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PUBLIC EMPLOYEES RELATIONS BOARD PERB No. _________________ George Parker Gloria Guess Alfred E. Hubbard William F. Rope Plaintiffs, (on their own behalf and on behalf of those similarly situated) v. American Federation of Teachers AFT Ester Hankerson, Individually and as Executive Board Member Barbara Bullock Gwendolyn M. Hemphill James O. Baxter, II Leroy Holmes COMPLAINT FOR DAMAGES IntroductionFor their Complaint for Damages against the Defendants described in the caption above, Plaintiff/Plaintiffs, on his/her/their own behalf and on behalf of all others similarly situated in the District of Columbia, allege and state as follows: 1. Member teachers of the Washington Teachers’ Union, Local #6, AFL-CIO ("WTU") who are also members of the parent organization, American Federation of Teachers, AFL-CIO, have been the victims of an illegal scheme perpetrated by Barbara A. Bullock, Gwendolyn M. Hemphill, James O. Baxter II, Leroy Holmes, Errol Alderman, Expressions Unlimited, Michael Martin, Cheryl Martin and Gwendolyn B. Clark (collectively "Defendants"), to misappropriate, misuse and convert the Washington Teachers’ Union’s funds to Defendants’ personal use and to the unauthorized use of others, thereby denying Plaintiffs and each member of the Class proposed to be represented by them, the lawful owners of those funds, sums in excess of Five Million Dollars ($5,000,000.00). 2. Defendant AFT, the parent organization has oversight responsibility for the audit and review of the financial operations of the local. Under this oversight responsibility, AFT is required to perform an audit and/or review of WTU ‘s finances. During at least the period of 1998 up to and including 2002, AFT negligently failed to perform audits or review the finances of WFT as required. This consistent and ongoing failure to perform its fiduciary responsibilities owed to the individual member teachers, Plaintiffs and each member of the Class proposed to be represented by them, has caused financial losses through the gross mismanagement of Defendant AFT. 3. Defendants, individual members of the Board of WTU and named individually herein, participated in this scheme using WTU as an enterprise to conduct their unlawful activity resulting in serious injury to Plaintiffs and each member of the Class proposed to be represented by them. 4. Beginning on or before 1995, less than one year after she took office, Bullock began using WTU’s funds, through the use of Union credit cards, to purchase designer clothes, furs, accessories and gifts; by issuance of WTU checks to herself and to others for her personal benefit; and by issuance of WTU checks to the other Defendants, including Baxter and her sister Clark. 5. Baxter and Bullock both signed the checks that went to Bullock and to merchants, such as a custom clothier, who provided goods solely for Bullock’s person use, received statements indicating Bullock’s personal charges on WTU’s credit cards and paid the bills for those credit cards with WTU funds. 6. Clark and Bullock shared personal bank accounts and a Diners Club card. Proceeds from checks written to Bullock were deposited into those joint accounts and charges made by both Bullock and Clark on their Diners Club card were paid by the Union. Additionally, Bullock engaged Clark’s company, Gwen’s of Columbia, to "decorate" WTU’s office for the winter holidays. For those services, Gwen Clark and Gwen’s of Columbia were paid over Fourteen Thousand Six Hundred Dollars ($14,600.00). 7. As with Bullock, beginning on or before 1995, less than one year after he took office, Baxter began using WTU’s funds for his personal benefit, through the use of Union credit cards to purchase personal items, such as food, clothing and entertainment; by issuance of WTU checks to himself, to the other Defendants and to others. 8. Gwendolyn M. Hemphill was hired in 1996 as Special Assistant to the President and served as Bullock’s high-level aide. Shortly after being hired, Hemphill took over the day-to-day responsibility for WTU’s financial affairs. In this capacity, Hemphill wrote the checks to be issued by the Union and presented them to Bullock and Baxter for signature. She also maintained WTU’s accounts. Around 1996, WTU obtained a stamp, to be used to affix Bullock’s signature to checks. Hemphill had access to, control of and maintained possession of the Bullock signature stamp. Using it, in many cases at the direction of Bullock, Hemphill affixed one of the two signatures needed to authorize checks written on WTU’s accounts. 9. Beginning on or before December 1996, shortly after she was hired, Hemphill began using WTU’s funds to write checks to herself and to others, including her son-in-law, Michael Martin, as well as the other Defendants. Beginning on or before 1998, Hemphill began issuing large checks to Holmes, a driver for Bullock. Upon cashing the checks, Holmes gave the proceeds to Hemphill, who returned a portion of the cash to Holmes and retained the rest. In addition, some of the proceeds from checks issued to Holmes were deposited into the personal bank account of Bullock. Since 1998, Hemphill issued checks to Holmes in excess of over One Million Two Hundred Thousand Dollars ($1,200,000.00). Hemphill also issued a large number of checks to her son-in-law, Michael Martin, his business associate Alderman, and a company with which both Martin and Alderman were affiliated, Expressions Unlimited. Between the period beginning about July 1, 1998 through approximately September 2002, unauthorized WTU checks in excess of Four Hundred and Fifty Thousand Dollars ($450,000.00) were issued to Expressions Unlimited. Upon information and belief, some of these checks were deposited in Hemphill’s personal bank account. 10. In addition, beginning on or before May 1998, Hemphill was issued a Union credit card, to which she began making unauthorized purchases of personal items, such as clothing, electronics and jewelry, including a plasma television costing over Ten Thousand Dollars ($10,000.00), which was delivered to her home. Hemphill also used WTU’s credit cards to purchase items for her daughter and son-in-law, Cheryl and Michael Martin, including the purchase of a dining room table purchased on November 4, 1999 and delivered to the Martin’s home and a trip to the Bahamas purchased for the Martin’s on February of 2000. 11. In addition to Holmes’ activities described above, Holmes was paid in cash from WTU funds to be Bullock’s personal chauffeur. In addition to driving Bullock to official Union meetings and appointment, Holmes drove Bullock to run personal errands, such as antiquing and clothes shopping at various shopping malls across the Washington, DC metropolitan area. 12. Together, through their collective efforts, Bullock, Baxter and Hemphill issued checks to themselves and the other Defendants and made purchases on WTU’s credit cards for themselves and the benefit of the other Defendants, in a scheme to illegally embezzle and convert WTU’s funds. Alderman, Michael Martin, individually and through their business, Expressions Unlimited, Cheryl Martin, and Clark, individually and through her business, Gwen’s of Columbia, cashed, deposited or otherwise made use of WTU’s funds and property for their personal benefit. This scheme began in 1995 and continued until their activities were uncovered on or around September 2002. 13. Defendant AFT’s failure to exercise its responsibility of financial oversight created under AFT’s constitution resulted in massive fiscal damages to be suffered by the individually named plaintiffs and each individual similarly situated. 14. This action arises under provisions of the Labor-Management Reporting and Disclosure Act ("Landrum-Griffin Act") 29 U.S.C. § 501 et seq., and various state law claims specifically, breach of contract, fraud and breach of fiduciary duties. PARTIES15. Defendant, the American Federation of Teachers, AFL-CIO (AFT), is a, non-profit labor union and parent organization of the local Washington Teachers Union (WTU) having its principal place of business at 555 New Jersey Avenue, N.W., Washington, DC 20001. AFT is an international labor organization representing local unions primarily made-up of public and private school teachers, paraprofessionals and higher education faculty. Members of the local unions chartered by the AFT are also members of the AFT. AFT owes a fiduciary duty to its members. 16. The four individually named and similarly situated plaintiffs are all teachers in the District of Columbia Public School System and all members of the American Federation of Teachers and the Washington Teachers Union. 17. There are over 5,000 similarly situated teachers who are members of the Washington Teachers Union and the American Federation of Teachers. As such, it is impracticable to join all interested parties, i.e. teacher members individually to this lawsuit. 18. The American Federation of Teachers has acted uniformly with respect to each individual teacher that is a potential class member. 19. The actions of each of the individually named defendants have affected each individual potential member of the class in a uniform way. 20. Each individually named plaintiff and each member teacher of the American Federation of Teachers and the Washington Teachers Union is entitled to recover monies illegally misappropriated by the individually named defendants – monies rightfully belonging to every member of the Washington Teachers Union of which the individually named plaintiffs are members. 21. Every allegation of a breach of the fiduciary duty of the American Federation of Teachers and misappropriation of funds by the individually named defendants is common to each and every member of the Washington Teachers Union and the individually named plaintiffs who are representative thereof. 22. Defendant Barbara A. Bullock ("Bullock") is an individual who resides at 1221 Massachusetts Avenue, N.W., #1021. Washington, DC 20005. Bullock served as the elected President of the Washington Teachers’ Union from on or about July 1, 1994 through on or about September 2002. 23. During the time she served as an officer, agent and representative of the Union, Bullock had check signing authority and overall responsibility for the conduct of WTU’s affairs. 24. During her tenure as President, Bullock made unauthorized personal charges on WTU’s credit card accounts; issued or caused to be issued unauthorized checks to herself and to others from WTU’s bank accounts; knowingly received unauthorized funds and material goods paid for by WTU’s bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 25. Together with Defendants Gwendolyn M. Hemphill ("Hemphill"), James O. Baxter II ("Baxter"), Leroy Holmes ("Holmes"), Bullock orchestrated and participated in an illegal scheme to convert Union funds to her personal use and to the use of others. 26. Defendant Gwendolyn M. Hemphill is an individual who resides at 1919 Yorktown Road, N.W., Washington, DC 20012. Hemphill is a former WTU employee who served as Special Assistant to the President and Legislative Representative from 1996 through on or about September 2002. 27. In her position as an agent, employee and representative of the Union, Hemphill had general responsibility for the financial affairs of the Union, check writing responsibility and maintained possession and control of a signature stamp bearing Bullock’s name. 28. During her tenure as Special Assistant to the President, Hemphill made unauthorized personal charges on WTU’s credit card accounts; issued or caused to be issued unauthorized checks to herself and to others from WTU’s bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 29. Together with Defendants Bullock, Baxter, Holmes and others not named by this petition, Hemphill orchestrated and participated in an illegal scheme to convert Union funds to her personal use and to the use of others. 30. Defendant James O. Baxter, II is an individual who resides at 1307 Lark Lane, Fort Washington, MD 20744. Baxter is the elected Treasurer of the Washington Teachers’ Union. 31. Baxter served in the capacity as Treasurer from on or about July 1, 1994 through approximately September 2002, when he was asked to take a leave of absence without pay from the Union. 32. In his position as an agent, employee and representative of the Union, Baxter had check signing authority and financial responsibility for WTU’s affairs. 33. During his tenure as Treasurer, Baxter made unauthorized personal charges on WTU’s credit card accounts; issued or caused to be issued unauthorized checks to himself and to others from WTU’s bank accounts; knowingly received unauthorized funds and material goods paid for by WTU funds; knowingly conducted financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 34. Together with Defendants Bullock, Hemphill, Holmes and others not herein named, Baxter orchestrated and participated in an illegal scheme to convert Union funds to his personal use and to the use of others. 35. Defendant Leroy Holmes is an individual who resides at 11101 Bennington Drive, Upper Marlboro, MD 20774. Holmes served as Bullock’s personal driver beginning around 1998 through approximately September 2002 and was paid for his services by WTU. 36. Holmes knowingly received unauthorized funds from WTU; cashed checks for large sums of money written on WTU’s accounts; knowingly conducted unauthorized financial transactions with money received as the result of unlawful activity; and engaged in money laundering. 37. Together with Defendants Bullock, Baxter, Hemphill, and others not herein named, Holmes participated in an illegal scheme to convert Union funds to his personal use and the personal use of others. 38. George Parker is a resident in the state of Maryland. Mr. Parker is a teacher from the DC public school system and a member of the Washington Teachers Union. 39. Gloria Guess is a resident in the state of Maryland. Ms. Guess is a teacher for the DC public school system and a member of the Washington Teachers Union. 40. Alfred Hubbard is a resident in the District of Columbia. Mr. Hubbard is a teacher for the DC public school system and a member of the Washington Teachers Union. 41. William Rope is a resident in the District of Columbia. Mr. Rope is a teacher for the DC public school system and a member of the Washington Teachers Union. (WTU-Generally)42. WTU is a labor organization representing approximately 5,000 persons employed by or retired from the Board of Education of the District of Columbia. The membership primarily consists of District of Columbia public school teachers and professionals. 43. WTU is affiliated with AFT. 44. In addition to being affiliated with AFT, WTU is affiliated with the Greater Washington Central Labor Council, the Maryland State and District of Columbia AFTL-CIO, and the United Federation of Maryland and D.C. Teachers, and is the primary bargaining agent for District of Columbia public school teachers. Individuals who are members of WTU are also members of AFT. 45. WTU is governed by a Constitution and By-Laws, which set forth WTU’s purpose, operating procedures, election and discipline procedures, meeting requirements and the duties of its officers and board of directors. 46. WTU’s Constitution and By-Laws call for the biennial election of officers and for such officers to hold two-year terms. 47. The Union officers, employees and vendors named as Defendants herein, engaged in a conspiracy to and did commit serious felony offenses to the detriment of Plaintiffs and each member of the Class proposed to be represented by them, including: money laundering, in violation of 18 U.S.C.§ 1956; engaging in monetary transactions with property derived from unlawful activity, in violation of 18 U.S.C. § 1957; and embezzlement from the Union, in violation of 29 U.S.C. §501(c). 48. As the result of an affidavit filed by the Federal Bureau of Investigation, search warrants were executed, inter alia, at Defendants’ homes on December 19, 2002, on the ground that there is probable cause to believe that Defendants committed and participated in these crimes. 49. Bullock, Baxter, Hemphill, Holmes, Alderman, Michael Martin, Cheryl Martin and Clark, in their positions as Union officers, agents, representatives and employees, or through their relationships with Union officers, agents, representatives and employees, aided and abetted and participated in, and used the Union as part of their conspiracy to embezzle and convert funds of the Union, in that they authorized, issued, or caused to be issued, cashed, deposited or otherwise made use of unauthorized checks written on WTU’s bank accounts; received material goods paid for by WTU funds and money illegally obtained from WTU; submitted false invoices for payment to WTU; and received payment for goods and services not authorized by WTU. 50. Bullock, Baxter, Hemphill, Holmes, and others not herein named conducted numerous financial transactions involving checks received from Bullock, Baxter and Hemphill, written on WTU’s bank accounts, knowing that the checks were used to illegally covert funds from WTU; cashed and deposited those checks in their personal bank accounts, bank accounts of their affiliated businesses, including Expressions Unlimited, and at times, deposited the funds into the bank accounts of Bullock and Hemphill. 51. Additionally, Bullock, Baxter and Hemphill used Union American Express credit cards issued to them in their positions as Union officers, agents, representatives and employees, and to be used solely for the conduct of Union business, to make personal or otherwise unauthorized purchases for the benefit of themselves, the other Defendants and others. Bullock, Baxter and Hemphill further inappropriately and without authorization caused the Union to use Union funds to pay the credit card bills associated with those accounts, which included the personal and unauthorized purchases charged thereon. Bullock, Baxter and Hemphill did not receive authorization from WTU’s Board of Directors or the Union membership to make those purchases or payments, nor did they reimburse WTU for those charges or payments. (Bullock)52. Bullock was elected by WTU’s membership to the position of President for a two-year term commencing on or about July 1, 1994. She was subsequently reelected to that position biannually and continued in that role until on or about September 2002, when she voluntarily agreed to relinquish her duties and accept leave without pay from the Union. 53. Bullock formally resigned as President on October 23, 2002. 54. In accordance with the Constitution and By-Laws of the Union, as President, Bullock was charged with administering all of the affairs of and the executive policy of the Union, acting as Chairman of the Executive Board, and signing all necessary documents, including the co-signing of checks. 55. Bullock had overall responsibility and authority for the conduct of WTU’s affairs. 56. Beginning in 1995, on behalf of WTU, Bullock and Baxter entered into Corporate Account Agreements with American Express Travel Related Services Company ("American Express") for the issuance of corporate credit cards to the Washington Teachers Union. As stated in the Corporate Account Agreements, American Express issued credit cards to persons whom the Union designated in writing to receive a corporate card ("Corporate Cardmembers"). Baxter and Bullock caused cards from the Corporate Account to be issued to themselves, Ester Hankerson, WTU’s General Vice President, and Hemphill. Prior to receiving a corporate card, each Corporate Cardmember agreed to the Corporate Cardmember Agreement, which among other things, stated that the American Express Corporate cards were to be used solely for WTU business purposes. 57. The Washington Teachers Union paid the bills for the American Express accounts with Union funds. 58. From the period beginning in 1995 through July 2002, Bullock was issued a total of five Corporate Cards from WTU’s two Corporate Accounts, including card numbers 3782-964988-01016 (1995-1996); 3782-964988-01008 (9/97-7/02); 3782-964988-02014 (11/96-7/02); 3782-993128-11005 (10/00-7/02) and 3782-993128-11013 (9/99-7/02). 59. During her tenure as President, Bullock made substantial unauthorized purchases on WTU’s corporate credit cards. A large portion of those charges were for goods and services of a clearly personal nature, including, but not limited to: custom, designer, and hand-made clothing; dry-cleaning; beauty salon services; jewelry; art; furniture; and furs. Many such purchases were delivered to Bullock’s home or the home of her sister, Clark. 60. Bullock did not receive authorization from WTU’s Board of Directors or the Union membership to make those purchases, nor did she reimburse WTU for those charges. WTU’s Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Bullock. 61. In addition to purchasing items for her personal use, Bullock purchased items on WTU’s Corporate American Express Cards for others. 62. Bullock’s unauthorized and personal charges to WTU’s Corporate American Express Cards, which have been identified to date, exceed One Million Eight-Hundred Thousand Dollars ($1,800,000.00). 63. Bullock also issued or caused to be issued checks from WTU’s bank accounts to herself and to merchants for the purchase of goods and services solely for her personal benefit, including checks for custom-made clothing and checks to Diner’s Club to pay for meals, hotels, designer clothing and jewelry. These checks were not authorized by WTU’s Board of Directors and were used to illegally convert funds from WTU. WTU’s Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Bullock. 64. 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). 65. Additionally, Bullock issued or caused to be issued unauthorized checks in excess of One Million Five-Hundred Thirteen Thousand ($1,513,000.00) from WTU's bank accounts to Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark, in a scheme to convert WTU's funds. Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU. Because AFT negligently failed to conduct the bi-annual audits, Plaintiffs and each member of the Class proposed to be represented by them were not aware of this unauthorized use of Union funds by Bullock. 66. Hemphill served as Special Assistant to the President and Legislative Representative of WTU from 1996 through on or about September 2002, when she voluntarily agreed to relinquish her duties and accept leave without pay from the Union. 67. Hemphill formally resigned from her positions on November 1, 2002. 68. As Special Assistant to the President, Hemphill served as the office manager and high-level aid to Bullock. In this capacity, Hemphill was responsible for overseeing the administration of WTU's offices and managing its staff. 69. 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. 70. In addition to her check writing responsibilities, Hemphill maintained possession of a signature stamp bearing Bullock's signature, which she used to affix Bullock's name via the stamp to checks written on behalf of the Union. 71. From the period beginning on or about May 1998 through July 2002, Hemphill was issued Corporate Cards from WTU's two Corporate Accounts, including card numbers 3782-964988-01040 (5/98-11/99) and 3782-964988-11021 (9/99-7/02). 72. During her tenure as Special Assistant and Legislative Representative, Hemphill used these credit cards, which were issued solely for the purpose of conducting the official business of the Washington Teachers' Union, to make numerous unauthorized personal charges on WTU's credit card accounts, including a large number of purchases of a clearly personal nature, including, but not limited to: art; antiques; electronic equipment; jewelry; evening gowns; designer handbags and clothing; hair care; and personal travel. 73. Hemphill did not receive authorization from WTU's Board of Directors or the Union membership to make those purchases, nor did she reimburse WTU for those charges. Because AFT negligently failed to exercise its fiscal oversight responsibility, Plaintiffs and each member of the Class proposed to be represented by them were not aware of this unauthorized use of Union funds by Hemphill. 74. In addition to purchasing items for her personal use, upon information and belief, Hemphill purchased items on WTU's Corporate American Express Cards for use by other members of her family, including her husband Laurence Hemphill, and other Defendants including Michael Martin, Cheryl Martin and Clark. 75. In total, Hemphill's unauthorized and personal charges to WTU’s Corporate American Express accounts exceed Three-Hundred and Eleven Thousand Dollars ($311,000.00). Hemphill did not receive authorization from WTU's Board of Directors or the Union membership to make the unauthorized purchases, nor did she reimburse WTU for those charges. Because AFT negligently failed to exercise its fiscal oversight responsibility, Plaintiffs and each member of the Class proposed to be represented by them were not aware of this unauthorized use of Union funds by Hemphill. 76. Hemphill also wrote or caused to be written checks to herself in the amount of One Hundred and Eighty-One Thousand Dollars ($181,000.00). Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU. Additionally, Hemphill wrote or caused to be written checks to other participants in the illegal scheme, including Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark. Included among those checks were some checks written to Expressions Unlimited the proceeds of which were deposited in Hemphill's personal bank account. Those checks were not authorized by WTU's Board of Directors and were used to illegally convert funds from WTU's treasury. 77. Upon information and belief, Hemphill directed Holmes to cash checks for large sums of money on WTU's account and to return the proceeds to her or to deposit them in Bullock's personal bank account. Upon information and belief, upon receiving cash proceeds from Holmes, Hemphill returned a portion of the money to Holmes and retained the rest. 78. Checks issued on the Washington Teachers' Union's accounts were prepared by Hemphill, signed by Baxter and issued with the knowledge of, and in many cases, at the direction of Bullock. (Baxter)79. Baxter was elected to the position of Treasurer by the WTU membership and t assumed office on or about July 1, 1994. He was subsequently reelected as Treasurer in biennial elections and continued in that role until present. 80. As Treasurer, Baxter was responsible for receiving and disbursing funds, co- signing all checks, issuing all receipts, notifying members of non-payment of dues, presenting financial reports to the membership and maintaining satisfactory financial records. 81. In September 2002, the WTU Board removed Baxter from his duties and put him on leave without pay. WTU formally requested Baxter's resignation on October 23, 2002, however, he has refused to resign. 82. From the period beginning in 1995 through July 2002, Baxter was issued Corporate Cards from WTU's two Corporate Accounts, including card numbers 3782-964988- 01008 (1995-8/97) and 3782-964988-01032 (1995- 7/02). 83. During his tenure as Treasurer, Baxter used the credit cards, which were issued for the sole purpose of conducting the official business of the Washington Teachers' Union, to make a large number of purchases of a clearly personal nature, including, but not limited to: purchases at bars and nightclubs; art; clothing; theater and sporting tickets; flowers; jewelry anti tobacco. 84. In total, Baxter's unauthorized and personal charges to WTU's Corporate American Express Cards exceeds Two-Hundred and Sixty-Seven- Thousand Dollars ($267,000.00). Baxter did not receive authorization from WTU's Board of Directors to make these purchases, nor did he reimburse WTU for those charges. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Baxter. 85. Baxter also wrote or caused to be written checks to himself( in amounts in excess of Two Hundred and Seventy Thousand Dollars ($270,000.00), including checks designated as "pension payments" which were not due and owing to Baxter and were therefore improperly made. These checks were not authorized by WTU's Board of Directors or membership and were used to illegally convert funds from WTU. WTU's Board of Directors and the Union membership were not aware of this unauthorized use of Union funds by Baxter. 86. Baxter also wrote or caused to be written checks to other participants in the illegal scheme, including Bullock, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman, Expressions Unlimited and Clark. Those checks were not authorized by WTU's Board of Directors or membership and were used to illegally convert funds from WTU's treasury. Because AFT negligently failed to exercise its fiscal oversight responsibility, Plaintiffs and each member of the Class proposed to be represented by them were not aware of this unauthorized use of Union funds by Baxter. This failure resulted in an increase of losses of vast sums of monies to Plaintiffs and each member of the Class proposed to be represented by them. 87. Defendants Bullock, Baxter and Hemphill, as officers, agents, representatives and employees of the Union, had a fiduciary duty to act on its behalf in all matters associated with the conduct of Union affairs and not appropriate and convert Union funds to personal use. These defendants breached that duty. AFT had a duty to act on behalf of Plaintiffs and each member of the Class proposed to be represented by them. As a result of AFT’s negligent failure to conduct the bi-annual audits, that duty was breached to the fiscal detriment of Plaintiffs and each member of the Class proposed to be represented by them. (Bullock, Baxter and Hemphill)88. Defendants Bullock, Baxter and Hemphill, as officers, agents, representatives and employees of the Union, had a duty to act on its behalf in all matters associated with the conduct of Union affairs. 89. Bullock and Baxter were elected officers of the Union who held consecutive two-year terms since 1994. Hemphill was an at-will employee hired in 1996. 90. Through their positions as officers, agents, representatives and employees of the Union, Bullock, Baxter and Hemphill were placed in positions of authority and trust and were given access to and control of WTU's treasury. 91. 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. 92. On October 23, 2002, on behalf of the Union, formal requests were made to Bullock, Baxter and Hemphill, to repay WTU all of the Union funds expended by or caused to be expended by them for personal and otherwise unauthorized and/or non-Union purposes. 93. Subsequently, on December 23,2002, a second demand for repayment was made to Bullock, Baxter and Hemphill. 94. Bullock, Baxter and Hemphill have not complied with these demands for return of its property. (Holmes)95. Between approximately 1998 through September 2002, Holmes received in excess of 200 checks, ranging in amounts from $500 to $20,000, which in total exceed One Million Two Hundred Thousand Dollars ($1,200,000.00). Those checks were written on WTU's primary checking account and were cashed by Holmes at WTU's bank, Independence Federal Savings Bank. 96. Upon information and belief, after cashing those checks Holmes provided the cash proceeds to Hemphill who returned a portion of the cash to Holmes and kept the rest of the money for unauthorized purposes, or Holmes deposited funds into Bullock's personal bank account. 97. In addition, Holmes cashed numerous altered checks, including checks in which the original payee’s name had been marked through and replaced with Holmes’ name. The altered checks cashed by Holmes were, among others, originally payable to Verizon, D.C. Treasurer, Slevin & Hart (attorney) and Blue Cross/Blue Shield (WTU's medical insurance provider), for the payment of WTU's legitimate business expenses. 98. Holmes cashed, deposited or otherwise made use of checks he received knowing that the funds were proceeds of unlawful activity. 99. Holmes knew that the checks he cashed on WTU's bank accounts resulted in the unlawful embezzlement and conversion of WTU's funds. 100. While Holmes provided services to WTU, namely driving Bullock to appointments and performing odd jobs at WTU's office, the money he received as a result of his participation in the illegal scheme, greatly exceeded the value of his services to WTU. 101. Payments made to Holmes in excess of the reasonable value of his services were made without the authorization or knowledge of Plaintiffs and each member of the Class proposed to be represented by them. 102. Between the periods of January 1996 through July 2002, payments were made by WTU to Diner's Club for account number 3850-814404-0035 in excess of One Hundred and Nineteen Thousand Dollars ($119,000.00). 103. Gwendolyn Clark made use of unauthorized funds and material goods paid for by WTU funds she received from Bullock, Hemphill and WTU, knowing that the goods and funds were proceeds of unlawful activity. 104. Payments made to and Union money spent on behalf of Cheryl Martin were made without the authorization or knowledge of Plaintiffs and each member of the Class proposed to be represented by them. (Bullock, Baxter, Hemphill, Holmes, and Herein Unnamed Co-Conspirators Michael Martin, Cheryl Martin, Alderman and Clark)105. At all times, Bullock, Baxter, Hemphill, Holmes, Michael Martin, Cheryl Martin, Alderman and Clark knew that the funds and material goods paid for by WTU funds that were the subjects of their transactions represented the proceeds of unlawful activity and cashed and deposited those checks with the intent of carrying out the unlawful activity, and/or to conceal or disguise the nature, the location, the source, the ownership or the control of the proceeds. 106. Defendants' activities are the subject of criminal investigations by the federal government. COUNT I
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