An ironworkers union accountant pleaded guilty yesterday in federal court to falsifying financial reports in a growing scandal that had members of Congress calling for reforms.
Francis Massey, a former partner in the Washington accounting firm of Thomas Havey LLP, admitted in federal court that he covered up at least $1.5 million in unauthorized “entertainment” expenditures by leaders of the Bridge, Structural, and Ornamental Iron Workers union.
Thomas Havey LLP is one of the nation’s largest accounting firms for organized labor, including the AFL-CIO national federation of unions.
Among union leaders accused by federal prosecutors of misusing union funds is Jake West, former president of the ironworkers union. He is awaiting trial in the U.S. District Court for the District of Columbia, where Massey, a second Thomas Havey accountant and six ironworkers union officials have pleaded guilty.
Prosecutors say Mr. West and other union leaders spent more than $1.5 million in union funds on “dining, drinking and entertainment” between 1992 and 1998. The expenses included golf games and dinners at the Prime Rib restaurant in Washington.
Afterward, Thomas Havey accountants classified the expenses as “office administrative expenses,” or “educational and publicity expenses” in annual financial reports that the Department of Labor requires from labor unions.
As part of the guilty plea for “aiding and abetting a conspiracy to make false statements,” Massey agreed to cooperate with law enforcement personnel in investigating any other accounting misdeeds.
“It’s an ongoing investigation,” said Monty Wilkinson, spokesman for the U.S. Attorney’s Office. “We’ll go wherever the investigation leads us.”
Rep. Charlie Norwood, a Georgia Republican and longtime critic of unions, said: “The challenge in Washington now is to work together to bring about real reform for Republicans, Democrats, congressional leaders and the administration to make empowering our nation’s workers a priority.”
He recommends tougher financial disclosure rules on unions.
AFL-CIO officials said they were unaware of similar financial concealment by the Thomas Havey accounting firm.
“Our experience with them has been that they have been a tough, by-the-book auditor,” said AFL-CIO spokeswoman Lane Windham. “We’re surprised.”
Former ironworkers General Secretary LeRoy Worley awaits trial along with Mr. West.
The entertainment expense cover-up is one of two organized labor scandals involving Mr. West.
He also is a former board member of Ullico Inc., a financial services company run by union leaders that invests money from union pension funds.
An ongoing grand jury investigation is looking into accusations that Ullico board members approved a stock buyback of their own shares at inflated prices, thereby making hefty profits for themselves at the expense of the pension funds.
Other board members under investigation headed the Communications Workers of America, the plumbers union, the asbestos workers union and the carpenters union.
The National Right to Work Legal Defense Foundation has used Massey’s guilty plea to renew its recommendation that unions lose their legal right to negotiate contracts that require employees to join unions and pay dues.
“Union officials have long lived limousine, all-expense-paid life-styles,” said Stefan Gleason, National Right to Work Legal Defense Foundation vice president.
“Unfortunately, rank-and-file workers are forced by federal law to foot the bill with their mandatory union dues.”
Massey’s next hearing date before U.S. District Court Judge Thomas Hogan is set for Oct. 31, after which he will be sentenced.
He could face a prison sentence of five years.
He agreed in his plea bargain to pay a $30,000 fine and $5,000 in restitution to the Labor Department.
“It’s a sad day for him and he accepts the responsibility for his conduct,” said Justin Thornton, Massey’s attorney.
The Thomas Havey accounting firm said in a statement: “Our firm deeply regrets any harm resulting from the actions taken by our former partner, Mr. Massey, that led to his guilty plea today. His conduct is clearly unacceptable and completely deviates from the values and code of conduct at Thomas Havey LLP.”