UNITED
STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CASE NUMBER: 1:02CV02536
FIRST AMENDED COMPLAINT
Nathan
A. Saunders II
3224 Wheeler Road, SE
Washington D.C. 20032
(derivatively on behalf of the Washington Teachers Union) Plaintiff,
v.
Esther Hankerson,
1717 K Street, N.W.
Washington, D.C. 20036
Barbara Bullock
1221 Massachusetts Avenue, N.W. #1021
Washington D.C. 20005
Gwendolyn M. Hemphill
1919 Yorktown Road, N.W.
Washington D.C. 20012
James O. Baxter II
1307 Lark Lane,
Fort Washington, MD 20744
Leroy Holmes
11101 Bennington Drive,
Upper Marlboro, MD 20774
Errol Alderman, individually and d.b.a. Expressions Unlimited
2300 Pattern Bond Drive
Silver Spring, MD 20902
Michael Martin, individually and d.b.a. Expressions Unlimited
1200 Quartette Lane
Bowie, MD 20720
Cheryl Martin
1200 Quartette Lane
Bowie, MD 20720
Gwendolyn B.
Clark
307 Yoakum
Parkway, #711
Alexandria, VA
22304
Janice S. Spencer
1717 K St.,
N.W.
Washington, D.C.
20036
Jerolyn Spicer
1717 K Street,
N.W.
Washington, D.C.
20036
Adolphus Brookins,
Jr.
1717 K Street,
N.W.
Washington, D.C. 20036
H. Beryl Hager
1717 K Street,
N.W.
Washington, D.C. 20036
Dorothy E.
Duppias
1717 K Street,
N.W.
Washington, D.C.
20036
Brenda Jenkins
1717 K Street,
N.W.
Washington, D.C. 20036
Delores Haynes
1717 K Street,
N.W.
Washington, D.C. 20036
Dorothy King
1717 K Street,
N.W.
Washington, D.C. 20036
Theresa D. McDougald
1717 K Street,
N.W.
Washington, D.C. 20036
Delores E. Timmons
1717 K Street,
N.W.
Washington, D.C. 20036
Janice E. Waters
1717 K Street,
N.W.
Washington, D.C.
20036
Deloris B. Brown
1717 K Street,
N.W.
Washington, D.C.
20036
Sarah Crawley
1717 K Street,
N.W.
Washington, D.C.
20036
Alan M. Friedman
1717 K Street,
N.W.
Washington, D.C.
20036
Benita Nicholson
1717 K Street,
N.W.
Washington, D.C.
20036
Elmma C. Oxendine
1717 K Street,
N.W.
Washington, D.C.
20036
John Donnelly
1717 K Street,
N.W.
Washington, D.C.
20036
Urman Edwards
1717 K Street,
N.W.
Washington, D.C.
20036
John Traina
1717 K Street,
N.W.
Washington, D.C.
20036
Margarete Jamison
1717 K Street,
N.W.
Washington, D.C. 20036
Theodore R. Vincent, Jr.
1717 K Street, N.W.
Washington, D.C. 20036
American Federation of Teachers, AFL-CIO
555 New Jersey Avenue, N.W.
Washington D.C. 20001
Edward J. McElroy
Secretary-Treasurer of American
Federation of Teachers
555 New Jersey Avenue, N.W.
Washington D.C. 20001
James Goosby
5204 Kaufman Ct.,
Upper Marlboro, MD 20772
Independence Federal Savings Bank
1229 Connecticut Ave., N.W.
Washington, D.C. 20036
Defendants.
Washington Teachers Union
1717 K. St. N.W.
Washington D.C. 20036
Nominal Defendant
INTRODUCTION
1. Between 1995 and July 2002, Defendant Barbara Bullock served as elected
President of the Washington Teachers' Union ("WTU"), Defendant
Gwendolyn Hemphill served as Bullock's Special Assistant, and Defendant
James Baxter served as the WTU's elected Treasurer, and in these
capacities, all three were legally obligated and duty-bound to serve and
protect the interests of the WTU and its approximately 5,000 members.
Instead, Bullock, Hemphill, and Baxter, acting in concert with and/or due
to the failed oversight of other Defendants, plundered and depleted the
WTU treasury by illegally misappropriating more than Five Million Dollars
($5,000,000.00) for substantial personal gain and for the benefit of their
families and friends. These officers and union insiders used the WTU
treasury, funded almost entirely from union dues paid by active and
retired teachers for the District of Columbia Public Schools ("DCPS"),
as a personal bank account to pay for, on information and belief, such
luxury items as: multiple fur coats and fur accessories; antiques; a
million-dollar wardrobe of designer and custom clothing; multiple designer
handbags; a $10,000 plasma television and other electronic and stereo
equipment; a personal chauffeur; travel to the Bahamas; a $57,000 Tiffany
tea set; bone china; home computers; custom hair wigs; season tickets for
professional sports events; jewels and pearl necklaces; artwork; a $6,800
ice bucket; partial payment towards a new Cadillac; and home furnishings,
including a dining table and a burled wood desk.
2. The American Federation of Teachers, AFL-CIO ("AFT"), the
WTU's national parent labor organization, ignored the WTU's trail of
significant financial missteps and failed in its role as watchdog and
parent of the WTU. Despite the mandate imposed by the AFT's constitution
that its locals submit biennial audit reports to the AFT, the AFT failed
to require WTU to submit an audit any time after 1996. The AFT also failed to insist
that the WTU submit timely annual financial reports, which were also
required by the AFT's constitution, or failed to detect financial
discrepancies in any reports that were submitted. Moreover, although the
WTU was behind in paying the AFT its per capita national dues, the AFT and
McElroy did not order an investigation or commission an audit of the WTU's
suspect finances. Indeed, the AFT failed to conduct any audit or
investigation into the WTU's financial affairs until July 2002, after
several WTU members lodged complaints with the AFT claiming that
unauthorized dues, which totaled more than $700,000, had been deducted
from their June 2002 payroll checks.
3. The WTU's Executive Board and Board of Trustees also failed in their
roles as fiduciaries and abandoned, for several successive years, their
affirmative duties to oversee the WTU's activities. The Executive Board
and Board of Trustees failed to exercise critical and required oversight
of the WTU's financial affairs or to take the necessary steps to prevent
Bullock, Hemphill, and Baxter from converting union checks to millions of
dollars in cash, depositing union checks into personal bank accounts,
engaging in union-funded spending sprees, sharing union wealth among their
families and close associates, making false and fraudulent statements to
WTU members, and filing materially false financial reports with the United
States Department of Labor and other governmental entities. In addition to
their willful ignorance and neglect of duty, Defendant Esther Hankerson,
the WTU's General Vice President turned a blind eye after learning, at
least as early as 1997, that a WTU insider had forged a union check
payable to Bullock for thousands of dollars.
4. The misconduct of these actors allowed Bullock, Hemphill, and Baxter to
confer substantial benefits on the following Defendants:
a. Leroy Holmes, a personal chauffeur for Bullock who cashed more than One Million Two
Hundred Thousand Dollars ($1,200,000.00) in union
checks, some made payable to the WTU's vendors, then pocketed some of the
cash to pay his unreported union salary and returned the remainder to
Bullock, Hemphill, or Baxter;
b. Cheryl and Michael Martin, Hemphill's
daughter and son-in-law, who received furniture and a trip to the Bahamas
paid with union funds, along with union checks for more than Four Hundred
Fifty Thousand Dollars ($450,000.00) made payable to Expressions
Unlimited, Michael Martin's business enterprise;
c. Errol Alderman, a
colleague of Michael Martin's in the District of Columbia government and
business associate of Michael Martin in Expressions Unlimited; and
d. Gwendolyn B. Clark, Bullock's sister, who received proceeds from union
checks deposited into a joint bank account she shared with Bullock,
received union-paid luxury items delivered to her home, and, doing
business as "Gwen's of Columbia" was paid by the WTU for alleged
"decorating" services performed for the WTU.
5. Plaintiff Nathan A. Saunders II, a teacher of History and Government at
Anacostia Senior High School, like most of the approximately 5,000 members
of the WTU, has been victimized by the illegal and unauthorized acts
committed by the Defendants and has been directly and seriously injured
through the loss of money and important union services. He brings this
derivative action on behalf of the WTU because the AFT has denied that it
has any responsibility for failure to oversee the WTU. He is suing for damages on
behalf of the WTU, the restitution of the WTU's funds, the appointment of
an independent monitor, and other injunctive relief.
JURISDICTION
AND VENUE
6. This action arises under provisions of the Labor-Management
Reporting and Disclosure Act (LMRDA), 29 U.S.C. §401 et seq., the
Labor-Management Relations Act (LMRA), 29 U.S.C. §141 et seq., the
Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C: §1961 et seq., and District of Columbia law. 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.
7. 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 WTU is located in the District, the AFT is located in the
District, and Barbara A. Bullock and Gwendolyn H. Hemphill reside here.
8. All of the
Defendants are subject to the exercise of personal jurisdiction by this Court.
9. 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.
10. This is a derivative action brought pursuant to Rules 23.1 and 23.2 of
the Federal Rules of Civil Procedure. Plaintiff was a member of the WTU at
the time of the events complained of herein. This action is not a collusive one to confer
jurisdiction on a Court of the United States which it would not
otherwise have.
PARTIES
11. Plaintiff, Nathan A. Saunders II, is an individual who resides at
3224 Wheeler Road., S.E., Washington, D.C. 20032.
12. Defendant 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, D.C. 20001.
13. Defendant Edward J. McElroy has been the Secretary-Treasurer of the
AFT since 1992. McElroy is sued in his capacity as the
Secretary-Treasurer of the AFT.
14. Defendant Barbara A. Bullock is an individual who resides at 1221
Massachusetts Avenue, N. W., #1021, Washington, D.C. 20005. Bullock
served as the elected President of the Washington Teachers' Union from
on or about August 10, 1994 through on or about September 2002.
15. Bullock also was Vice President of the AFT, an elected position on
the AFT Executive Council, and was reelected to that position as
recently as July 2002. Bullock has since resigned from the AFT's
Executive Council. Bullock also served on at least one AFT Task Force.
16. Defendant Gwendolyn M. Hemphill is an individual who resides at 1919
Yorktown Road, N.W., Washington, D.C. 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.
17. Defendant James O. Baxter II is an individual who resides at 1307
Lark Lane, Fort Washington, MD 20744. Baxter was the elected Treasurer
of the Washington Teachers' Union. Baxter served 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.
18. 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 the WTU.
19. Defendant Errol Alderman is an individual who resides at 2300
Pattern Bond Drive, Silver Spring, MD 20902. On information and belief,
Alderman was affiliated with a business called Expressions Unlimited.
20. Defendant Michael Martin is an individual who resides at 1200
Quartette Lane, Bowie, MD 20720. 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.
21. 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.
22. Defendant Gwendolyn B. Clark is an individual who resides at 307
Yoakum Parkway, #711, Alexandria, VA 22304. Clark is Bullock's sister.
23. Defendants Bullock, Hemphill, Baxter, Holmes, Alderman, Michael
Martin, Cheryl Martin, and Clark, collectively, are hereinafter referred
to as the "Individual Defendants."
24. Defendant Esther Hankerson is the former General Vice President of
the Washington Teachers Union.
25. On information and belief, Defendants Janice S. Spencer, Jerolyn
Spicer, Adolphus Brookins Jr., H. Beryl Hager, Dorothy E. Dupins, Brenda
Jenkins, Delores Haynes, Dorothy King, Theresa McDougald, Delores E.
Timmons, Janice E. Waters, Deloris B. Brown, Sarah Crawley, Alan M.
Friedman, Benita Nicholson, Elmma C. Oxendine, Maragerete Jamison, and
Theodore R. Vincent Jr. (collectively "the WTU Executive
Board") were members of the WTU Executive Board for the time period
from 1995 to 2002.
26. On information and belief, Defendants John Donnelly, Urman Edwards,
and John Traina were members of the WTU's Board of Trustees
(collectively "the WTU Board of Trustees") for the time period
from 1995 to 2002.
27. On information and belief, Defendant James Goosby resides at 5204
Kaufman CT, Upper Marlborough, MD 20772. On information and belief,
Goosby is a tax preparer who prepared financial forms and tax schedules
for the WTU between September 2001 and June 2002. On information and
belief, Goosby prepared these forms in his individual capacity and/or as
a principal or associate of Goosby's Tax Service, an unincorporated
Maryland business.
28. Defendant Independence Federal Savings Bank ("IFSB") is a
federally chartered stock savings bank located in Washington, D.C.
29. Nominal Defendant the Washington Teachers Union 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.
FACTS
I. The WTU's Unauthorized Deduction of Union Dues.
30. Plaintiff, Nathan A. Saunders II, is a teacher for the DCPS and
currently teaches at Anacostia Senior High School. Plaintiff is a member
in good standing of the WTU and by virtue of his membership in the WTU is
a member of the AFT.
31. On information and belief, in April 2002 Bullock wrote a letter to the
DCPS requesting it to withhold One Hundred Sixty Dollars ($160.00) as
union dues from each paycheck sent to teachers as part of a new contract.
This request was not authorized by the WTU Executive Board and did not
comply with the WTU's by-laws, which require that special assessments or
dues increases to be levied on the membership be approved by a majority
vote of Union members at a duly constituted membership meeting.
32. This $160 deduction purported to represent union dues owed on a salary
increase that was retroactive to the fall of 2001. In fact, only Sixteen
Dollars ($16.00) should have been deducted as the retroactive dues
increase for each member.
33. In July 2002, in accordance with Bullock's request, DCPS deducted an
unauthorized One Hundred Sixty dollars ($160.00) from Plaintiff's paycheck
and also deducted the same amount from each of the paychecks of other WTU
members.
34. At first, despite the fact that the deduction took place at Bullock's
request, the WTU Executive Board represented to the WTU membership that
the deduction was a mistake by DCPS. Plaintiff was told that a telephone
call to the WTU office would result in a refund.
35. When Plaintiff requested a refund from the WTU by telephone, he was
told that the WTU had a new policy and that he would have to send a letter
by fax to the WTU office. Plaintiff complied and sent such a fax in July of 2002. The WTU did not
pay Plaintiff $144, which was equivalent to the amount of the dues
overcharge, until January 21, 2003.
36. In order to pay $144 to Plaintiff and other similarly situated WTU
members, the WTU took out a loan at 5.25% interest over 36 months. The AFT
was a cosignatory on this loan, and, on information and belief, the WTU
took out the loan at the AFT's behest. On February 3, 2003 the AFT's
counsel represented to Plaintiff's counsel that AFT would
"grant" the WTU the money needed to pay back the loan and repay
any other teachers who had not yet been repaid.
37. Although the AFT has engaged in an audit and published the audit
results, the AFT has not fully yet explained what happened to the money
that the WTU received from this unauthorized dues deduction. The only
statement that the AFT has made through its auditors is that shortly
before receiving complaints about the excess dues deduction, WTU had made
large payments of delinquent per capita dues to the AFT.
II. Saunders's Attempts to Seek Redress.
38. Plaintiff has standing to sue on behalf of himself and on behalf
of the general WTU membership pursuant to 29 U.S.C. §§ 411 & 501(b)
and 18 U.S.C. § 1964(c) for violation of his rights and the obligations
that the Defendants owed him and the other approximately 5,000 members of
the WTU. Plaintiff was injured through the unauthorized deduction of dues
from his paycheck and the WTU is in financial turmoil as a result of the
Defendants' actions. The WTU has been injured in the sum of more than Five
Million Dollars ($5,000,000.00) by the actions of the Defendants.
39. Plaintiff has exhausted his administrative remedies against both the
WTU and the AFT.
40. In November 2002, Plaintiff assisted in drafting a letter directed to
the WTU, Interim WTU President Esther Hankerson, Members of the WTU
Executive Board, and Members of the WTU Board of Trustees (the
"November 2002 letter") requesting that the recipients
"provide the WTU Membership written and detailed information
regarding the overall financial health of the WTU and the financial
oversight practices of our elected Union officers."
41. The November 2002 letter further posed six questions and asked the
recipients to "provide written, accurate, and detailed responses to
the . . . questions and make the responses available for review, copy, and
inspection by the Membership no later than December 9, 2002."
42. The questions
included in the November 2002 letter included questions regarding:
a. the
specific date when WTU members would receive "their retroactive dues
refund checks";
b. the number
of WTU members who had requested and received refund checks as
of November 25, 2002;
c. "the
specific errors on the part of WTU Officers that resulted in the improper
deduction" for union dues from WTU members' payroll checks;
d. reasons
why the WTU Officers "initially mislead [sic] teachers by indicating that the improper deduction of retroactive union dues" was
a payroll deduction error committed by the District of Columbia Public Schools;
e. reasons why WTU members were "forced by WTU Officers to verbally
apply for refunds" of overpaid union dues; and
f. reasons why
"the WTU Officers fail[ed] to immediately refund the $144.00
in unauthorized deductions . . . as required by the WTU
Constitution."
43. Plaintiff also organized a picket and demonstration, including
applying for picket/demonstration permit from the District of Columbia
police department, in front of the WTU's offices and the AFT's offices.
Plaintiff's remarks on his picket/demonstration permit applications stated
that the purpose of the picket and demonstration was "[u]nion members
demonstrating against unfair dues, working conditions and misuse of our
vital resources. We are demanding a election of New Executive Committee
NOW." (Emphasis in original.)
44. A press release announcing the planned picket and demonstration stated
that the purpose of the picket and demonstration was to "immediately
address the memberships' right to full disclosure of the factors which
lead to the stated resignation of our elected president Barbara
Bullock," to protest the "unfair and unlawful union dues
deduction" and "the most recent institution of yet another dues
increase," and to demand that the WTU President, General Vice
President, and Treasurer positions "be filled immediately"
through a new election.
45. The press release also stated that the purpose of the picket and
demonstration was that "[t]he American Federation of Teachers must
respond to the entire membership as to how the parent body, which has
ultimate oversight responsibility, could allow such alleged improprieties
to exist and yet still expect dues paying members to continue to trust
their leadership."
46. On November 21, 2002, Plaintiff attended the picket and demonstration
of the WTU's offices and the AFT's offices.
47. Plaintiff also voted in favor of a motion for "Dues Refund and No
Increase in Union Dues" (the "Motion for Refund of Unauthorized
Dues") at a general membership meeting held in November or December
2002.
48. Through his vote for the Motion for Refund of Unauthorized Dues,
Plaintiff requested that "the WTU Executive Board . . . refund the
one hundred forty-four dollars ($144.00) in unauthorized dues deductions
to all affected Bargaining unit members, and to immediately freeze all
deduction of union dues at the current twenty-four dollars and
seventy-five
cents ($24.75) per pay period, until October 1, 2003."
49. Plaintiff and other WTU members in the Motion for Refund of
Unauthorized Dues further requested that "the WTU Executive Board
also provide each affected member, by December 13, 2002, a written
statement indicating when his or her refund will be mailed, and a written
explanation of the process implemented by the Executive Board to determine
the order in which members will receive their dues refund."
50. The WTU
members succeeded in passing the Motion for Refund of Unauthorized Dues.
51. Nonetheless, the WTU Executive Board refused to address the concerns
of Plaintiff and other WTU members regarding union financial activities,
citing the ongoing FBI investigation.
52. The WTU Executive Board further failed to provide full and adequate
responses to the requests stated in the Motion for Refund of Unauthorized
Dues by December 13, as requested. On information and belief the answers
were posted on or about January 6, 2003.
53. On December 27, 2002, Plaintiff filed a pro se lawsuit against the
AFT, the WTU Executive Board, Bullock, Baxter and Hemphill.
54. At the time that Plaintiff filed his pro se complaint, neither
the WTU Executive Board nor the AFT had brought suit against the former
WTU officers or other Individual Defendants.
55. On January 16, 2003, the AFT ultimately did file its own lawsuit, but
continued to deny in this action any and all responsibility for failure to
monitor the WTU's finances. For example, in this Court on January 21,
2003, the AFT represented that it had no duties to monitor the WTU's
finances. Counsel for the AFT stated that:
The National
Union has very limited powers over the locals. [The AFT] is an
unusual union in that regard, where the locals are very autonomous
and the first instance of governance is to the locals .... There are
limited powers that the
AFT has over a local, and sometimes they go from almost nothing,
with a large gap, up
to trusteeship, which is a process that has begun[.]
(Emphasis added.)
56. The AFT
also represented that it had no duties to oversee the completion and presentation of the WTU's audit process. Counsel for the AFT stated that:
The audits are
for the membership not the AFT. And, indeed there are no powers
specifically given to the AFT in regard to these audits. There
is no requirement to audit the audit or do anything about it.
57. The AFT did
not provide any explanation, however, for why the National should be required to receive an audit if it was not required to review it.
Moreover, the AFT did not deny that regardless of whether it was required to review the audits, it
never received them.
58. Plaintiff wrote to the AFT on January 27, 2003, requesting full union
membership meetings. As of the date of this Amended Complaint, and despite
the fact that the AFT has had de facto control of the WTU for six
months, and de jure control of the union for a week, no firm dates
have been set for a full membership meeting, though the AFT has made
representations that such meetings will occur.
59. In addition the AFT has failed to take action against those AFT
officers and employees responsible for ensuring that the audit process at
the WTU and its other locals took place or that the WTU was complying with
its financial obligations to its membership and to the AFT.
60. Plaintiff asserts that any further attempts to exercise administrative
remedies against the WTU would be futile because the AFT has suspended the
WTU's Constitution, and assumed an administratorship of the WTU. The AFT
appointed George C. Springer to be the Administrator of the WTU on January
27, 2002.
61. Plaintiff asserts that any further attempts to exercise administrative
remedies against the AFT would be futile because the AFT denies it had any
responsibility to enforce its audit requirement and because the AFT has
failed to agree to his reasonable requests for full membership meetings,
though the AFT has represented such meetings will occur. It would be
futile to demand that the AFT proceed against itself on behalf of the WTU,
particularly in light of its assertion that it had no obligation to act
with respect to WTU's audit process.
III. The American Federation of Teachers.
62. Beginning January 1, 1971, the AFT's constitution required its
local unions, such as the WTU, to submit an annual financial statement for
the local, including a statement of assets and liabilities and statement
of income and expenses, to the AFT Secretary-Treasurer within five months
after the local's fiscal year end.
63. As of September 1, 1993, the AFT's constitution began to require its
local unions, like the WTU, to submit audits to their members and to the
AFT at least every two years.
64. The AFT provides two guidance documents on its website for treasurers
of local unions. The first, "Keeping the Records Straight,"
outlines bookkeeping procedures and financial control programs. The second, the "AFT Guidelines for
Audit Committees," outlines the procedures to be used by members of
a local union's audit committee for conducting audits. Both of these
documents re-emphasize the AFT's constitutional audit requirements.
65. The WTU Executive Board failed to incorporate either the AFT's
financial statement requirement or the AFT's audit requirement into the
WTU's constitution or by-laws.
66. The AFT, by the vote of its Executive Council, has the power to
suspend or revoke the charter of a local union if the existence of such
a union is detrimental to the development of democracy in education.
67. The AFT, by the vote of its Executive Council, has special powers to
suspend or revoke the charter of a local union for non-payment of
national dues.
68. The AFT, by the vote of its Executive Council, has the power to
investigate a local union when the local's conduct fails to comply with
the provisions of the AFT constitution or when the local's conduct is
not in harmony with the principles of the AFT and tends to bring the AFT
into disrepute.
69. Bullock was a Vice President of the AFT and a member of the AFT
Executive Council from at least July 2000 through July 2002.
70. The AFT did not receive any audits from the WTU after 1996, although
the WTU should have conducted at least three audits between 1996 and
2002.
71. On information and belief, the AFT did not receive timely annual
financial statements from the WTU. On information and belief, any
financial statements that were submitted by the WTU to the AFT between
1996 and 2002 contained financial inaccuracies and discrepancies.
72. On information and belief, the WTU pays the AFT annual membership
dues of approximately Seven Hundred Thousand Dollars ($700,000.00). On
information and belief, since 1996 the WTU has paid the AFT millions of
dollars in membership dues.
73. On information and belief, the WTU became delinquent in its dues to
the AFT.
74. The AFT failed to take action to investigate the WTU's finances
until September 2002, when they hired forensic auditors.
75. Edward J. McElroy has been the Secretary-Treasurer of the AFT since
1992.
76. Under the AFT's constitution, McElroy is responsible for receiving
annual financial statements from local unions.
77. On information and belief, McElroy or his office is also responsible
for receiving the biennial audit statements from local unions. The
stated mission of the AFT financial services department, headed by
McElroy, is to assist treasurers and other officers at local unions in
dealing with the financial and administrative challenges of running a
union.
78. On information and belief, McElroy has not received any of the
information required by the AFT's constitution from the WTU since 1996.
79. The WTU's delinquency in its dues payments put or should have put
McElroy and the AFT on notice that there were serious financial problems
at the WTU.
80. Springer, the Administrator appointed by the AFT on January 27,
2003, to administer the WTU, served on the AFT Executive Council with
Bullock.
IV. The Washington Teacher's Union.
81. The WTU is a labor organization representing approximately 5,000
people 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.
82. The WTU is affiliated with the AFT. Individuals who are members of
the WTU are also members of the AFT.
83. The WTU was governed by a constitution and by-laws which set forth
the WTU's purpose, operating procedures, election and discipline
procedures, meeting requirements, and the duties of its officers and
Executive Board.
A. The WTU Executive Board.
84. The WTU Executive Board was the governing body of the WTU with
general oversight responsibilities.
85. As part of these responsibilities, the WTU Executive Board was
required to maintain adequate oversight over the activities of the
individuals handling the WTU's funds and to demand regular accountings
of how those funds were being spent.
86. The WTU constitution and by-laws also granted the Executive Board
the specific duty to hire (and fire) union employees, including the
Treasurer and accountants.
87. Despite these responsibilities, the WTU Executive Board did not
adequately question Bullock or Baxter's decisions or demand a full
regular accounting of the WTU's funds.
88. On information and belief, the WTU Executive Board also failed to
employ an accountant between 1996 and 2002.
B. The WTU Board of Trustees.
89. The WTU Board of Trustees had oversight responsibilities for the
union finances.
90. The WTU Board of Trustees was required to monitor the WTU's funds
and financial records and had the authority to demand regular
accountings of how those funds were being spent.
91. Specifically, and according to the WTU constitution and by-laws,
each member of the Board of Trustees of the WTU is an elected officer of
the WTU charged with "attest[ing] to the accuracy of all bank
accounts of Local #6 at the end of each fiscal year" and has the
right "to examine all financial records, receipts, expenditures,
disbursements, vouchers, bills and statements."
92. The Board of Trustees, together with the Treasurer, is also
responsible for preparing the proposed annual budget.
93. According to the WTU constitution and by-laws, the WTU trustees also
are to consult with the Treasurer in the preparation of a quarterly
report and present their findings to the Executive Board prior to
presenting the report to the WTU membership.
94. The WTU's Board of Trustees failed to ensure the accuracy of the
WTU's bank accounts on an annual basis.
95. The WTU's Board of Trustees failed to exercise their right to
examine the WTU's financial records, receipts, expenditures,
disbursements, vouchers, bills and statements.
96. On information and belief, the Board of Trustees also failed to
oversee compliance with the WTU's annual budgets.
97. On information and belief, the WTU's quarterly reports also were not
issued on a regular basis.
98. None of the members of the Board of Trustees adequately questioned
or oversaw the activities of Baxter, Bullock or Hemphill.
V. The Individual Defendants Formed an Association-In-Fact Enterprise
to Embezzle and Convert WTU's Funds to Their Own Use
99. The Individual Defendants and other parties as yet unknown, formed
an association-in-fact enterprise, the activities of which affected
interstate commerce. The purpose
of this association-in-fact enterprise was to defraud the WTU, to
embezzle and convert the WTU's funds, and to launder those funds to
disguise their origin for the personal gain of the Individual Defendants
and others. Through the operation of this enterprise, they engaged in a
conspiracy to commit 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 embezzling from the Union, in violation of 29 U.S.C. §501(c).
100. On information and belief, Bullock, Baxter and Hemphill formed the
organizational head of this association-in-fact enterprise. Holmes,
Michael Martin, Cheryl Martin, Alderman, and Clark helped to carry out
the enterprise's activities.
101. Defendants Bullock, Baxter and Hemphill, as officers, agents, and
representatives of the Union, had a duty to act in good faith on its
behalf in all matters associated with the conduct of Union affairs.
102. Bullock, Baxter and 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, and 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.
103. On October 23, 2002, on behalf of the Union, formal requests were
made to Bullock, Baxter, and Hemphill to repay to the 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.
104. Subsequently, on December 23, 2002, a second demand for repayment
was made to Bullock, Baxter, and Hemphill.
105. Bullock, Baxter, and Hemphill have not complied with these demands
for return of the WTU's property.
A. Barbara Bullock.
106. Bullock was elected by WTU's membership to the position of
President on July 1, 1994. She was reelected to that position in
subsequent WTU elections and continued in that role until September
2002, when she voluntarily agreed to relinquish her duties and accept
leave without pay from the Union.
107. Bullock formally resigned as President on October 23, 2002.
108. Under 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 cosigning of
checks.
109. Bullock had overall responsibility and authority for the conduct of
the WTU's affairs. As a union officer handling union funds, Bullock was
required to be bonded. On information and belief, no bond was
maintained.
110. On information and belief, Bullock acted in concert with Baxter and
supervised Clark, Holmes, and Hemphill with regard to their roles in the
association-in-fact enterprise.
111. Beginning in 1995, on behalf of the 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 WTU. 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, 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.
112. The WTU paid the bills for the American Express accounts with Union
funds.
113. From the period beginning in 1995 through July 2002, Bullock was
issued a total of five Corporate Cards from the WTU's two Corporate
Accounts, including card numbers 378296498801016 (1995-10/96);
3782-964988-01008 (9/97-7/02); 3782-964988-02014 (11/967/02);
3782993128-11005 (10/00-7/02), and 3782-993128-11013 (9/99-7102).
114. During her tenure as President, Bullock made substantial
unauthorized purchases on the 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
handmade 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.
115. Bullock did not receive authorization from the WTU's Executive
Board or the Union membership to make those purchases, nor did she
reimburse the WTU for those charges.
116. In addition to purchasing items for her personal use, Bullock
purchased items on the WTU's Corporate American Express Cards for
others.
117. Bullock's unauthorized and personal charges to the WTU's Corporate
American Express Cards that have been identified to date exceed One
Million Eight Hundred Thousand dollars ($1,800,000.00).
118. Bullock also issued or caused to be issued checks from the 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 Diners Club to pay for meals, hotels,
designer clothing, and jewelry. These checks were not authorized by the
WTU's Executive Board and were used to illegally convert funds from the
WTU.
119. 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).
120. Additionally, Bullock issued or caused to be issued unauthorized
checks in excess of One Million Five Hundred Thirteen Thousand dollars
($1,513,000.00) from the WTU's bank accounts to Baxter, Hemphill,
Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited,
and Clark, in a scheme to convert the WTU's funds. Those checks were not
authorized by the WTU's Executive Board and were used to illegally
convert funds from the WTU.
121. On information and belief, in an attempt to conceal the fact that
the association-in-fact enterprise had depleted the WTU's funds beyond
the WTU's ability to pay its AFT dues, Bullock caused the unauthorized
deduction of $160 from the paychecks of WTU members in June 2002.
B. Gwendolyn Hemphill.
122. On information and belief, Hemphill served as Special Assistant to
the President and Legislative Representative of the WTU from 1996
through on or about September 2002, when she voluntarily agreed to
relinquish her duties and accept leave without pay from the WTU.
123. Hemphill formally resigned from her positions on November 1, 2002.
124. 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 the WTU's offices
and managing its staff.
125. On information and belief, Hemphill supervised Holmes in his
activities on behalf of the association-in-fact enterprise. On
information and belief, she was responsible for distributing the WTU's
funds and consumer goods paid for with the WTU's funds to Cheryl and .
Michael Martin.
126. 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. As a union agent
handling union funds, Hemphill was required to be bonded. On information
and belief, no bond was maintained.
127. 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 to checks written on behalf of
the Union.
128. 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 3782964988-01040 (5/98-11/99), and
3782-964988-11021 (9/99-7/02).
129. 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 WTU,
to make numerous unauthorized personal charges, 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.
130. Hemphill did not receive authorization from the WTU's Executive
Board or the Union membership to make those purchases, nor did she
reimburse the WTU for those charges.
131. In addition to purchasing items for her personal use, on
information and belief, Hemphill purchased items on the 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.
132. In total, Hemphill's unauthorized and personal charges to the WTU's
Corporate American Express accounts exceeds Three Hundred and Eleven
Thousand dollars ($311,000.00). Hemphill did not receive authorization
from the WTU's Executive Board or the Union membership to make the
unauthorized purchases, nor did she reimburse the WTU for those charges.
133. 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 the WTU's Executive Board and were
used to illegally convert funds from the 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.
134. On information and belief, Hemphill directed Holmes to cash checks
for large sums of money on the WTU's account and to return the proceeds
to her or deposit them in Bullock's personal bank account. On information and belief, upon
receiving cash proceeds from Holmes, Hemphill returned a portion of the
money to Holmes and retained the rest.
135. Checks issued on the WTU's accounts were prepared by Hemphill,
signed by Baxter, and, on information and belief, issued with the
knowledge of, and in many cases, at the direction of Bullock.
C. James Baxter.
136. 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 September 2002 when he "stepped aside"
after the WTU Board removed Baxter from his duties and put him on leave
without pay. Although the WTU formally requested Baxter's resignation on
October 23, 2002, he has refused to resign.
137. On information and belief, Baxter acted in concert with Bullock and
Hemphill to embezzle funds from the Union. On information and belief,
Baxter also acted to dissuade the WTU's Executive Board from
investigating the WTU's finances.
138. 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. As a union officer handling
union funds, Baxter was required to be bonded. On information and
belief, no bond was maintained.
139. From the period beginning in 1995 through July 2002, Baxter was
issued Corporate Cards from the WTU's two Corporate Accounts, including
card numbers 3782964988-01008 (1995-8/97), and 3782-964988-01032
(1995-7/02).
140. During his tenure as Treasurer, Baxter used the credit cards, which
were issued for the sole purpose of conducting the official business of
the WTU, 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.
141. In total, Baxter's unauthorized and personal charges to the WTU's
Corporate American Express Cards exceed Two Hundred Sixty-Seven Thousand
dollars ($267,000.00). Baxter did not receive authorization from the
WTU's Executive Board to make those purchases, nor did he reimburse the
WTU for those charges.
142. 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 the WTU's Executive
Board or membership and were used to illegally convert funds from the
WTU.
143. 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 the WTU's Executive Board or
membership and were used to illegally convert funds from the WTU's
treasury.
D. Leroy Holmes
144. Between approximately October 1998 and September 2002, Holmes
received in excess of 200 checks, ranging in amounts from $500 to
$20,000, and totaling more than One Million Two Hundred Thousand dollars
($1,200,000.00). Those checks were written on the WTU's primary checking
account and were cashed by Holmes at the WTU's bank, IFSB.
145. At least four of the checks cashed by Holmes at IFSB were equal to
or exceeded Ten Thousand Dollars ($10,000.00).
146. On information and belief, after cashing those checks Holmes either
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 deposited funds into Bullock's personal bank account.
147. In addition, Holmes cashed numerous altered checks, including
checks in which the original payee was marked through and his name
written in. The altered checks cashed by Holmes were originally payable
to Verizon, D.C. Treasurer, Slevin & Hart, and Blue Cross/Blue
Shield among others, for the payment of the WTU's legitimate business
expenses.
148. Holmes cashed, deposited, or otherwise made use of checks he
received knowing that the funds were proceeds of unlawful activity.
149. Holmes knew that the checks he cashed on the WTU's bank accounts
resulted in the unlawful embezzlement and conversion of the WTU's funds.
150. While Holmes provided services to the WTU, namely driving Bullock
to appointments and performing odd jobs at the 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 the WTU.
151. Payments made to Holmes in excess of the reasonable value of his
services were made without the authorization of the WTU's Executive
Board, and the WTU's membership did not know of these payments.
E. Michael Martin.
152. Michael Martin is the son-in-law of Gwendolyn Hemphill, the husband
of Cheryl Martin, and, on information and belief, was affiliated with a
business called Expressions Unlimited.
153. Michael Martin received unauthorized funds and material goods paid
for with the WTU's 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.
154. 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.
155. 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.
156. 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.
157. Michael Martin participated in these financial transactions knowing
that he was wrongfully embezzling and converting money from the WTU.
158. Payments made to Michael Martin were made without the authorization
of the WTU's Executive Board, and the WTU's membership did not know of
payments made to Michael Martin.
F. Cheryl Martin.
159. Cheryl Martin is the daughter of Gwendolyn Hemphill and the wife of
Michael Martin.
160. Cheryl Martin received unauthorized funds and material goods paid
for with the WTU's funds and conducted financial transactions with money
received as the result of unlawful activity and money laundering.
161. Cheryl Martin cashed and deposited unauthorized checks written on
the WTU's bank accounts to Errol Alderman, her husband Michael Martin,
and Expressions Unlimited.
162. 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.
163. On 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; and the
personal bank account of Hemphill.
164. Cheryl Martin participated in these financial transactions knowing
that she was wrongfully embezzling and converting money from WTU.
165. Payments made to and Union money spent on behalf of Cheryl Martin
were made without the authorization of the WTU's Executive Board, and
the WTU's membership did not know of payments made to Cheryl Martin.
G. Errol Alderman.
166. On information and belief, Alderman was affiliated with a business
called Expressions Unlimited.
167. Alderman received unauthorized funds from the 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.
168. 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 the WTU's bank accounts.
169. 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 the WTU's
bank accounts.
170. On 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.
171. 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.
172. Alderman participated in those financial transactions knowing that
he was wrongfully embezzling and converting money from the WTU.
173. Payments made to Alderman were made without the authorization of
the WTU's Executive Board, and the WTU's membership did not know of
payments made to Alderman.
H. Gwendolyn Clark.
174. Clark is the sister of Barbara Bullock.
175. Clark received unauthorized funds and material goods paid for with
the WTU's funds and conducted financial transactions with money received
as the result of unlawful activity and money laundering.
176. Clark and Bullock share a joint bank account, where some of the
proceeds of unauthorized checks written on the WTU's bank accounts were
deposited.
177. Clark and Bullock also share a Diners 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 WTU.
178. Between the period of January 1996 through July 2002, payments
were made by WTU to Diners Club for account number 3850-814404-0035 in
excess of One Hundred and Nineteen Thousand dollars ($119,000.00).
179. Clark made use of unauthorized funds and material goods paid for by
the WTU's funds she received from Bullock, Hemphill, and the WTU knowing
that the goods and funds were proceeds of unlawful activity.
180. Clark accepted funds and material goods paid for by the WTU's
funds, knowing that she was wrongfully embezzling and converting money
from the WTU.
181. Payments made to and WTU money spent on behalf of Clark were made
without the authorization of the WTU's Executive Board, and the WTU
membership did not know of the payments made to and WTU money spent on
behalf of Clark.
I. All Individual Defendants.
182. At all times, Bullock, Baxter, Hemphill, Holmes, Michael Martin,
Cheryl Martin, Alderman, and Clark knew that the funds and material
goods paid for with the WTU's 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.
183. Defendants' activities are the subject of a criminal investigation
by the federal government.
VI. Esther Hankerson.
184. Esther Hankerson served as General Vice President during Barbara
Bullock's entire term as President. Esther Hankerson knew or had reason
to know that Bullock was misappropriating the WTU's funds.
185. Hankerson has admitted that at some point in 1997 she received a
phone call from Independence Federal Savings Bank, the WTU's bank,
stating that it had been presented with an $8,000 WTU check that was
made payable to Bullock and that ostensibly had been signed by
Hankerson.
186. Hankerson indicated that she had not signed the check and that the
signature was a forgery but nevertheless instructed the bank to pay it.
187. Hankerson claims that she confronted Bullock about the check and
that Bullock promised to repay the money. However, on information and
belief, there is no evidence that the money was repaid.
188. On information and belief, Hankerson did not report the forgery or
the payment to Bullock to anyone else at the WTU, the WTU Executive
Board, the WTU membership, or the AFT.
189. On information and belief, Bullock subsequently issued many other
checks with forged Hankerson signatures.
VII. James Goosby.
190. James Goosby is the owner and operator of Goosby Income Tax
Service, an unincorporated business. On information and belief, Goosby
is not a Certified Public Accountant.
191. On information and belief, in August 2001, Goosby entered into a
contract with Hemphill on behalf of the WTU which required the WTU to
pay Goosby $5,000 per month in exchange for the preparation of WTU
financial statements, Forms 990, and Forms LM-2.
192. On information and belief, Goosby prepared financial forms for the
WTU between September 2001 and June 2002. However, these financial forms
showed serious discrepancies with the actual facts.
193. As an example of the discrepancies between Goosby's forms and
actual WTU expenditures, on WTU's 2001 LM-2 form Goosby reported only
payroll disbursements to Bullock and Hemphill; understated the amounts
disbursed to Baxter; and showed no disbursements of any kind to Holmes.
194. On information and belief, as Holmes's personal tax preparer,
Goosby had reason to know that by April 2002, Holmes derived his income
primarily from the WTU and was being paid approximately $105,000 per
year. On information and belief, Goosby's schedules show that the WTU
issued checks to Holmes in the amount of $1,046,873 between October 1998
and December 2001.
VIII. Independence Federal Savings Bank
195. IFSB is a federally-chartered stock savings bank located in
Washington, D.C.
196. The WTU maintained a checking account at IFSB.
197. From October 9, 1998, to August 29, 2002, Leroy Holmes cashed or
negotiated approximately 228 checks drawn on the WTU's account with IFSB
totaling approximately One Million Two Hundred Thousand Dollars
($1,200,000.00).
198. Holmes's activity was suspicious in several respects:
a. Holmes cashed numerous checks within days of each other. Indeed, on September 15, 2000, Holmes cashed two checks totaling $21,875.
b. A number of checks were just under the $10,000 amount required to be reported under the Currency Transaction Report.
c. At least four checks cashed by Holmes at IFSB were equal to or exceeded
Ten Thousand Dollars ($10,000.00).
d. While many of the checks were written directly to Holmes, several
were written to other payee names that were crossed off and changed to Holmes's name.
e. Nonetheless, IFSB consistently cashed these checks and gave the money
to Holmes.
199. As a result of his frequent check cashing, Holmes developed a close
working relationship with Gretchen Calloway, a branch manager for IFSB.
200. At Calloway's request, Holmes would call Calloway before cashing
large checks to verify that the bank had enough cash on hand.
201. In addition to cashing checks written to Holmes, IFSB paid
numerous, checks that contained the forged signature of Esther
Hankerson.
202. In 1997, someone from IFSB called Hankerson to inform her that
another bank had presented a check for payment that appeared to contain
Hankerson's forged signature. Hankerson informed the bank that she had
not signed the check, but instructed the bank to pay it, and the bank
did so.
203. At that time, Hankerson instructed IFSB not to authorize payment of
any additional checks where her signature was in question and to call
her immediately if any other forged checks were presented for payment.
204. Despite this instruction, IFSB paid numerous checks on which
Hankerson's signature had been forged, including checks written to
Bullock, Gwen's of Columbia, Diners Club, Domestic Bliss, and Ascension
Gallery.
205. IFSB also paid checks that were originally made payable to WTU
vendors but were subsequently altered to be made payable to Cheryl
Martin.
206. Despite being authorized to do so by a resolution from the WTU
Executive Board, IFSB refused to provide complete information to
investigators conducting an audit on behalf of the AFT.
COUNT I
(Breach of Fiduciary Duty pursuant to the Labor-Management Reporting and Disclosure Act against Bullock, Baxter, Hemphill,
Hankerson, Former Members of the WTU Board of Trustees, Former Executive Board Members, and
Goosby)
207. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 206.
208. Bullock, Baxter, and Hemphill were officers, agents, or
representatives of the WTU who owed the following fiduciary duties to
the WTU and its members:
a. a duty to hold the WTU's money and property solely for the benefit of
the organization and its members;
b. a duty to manage, invest, and expend the WTU's money and property in accordance with the WTU's constitution and by-laws;
c. a duty to refrain from holding or acquiring any pecuniary or personal
interest which conflicts with the interest of such organization; and
d. a duty to account to the WTU for any profit received by him or her in
whatever capacity in connection with the transactions conducted by him
or her or under his or her direction on behalf of the organization.
209. Hankerson, as the elected General Vice President of the WTU, owed a
fiduciary duty to the WTU and its members to manage, invest, and expend
the WTU's money and property in accordance with the WTU's constitution
and by-laws.
210. Donnelly, Edwards, and Traina, as members of the WTU Board of
Trustees, were all officers, agents, or representatives of the WTU who
owed a fiduciary duty to the WTU and its members to manage, invest, and
expend the WTU's money and property in accordance with the WTU's
constitution and by-laws.
211. Brookins, Brown, Crawley, Duppias, Friedman, Hager, Haynes,
Jenkins, King, McDougald, Nicholson, Oxendine, Spencer, Spicer, Timmons,
and Waters, as WTU Executive Board members, were all officers, agents,
or representatives of the WTU who owed a fiduciary duty to the WTU and
its members to manage; invest, and expend the WTU's money and property
in accordance with the WTU's constitution and by-laws.
212. Goosby was an agent or representative of the WTU who owed the
following fiduciary duties to the WTU and its members:
a. a duty to manage, invest, and expend the WTU's money and property in
accordance with the WTU's constitution and by-laws; and
b. a duty to refrain from holding or acquiring any pecuniary or personal
interest which conflicts with the interest of such organization.
213. Bullock, Baxter, and Hemphill breached their fiduciary duties to
the WTU and its members by:
a. conspiring to and engaging in a scheme to embezzle the WTU's funds
and convert more than Five Million Dollars ($5,000,000.00) in union
funds for their personal use, the use of the other Individual Defendants, or other
unauthorized purposes;
b. charging personal expenses to WTU credit cards without reimbursement
to the WTU or authorization from the WTU's Executive Board;
c. 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;
d. filing and causing to be filed false and misleading reports regarding
the WTU's financial condition and the WTU officers' and employees' compensation to federal and local authorities, including the United
States Department of Labor and the Internal Revenue Service;
e. failing to submit accurate budgets, financial statements, and audits to
the WTU's members and to the AFT;
f. failing to ensure that the proper financial and accounting procedures
were being followed by the WTU;
g. failing to adequately bond themselves;
h. otherwise failing to hold the WTU's money and property solely for the
benefit of the organization and its members;
i. otherwise failing to manage, invest, and expend the WTU's money and
property in accordance with the WTU's constitution and by-laws;
j. otherwise holding or acquiring a pecuniary or personal interest which
conflicted with the interest of the WTU; and
k. otherwise failing to account to the WTU for any profit received by
him or her in whatever capacity in connection with the transactions
conducted by him or her or under his or her direction on behalf of the
WTU.
214. Additionally, Baxter breached his fiduciary duty to the WTU and its
members by simultaneously holding salaried positions both in the
District of Columbia government and in the WTU.
215. Hankerson breached her fiduciary duty to the WTU and its members
by:
a. permitting Hemphill, an unelected WTU employee, to assume check-signing authority using a signature stamp bearing Bullock's signature,
which she used to affix Bullock's name stamp to checks written on behalf
of the WTU;
b. failing to conduct an investigation or notify the Executive Board
when she discovered, in 1997, that her name had been forged on a WM check
payable to Bullock for thousands of dollars;
c. neglecting and withdrawing from her affirmative responsibilities as the
elected General Vice President of the WTU;
d. otherwise failing to maintain adequate oversight of the financial
affairs of the WTU and monitor the activities of Bullock, Baxter, and Hemphill; and
e. otherwise failing to manage, invest, and expend the WTU's money and
property in accordance with the WTU's constitution and by-laws.
216. Donnelly, Edwards, and Traina breached their respective fiduciary
duties to the WTU and its members by:
a. failing to ensure the accuracy of all bank accounts of the WTU at the
end of each fiscal year;
b. failing to prepare accurate quarterly reports in consultation with
Baxter;
c. failing to ensure that officers of the WTU were adequately bonded;
d. and otherwise failing to manage, invest, and expend the WTU's money
and property in accordance with the WTU's constitution and by-laws.
217. Brookins, Brown, Crawley, Duppias, Friedman, Hager, Haynes,
Jenkins, King, McDougald, Nicholson, Oxendine, Spencer, Spicer, Timmons,
and Waters breached their duties to the WTU and its members by:
a. failing to ensure that Bullock and Baxter submitted accurate budgets
and financial statements to the WTU's members;
b. failing to maintain adequate oversight of the activities of Bullock,
Baxter, and Hemphill;
c. failing to ensure that officers of the WTU were adequately bonded; and
d. otherwise failing to manage, invest, and expend the WTU's money and property in accordance with the WTU's constitution and by-laws.
218. Goosby breached his fiduciary duty to the WTU and its members by:
a. preparing false and misleading reports regarding the WTU's financial condition and the WTU officers' and employees', compensation to federal
and local authorities, including the United States Department of Labor
and the Internal Revenue Service;
b. failing to ensure that the proper financial and accounting procedures
were being followed by the WTU;
c. otherwise failing to manage, invest, and expend the WTU's money and
property in accordance with the WTU's constitution and by-laws; and
d. otherwise holding or acquiring a pecuniary or personal interest which
conflicted with the interest of the WTU.
219. As a result of the breaches of fiduciary duties committed by
Bullock, Baxter, Hemphill, Former Members of the WTU Board of Trustees,
Former Executive Board Members, and Goosby, the Individual Defendants
were able to embezzle and convert Five Million Dollars ($5,000,000.00)
in union funds to their personal use or use of their friends, families,
or associates.
220. The WTU has been significantly harmed by the breaches of fiduciary
duties committed by Bullock, Baxter, Hemphill, Donnelly, Edwards, Traina,
and Goosby because the WTU is missing sums in excess of Five Million
Dollars ($5,000,000.00) from its treasury. As a result of this loss, the
WTU is unable to adequately represent its membership. Plaintiff, as a
member of WTU has been injured both by the deduction of the unauthorized
dues from his bank account and because he has been deprived of the
benefits of the dues that he has paid to WTU.
COUNT II
(Breach of Fiduciary Duty pursuant to the Labor-Management Reporting and Disclosure Act against
AFT and McElroy)
221. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 220.
222. The AFT, as parent and agent of the WTU, owed the following
fiduciary duties to the WTU and its members:
a. a duty to manage, invest, and expend the WTU's money and property in
accordance with the WTU's and the AFT's constitution and by-laws; and
b. a duty to refrain from holding or acquiring any pecuniary or personal
interest which conflicts with the interest of such organization.
223. McElroy, as an officer of the AFT, owed the following fiduciary
duties to the WTU and its members:
a. a duty to manage, invest, and expend the WTU's money and property in
accordance with the WTU's and the AFT's constitution and by-laws; and
b. a duty to refrain from holding or acquiring any pecuniary or personal
interest which conflicts with the interest of such organization.
224. The AFT breached its fiduciary duty to the WTU and its members by:
a. failing to require compliance with the biennial audit mandates in the
AFT constitution;
b. failing to ensure that the WTU conduct a financial
audit of any kind at any time after 1996;
c. failing to conduct a meaningful review of any financial reports
submitted by the WTU;
d. failing to obtain WTU financial reports to discover financial
discrepancies that appeared in any such annual financial reports submitted by the
WTU;
e. failing to ensure that officers of the WTU were adequately bonded;
f. otherwise failing to manage, invest, and expend the WTU's money and
property in accordance with the WTU's constitution and by-laws.
225. McElroy breached his fiduciary duty to the WTU and its members by:
a. failing to require compliance with the biennial audit mandates in the
AFT constitution;
b. failing to ensure that the WTU conduct a financial audit of any kind
at any time after 1996;
c. failing to conduct a meaningful review of any financial reports
submitted by the WTU;
d.
failing to obtain annual WTU financial reports or to discover the
financial discrepancies that appeared in annual financial reports submitted by the
WTU;
e. failing to ensure that officers of the WTU were adequately bonded;
f. otherwise failing to manage, invest, and expend the WTU's money and
property in accordance with the WTU's constitution and by-laws.
226. As a result of the breaches of fiduciary duties committed by the
AFT and McElroy the Individual Defendants were able to embezzle and
convert Five Million Dollars ($5,000,000.00) in union funds to their
personal use or use of their friends, families, or associates.
227. The WTU has been significantly harmed by the breaches of fiduciary
duties committed by the AFT and McElroy because the WTU is missing sums
in excess of Five Million Dollars ($5,000,000.00) from its treasury. As
a result of this loss, the WTU is unable to adequately represent its
membership. Plaintiff, as a member of WTU has been injured both by the
deduction of the unauthorized dues from his bank account and because he
has been deprived of the benefits of the dues that he has paid to WTU.
COUNT III
(Violation of Bill of Rights of Members of Labor Organizations against Bullock and Baxter)
228. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 227.
229. On information and belief, Bullock and/or Baxter authorized a WTU
union dues increase of $160 per member, rather than the approved $16
increase, in 2002.
230. This dues increase was not approved by either:
a. a majority vote by secret ballot of the WTU members in good standing,
voting at a general or special membership meeting; or
b. a majority vote of the WTU members in good standing, voting in a
membership referendum conducted by secret ballot.
231. This dues increase therefore violated the WTU union members' Bill
of Rights because it was an unauthorized and illegal dues increase.
232. As a result of this violation, excess dues exceeding $700,000 were
deducted from the payroll checks belonging to Saunders and to other WTU
union members.
233. Saunders has requested reimbursement on several occasions.
234. Saunders received payment from the WTU on January 21, 2003 for the
amount of the unauthorized dues deduction but has still not received an
explanation of what happened to the money.
235. Any additional efforts to request relief from the WTU or its
current or former officers would have been futile.
236. Plaintiff, as a member of WTU, has been significantly harmed by
Bullock and/or Baxter's violation of his Bill of Rights because he was
forced to pay the dues increase.
COUNT IV
(Breach of National Constitution pursuant to the Labor-Management Relations Act against the AFT)
237. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 236.
238. The AFT's constitution requires that its local affiliated unions
either "convene a committee of at least three members to conduct an
internal financial review according to a format to be determined by the
AFT executive counsel" or "contract for an outside audit that
meets the standards of generally accepted accounting principles."
The AFT constitution further required its local unions to provide such
reviews to the AFT's national office "by January 1, 1994, and at
least every two years thereafter."
239. The AFT's constitution also mandates that each local "submit a
financial statement for the local including a statement of assets and
liabilities and a statement of income and expenses to the AFT
secretary-treasurer within five months of the end of the fiscal year for
the local."
240. The AFT constitution further states that its "executive
council shall have power to employ an auditor to examine the books of
any affiliated local or state federal upon the direction of a majority
vote of the executive council."
241. Through the provisions of the AFT constitution set forth in
paragraphs 238 through 240, the AFT established its obligation to obtain
and review the financial accounting and reporting records of its locals.
242. The WTU conducted an audit in 1995 and submitted this audit to the
AFT in 1996, but this audit failed to meet the requirements of the AFT
constitution.
243. The WTU failed to submit any audit at any time after 1996.
244. On information and belief, the WTU also failed to file timely
financial statements, and any financial statements that were ultimately
presented to the AFT contained substantial and material financial
discrepancies.
245. Despite these failures, the AFT never required the WTU to modify
its 1996 audits or file further audits to bring the WTU into compliance
with the AFT's constitution. The AFT also failed to employ an auditor to
examine the WTU's books and financial records.
246. The AFT failed to take these actions although it had continuing
contact with Bullock and the WTU during at least two years of the
relevant period because Bullock was an elected Vice President of the AFT
serving on the AFT's Executive Council.
247. The AFT's lack of oversight and failure to enforce its constitution
against the WTU regarding audits and financial reports constituted a
breach of the AFT constitution.
248. The AFT's breach prevented it from discovering that Bullock,
Hemphill, Baxter and the other Defendants were plundering and depleting
the WTU Treasury over a period of years and, thereby, prevented the AFT
from taking appropriate remedial actions.
249. The AFT's breach similarly prevented it from discovering the WTU's
default on or failure to pay on obligations owed to the WTU's vendors
and other creditors located in the District of Columbia and in other
jurisdictions, and, thereby, prevented the AFT from taking appropriate
remedial actions.
250. The WTU has been significantly harmed by the AFT's breach because
the WTU is missing sums in excess of Five Million Dollars
($5,000,000.00) from its treasury, has outstanding obligations to
commercial vendors and other creditors and is unable to adequately serve
its membership. Plaintiff, as a member of WTU has been injured both by
the deduction of the unauthorized dues from his bank account and because he has been
deprived of the benefits of the dues that he has paid to WTU.
COUNT V
(Plaintiffs Right to Review Union Financial Records Against the AFT)
251. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 250.
252. On information and belief, the WTU and its former officers, agents,
and representatives have filed materially false financial reports with
the following entities:
a. the United States Department of Labor;
b. the United States Internal
Revenue Service;
c. the AFT; and
d. other authorities.
253. The WTU and its former officers also have substantially wasted and
depleted the WTU treasury.
254. The WTU therefore has a risk of liability to vendors and other
creditors for nonpayment of its obligations.
255. These facts establish good cause for Plaintiff, a rank and file
union member, to review the WTU's financial records pursuant to 29 U.S.C.
§431(c).
256. Plaintiff therefore is entitled to review any books, records, and
accounts necessary to verify WTU's financial reports filed with the
Board of Labor, which are in control of the AFT.
COUNT VI
(Breach of Fiduciary Duty against AFT)
257. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 256.
258. The AFT owed a fiduciary duty to the WTU and its members to
exercise oversight over the WTU and to ensure that the WTU's money and
property were being used solely for the benefit of its members.
259. The AFT breached that duty by failing to exercise care to detect or
prevent the loss of more than Five Million dollars ($5,000,000.00) from
the WTU treasury.
260. The AFT failed to ensure that the proper financial and accounting
procedures were being followed by the WTU. The AFT's constitution
required the WTU to submit audited or reviewed financial statements to
its members every two years, and to provide a copy of those statements
to the AFT. Although the WTU submitted no such statements after January
1, 1996, the AFT took no steps to ensure that such statements were
provided or to determine why they were not completed.
261. On information and belief, the AFT was aware by early 2002 that the
WTU was experiencing financial problems and was unable to pay its dues
to the AFT. Nevertheless, the AFT took no steps to determine the reasons
for the WTU's inability to pay.
262. Additionally, the AFT breached its duty by failing to disclose to
its members its knowledge regarding the financial problems experienced
by the WTU.
263. As a result of the AFT's breach of its fiduciary duties, the
Individual Defendants were able to embezzle and convert Five Million
dollars ($5,000,000.00) in union funds to their personal use.
264. The WTU has been significantly harmed by AFT's breach of fiduciary
duty because it resulted in the loss of more than Five Million Dollars
($5,000,000.00) from the WTU treasury and WTU is no longer able to adequately serve its membership.
As a result of this breach, the WTU has been deprived of the benefits of
the dues it has paid to AFT. Plaintiff, as a member of WTU has been
injured both by the deduction of the unauthorized dues from his bank
account and because he has been deprived of the benefits of the dues
that he has paid to WTU.
COUNT VII
(Negligence against AFT)
265. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 264.
266. The AFT was negligent in failing to exercise care to detect or
prevent the loss of more than Five Million dollars ($5,000,000.00) from
the WTU treasury.
267. The AFT failed to ensure that the proper financial and accounting
procedures were being followed by the WTU. The AFT's constitution
required the WTU to submit audited or reviewed financial statements to
its members every two years, and to provide a copy of those statements
to the AFT. Although the WTU submitted no such statements after January
1, 1996, the AFT took no steps to ensure that such statements were
provided or to determine why they were not completed.
268. On information and belief, the AFT was aware by early 2002 that the
WTU was experiencing financial problems and was unable to pay its dues
to the AFT. Nevertheless, the AFT took no steps to determine the reasons
for the WTU's inability to pay.
269. As a result of the AFT's negligence, the Individual Defendants were
able to embezzle and convert Five Million dollars ($5,000,000.00) in
union funds to their personal use.
270. The WTU has been significantly harmed by AFT's negligence because
it resulted
in the loss of more than Five Million Dollars ($5,000,000.00) from the
WTU treasury and WTU is unable to adequately serve its membership.
Plaintiff, as a member of WTU has been injured both by the deduction of
the unauthorized dues from his bank account and because he has been
deprived of the benefits of the dues that he has paid to WTU.
COUNT VIII
(Breach of Fiduciary Duty against Bullock, Hemphill, Baxter, and
Holmes)
271. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 270.
272. Bullock and Baxter, as officers of the WTU, and Hemphill and
Holmes, as employees, owed a fiduciary duty to the WTU and its members
to hold the WTU's money and property solely for the benefit of its
members, and not to use the WTU's funds for unauthorized purposes,
including, but not limited to, wholly personal uses.
273. Bullock, Baxter, Hemphill, and Holmes each breached that duty by
conspiring to and engaging in a scheme to embezzle the WTU's 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 the WTU or authorization from the WTU's Executive
Board; writing Union checks to themselves; cashing Union checks and
keeping the funds for their own use; and writing and causing to be
written WTU checks to Michael Martin, Cheryl Martin, Alderman,
Expressions Unlimited, and Clark for goods and services unrelated to
Union business and/or for their wholly personal benefit.
274. As part of its obligations to its membership, the 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 the
WTU's members.
275. Bullock and Baxter also breached their duty to the WTU and its
members by filing and causing to be filed false and misleading reports
regarding the WTU's financial condition and the WTU officers' and
employees' compensation to federal and local authorities, including the
Internal Revenue Service and the United States Department of Labor.
276. Additionally, Bullock, Baxter, and Hemphill breached their duty to
the AFT and the WTU and their members by failing to ensure that the
proper financial and accounting procedures were being followed by the
WTU.
277. WTU has been significantly harmed by Bullock's, Baxter's,
Hemphill's and Holmes's breaches of fiduciary duty because it resulted
in the loss of more than Five Million Dollars ($5,000,000.00) from the
WTU treasury and WTU is no longer able to adequately serve its
membership. Plaintiff, as a member of WTU has been injured both by the
deduction of the unauthorized dues from his bank account and because he
has been deprived of the benefits of the dues that he has paid to WTU.
COUNT IX
(Fraud against Bullock, Hemphill, and Baxter)
278. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 277.
279. Bullock, Baxter, and Hemphill, as officers and employees of the
Union, had a duty to report accurate information about the financial
condition of the WTU to the WTU's Executive Board, Board of Trustees,
and members.
280. Despite that duty, Bullock, Baxter, and Hemphill falsely
represented and concealed material information about the WTU's financial condition from
the WTU's Executive Board, 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 reported to the WTU and
to government officials; the recipients, amounts, and nature of checks
written
on
the WTU's bank accounts to Holmes, Michael Martin, Alderman, Clark, and
others; the amounts, Union purposes, recipients and nature of purchases
made on the WTU's American Express credit cards; the purposes for which
the WTU's funds were being spent; and the status of payment of the WTU's
obligations to vendors and affiliates, including the AFT.
281. Bullock, Baxter, and Hemphill further falsely represented and
concealed material information about the WTU's financial condition from
the WTU's Executive Board, Board of Trustees, and members by filing
false and misleading reports with government agencies.
282. Pursuant to the LMRDA, the 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 the WTU, contained material false and
misleading information.
283. 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 the WTU, for example, included numerous
misrepresentations including the extensive under-reporting of cash
disbursements to the WTU officers and employees.
284. The WTU and its membership relied on Defendant Bullock's, Baxter's
and Hemphill's representations that WTU's bills were being paid, per
capita payments to the AFT were up-to-date, and reports filed on behalf of the WTU with federal and
local authorities contained accurate information, and this reliance was
justified.
285. These and other misrepresentations and omissions were made
intentionally by Bullock, Baxter, and Hemphill, with the intent to
conceal the true financial condition of the Union so that they, along
with the other Individual Defendants, could continue the wrongful
embezzlement and conversion of WTU's funds.
286. Defendant Bullock's, Baxter's, and Hemphill's misrepresentations
and omissions were material, in that they failed to disclose the actual
recipients of the WTU's funds and the delinquent condition of many of
the WTU's accounts.
287. Defendants Bullock, Baxter, and Hemphill controlled the financial
functions of the Union, provided false information in the form of
inaccurate budgets, financial statements, and LM-2 reports, and
continually misrepresented, concealed and omitted material information
about the WTU's financial condition to the Executive Board, Board of
Trustees and the members.
288. The WTU has been significantly harmed by Bullock's, Baxter's,
Hemphill's and Holmes's fraud because it resulted in the loss of more
than Five Million Dollars ($5,000,000.00) from the WTU treasury and WTU
is no longer able to adequately serve its membership. Plaintiff, as a
member of WTU has been injured both by the deduction of the unauthorized
dues from his bank account and because he has been deprived of the
benefits of the dues that he has paid to WTU.
COUNT X
(Conversion against Bullock, Hemphill, Baxter, Holmes, Alderman,
Michael Martin, Cheryl Martin, and Clark)
289. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 288.
290. Defendants Bullock and Baxter had access to and control of the
WTU's bank and credit card accounts to carry out their duties of
President and Treasurer, respectively, as required by the constitution
and by-laws of the WTU. Defendant Hemphill had access to and
responsibility for properly maintaining the WTU's bank accounts and
credit card accounts in connection with her position as Special
Assistant to the President.
291. 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 to Defendants Holmes,
Alderman, Michael Martin, Cheryl Martin, and Clark; to make personal and
unauthorized purchases on the WTU's American Express accounts; and to
pay the American Express bills associated with these personal and
unauthorized purchases with money from the WTU's treasury.
292. The money and property taken by the Individual Defendants were at
all times the property of the WTU and its members and were to be used to
conduct the WTU's official business.
293. Defendants' retention of the WTU's property is intentional, without
permission or justification, and constitutes conversion of the WTU's
property.
294. WTU is entitled to immediate possession of these funds.
295. WTU's property had a value in excess of Five Million Dollars
($5,000,000.00) at the time of the conversion.
296. The WTU has been significantly harmed by Bullock's, Baxter's,
Hemphill's and Holmes's, Michael Martin's, Cheryl Martin's, Alderman's
and Clark's acts of conversion because they resulted in the loss of more
than Five Million
Dollars
($5,000,000.00) from the WTU treasury. Plaintiff, as a member of WTU has
been injured both by the deduction of the unauthorized dues from his
bank account and because he has been deprived of the benefits of the
dues that he has paid to WTU.
COUNT XI
(Unjust Enrichment against Bullock, Hemphill, Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin, and Clark)
297. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 296.
298. WTU and its members, including Plaintiff, conferred a benefit on
Defendants Bullock, Hemphill, Baxter, Holmes, Alderman, Michael Martin,
Cheryl Martin, and Clark in the amount of Five Million dollars
($5,000,000.00) of Union funds.
299. The Individual Defendants accepted the WTU's funds by charging
personal expenses to WTU credit cards without reimbursement to the WTU
or authorization from the WTU's Executive Board, writing Union checks to
themselves, and cashing Union checks and keeping the funds for their own
use.
300. Because Defendants' use of Union funds was unauthorized, was not
related to any legitimate Union business, and conferred no benefit on
the WTU or its members, it would be unjust for Defendants to retain the
money that they received from the WTU and its members.
COUNT XII
(Aiding and Abetting against Bullock, Hemphill, Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin, and Clark)
301. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 300.
302. Defendants Bullock, Hemphill, Baxter, Holmes, Alderman, Michael
Martin, Cheryl Martin, and Clark each played a role and provided assistance to
each other in carrying out their unlawful scheme to breach the fiduciary duties owed to the WTU by
embezzling and converting the WTU's funds to their personal use, and that of each
other.
303. Bullock, Baxter, and Hemphill each played an important role in
disseminating checks written on the WTU's bank accounts to each other
and to Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions
Unlimited, and Clark.
304. Bullock, with full knowledge of the unlawful scheme and awareness
of her role 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 Individual Defendants and
made personal and otherwise unauthorized charges to the WTU's credit
cards issued to her.
305. 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 Individual Defendants, kept
the WTU's accounts and made personal and otherwise unauthorized charges
to the WTU's credit cards issued to her.
306. 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.
307. 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 Individual Defendants and
made personal and otherwise unauthorized charges to the WTU's credit
cards issued to him.
308. Holmes, with full knowledge of the unlawful scheme and awareness of
his role, cashed over 200 checks written to him on the WTU's accounts
since on or about January 1998, totaling over One Million Two Hundred
Thousand dollars ($1,200,000.00) and either provided the proceeds to
Hemphill (who returned a portion of the cash proceeds to Holmes and kept
the remainder for unauthorized purposes) or deposited proceeds from the
unauthorized checks made payable to him into Bullock's personal bank
account.
309. Alderman, with full knowledge of the unlawful scheme and awareness
of his role, cashed, deposited, or otherwise made use of unauthorized
checks written on the WTU's bank accounts to him personally in excess of
Twenty Thousand dollars ($20,000.00) and in the name of Expressions
Unlimited in excess of Four Hundred and Fifty Thousand dollars
($450,000.00).
310. 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 the WTU's bank accounts in the name of
Expressions Unlimited in excess of Four Hundred and Fifty Thousand
dollars ($450,000.00).
311. 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 the WTU's bank accounts to Michael Martin, Expressions Unlimited and Errol
Alderman and received goods from unauthorized purchases made on the
WTU's American Express cards.
312. Clark, with full knowledge of the unlawful scheme and awareness of
her role, cashed, deposited, or otherwise made use of unauthorized
checks written on the WTU's bank, including making deposits of
unauthorized checks written on the WTU's accounts into the Bullock-Clark
joint personal bank accounts banks in Virginia and Bethesda, Maryland,
and received goods from unauthorized purchases made on the WTU's credit
cards.
313. The above-described acts carried out by Bullock, Baxter, Hemphill,
Holmes, Alderman, Michael Martin, Cheryl Martin and Clark provided aid
to each other and substantially assisted the embezzlement and conversion
of the 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).
314. WTU has been significantly harmed by Bullock's, Baxter's,
Hemphill's and Holmes's, Michael Martin's, Cheryl Martin's, Alderman's
and Clark's acts of aiding and abetting because they resulted in the
loss of more than Five Million Dollars ($5,000,000.00) from the WTU
treasury and WTU is no longer able to adequately serve its membership.
Plaintiff, as a member of WTU has been injured both by the deduction of
the unauthorized dues from his bank account and because he has been
deprived of the benefits of the dues that he has paid to WTU.
COUNT XIV
(Civil Conspiracy against Bullock, Hemphill, Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin, and Clark)
315. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 314.
316. Without the consent of the WTU, Defendants Bullock, Hemphill,
Baxter, Holmes, Alderman, Michael Martin, Cheryl Martin, and Clark
entered into an agreement with and among each other to wrongfully
embezzle and convert the WTU's funds to their personal use, and that of
each other.
317. Without the consent or approval of the WTU, Bullock, Hemphill and
Baxter unlawfully conspired to, and actually issued or caused to be
issued checks to themselves, to each other and to Holmes, Alderman,
Michael Martin, and Expressions Unlimited and they negotiated these
checks all in furtherance of Individual Defendants' conspiracy to
embezzle and convert the WTU's funds to their personal use.
318. On information and belief, Cheryl Martin participated in the
conspiracy to embezzle and convert the WTU's funds for her personal use
and the use of the other Defendants by depositing checks written on the
WTU's accounts issued by Hemphill, authorized for payment by Bullock and
Baxter, and made payable to Alderman, Michael Martin 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.
319. On information and belief, Clark participated in the conspiracy to
embezzle and convert the WTU's funds for her personal use and the use of
the other Defendants by depositing checks written on the 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, and by accepting items purchased on the WTU's credit cards, with
knowledge that the funds and property were the proceeds of unlawful
activity.
320. The above-described acts, carried out by Bullock, Hemphill, Baxter,
Holmes, Alderman, Michael Martin, Cheryl Martin, and Clark were done pursuant to
and in furtherance of a common scheme to embezzle and convert funds from
the WTU to their personal use and constitute common law civil
conspiracy.
321. WTU has been significantly harmed by Bullock's, Baxter's;
Hemphill's
and
Holmes's, Michael Martin's, Cheryl Martin's, Alderman's and Clark's
civil conspiracy because it resulted in the loss of more than Five
Million Dollars ($5,000,000.00) from the WTU treasury and WTU is no
longer able to adequately serve its membership. Plaintiff, as a member
of WTU has been injured both by the deduction of the unauthorized dues
from his bank account and because he has been deprived of the benefits
of the dues that he has paid to WTU.
COUNT XV
(Violations of the Racketeer Influenced and Corrupt Organizations Act
("RICO") 18 U.S.C. § 1964(c) Against All Individual Defendants)
322. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 321.
323. Plaintiff asserts standing on behalf of the WTU through his
derivative action against Bullock, Baxter, Hemphill, and Holmes under
the LMRDA (Count I above). As a direct result of the Individual
Defendants' association-in-fact enterprise, the WTU has suffered serious
financial injury to its property and serious financial injury to its
business.
324. In addition to the loss of over Five Million Dollars
($5,000,000.00) from the WTU treasury as a result of the Individual
Defendants racketeering activity, Plaintiff and other WTU members have
been injured in their property and business by the Individual
Defendants' participation in their association-in-fact enterprise. In
June 2002, as a direct result of the Individual Defendants' racketeering
activity, Plaintiff's and other WTU members' paychecks were subjected to
an unauthorized deduction of $160, which was not repaid by the WTU for 6
months. In addition, members of the WTU have been injured in their
business because as a teachers for the DCPS, they are dependent on a
solvent and productive WTU to engage in representation on their behalf.
As a result of the Individual Defendants actions, the WTU is currently
not capable of adequately representing Plaintiff or any of its other
5,000 members.
325. At all times relevant to this complaint, the Individual Defendants
formed an association-in-fact enterprise as defined by 18 U.S.C. §1961(4) to defraud the WTU, embezzle its funds and launder those funds
to disguise their origins in violation of 18 U.S.C. §1962(c)
("Enterprise"). The structure of this Enterprise was that
Bullock, Baxter and Hemphill were the organizational heads of the
enterprise and were in charge of issuing checks to themselves and to the
other individual defendants. The Enterprise grew over time. Holmes was
responsible for cashing checks at the WTU's bank. Alderman and Michael
Martin provided invoices for services to the WTU through their business
Expressions Unlimited. Cheryl Martin cashed checks from the WTU made out
to Expressions Unlimited, Alderman and Michael Martin. Clark, along with
Alderman, Cheryl Martin, Michael Martin, Bullock, Baxter, Hemphill, and
Holmes received goods and services purchased with the WTU's funds.
326. The activities of the Enterprise affected interstate commerce in
many ways including that:
a. Bullock, Baxter, Hemphill, Holmes, conducted part of their
racketeering activity through the WTU offices at 1717 K. St. N.W.,
Washington D.C.
b. Bullock used the WTU's credit cards to finance the purchase of furs
for herself in Alaska and Maryland.
c. Bullock also used the WTU's funds to purchase custom made clothing in
Maryland.
d. On November 4, 1999, Hemphill used the WTU's credit cards to
purchase a dining room table from IMI Furniture in Sterling,
Virginia, which was delivered to Michael and Cheryl Martin's
residence in Maryland.
e. WTU funds were used to pay for Clark's Diners Club account.
Diners Club personal card payments are sent to Nevada.
327. All of the Individual Defendants conducted or participated
directly or indirectly in the conduct of the Enterprise's affairs
through a pattern of racketeering activity.
328. The predicate acts of racketeering activity include embezzling
union funds by an officer or employee of a union under 29 U.S.C. §
501(c); money laundering under 18 U.S.C. § 1956; and engaging
in monetary transactions in property derived from specified unlawful
activity under 18 U.S.C. § 1957.
Embezzling Union Funds 29 U.S.C. § 501(c)
(Bullock, Hemphill, Baxter, and Holmes)
329. Bullock and Baxter, while serving as officers of the WTU,
embezzled, stole, or unlawfully and willfully converted millions of
dollars in WTU money and funds to their own use or the use of others.
330. As alleged in paragraphs 106 to 121 and 182 to 183, between 1995
and 2002 Bullock engaged in multiple acts of embezzlement of WTU
funds.
331. As alleged in paragraphs 136 to 143 and 182 to 183, between 1995
and 2002 Baxter engaged in multiple acts of embezzlement of WTU funds.
332. Hemphill and Holmes, while employees of the WTU, embezzled,
stole, or unlawfully and willfully converted millions of dollars in
WTU money and funds to their own use or the use of others.
333. As alleged in paragraphs 122 to 135 and 182 to 183, to between
1996 and 2002 Hemphill engaged in multiple acts of embezzlement of WTU
funds.
334. As alleged in paragraphs 144 to 151 and 182 to 183, between 1998
and 2002 Holmes engaged in multiple acts of embezzlement of WTU
funds.
335. Bullock, Baxter, Hemphill, and Holmes knew that they lacked the
authority to commit these acts of embezzlement, theft, or unlawful and
willful conversion and did not base their actions on any reasonable
interpretation of the WTU constitution and by-laws.
336. As a direct and proximate result of this unlawful embezzlement,
theft, or unlawful and willful conversion, the WTU has been
significantly harmed because the WTU is missing sums in excess of Five
Million Dollars ($5,000,000.00) from its treasury and WTU is no longer
able to adequately serve its membership. As a result of this loss and
the above unmet obligations, Plaintiff has been deprived of the
benefits of dues he has paid to the WTU.
Money Laundering 18 U.S.C. § 195
(All
Individual Defendants)
337. Acts under 18 U.S.C § 1956(a)(1)(B)(i). Between 1995 and
July 2002, all of the Individual Defendants entered into multiple
financial transactions that affected interstate commerce as defined by
§§ 1956(c)(3) and (4) knowing that the property involved in the
financial transactions -- WTU funds-represented the proceeds of some form
of unlawful activity, and with the intent to conceal or disguise the
nature, the location, the source, the ownership, or the control of the
proceeds of the embezzlement from the WTU.
a. As alleged in paragraphs 106 to 121 and 182 to 183, between 1995
and 2002 Bullock engaged in multiple financial transactions as defined
by §§ 1956(c)(3) and (4) knowing that the property involved in the
financial transactions represented some form of unlawful activity and
with the intent to conceal or
disguise the nature, the location, the source, the ownership, or the
control of the proceeds of the embezzlement from the WTU.
b. As alleged in paragraphs 136 to 143 and 182 to 183, between 1995
and 2002 Baxter engaged in multiple financial transactions as defined
by §§ 1956(c)(3) and (4) knowing that the property involved in the
financial transactions represented some form of unlawful activity and
with the intent to conceal or disguise the nature, the location, the
source, the ownership, or the control of the proceeds of the
embezzlement from the WTU.
c. As alleged in paragraphs 122 to 135 and 182 to 183, between 1995 and
2002 Hemphill engaged in multiple financial transactions as defined by
§§ 1956(c)(3) and (4) knowing that the property involved in the
financial transactions represented some form of unlawful activity and
with the intent to conceal or disguise the nature, the location, the
source, the ownership, or the control of the proceeds of the
embezzlement from the WTU.
d. As alleged in paragraphs 144 to 151 and 182
to 183, between 1995 and 2002 Holmes engaged in multiple financial
transactions as defined by §§ 1956(c)(3) and (4) knowing that the
property involved in the financial transactions represented some form
of unlawful activity and with the intent to conceal or disguise the
nature, the location, the source, the ownership, or the control of the
proceeds of the embezzlement from the WTU.
e. As alleged in paragraphs 152 to 156 and 182 to 183, between 1995 and
2002 Michael Martin engaged in multiple financial transactions as
defined by §§ 1956(c)(3) and (4) knowing that the property involved
in the financial transactions represented some form of unlawful activity and with the
intent to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of the embezzlement from the
WTU.
f. As alleged in paragraphs 159 to 165 and 182 to 183, between 1995 and
2002 Cheryl Martin engaged in multiple financial transactions as defined by
§§1956(c)(3) and (4) knowing that the property involved in the financial
transactions represented some form of unlawful activity and with the
intent to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of the embezzlement from the
WTU.
g. As alleged in paragraphs 166 to 174 and 182 to 183, between 1995
and 2002 Alderman engaged in multiple financial transactions as defined by §§
1956(c)(3) and (4) knowing that the property involved in the financial
transactions represented some form of unlawful activity and with the intent to
conceal or disguise the nature, the location, the source, the ownership, or the
control of the proceeds of the embezzlement from the WTU.
h. As alleged in paragraphs 174 to 183, between 1995 and 2002 Clark
engaged in multiple financial transactions as defined by §§ 1956(c)(3) and (4)
knowing that the property involved in the financial transactions represented some
form of unlawful activity and with the intent to conceal or disguise the
nature, the location, the source, the ownership, or the control of the proceeds of
the embezzlement from the WTU.
338. Acts under 18 U.S.C § 1956(a)(1)(B)(ii). Between 1995 and
July 2002, Bullock, Holmes and Hemphill entered into multiple financial
transactions as defined in §§1956(c)(3) and (4) knowing that the property involved in the financial
transactions-WTU funds-represented the proceeds of some form of
unlawful activity, and knowing that the transactions were designed in
whole or in part to avoid a transaction reporting requirement under
State or Federal Law.
a. For example, on April 8, 2001 Bullock, Baxter and Hemphill
collectively issued or caused to be issued two unauthorized checks
written on the WTU's bank to Leroy Holmes: check number 5052 in the
amount of Nine Thousand Three Hundred and Seventy-Five 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). On
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 IFSB, with the purpose of avoiding District of
Columbia and Federal reporting requirements.
Engaging in Monetary Transactions In Property Derived From
Specified Unlawful Activity
18 U.S.C. § 1957
339. All of the relevant activities alleged in this complaint took
place in the United States.
340. On September 15, 2000, defendants Bullock, Hemphill, Baxter
collectively issued or caused to be issued an unauthorized check
written on the WTU's bank to Leroy Holmes in the amount of Twenty
Thousand dollars ($20,000).
341. Holmes cashed, deposited or otherwise made use of this check
knowing that the money was unlawfully embezzled and converted from the
WTU's treasury.
342. With the intent to carry out the embezzlement scheme and to
disguise the true source, ownership and control of the funds Holmes
provided the cash proceeds to Hemphill who returned a portion of the
funds to Holmes.
343. Holmes's action in cashing the Twenty Thousand dollar check 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 the WTU's accounts
returning the proceeds to Hemphill or depositing them into the
personal bank account of Bullock, to assist in the conversion of the
WTU's funds and to disguise the nature, source and true ownership of
these funds.
344. The WTU has been significantly harmed by the Individual
Defendants' Enterprise and pattern of racketeering activity in
furtherance of it because it resulted in the loss of more than Five
Million Dollars ($5,000,000.00) from the WTU treasury and WTU is no
longer able to adequately serve its membership. As a result of this
loss, Plaintiff has been deprived of the benefits of the dues he has
paid to the WTU.
COUNT XVI
(Civil RICO Conspiracy)
345. Plaintiff incorporates by reference, the allegations set forth in
paragraphs 1 through 349.
346. In addition to committing the acts alleged in Count XIV, the
Individual Defendants conspired to commit the acts alleged in Count
XIV and each agreed to the commission of at least two predicate acts
in furtherance of the conspiracy.
347. The WTU has been significantly harmed by the Individual
Defendants' conspiracy to enter into the Enterprise and commit acts in
furtherance of it because it resulted in
the loss of more than Five Million Dollars ($5,000,000.00) from the
WTU treasury and the WTU is no longer able to adequately serve its
membership. As a result of this loss, Plaintiff has been deprived of
the benefits of the dues he has paid to the WTU.
COUNT XVII
(Negligence against IFSB)
348. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 352.
349. IFSB had a duty to the WTU and its members to take care in paying
checks drawn on the WTU's account.
350. IFSB breached its duty by paying checks that would have aroused
substantial suspicion of wrongdoing in any reasonable person. Those
circumstances include:
a. The payment of approximately One Million Two Hundred Thousand Dollars in cash to Leroy Holmes, who worked as a chauffeur for the
WTU.
b. The payment of numerous checks just under $10,000.
c. Permitting Leroy Holmes to cash at least four checks that were equal
to or exceeded Ten Thousand Dollars ($10,000.00).
d. The payment of checks originally written to WTU vendors, but subsequently altered to be made payable to Holmes or Cheryl Martin.
e. The payment of checks on which Esther Hankerson's signature had been
forged.
351. As a result of IFSB's negligence, the Individual Defendants were
able to embezzle and convert the WTU's funds to their personal use.
352. The WTU has been significantly harmed by IFSB's negligence
because it resulted in the loss of more than Five Million Dollars
($5,000,000.00) from the WTU treasury and the WTU is no longer able to adequately serve its membership. As a result of
this loss, Plaintiff has been deprived of the benefits of the dues he has paid to the
WTU.
COUNT XVIII
(Aiding and Abetting against IFSB)
353. Plaintiff incorporates by reference the allegations set forth in
paragraphs 1 through 352.
354. As described in detail above, the Individual Defendants performed
numerous wrongful acts that constituted breach of fiduciary duty,
fraud, and conversion against the WTU and its members by embezzling
and converting the WTU's funds to their personal use, and that of each
other.
355. IFSB provided substantial assistance to the Individual Defendants
in carrying out their unlawful scheme:
a. IFSB paid approximately One Million Two Hundred Thousand Dollars ($1,200,000.00) in cash to Holmes, who in turn gave some of the
proceeds to Hemphill.
b. IFSB paid checks that had been altered to be made payable to Cheryl
Martin.
c. IFSB paid checks with the forged signature of Esther Hankerson to Bullock and Clark (under the name "Gwen's of Columbia") and
to other payees for the benefit of the Individual Defendants.
356. IFSB had knowledge of its role in the Individual Defendants'
scheme.
a. IFSB knew that
Holmes was employed as a chauffeur to the union; that he cashed approximately 228 checks totaling approximately One Million
Two Hundred Thousand Dollars ($1,200,000.00) over a four-year period; that he often cashed large checks within days of each other; that he
cashed numerous checks just below $10,000; and at least four checks equal to or
exceeding $10,000.00 and that many of the checks he presented had been altered to be made payable to him.
b. IFSB knew that checks paid to Cheryl Martin had been altered to be made
payable to her.
c. IFSB knew that someone had forged Esther Hankerson's signature to a check in 1997, but nevertheless paid that check and several other checks
on which her signature had been forged.
357. The WTU, has been significantly harmed by IFSB's actions because they
resulted in the loss of more than Five Million Dollars ($5,000,000.00)
from the WTU treasury and the WTU is no longer able to adequately serve
its membership. As a result of this loss, Plaintiff has been deprived of
the benefits of the dues he has paid to the WTU.
PRAYER FOR RELIEF
WHEREFORE Plaintiff prays for the following relief:
a. Injunctive
relief against Bullock, Baxter, Hemphill, Holmes, Hankerson, the members
of the WTU Board of Trustees and the members of the WTU Executive Board as
named in this complaint to prevent them from holding any elected or
appointed office in the WTU for the next 10 years;
b. Injunctive
relief against the AFT, to appoint an independent monitor to oversee the
actions of George Springer, the AFT's Administrator, with all costs to be
borne by the AFT.
c. Restitution for all sums the AFT has received as dues from WTU for the
last 7 years, such amount to be paid to the WTU treasury.
d. Compensatory
damages against Bullock, Baxter, Hemphill, Holmes, Clark, Michael Martin,
Cheryl Martin, Alderman, Goosby, Hankerson, the WTU Board of Trustees and
the WTU Executive Board for all sums that the Individual Defendants
wrongfully embezzled, converted and laundered from the WTU treasury during
the period of 1995 to September 2002, such damages to be paid to the WTU
treasury.
e. Treble damages against the Individual Defendants under 18 U.S.C. §1964(c) for the amounts wrongfully embezzled, converted and laundered from
the WTU's treasury during the period of 1995 to September 2002, such
damages to be paid to the WTU treasury.
f. Compensatory damages against the IFSB for negligent payment of
checks drawn on the WTU's account.
g. Any other just and equitable relief the Court deems appropriate.
Respectfully Submitted,
Charles Davidow No. 331702
Patricia Byrne No. 469127
WILMER CUTLER & PICKERING
2445 M. St. N.W.
Washington D.C. 20037
Phone 202-663-6000
February 4, 2003
VERIFICATION
I declare under penalty
of perjury that the foregoing is true and correct. Executed on February 4,
2003.Patricia M. Byrne
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