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UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF COLUMBIA The American Federation of Teachers, AFL-CIO v. Barbara A. Bullock Gwendolyn M. Hemphill James O. Baxter II Leroy Holmes Errol Alderman, individually and Michael Martin, individually and Cheryl Martin Gwendolyn B. Clark COMPLAINTINTRODUCTION1. The American Federation of Teachers, AFL-CIO ("AFT") and its affiliate Washington Teachers' Union, Local #6, AFL-CIO ("WTU") and the members thereof who are also members of AFT, have been the victims of an illegal scheme perpetrated by Barbara A. Bullock, Gwendolyn M. Hemphill, James O. Baxter II, Leroy Holmes, Errol Alderman, Expressions Unlimited, Michael Martin, Cheryl Martin and Gwendolyn B. Clark (collectively "Defendants"), to misappropriate, misuse and convert the Washington Teachers' Union's funds to Defendants' personal use and to the unauthorized use of others, thereby denying AFT, Washington Teachers' Union, Local #6 and their members, the lawful owners of those funds, sums in excess of Five Million dollars ($5,000,000.00). 2. Defendants participated in this scheme using WTU as an enterprise to conduct their unlawful activity resulting in serious injury to AFT, WTU and their members. 3. Beginning on or before 1995, less than one year after she took office, Bullock began using WTU's funds, through the use of Union credit cards, to purchase designer clothes, furs, accessories and gifts; by issuance of WTU checks to herself and to others for her personal benefit; and by issuance of WTU checks to the other Defendants, including Baxter and her sister Clark. 4. Baxter and Bullock both signed the checks that went to Bullock and to merchants, such as a custom clothier, who provided goods solely for Bullock's personal use, received statements indicating Bullock's personal charges on WTU's credit cards and paid the bills for those credit cards with WTU funds. 5. Clark and Bullock shared personal bank accounts and a Diners Club card. Proceeds from checks written to Bullock were deposited into those joint accounts and charges made by both Bullock and Clark on their Diners Club card were paid by the Union. Additionally, Bullock engaged Clark's company, Gwen's of Columbia, to "decorate" WTU's office for the winter holidays. For those services, Gwen Clark and Gwen's of Columbia were paid over Fourteen Thousand Six Hundred dollars ($14,600.00).6. As with Bullock, beginning on or before 1995, less than one year after he took office, Baxter began using WTU's funds for his personal benefit, through the use of Union credit cards to purchase personal items, such as food, clothing and entertainment; by issuance of WTU checks to himself, to the other Defendants and to others. 7. Gwendolyn M. Hemphill, was hired in 1996 as Special Assistant to the President and served as Bullock's high-level aide. Shortly after being hired, Hemphill took over the dayto-day responsibility for WTU's financial affairs. In this capacity, Hemphill wrote the checks to be issued by the Union and presented them to Bullock and Baxter for signature. She also maintained WTU's accounts. Around 1996, WTU obtained a stamp, to be used to affix Bullock's signature to checks. Hemphill had access to, control of and maintained possession of the Bullock signature stamp. Using it, in many cases at the direction of Bullock, Hemphill affixed one of the two signatures needed to authorize checks written on WTU's accounts. 8. Beginning on or before December 1996, shortly after she was hired, Hemphill began using WTU's funds to write checks to herself and to others, including her son-in-law, Michael Martin, as well as the other Defendants. Beginning on or before 1998, Hemphill began issuing large checks to Holmes, a driver for Bullock. Upon cashing the checks, Homes gave the proceeds to Hemphill, who returned a portion of the cash to Holmes and retained the rest. In addition, some of the proceeds from checks issued to Holmes were deposited into the personal bank account of Bullock. Since 1998, Hemphill issued checks to Holmes in excess of over One Million Two Hundred Thousand dollars ($1,200,000.00). Hemphill also issued a large number of checks to her son-in-law, Michael Martin, his business associate Alderman, and a company with which both Martin and Alderman were affiliated, Expressions Unlimited. Between the period beginning about July 1, 1998 through approximately September 2002, unauthorized WTU checks in excess of Four Hundred and Fifty Thousand dollars ($450,000.00) were issued to Expressions Unlimited. Upon information and belief, some of these checks were deposited in Hemphill's personal bank account. 9. In addition, beginning on or before May 1998, Hemphill was issued a Union credit card, to which she began making unauthorized purchases of personal items, such as clothing, electronics and jewelry, including a plasma television costing over Ten Thousand dollars ($10,000.00), which was delivered to her home. Hemphill also used WTU's credit cards to purchase items for her daughter and son-in-law, Cheryl and Michael Martin, including the purchase of a dining room table purchased on November 4, 1999 and delivered to the Martin's home and a trip to the Bahamas purchased for the Martin's on February of 2000. 10. In addition to Holmes' activities described above, Holmes was paid in cash from WTU funds to be Bullock's personal chauffer. In addition to driving Bullock to official Union meetings and appointment, Holmes drove Bullock to run personal errands, such as antiquing and clothes shopping at various shopping malls across the Washington, DC metropolitan area. 11. Together, through their collective efforts, Bullock, Baxter and Hemphill issued checks to themselves and the other Defendants and made purchases on WTU's credit cards for themselves and the benefit of the other Defendants, in a scheme to illegally embezzle and convert WTU's funds. Alderman, Michael Martin, individually and through their business, Expressions Unlimited, Cheryl Martin, and Clark, individually and through her business, Gwen's of Columbia, cashed, deposited or otherwise made use of WTU's funds and property for their personal benefit. This scheme began in 1995 and continued until their activities were uncovered on or around September 2002.JURISDICTION AND VENUE12. This action arises under provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., the Labor-Management Reporting and Disclosure Act ("Landrum-Griffin Act"), 29 U.S.C. § 501 et seq., and various state law claims. This Court has jurisdiction over the case pursuant to 28 U.S.C. § 1331 because this complaint arises under the laws of the United States, and 28 U.S.C. § 1367, because supplemental claims arising under the laws of the District of Columbia are so related to the Federal claims in this action that they form part of the same case or controversy. 13. Venue is proper in the United States District Court for the District of Columbia pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events and omissions giving rise to the claims occurred in the District, the Washington Teachers' Union is located in the District, and Barbara A. Bullock and Gwendolyn H. Hemphill reside here. 18 U.S.C. § 1965(a)-(b). 14. All of the Defendants are subject to the exercise of personal jurisdiction by this Court. 15. There exists now between the parties an actual, justiciable controversy in which Plaintiff is entitled to relief because of the facts and circumstances set forth below. PARTIES16. Plaintiff, the American Federation of Teachers, AFL-CIO, is a non-profit labor union, having its principal place of business at 555 New Jersey Avenue, N.W., Washington, DC 20001. 17. Defendant Barbara A. Bullock ("Bullock") is an individual who resides at 1221 Massachusetts Avenue, N.W., #1021, Washington, DC 20005. Bullock served as the elected President of the Washington Teachers' Union from on or about July 1, 1994 through on or about September 2002. 18. During the time she served as an officer, agent and representative of the Union, Bullock had check signing authority and overall responsibility for the conduct of WTU's affairs. 19. During her tenure as President, Bullock made unauthorized personal charges on WTU's credit card accounts; issued or caused to be issued unauthorized checks to herself and to others from WTU's bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 20. Together with Defendants Gwendolyn M. Hemphill ("Hemphill"), James O. Baxter II ("Baxter"), Leroy Holmes ("Holmes"), Errol Alderman ("Alderman"), Michael Martin. Cheryl Martin and Gwendolyn B. Clark ("Clark"), Bullock orchestrated and participated in an illegal scheme to convert Union funds to her personal use and to the use of others. 21. Defendant Gwendolyn M. Hemphill is an individual who resides at 1 91 9 Yorktown Road, N. W., Washington, DC 20012. Hemphill is a former WTU employee %% who served as Special Assistant to the President and Legislative Representative from 1996 through on or about September 2002. 22. In her position as an agent, employee and representative of the Union, Hemphill had general responsibility for the financial affairs of the Union, check writing responsibility and maintained possession and control of a signature stamp bearing Bullock's name. 23. During her tenure as Special Assistant to the President, Hemphill made unauthorized personal charges on WTU's credit card accounts; issued or caused to be issued unauthorized checks to herself and to others from WTU's bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 24. Together with Defendants Bullock, Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin and Clark, Hemphill orchestrated and participated in an illegal scheme to convert Union funds to her personal use and to the use of others. 25. Defendant James O. Baxter 11 is an individual who resides at 1307 Lark Lane, Fort Washington, MD 20744. Baxter is the elected Treasurer of the Washington Teachers' Union. 26. Baxter served in the capacity as Treasurer from on or about July 1, 1994 through approximately September 2002, when he was asked to take a leave of absence without pay from the Union. 27. In his position as an agent, employee and representative of the Union, Baxter had check signing authority and financial responsibility for WTU's affairs. 28. During his tenure as Treasurer, Baxter made unauthorized personal charges on WTU's credit card accounts; issued or caused to be issued unauthorized checks to himself and to others from WTU's bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 29. Together with Defendants Bullock, Hemphill, Holmes, Alderman, Michael Martin, Cheryl Martin and Clark, Baxter orchestrated and participated in an illegal scheme to convert Union funds to his personal use and to the use of others. 30. Defendant Leroy Holmes is an individual who resides at 11101 Bennington Drive, Upper Marlboro, MD 20774. Holmes served as Bullock's personal driver beginning around 1998 through approximately September 2002 and was paid for his services by WTU. 31. Holmes knowingly received unauthorized funds from WTU; cashed checks for large sums of money written on WTU's accounts; knowingly conducted unauthorized financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 32. Together with Defendants Bullock, Baxter, Hemphill, Alderman, Michael Martin, Cheryl Martin and Clark, Holmes participated in an illegal scheme to convert Union funds to his personal use and to the use of others. 33. Errol Alderman is an individual who resides at 2300 Pattern Bond
Drive, Silver Spring, MD 20902.
34. Upon information and belief, Alderman was affiliated with a business called Expressions Unlimited. 35. Alderman, individually and doing business as Expressions Unlimited; knowingly received unauthorized funds from WTU, personally, individually and as an agent of Expressions Unlimited; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 36. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin and Clark, Alderman participated in an illegal scheme to convert Union funds to his personal use and to the use of others. 37. Defendant Michael Martin is an individual who resides at 1200 Quartette Lane, Bowie, MD 20720. 38. Michael Martin is the son-in-law of Hemphill, the husband of Cheryl Martin and, upon information and belief, was affiliated with a business called Expressions Unlimited. 39. Michael Martin, individually and doing business as Expressions Unlimited, knowingly received unauthorized funds and material goods paid for by WTU funds, personally and individually, and as an agent of Expressions Unlimited; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 40. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Alderman, Cheryl Martin and Clark, Michael Martin participated in an illegal scheme to convert Union funds to his personal use and to the use of others. 41. Defendant Cheryl Martin is an individual who resides at 1200 Quartette Lane, Bowie, MD 20720. Cheryl Martin is the daughter of Hemphill and the wife of Michael Martin. 42. Cheryl Martin knowingly received unauthorized funds and material goods pail for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 43. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin. Alderman, and Clark, Cheryl Martin participated in an illegal scheme to convert Union funds to her personal use and to the use of others. 44. Defendant Gwendolyn B. Clark is an individual who resides at 307 Yoakum Parkway, #711, Alexandria, VA 22304. Clark is the sister of Bullock. 45. Clark knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 46. Together with Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin and Alderman, Clark participated in an illegal scheme to convert Union funds to her personal use and to the use of others. FACTS(AFT-Generally)47. AFT is an international labor organization representing local unions primarily made-up of public and private school teachers, paraprofessionals and higher education faculty. Members of the local unions chartered by the AFT are also members of the AFT. AFT is suing on its own behalf and on behalf of its affiliate, WTU, and the members thereof who are also members of AFT. 48. Article VI, Section 17 of AFT's Constitution gives AFT's Executive Council the power to carry on all the business affairs of the American Federation of Teachers, and its Members, and including, without limitation, the power to sue, complain and defend on behalf of the Federation. 49. AFT has authority to file this lawsuit, on its behalf and on behalf of its affiliate, the WTU, and the members thereof who are also members of AFT. 50. Members of AFT, including WTU and the WTU members who are also members of AFT, are suffering immediate injury as a result of the facts alleged herein. 51. The facts alleged in this complaint would make out a justiciable case had the members themselves brought suit. 52. Members of AFT making up Local #6, the Washington Teachers' Union, otherwise have standing to sue in their own right. 53. The interests AFT seeks to protect in filing this complaint are germane to AFT's purpose of representing public and private school teachers, paraprofessionals and higher education faculty as a bargaining agent, in bringing them together in relations of mutual assistance and cooperation, and in obtaining for all teachers and other members the rights to which they are entitled in a free society. 54. Neither the claims asserted nor the relief requested herein requires the participation of individual members in the lawsuit. (WTU - Generally)55. WTU is a labor organization representing approximately 5,000 persons employed by or retired from the Board of Education of the District of Columbia. The membership primarily consists of District of Columbia public school teachers and professionals. 57. In addition to being affiliated with AFT, WTU is affiliated with the Greater Washington Central Labor Council, the Maryland State and District of Columbia AFL-CIO, and the United Federation of Maryland and D.C. Teachers, and is the primary bargaining agent for District of Columbia public school teachers. Individuals who are members of WTU are also members of AFT. 58. WTU is governed by a Constitution and By-Laws which set forth WTU's purpose, operating procedures, election and discipline procedures, meeting requirements and the duties of its officers and board of directors. 59. WTU's Constitution and By-Laws call for the biennial election of officers and for such officers to hold two year terms. 60. The Union officers, employees and vendors named as Defendants herein, engaged in a conspiracy to and did commit serious felony offenses to the detriment of members of the Union, including: money laundering, in violation of 18 U.S.C. § 1956; engaging in monetary transactions with property derived from unlawful activity, in violation of 18 U.S.C. § 1957; and embezzlement from the Union, in violation of 29 U.S.C. § 501(c). 61. As the result of an affidavit filed by the Federal Bureau of Investigation, search warrants were executed, inter alia, at Defendants' homes on December 19, 2002, on the ground that there is probable cause to believe that Defendants committed and participated in these crimes. 62. Bullock, Baxter, Hemphill, Holmes, Alderman, Michael Martin, Cheryl Martin and Clark, in their positions as Union officers, agents, representatives and employees, or through their relationships with Union officers, agents, representatives and employees, aided and abetted and participated in, and used the Union as part of their conspiracy to embezzle and convert funds of the Union, and in their actual embezzlement and conversion of funds from the Union, in that they authorized, issued, or caused to be issued, cashed, deposited or otherwise made use of unauthorized checks written on WTU's bank accounts; received material goods paid for by WTU funds and money illegally obtained from WTU; submitted false invoices for payment to WTU: and received payment for goods and services not authorized by WTU. 63. Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark conducted numerous financial transactions involving checks received from Bullock, Baxter and Hemphill, written on WTU's bank accounts, knowing that the checks were used to illegally convert funds from WTU; cashed and deposited those checks in their personal bank accounts, bank accounts of their affiliated businesses, including Expressions Unlimited, and at times, deposited the funds into the bank accounts of Bullock and Hemphill. 64. Additionally, Bullock, Baxter and Hemphill used Union American Express credit cards issued to them in their positions as Union officers, agents representatives and employees, and to be used solely for the conduct of Union business, to make personal or otherwise unauthorized purchases for the benefit of themselves, the other Defendants and others. Bullock, Baxter and Hemphill further inappropriately and without authorization caused the Union to use Union funds to pay the credit card bills associated with those accounts, which included the personal and unauthorized purchases charged thereon. Bullock, Baxter and Hemphill did not receive authorization from WTU's Board of Directors or the Union membership to make those purchases or payments, nor did they reimburse WTU for those charges or payments. 65. WTU's Board of Directors and the Union membership were not aware of these unauthorized uses of Union funds by Bullock, Baxter and Hemphill. 66. Bullock, Baxter and Hemphill actively and by omission concealed these unauthorized uses of Union funds and the financial condition of the Union from WTU's Board of Directors and the Union membership. (Bullock)67. Bullock was elected by WTU's membership to the position of President for a two-year term commencing on or about July 1, 1994. She was subsequently reelected to that position biannually and continued in that role until on or about September 2002, when she voluntarily agreed to relinquish her duties and accept leave without pay from the Union. 68. Bullock formally resigned as President on October 23, 2002.69. In accordance with the Constitution and By-Laws of the Union, as
President, Bullock was charged with administering all of the affairs of
and the executive policy of the Union, acting as Chairman of the
Executive Board, and signing all necessary documents, including the
co-signing of checks.
70. Bullock had overall responsibility and authority for the conduct of WTU's affairs. 71. Beginning in 1995, on behalf of WTU, Bullock and Baxter entered into Corporate Account Agreements with American Express Travel Related Services Company ("American Express") for the issuance of corporate credit cards to the Washington Teachers Union. As stated in the Corporate Account Agreements, American Express issued credit cards to persons whom the Union designated in writing to receive a corporate card ("Corporate Cardmembers"). Baxter and Bullock caused cards from the Corporate Account to be issued to themselves, Esther Hankerson, WTU's General Vice President, and Hemphill. Prior to receiving a corporate card, each Corporate Cardmember agreed to the Corporate Cardmember Agreement, which among other things, stated that the American Express Corporate cards were to be used solely for WTU business purposes. 72. The Washington Teachers Union paid the bills for the American Express accounts with Union funds. 73. From the period beginning in 1995 through July 2002, Bullock was issued a total of five Corporate Cards from WTU's two Corporate Accounts, including card numbers 3782-964988-01016 (1995-10/96); 3782-964988-01008 (9/97-7/02); 3782-964988-02014 (11/967/02); 3782-993128-11005 (10/00-7/02) and 3782-993128-11013 (9/99-7/02). 74. During her tenure as President, Bullock made substantial unauthorized purchases on WTU's corporate credit cards. A large portion of those charges were for goods and services of a clearly personal nature, including, but not limited to: custom, designer, and hand-made clothing; dry-cleaning; beauty-salon services; jewelry; art; furniture; and furs. Many such purchases were delivered to Bullock's home or the home of her sister, Clark. 75. Bullock did not receive authorization from WTU's Board of Directors or the Union membership to make those purchases, nor did she reimburse WTU for those charges. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Bullock. 76. In addition to purchasing items for her personal use, Bullock purchased items on WTU's Corporate American Express Cards for others.77. Bullock's unauthorized and personal charges to WTU's Corporate American Express Cards which have been identified to date exceed One Million Eight-Hundred Thousand dollars ($1,800,000.00). 78. Bullock also issued or caused to be issued checks from WTU's bank accounts to herself and to merchants for the purchases of goods and services solely for her personal benefit, including checks for custom-made clothing and checks to Diner's Club to pay for meals, hotels, designer clothing and jewelry. These checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU. WTU's Board of Directors and the L'nion membership were not aware of this unauthorized use of Union funds by Bullock. 79. In total, checks issued or caused to be issued by Bullock to herself and to others for her personal benefit, exceed Three-Hundred and Eighty-One Thousand dollars ($381,000.00).80. Additionally, Bullock issued or caused to be issued unauthorized checks in excess of One Million Five-Hundred Thirteen Thousand ($1,513,000.00) from WTU's bank accounts to Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark, in a scheme to convert WTU's funds. Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Bullock. (Hemphill)81. Hemphill served as Special Assistant to the President and Legislative Representative of WTU from 1996 through on or about September 2002, when she voluntarily agreed to relinquish her duties and accept leave without pay from the Union. 82. Hemphill formally resigned from her positions on November 1, 2002.83. As Special Assistant to the President, Hemphill served as the office manager and high-level aid to Bullock. In this capacity, Hemphill was responsible for overseeing the administration of WTU's offices and managing its staff. 84. As a result of the illness and subsequent death of WTU's internal accountant. beginning in 1996, Hemphill took over responsibility for many of WTU's financial matters. including check writing, payroll, benefits administration and accounts receivable. 85. In addition to her check writing responsibilities, Hemphill maintained possession of a signature stamp bearing Bullock's signature, which she used to affix Bullock's name via the stamp to checks written on behalf of the Union. 86. From the period beginning on or about May 1998 through July 2002, Hemphill was issued Corporate Cards from WTU's two Corporate Accounts, including card numbers 3782-964988-01040 (5/98-11/99) and 3782-964988-11021 (9/99-7/02). 87. During her tenure as Special Assistant and Legislative Representative, Hemphill used these credit cards, which were issued solely for the purpose of conducting the official business of the Washington Teachers' Union, to make numerous unauthorized personal charges on WTU's credit card accounts, including a large number of purchases of a clearly personal nature, including, but not limited to: art; antiques; electronic equipment; jewelry; evening gowns; designer handbags and clothing; hair care; and personal travel. 88. Hemphill did not receive authorization from WTU's Board of Directors or the Union membership to make those purchases, nor did she reimburse WTU for those charges. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Hemphill. 89. In addition to purchasing items for her personal use, upon information and belief, Hemphill purchased items on WTU's Corporate American Express Cards for use by other members of her family, including her husband Laurence Hemphill, and other Defendants including Michael Martin, Cheryl Martin and Clark. 90. In total, Hemphill's unauthorized and personal charges to WTU's Corporate American Express accounts exceeds Three-Hundred and Eleven Thousand dollars ($311,000.00). Hemphill did not receive authorization from WTU's Board of Directors or the Union membership to make the unauthorized purchases, nor did she reimburse WTU for those charges. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Hemphill. 91. Hemphill also wrote or caused to be written checks to herself in the amount of One Hundred and Eighty-One Thousand dollars ($181,000.00). Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU. Additionally, Hemphill wrote or caused to be written checks to other participants in the illegal scheme, including Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark. Included among those checks were some checks written to Expressions Unlimited the proceeds of which were deposited in Hemphill's personal bank account. Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU's treasury. 92. Upon information and belief, Hemphill directed Holmes to cash checks for large sums of money on WTU's account and to return the proceeds to her or to deposit them in Bullock's personal bank account. Upon information and belief, upon receiving cash proceeds from Holmes, Hemphill returned a portion of the money to Holmes and retained the rest. 93. Checks issued on the Washington Teachers' Union's accounts were prepared by Hemphill, signed by Baxter and issued with the knowledge of, and in many cases, at the direction of Bullock. (Baxter)94. Baxter was elected to the position of Treasurer by the WTU membership and assumed office on or about July 1, 1994. He was subsequently reelected as Treasurer in biennial elections and continued in that role until present. 95. As Treasurer, Baxter was responsible for receiving and disbursing funds, cosigning all checks, issuing all receipts, notifying members of non-payment of dues, presenting financial reports to the membership and maintaining satisfactory financial records. 96. In September 2002, the WTU Board removed Baxter from his duties and put him on leave without pay. WTU formally requested Baxter's resignation on October 23, 2002, however, he has refused to resign. 97. From the period beginning in 1995 through July 2002, Baxter was issued Corporate Cards from WTU's two Corporate Accounts, including card numbers 3782-96498801008 (1995-8/97) and 3782-964988-01032 (1995-7/02). 98. During his tenure as Treasurer, Baxter used the credit cards, which were issued for the sole purpose of conducting the official business of the Washington Teachers' Union, to make a large number of purchases of a clearly personal nature, including, but not limited to: purchases at bars and nightclubs; art; clothing; theater and sporting tickets; flowers; jewelry and tobacco. 99. In total, Baxter's unauthorized and personal charges to WTU's Corporate American Express Cards exceeds Two-Hundred and Sixty-Seven-Thousand dollars ($267,000.00). Baxter did not receive authorization from WTU's Board of Directors to make those purchases, nor did he reimburse WTU for those charges. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Baxter. 100. Baxter also wrote or caused to be written checks to himself in amounts in excess of Two Hundred and Seventy Thousand dollars ($270,000.00), including checks designated as "pension payments" which were not due and owing to Baxter and were therefore improperly made. These checks were not authorized by WTU's Board of Directors or membership and were used to illegally convert funds from WTU. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Baxter. 101. Baxter also wrote or caused to be written checks to other participants in the illegal scheme, including Bullock, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark. Those checks were not authorized by WTU's Board of Directors or membership and were used to illegally convert funds from WTU's treasury. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Baxter. (Bullock, Baxter and Hemphill)102. Defendants Bullock, Baxter and Hemphill, as officers, agents, representatives and employees of the Union, had a duty to act on its behalf in all manners associated with the conduct of Union affairs. 103. Bullock and Baxter were elected officers of the Union who held consecutive two year terms since 1994. Hemphill was an at-will employee hired in 1996. 104. Through their positions as officers, agents, representatives and employees of the Union, Bullock, Baxter and Hemphill were placed in positions of authority and trust and were given access to and control of WTU's treasury. 105. Bullock, Baxter arid Hemphill abused their positions by knowingly stealing. misappropriating and converting funds and property purchased with Union funds from the Union for their own use, the use of each other, the use of the other Defendants and others, anti otherwise fraudulently misapplied Union funds and property by diverting it to unauthorized persons, such as Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark, and for other unauthorized purposes and uses. 106. On October 23, 2002, on behalf of the Union, formal requests were made to Bullock, Baxter and Hemphill, to repay WTU all of the Union funds expended by or caused to be expended by them for personal and otherwise unauthorized and/or non-Union purposes. 107. Subsequently, on December 23, 2002, a second demand for repayment was made to Bullock, Baxter and Hemphill. 108. Bullock, Baxter and Hemphill have not complied with these demands for return of its property. (Holmes)109. Between approximately 1998 through September 2002, Holmes received in excess of 200 checks, ranging in amounts from $500 to 20,000, which in total exceed One Million Two Hundred Thousand dollars ($1,200,000.00). Those checks were written on WTU's primary checking account and were cashed by Holmes at WTU's bank, Independence Federal Savings Bank. 110. Upon information and belief, after cashing those checks Holmes provided the cash proceeds to Hemphill who returned a portion of the cash to Holmes and kept the rest of the money for unauthorized purposes, or Holmes deposited funds into Bullock's personal bank account. 111. In addition, Holmes cashed numerous altered checks, including checks in Much the original payee was marked through and his name written in. The altered checks cashed by Holmes were, among others, originally payable to Verizon, D.C. Treasurer, Slevin & Hart (attorney) and Blue Cross/Blue Shield (WTU's medical insurance provider), for the payment of WTU's legitimate business expenses. 112. Holmes cashed, deposited or otherwise made use of checks he received knowing that the funds were proceeds of unlawful activity. 113. Holmes knew that the checks he cashed on WTU's bank accounts resulted in the unlawful embezzlement and conversion of WTU's funds. 114. While Holmes provided services to WTU, namely driving Bullock to appointments and performing odd jobs at WTU's office, the money he received as a result of his participation in the illegal scheme, greatly exceeded the value of his services to WTU. 115. Payments made to Holmes in excess of the reasonable value of his services were made without the authorization or knowledge of WTU's Board of Directors or the Union membership. (Michael Martin)116. Michael Martin, is the son-in-law of Gwendolyn Hemphill, the husband of Cheryl Martin and, upon information and belief, was affiliated with a business called Expressions Unlimited. 117. Michael Martin received unauthorized funds and material goods paid for by WTU funds, personally and as an agent of Expressions Unlimited, and conducted financial transactions with money received as the result of unlawful activity and money laundering. 118. Michael Martin cashed, deposited or otherwise made use of unauthorized checks totaling over Twenty-Five Thousand dollars ($25,000.00) which were written to him on WTU's bank accounts. 119. Additionally, Michael Martin cashed, deposited or otherwise made use of unauthorized checks and funds totaling over Four Hundred and Fifty Thousand dollars ($450,000.00) which were written to Expressions Unlimited on WTU's bank accounts. 120. Michael Martin cashed, deposited or otherwise made use of checks he received personally and on behalf of Expressions Unlimited, knowing that the funds were proceeds of unlawful activity. 121. . Michael Martin participated in these financial transactions knowing that he was wrongfully embezzling and converting money from WTU. 122. Payments made to Michael Martin were made without the authorization
or knowledge of WTU's Board of Directors or the Union membership.
(Cheryl Martin)123. Cheryl Martin, is the daughter of Gwendolyn Hemphill and the wife of Michael Martin.124. Cheryl Martin received unauthorized funds and material goods paid for by WTU funds and conducted financial transactions with money received as the result of unlawful activity and money laundering. 125. Cheryl Martin cashed and deposited unauthorized checks written on WTU's bank accounts to Enrol Alderman, her husband Michael Martin and Expressions Unlimited. 126. Cheryl Martin cashed, deposited or otherwise made use of the checks she received on behalf of Expressions Unlimited, Michael Martin and Errol Alderman, knowing that the funds were proceeds of unlawful activity. 127. Upon information and belief, Cheryl Martin deposited unauthorized WTU checks made payable to Expressions Unlimited into the Annapolis Bank & Trust bank account she shared with her husband, Michael Martin; the Expressions Unlimited bank account at Bank of America, including the Lanham, Maryland and Bowie, Maryland branches; and the personal bank account of Hemphill. 128. Cheryl Martin participated in these financial transactions knowing that she was wrongfully embezzling and converting money from WTU. 129. Payments made to and Union money spent on behalf of Cheryl Martin were made without the authorization or knowledge of WTU's Board of Directors or the Union membership. (Alderman)130. Upon information and belief, Alderman was affiliated with a business called Expressions Unlimited. 131. Alderman received unauthorized funds from WTU, personally and as an agent of Expressions Unlimited, and conducted financial transactions with money received as the result of unlawful activity and money laundering. 132. Additionally, Alderman cashed, deposited or otherwise made use of unauthorized checks totaling over Twenty-One Thousand dollars ($21,000.00) which were written to him on WTU's bank accounts. 133. Alderman cashed, deposited or otherwise made use of unauthorized checks totaling over Four-Hundred and Fifty Thousand dollars ($450,000.00) which were written to Expressions Unlimited on WTU's bank accounts. 134. Upon information and belief, Cheryl Martin deposited some of the unauthorized checks received in the name of Expressions Unlimited and endorsed by Alderman into the personal bank account of Hemphill. 135. Alderman cashed, deposited or otherwise made use of checks he received personally or on behalf of Expressions Unlimited, knowing that the funds were proceeds of unlawful activity. 136. Alderman participated in those financial transactions knowing that he was wrongfully embezzling and converting money from WTU. 137. Payments made to Alderman were made without the authorization or knowledge of WTU's Board of Directors or the Union membership. (Clark)138. Clark is the sister of Barbara Bullock.139. Clark received unauthorized funds and material goods paid for by WTU funds and conducted financial transactions with money received as the result of unlawful activity and money laundering. 140. Clark and Bullock share a joint bank account at Sun Trust Bank, where some of the proceeds of unauthorized checks written on WTU's bank accounts were deposited. 141. Clark and Bullock also share a Diner's Club charge card (account number 3850814404-0035), on which numerous personal items were purchased by Bullock, Clark and Clark's daughter and paid for by the Union. 142. Between the period of January 1996 through July 2002, payments were made by WTU to Diner's Club for account number 3850-814404-0035 in excess of One Hundred anti Nineteen Thousand dollars ($119,000.00). 143. Clark made use of unauthorized funds and material goods paid for by WTU funds she received from Bullock, Hemphill and WTU, knowing that the goods and funds %% ere proceeds of unlawful activity. 144. Clark accepted funds and material goods paid for by WTU funds, knowing that she was wrongfully embezzling and converting money from WTU. 145. Payments made to and Union money spent on behalf of Clark were made
without the authorization or knowledge of WTU's Board of Directors or
the Union membership.
(Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark)146. At all times, Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark knew that the funds and material goods paid for by WTU funds that were the subjects of their transactions represented the proceeds of unlawful activity and cashed and deposited those checks with the intent of carrying out the unlawful activity, and/or to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds. 147. Defendants' activities are the subject of criminal investigations by the federal government. COUNT I(Violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO")148. Plaintiff incorporates by reference, re-alleges and repeats each of the allegations set forth in paragraphs 1 through 147 above and the allegations in paragraphs 193 through 201 set forth below. 149. WTU itself, and the Defendants associated in fact collectively and in groups, are separately enterprises engaged in, or enterprises in fact engaged in, or the activities of which affect, interstate commerce. 150. WTU is a non-profit labor organization having its principal place of business at 1717 K Street, N.W., Suite 902, Washington, DC 20036. 151. WTU represents approximately 5,000 persons, consisting primarily of District of Columbia public school teachers and professionals. 152. WTU's members, who pay dues to the Union, reside in the District of Columbia, Virginia and Maryland. 153. WTU participates in interstate commerce in that, among other things, it uses the banks to conduct financial transactions in the District of Columbia, Virginia and Maryland; it uses the U.S. Mail to transmit information to its members in the District of Columbia, Virginia and Maryland and to conduct business throughout the region and throughout the United States; it contracts for goods and services in the District of Columbia and the greater United States; and its officers, employees and members travel throughout the United States on Union business. 154. Defendants were employed by or associated with WTU. 155. Defendants conducted or participated directly and/or indirectly in the affairs of WTU through a pattern of racketeering activity. 156. Defendants were associated with the enterprise in fact.157. Defendants conducted or participated directly and/or indirectly in the affairs of the enterprise in fact through a pattern of racketeering activity. 158. Between on or about July 1, 1994 through approximately September 2002, Bullock served as the elected President of the Washington Teachers Union. 159. Between on or about July 1, 1996 through approximately September 2002, Baxter actively served as the elected Treasurer of the Washington Teachers Union. 160. Between 1996 through approximately September 2002, Hemphill served as Special Assistant to the President and Legislative Representative of the Washington Teachers Union. 161. Between 1998 through approximately September 2002, Holmes was employed by the Washington Teachers Union in the capacity as Bullock's driver. 162. Cheryl Martin is the daughter of Hemphill and during the period beginning in approximately November 2000 through on our about June 8, 2001, Cheryl Martin was a temporary employee of the Washington Teachers' Union. 163. Michael Martin is Cheryl Martin's husband, the son-in-law of Hemphill, and, upon information and belief, was affiliated with a business called Expressions Unlimited. Michael Martin received payments from WTU, personally in excess of Twenty-Five Thousand ($25,000.00) and on behalf of Expressions Unlimited, in excess of Four Hundred and Fifty Thousand dollars ($450,000.00), for services he and Expressions Unlimited allegedly performed on behalf of the Union. 164. Upon information and belief, Alderman was affiliated with a business called Expressions Unlimited. Alderman personally received payments from the Union in excess of Twenty-One Thousand dollars ($21,000.00) and on behalf of Expressions Unlimited in excess of Four Hundred and Fifty Thousand dollars ($450,000.00), for services he and Expressions Unlimited allegedly performed on behalf of the Union: 165. Clark is Bullock's sister and received payments from WTU, personally and on behalf of Gwen's of Columbia, in excess of Fourteen Thousand Six Hundred dollars ($14,600.00), for services she allegedly performed on behalf of the Union. 166. Bullock, Baxter and Hemphill participated in the conduct of WTU's affairs by issuing or causing to be issued checks on WTU's behalf, including checks for authorized Union business, as well as the unauthorized activities that form the basis of this complaint. 167. Bullock, Baxter and Hemphill further participated in the conduct of WTU's 's affairs by carrying out their duties as President, Treasurer and Special Assistant to the President /Legislative Representative, respectively. 168. Holmes participated in the conduct of WTU's affairs by driving Bullock to Union appointments and functions, performing various maintenance and administrative duties at WTU's office and conducting unauthorized financial transactions with checks written on WTU's accounts. 169. Cheryl Martin directly participated in the conduct of WTU's affairs as a temporary employee during the period beginning in approximately November 2001 through approximately June 8, 2001, and indirectly by conducting financial transactions with checks written on WTU's bank accounts to Michael Martin, Errol Alderman and Expressions Unlimited. 170. Michael Martin and Errol Alderman participated in the conduct of WTU's affairs by receiving payments for services allegedly performed by them and by Expressions Unlimited, on behalf the Union. 171. Clark participated in the conduct of WTU's affairs by conducting financial transactions with checks written on WTU's bank accounts to her and to her company Gwen's of Columbia, on behalf the Union. 172. Bullock's, Baxter's and Hemphill's actions, in knowingly issuing or causing to be issued over Five Million dollars ($5,000,000.00) in unauthorized funds from WTU's accounts to and for the benefit of themselves, Holmes, Alderman, Michael Martin, Expressions Unlimited and Clark; knowingly using WTU credit accounts from 1995 through July 2002 to make personal and otherwise unauthorized purchases; and orchestrating and participating in a scheme to embezzle and convert WTU's funds to their personal use and to the use of others, constitutes participation in a pattern of racketeering activity as defined by 18 U.S.C. 1961 et seq. 173. Holmes', Alderman's, Michael Martin's, Cheryl Martin's and Clark's actions, including: on numerous occasions cashing, depositing or otherwise making use of unauthorized checks issued or caused to be issued by Bullock, Baxter and Hemphill and written on WTU's accounts, with knowledge that the funds and property were the proceeds of unlawful activity, with the intent to carry out the unlawful activity and knowing that the transactions were designed to conceal and disguise the nature, source, ownership or control of the proceeds; on numerous occasions accepting delivery of goods that were purchased without authorization on Union credit cards with knowledge that the funds and property were the proceeds of unlawful activity, with the intent to carry out the unlawful activity and knowing that the transactions were designed to conceal and disguise the nature, source, ownership or control of the proceeds; on numerous occasions submitting invoices for payment to WTU for services of a personal nature allegedly performed for Bullock; and participation in a conspiracy to knowingly and illegally convert and embezzle WTU's funds, constitutes participation in a pattern of racketeering activity as defined by 18 U.S.C. 1961 et seq. 174. On July 1, 1998, Bullock, Baxter and Hemphill collectively issued or caused to be issued two unauthorized checks written on WTU's bank to Leroy Holmes. Each check was written in the amount of Four Thousand Two-Hundred and Forty dollars ($4,240.00), for a total in excess of Eight Thousand dollars ($8,000.00) and was cashed, deposited or otherwise made use of by Holmes. 175. On September 15, 2000, Bullock, Baxter and Hemphill collectively issued or caused to be issued an unauthorized check written on WTU's bank to Leroy Holmes in the amount of Twenty Thousand dollars ($20,000.00). 176. Holmes cashed, deposited or otherwise made use of these checks, knowing that the money was unlawfully embezzled and converted from WTU's treasury and with the intent to carryout out the unlawful activity and to disguise the true source, ownership and control of the funds in that he provided the cash proceeds to Hemphill who returned a portion of the cash to Holmes and retained the balance of the cash. 177. The above-described activity by Holmes was part of a pattern that extended from the period beginning on or before January 1998 through approximately September 2002, in which Holmes continually cashed unauthorized checks written on WTU's accounts, returning the proceeds to Hemphill or depositing them into the personal bank account of Bullock, to assist in the conversion of WTU's funds and to disguise the nature, source and true ownership of those funds. 178. Additionally, many of the checks issued or caused to be issued by Bullock, Baxter and Hemphill and cashed by Holmes were purposefully written in a way to avoid federal transaction reporting requirements, in that multiple checks, each under the amount of Ten Thousand dollars ($10,000.00) were written to and cashed by Holmes on the same day or within a few days of each other, the total of which exceeded the Ten Thousand dollar ($10,000.00 ) reporting requirement. 179. As examples of the conduct alleged in paragraph 178, on April 8, 2001 Bullock, Baxter and Hemphill collectively issued or caused to be issued two unauthorized checks written on WTU's bank to Leroy Holmes; check number 5052 in the amount of Nine Thousand Three Hundred and SeventyFive dollars ($9,375.00) and check number 5056 in the amount of Five Thousand Eight-Hundred and Seventy-Five dollars and Forty-Six cents ($5,875.46). Upon information and belief, these checks, issued on the same day and together, totaling over Fifteen Thousand dollars ($15,000.00) were cashed by Holmes at Independence Federal Savings Bank Additionally, upon information and belief, checks written on WTU's accounts and made payable to Expressions Unlimited and bearing Errol Alderman's signature, which totaled more than Ten Thousand dollars ($10,000.00) were deposited into Hemphill's personal bank account. 180. The above-described acts carried out by Bullock, Hemphill, Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin, Alderman and Clark, constitute money laundering in violation of 18 U.S.C. § 1956, knowingly engaging in monetary transactions in property derived from illegal activity, in violation of 18 U.S.C. § 1957, and embezzlement from a labor union, in violation of 29 U.S.C. § 501(c), and form a predicate act for a civil RICO violation under 18 U.S.C. §§ 1962(c)-(d). There are numerous other similar instances which constitute other predicate acts under RICO. 181. As a result of the illegal scheme to convert and embezzle WTU's funds for their personal benefit, their knowing engagement in monetary transactions derived from unlawful activity and their money laundering, Defendants, through the use of WTU as their enterprise, caused serious injury to WTU, by depriving it of funds necessary for the operation of the Union, and by subjecting WTU to claims by creditors. 182. WTU has suffered a direct and substantial monetary loss as a result of the enterprise's activities, exceeding Five Million dollars ($5,000,000.00). WTU has also suffered in that its Corporate Credit Card accounts have been closed by American Express, the Union has been sued by American Express for non-payment of the accounts misused by Defendants Bullock, Baxter and Hemphill and the Defendants activities have damaged WTU's credit. COUNT II(Conversion)183. Plaintiff incorporates by reference, re-alleges and repeats each of the allegation; set forth in paragraphs 1 through 182 above. 184. Defendants Bullock, Baxter and Hemphill had access to and control of WTU's bank and credit card accounts to cant' out their duties of President and Treasurer, respectively, as required by the Constitution and By-Laws of the Washington Teachers' Union. Defendant Hemphill had access to and responsibility for properly maintaining WTU's bank accounts and credit card accounts in connection with her position as Special Assistant to the President. 185. Continuously since at least 1995, Defendants Bullock, Baxter and Hemphill took advantage of their access to and control over Union funds to issue unauthorized checks to themselves and the other Defendants; to make personal and unauthorized purchases on WTU's American Express accounts; and to pay the American Express bills associated with these personal and unauthorized purchases with money from WTU's treasury. 186. The money and property taken by the Defendants were at all times the property of WTU and its members and were to be used to conduct WTU's official business. 187. On October 23, 2002, formal requests were made of Bullock, Baxter and Hemphill on behalf of the Union, for repayment to WTU of all Union funds expended by or caused to be expended by them for personal and otherwise unauthorized and/or non-Union purposes. 188. Subsequently, on December 23, 2002, a second demand for repayment was made to Bullock, Baxter and Hemphill. 189. Bullock, Baxter and Hemphill have not complied with WTU's demands for return of its property. 190. Bullock's, Baxter's and Hemphill's retention of WTU's property is intentional, without permission or justification, and constitutes conversion of WTU's property. 191. WTU is entitled to immediate possession of these items and funds. 192. WTU's property had a value in excess of Five Million dollars ($5,000,000.00) at the time of the conversion. COUNTS III and IV(Civil Conspiracy and RICO Conspiracy)193. Plaintiff incorporates by reference, re-alleges and repeats each of the allegations set forth in paragraphs 1 through 192 above. 194. Without the consent of WTU, Defendants Bullock, Baxter, Hemphill, Holmes Michael Martin, Cheryl Martin, Alderman and Clark entered into an agreement with and among each other to wrongfully embezzle and convert WTU's funds to their personal use, and that of each other. 195. Without the consent or approval of WTU, Hemphill, Baxter and Bullock unlawfully conspired to, and actually issued or caused to be issued checks to themselves, to each other and to Holmes, Michael Martin, Alderman, and Expressions Unlimited and they negotiated these checks all in furtherance of Defendants' conspiracy to embezzle and convert WTU's funds to their personal use.
196. Examples of the transactions through which Defendants furthered
their conspiracy include:
a. Without the consent or approval of WTU, on April 22, 2002, Hemphill.Baxter and Bullock collectively issued or caused to be issued check number 1180 in the amount of Eleven Thousand Five-Hundred dollars ($11,500.00) to Bullock. o. From on or about July 1998 through approximately September 2002, Michael Martin, deposited, cashed or otherwise made use of the checks and the resulting proceeds made payable to him personally, which total in excess of Twenty-Five Thousand dollars ($25,000.00); Alderman deposited, cashed or otherwise made use of the checks and the resulting proceeds made payable to him personally, which total in excess of Twenty-One Thousand dollars ($21,000.00), and Michael Martin and/or Alderman deposited, cashed or otherwise made use of the checks and the resulting proceeds made payable to Expressions Unlimited, which total in excess of Four Hundred and Fifty Thousand dollars ($450,000.00). 197. Upon information and belief, Cheryl Martin participated in the conspiracy to embezzle and convert WTU's funds for her personal use and the use of the other Defendants by depositing checks written on WTU's accounts issued by Hemphill, authorized for payment by Bullock and Baxter, and made payable to Michael Martin, Alderman and Expressions Unlimited, into Expressions Unlimited's bank account, into the bank accounts of Michael and Cheryl Martin, and into the personal bank account of Hemphill, with knowledge that the funds and property were the proceeds of unlawful activity. 198. Upon information and belief, Clark participated in the conspiracy to embezzle and convert WTU's funds for her personal use and the use of the other Defendants by depositing checks written on WTU's accounts, issued by Hemphill and authorized for payment by Bullock and Baxter, into the personal bank account held jointly in the name of Bullock and Clark at Sun Trust Bank, and by accepting items purchased on WTU's credit cards, with knowledge that the funds and property were the proceeds of unlawful activity. 199. The above-described acts, carried out by Bullock, Baxter, Hemphill, Holmes. Michael Martin, Cheryl Martin, Alderman and Clark were done pursuant to and in furtherance of a common scheme to embezzle and convert funds from WTU to their personal use and constitute common law civil conspiracy. 200. The above described acts, carried out by Bullock, Baxter, Hemphill Holmes, Michael Martin, Cheryl Martin, Alderman and Clark were done pursuant to and in furtherance of a common scheme to conduct or participate in the conduct of an enterprise' affairs through a pattern of racketeering activity while Defendants were employed by, or associated with the enterprise, or the combined Defendants or groups of Defendants associated in fact, that were engaged in, or the activities of which affected, interstate commerce. 201. As a result of Defendants' unlawful acts, WTU has suffered significant economic injury, including the loss of Five Million dollars ($5,000,000.00) from its treasury. COUNT V(Aiding and Abetting)202. Plaintiff incorporates by reference, re-alleges and repeats each of the allegations set forth in paragraphs 1 through 201 above. 203. Defendants Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark each played a role and provided assistance to each other in carrying out their unlawful scheme to embezzle and convert WTU's funds to their personal use, and that of each other. 204. Bullock, Baxter and Hemphill each played an important role in disseminating checks written on WTU's bank accounts to each other and to Holmes, Michael Martin, Cher,] Martin, Alderman, Expressions Unlimited and Clark. 205. Bullock, with full knowledge of the unlawful scheme issued or caused to he issued unauthorized checks in excess of One Million Eight-Hundred and Ninety-Four Thousand dollars ($1,894,000.00) to herself and to the other Defendants and made personal and otherwise unauthorized charges to WTU's credit cards issued to her. 206. Hemphill, with full knowledge of the unlawful scheme and awareness of her role, wrote and issued or caused to be issued unauthorized checks in excess of One Million Eight Hundred and Ninety-Four Thousand dollars ($1,894,000.00) to herself and to the other Defendants, kept WTU's accounts and made personal and otherwise unauthorized charges to WTU's credit cards issued to her. 207. Hemphill also affixed the signature stamp of Bullock to the checks issued to herself, Baxter, Bullock, Holmes, Michael Martin, Cheryl Martin, Alderman, Clark and Expressions Unlimited. 208. Bullock, with full knowledge of the unlawful scheme and awareness of her role, approved and directed the issuance of unauthorized checks to herself and to the other Defendants and made personal and otherwise unauthorized charges to WTU's credit cards issued to her. 209. Baxter, with full knowledge of the scheme and awareness of his role, approved and issued or caused to be issued unauthorized checks in excess of One Million Eight-Hundred and Ninety-Four Thousand dollars ($1,894,000.00) to himself and to the other Defendants and made personal and otherwise unauthorized charges to WTU's credit cards issued to him. 210. Holmes, with full knowledge of the unlawful scheme and awareness of his role, cashed over 200 checks written to him on WTU's accounts since on or about January 1998. totaling over One Million Two Hundred Thousand dollars ($1,200,000.00) and provided the proceeds to Hemphill who returned a portion of the cash proceeds to Holmes and kept the remainder for unauthorized purposes, or Holmes deposited proceeds from the unauthorized checks made payable to him into Bullock's personal bank account. 211. Michael Martin, with full knowledge of the unlawful scheme and awareness of his role, cashed, deposited, or otherwise made use of unauthorized checks written on WTU's bank accounts to him personally in excess of Twenty-Five Thousand dollars ($25,000.00) and in the name of Expressions Unlimited in excess of Four Hundred and Fifty Thousand dollars ($450,000.00). 212. Cheryl Martin, with full knowledge of the unlawful scheme and awareness of her role, cashed, deposited, or otherwise made use of unauthorized checks written on WTU's bank accounts to Michael Martin, Expressions Unlimited and Errol Alderman and received goods from unauthorized purchases made on WTU's American Express cards. 213. Clark, with full knowledge of the unlawful scheme and awareness of her role, cashed, deposited, or otherwise made use of unauthorized checks written on WTU's bank, including making deposits of unauthorized checks written on WTU's accounts into the Bullock-Clark joint personal bank accounts at Sun Trust Bank in Virginia and Crestar Bank in Bethesda, Maryland, and received goods from unauthorized purchases made on WTU's credit cards. 214. The above-described acts carried out by Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark provided aid to each other and substantially assisted the embezzlement and conversion of WTU's funds to Defendants and constitute common law aiding and abetting and aiding and abetting in violation of 18 U.S.C. § 1962(c). 215. As a result of Defendants' unlawful acts, WTU has suffered significant economic injury, including the loss of Five Million dollars ($5,000,000.00) from its treasury. COUNT VI(Fraud)216. Plaintiff incorporates by reference, re-alleges and repeats each of the allegations set forth in paragraphs 1 through 215 above. 217. Bullock, Baxter and Hemphill, as officers and employees of the Union, had a duty to report accurate information about the financial condition of WTU to WTU's Board of Directors, Board of Trustees and members. 218. Despite that duty, Bullock, Baxter and Hemphill falsely represented and concealed material information about WTU's financial condition, from WTU's Board of Directors, Board of Trustees and members, including, but not limited to: the amounts of money paid to Bullock, Baxter, Hemphill and Holmes, which exceeded the amount Defendants reported to WTU and to government officials; the recipients, amounts and nature of checks written on WTU's bank accounts to Holmes, Michael Martin, Alderman, Clark and others; the amounts, Union purposes, recipients and nature of purchases made on WTU's American Express credit cards; the purposes for which WTU funds were being spent; and the status of payment of WTU's obligations to vendors and affiliates, including the AFT. 219. Bullock, Baxter and Hemphill further falsely represented and concealed material information about WTU's financial condition from WTU's Board of Directors, Board of Trustees and members by filing false and misleading reports with government agencies, including the filing of false LM-2 reports with the Department of Labor and the filing of false tax forms with the IRS. 220. Pursuant to The Labor-Management Reporting and Disclosure Act, WTU is required to submit annual LM-2 Reports to the Department of Labor, certifying certain financial information pertaining to the Union. Reports, including, but not limited to the LM-2 for the period October 1, 2000 through September 30, 2001, signed under penalties of perjury by Bullock and Baxter and submitted to the Labor Department on behalf of WTU, contained material false and misleading information. 221. The LM-2 report for the period October 1, 2000 through September 30, 2001, signed by Bullock and Baxter and submitted to the Labor Department on behalf of WTU, for example, included numerous misrepresentations including the extensive under-reporting of cash disbursements to WTU officers and employees. 222. In addition, each quarter, WTU was required to file form 941 with the Internal Revenue Service ("IRS"), reporting the income, FICA, social security and Medicare taxes and payments withheld from employees' paychecks and Form 990, Return of Organization Exempt from Income Tax, with the IRS reporting such information as the compensation paid to officers, directors and key employees, deferred compensation, expense account payments and payments and contributions to the organization's benefit plans. 223. WTU's form 941 filed with the IRS did not report the wages paid to at least two employees who were paid in cash. Furthermore, WTU's Form 990 for 1998 reported no compensation for officers and Forms 990 for 2000 and 2001 drastically underreported the illegal and inappropriate compensation taken from WTU by Bullock and Baxter. 224. Bullock, Baxter and Hemphill signed and filed or caused to be filed Forms 9-t 1 and 990 with the IRS, knowing that those forms contained material misrepresentations. 225. Bullock, Baxter and Hemphill employed the services of an accountant, James Goosby, to further assist in their concealment of WTU's true financial condition. Together with Goosby, Bullock, Baxter and Hemphill prepared and assisted in the preparation of false financial statements, tax forms and LM-2 reports. 226. Plaintiff relied on Defendant Bullock's, Baxter's and Hemphill's representations that WTU's bills were being paid, per capita payments to AFT were up-to-date and reports filed on behalf of WTU with federal and local authorities contained accurate information, and its reliance was justified. 227. These and other misrepresentations and omissions were made intentionally by Bullock, Baxter and Hemphill, despite inquiries from Board members who inquired about the status or availability of audits, LM-2 reports and financial statements, with the intent to conceal the true financial condition of the Union so that they, along with the other Defendants, could continue the wrongful embezzlement and conversion of WTU's funds. 228. Defendant Bullock's, Baxter's and Hemphill's misrepresentations and omissions were material, in that failed to disclose the actual recipients of WTU's funds; the delinquent condition of many of WTU's accounts, including WTU's American Express accounts, rent and per capita payments to AFT. 229. Plaintiff could not have discovered the true financial condition of WTU because Defendants Bullock, Baxter and Hemphill controlled the financial functions of the Union, provided false information in the form of inaccurate budgets, financial statements LM-2 reports and tax filings, and continually misrepresented, concealed and omitted material information about WTU's financial condition to the Board of Directors, Board of Trustees and the members, both on their own initiative and upon inquiry. 230. As a result of Defendant Bullock's, Baxter's and Hemphill's misrepresentations omissions and concealment, Plaintiff has suffered damages, including the loss of over Four Million One Hundred Thousand dollars ($4,100,000.00) from its treasury. COUNT VII(Breach of Fiduciary Duty Pursuant to Common Law and 29 U.S.C. § 501)231. Plaintiff incorporates by reference, re-alleges and repeats each of the allegations set forth in paragraphs 1 through 230 above. 232. Bullock and Baxter, as officers of the Union, and Hemphill, as the employee with responsibility for financial matters, owed a fiduciary duty to AFT and WTU and their members, obligating them to hold WTU's money and property solely for the benefit of its members, WTU and AFT and not to use WTU's funds for unauthorized purposes, including, but not limited to, wholly personal uses. 233. Bullock, Baxter and Hemphill each breached that duty by conspiring to and engaging in a scheme to embezzle WTU funds and convert those funds to their personal use or the use of the other Defendants; charging personal expenses to WTU credit cards without reimbursement to WTU or authorization from WTU's Executive Board; writing Union checks to themselves; and writing and causing to be written WTU checks to Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark for goods and services unrelated to Union business and/or for the wholly personal benefit of Defendants. 234. As part of its obligations to its membership, WTU was required to submit accurate financial statements and a written budget annually to its membership. Bullock and Baxter failed to submit accurate budgets and financial statements to WTU's members. 235. Bullock and Baxter also breached their duty to AFT, WTU and their members by filing and causing to be filed false and misleading reports regarding WTU's financial condition and WTU officers' and employees' compensation to federal and local authorities, including the Internal Revenue Service and the United States Department of Labor. 236. Additionally, Bullock, Baxter and Hemphill breached their duty to AFT and WTU and their members by failing to ensure that the proper financial and accounting procedures were being followed by WTU. 237. These acts constitute a breach of fiduciary duty under common law and pursuant to 29 U.S.C. §501(a). 238. AFT, WTU and their members, individuals who are also members of WTU, have been significantly harmed by Bullock's, Baxter's and Hemphill's breaches because WTU is the subject of two lawsuits recently filed in the District of Columbia as a result of their breaches; has retained attorneys and expended significant funds to address the legal issues faced by the Union as a result of Bullock's and Baxter's breaches; and is missing sums in excess of Five Million dollars ($5,000,000.00) from its treasury. REQUEST FOR RELIEFWHEREFORE, in connection with each and every count identified above, the American Federation of Teachers, on behalf of itself and its affiliate the Washington Teachers' Union, and the members thereof who are also members of AFT, demand judgment against Bullock, Baxter Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark, jointly and severally. for: A. Compensatory damages in the amount of the value of the property wrongfully, embezzled and converted from the Union and resulting from the Defendants' conversion, civil conspiracy, aiding and abetting, breach of fiduciary duty and fraud, plus interests and costs. B. Compensatory damages for all expenses and costs the Union has incurred by virtue of Defendants' misconduct, including, but not limited to amounts spent defending, and liability that may be incurred from, suits by creditors seeking recovery based upon Defendant's misconduct. C. Treble damages and attorneys fees resulting from the losses sustained by Plaintiff as a result of Defendants' violations of 18 U.S.C. § 1961 et seq., plus interests and costs; and D. Any other just and equitable relief the Court deems appropriate. Respectfully submitted, James M. Cole (No. 385837) Counsel for American Federation of Teachers Of Counsel:
David Strom (No. 376233) Date: January 16, 2003 |
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