Federal Union Prosecutions Point to Need for Audits
Building trades officials and employees embezzled millions of dollars in recent years, raiding the bank accounts of their locals to pay for trips to Las Vegas, lavish jewelry, luxury cars, home renovations and even a new puppy, U.S. Labor Dept. records show.
In January, federal officials charged John Dougherty, a top official in Local 98 of the International Brotherhood of Electrical Workers in Philadelphia, as well as six others affiliated with the local, with stealing $600,000 from the union and its apprenticeship training program. In all of 2018, prosecutors charged or won convictions of 36 building trades officials or employees, according to the Office of Labor-Management Standards.
Many of the cases involved extravagant spending, with lax oversight and poor financial controls enabling local union officials and employees to supplement relatively modest on-the-book salaries by dipping into members’ dues and funds set aside for apprenticeship training, experts on fraud prevention say. “It’s that betrayal of trust,” says Peter Henning, a law professor at Wayne State University.
There were other much less well-publicized prosecutions. Raymond Ventrone, the former business manager of a boilermakers local in Pittsburgh, was sentenced last year to 41 months in prison and ordered to pay more than $3 million in restitution after an epic five-year white-collar crime spree. As business manager of Local 154, Ventrone blew more than $1.075 million at Best Buy and the Apple Store, $570,000 at luxury French retailer Louis Vuitton and tens of thousands to indulge his passion for music.
Robert Brown, founder of a Bangor, Maine-based fraud prevention and detection firm, says a top priority should be insisting that the same person who is authorized to write checks for a local union isn’t also doing the bank reconciliation. Henning contends the parent union organizations of the various national unions need to step up their oversight of locals and provide them with some accounting tools. Says Henning: “Nothing scares an embezzler more than an audit.”