By Pension and Benefits Editorial Staff
A federal district judge has sentenced the former president of a Colton, California-based labor union to 144 months in prison for stealing nearly $800,000 from the union’s health plan trust fund, which he used to pay for personal expenses including legal bills and a car loan for his son’s sports car, according to the DOJ. The judge also scheduled an April 5 hearing to determine the amount of restitution the 74-year old Loma Linda man owes his victims.
After a five-day trial in February 2020, a jury found the defendant guilty of one count of conspiracy, 12 counts of theft in connection with health care, and one count of making a false statement to a government agency.
Embezzlement scheme. The defendant appointed himself president of United Industrial Services Workers of America (UISWA) and trustee of the UISWA health plan trust fund, the DOJ said. Money paid into the fund was supposed to be used exclusively for health care benefits of its participants. Instead, the defendant stole the union’s health funds for the benefit of himself and his immediate family.
To carry out his scheme, the defendant appointed a sham trustee with no prior experience with unions. He also actively misled the third-party administrators of the health plan into making improper payments from the trust fund.
The defendant advanced his scheme by appointing his son as the secretary and treasurer of the union, and later appointing his 71-year-old ex-wife as the UISWA president and trustee in 2010, shortly before he began serving a two-year federal prison sentence for making false statements to federal officials while he was president of a different labor union
"To execute this scheme, [the defendant] manipulated others, including his own family members," prosecutors wrote in their sentencing memorandum. "He employed sophisticated means in furtherance of the scheme, including by diverting trust money through a Nevada shell company to hide his theft. He lied to brokers and administrators. And he bullied and pressured those around him to get his way, thereby intimidating and abusing those who trusted him most."
Personal piggy bank. From 2008 to 2014, the defendant embezzled health plan funds to pay a $110,000 personal civil judgment against himself and his 55-year-old son. He also embezzled $40,000 to pay criminal defense lawyers who represented him in a separate case. The defendant funneled more than $310,000 to himself by disguising the funds as rent payments on two properties he owned and held under a shell company.
The defendant also stole more than $300,000 in union health plan money to make "salary" payments to his family, even though none of his family members ever worked for the plan. And he used plan funds to pay off a $25,000 loan on his son’s Ford Mustang Shelby GT500 sports car.
False union report. In addition, the defendant filed a false financial report with the Department of Labor in which he concealed the existence of more than $100,000 in union receipts and disbursements that he held in a secret bank account and from which he made regular payments to his mistress.
Family members pleaded guilty. The defendant’s son, ex-wife, and 42-year-old daughter pleaded guilty to criminal charges in this case. His ex-wife and daughter were sentenced to two years’ probation, while his son was sentenced to time served in prison, plus three years of supervised release. As to restitution, his ex-wife was ordered to pay $316,502; his son to pay $273,350; and his daughter to pay $200,552.
SOURCE: Department of Justice, U.S. Attorney’s Office, Central District of California, Press Release Number 21-003, January 5, 2021.
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