When union corruption is massive, pervasive and systemic, and labor leaders repeatedly fail to perform their fiduciary duties, should the labor organization forfeit its tax-exempt status?
Landmark Legal Foundation makes a persuasive case that the corruption-plagued Washington Teachers Union (WTU) and the crime-infested United Teachers of Dade County (UTDC) in South Florida deserve to forfeit their tax-exempt status. Both local unions are affiliates of the American Federation of Teachers (AFT). The parent organization was so blind that the WTU’s corruption spanned nearly seven years.
Landmark, which has spent years investigating and uncovering political and financial abuses of the nation’s largest teachers’ unions and their affiliates, has filed a complaint with both the IRS and Tax Division of the Department of Justice, seeking the revocation of the non-profit tax status of both the WTU and the UTDC.
Meticulously documenting its case, Landmark provides persuasive evidence that “officers of the WTU and UTDC, while acting in their official capacities, compromised the tax-exempt status of their unions by engaging in an ongoing pattern of fraud, self-dealing, money-laundering and conspiracy.”
Citing Internal Revenue Code sections that specifically prohibit 501(c)(5) labor organizations from utilizing the “earnings” of the union for the benefit of “any member,” Landmark conclusively demonstrates how former WTU President Barbara Bullock and other officers participated in schemes that depleted the union’s coffers of an estimated $5 million over several years.
Landmark also notes that Pat Tornillo, who headed UTDC for decades, recently pleaded guilty to multiple felony counts for his role in looting the UTDC treasury. A much-belated audit commissioned by the AFT found that Tornillo, who used his position to make himself a kingmaker in the Florida Democratic Party, spent at least $2.5 million in diverted loot over the past six years to finance an expensive lifestyle, which AFT and other union leaders had to close their eyes to avoid seeing. The audit found that an additional $1 million was misused by other union leaders.
Landmark’s complaint cites the 2001 Exempt Organizations Text, which declares that, when a 501(c)(5) organization pays “unreasonable compensation to individuals that retain ‘substantial influence,’ such organization will jeopardize its exempt status based on inurement,” which “arises from the misuse of control over the organization.” The wholesale looting of these unions could occur only when other officials willfully or negligently failed to perform duties that could have easily prevented the abuse. Landmark’s case has substantial merit.