20/2003 4:39:20 PM PST by VMI70
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To: csvset

16 posted on 02/20/2003 4:40:53 PM PST by Remedy
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To: aristeides
Hmmmmm... Hillary's Senate campaign also received some of this ill gotten cash.

National Legal and Policy Center -- Organized Labor Accountability Project UNION CORRUPTION UPDATE January 20, 2003 -- Vol. 6, Issue 2

{snip} In violation of federal election law, Bullock also contributed $9,000 to the Dem. Natl. Cmte. and $2,000 to Hillary Clinton's senate campaign in 2000.

By charging those contributions to the WTU's American Express card, Bullock violated the Fed. Elect. Campaign Act by making a contribution to a fed. candidate directly from the union, instead of its pol. action cmte.

Bullock also wrote checks for her personal benefit of at least $381,000. {snip}

17 posted on 02/20/2003 4:45:09 PM PST by csvset (Willie Brown, Bill Clinton without the body count)
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To: Remedy
Who could imagine corruption in the same city that gave us, Marion Barry, America's crack-erjack mayor?
18 posted on 02/20/2003 4:48:47 PM PST by O.C. - Old Cracker
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To: boop
Why were Washington officials contributing to Hilary's New york campaign?

Why do you think it took so long for their malfeasance to be discovered?

19 posted on 02/20/2003 4:55:17 PM PST by aristeides
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To: cavtrooper21; Remedy; All; *Education News
"Sort of makes you wonder what the NEA has gotten away with, besides the minds and morals of our country's children...."

The Union That Killed Education

20 posted on 02/20/2003 5:34:51 PM PST by EdReform
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