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Common Violations Discovered During Compliance Audits

Unions’ lack of proper bonding is a common problem discovered during OLMS compliance audits. So, why does a union need to be bonded? The required bonds are a type of insurance agreement which guarantees reimbursement to the union for any financial losses caused by fraudulent or dishonest acts by officers or employees, such as theft, embezzlement, or forgery. The bonding requirements are not based on the idea that particular individuals or organizations are inherently dishonest. Rather, bonding is required because experience has shown that when people are entrusted with the money or property of another, there will be instances when individuals will cause a loss through fraud or dishonesty. Bonding is therefore required to insure the union against such a loss. (Source: OLMS)

Examples of Compliance Audit Closing Letter Notices

Former Union Officer Sentenced to Prison for Extortion

Warren Annunziata, former President and Fund Administrator for United Craft and Industrial Workers Union Local 91 (a union that represents school bus drivers in New York City), was sentenced in March 2011 to 33 months in prison, two years supervised release, and was ordered to pay $250,000 in forfeiture and restitution.  Annunziata was previously indicted for extorting cash payments from union employers totaling at least $500,000.  Annunziata collected tens of thousands of dollars from a union employer who placed money into a bank account controlled by Annunziata, which he then used for personal expenses by utilizing a false identity and forged signatures.  This case was conducted jointly with the Department of Labor’s Office of Inspector General and the Federal Bureau of Investigation.

Former Secretary-Treasurer Guilty of Embezzling over $300,000

James Drury, former Secretary-Treasurer of Communications Workers of America (CWA) Local 3121 in Hialeah, Florida, was sentenced in March 2011 to 24 months incarceration followed by three years supervised release.  Between 2005 and 2009, Drury wrote unauthorized checks to himself, made unauthorized withdrawals from the union’s checking account, and used the union’s credit card for personal expenses, together totaling over $300,000.  Drury forged the former president’s signature on checks in order to deceive the union and further his scheme.  At sentencing, Drury was ordered to pay $186,757 in yet unpaid restitution and a $100 special assessment.  This case was conducted jointly with the Department of Labor’s Office of Inspector General.

Former National Officer Gets Prison For Theft Of Union Funds During Hurricane Katrina

Frankie Sanders, former American Postal Workers Union (APWU) Southern Regional Coordinator in Houston, Texas, was sentenced in June 2011 to 18 months in federal prison without parole for theft of union funds.  A jury found Sanders guilty of submitting false travel receipts seeking and obtaining more than $10,000 in union funds for reimbursement.  Sanders was also sentenced to a three-year term of supervised release and ordered to pay restitution to the APWU.  OLMS initiated the investigation after an audit disclosed falsified hotel receipts in excess of $10,000.  The fraudulent receipts were for two New Orleans hotels and included alleged stays for periods when the hotels were closed due to damages as a result of Hurricane Katrina.  In addition to his employment with the APWU National, Sanders also served as a trustee to a New Orleans APWU local union following the aftermath of Hurricane Katrina.

Court Rules in Favor of Department in Lawsuit Against AFGE

In February 2011, the U.S. District Court for the District of Columbia granted the Department’s motion for summary judgment and ordered a new election under the Department’s supervision in a lawsuit against the American Federation of Government Employees (AFGE) National Union.  The lawsuit sought to void the May 2008 election for District 2 AFGE National Vice President (NVP) because the union denied a member in good standing the right to run for office. OLMS supervised new nominations and a new election for the office of AFGE District 2 NVP.  Between February and June 2011, OLMS investigators from the New York, Buffalo, Boston, and Philadelphia District Offices reviewed delegate election records for each of the 120 local unions in District 2 and supervised new delegate nominations and elections where necessary.  The supervised election was successfully completed at the July 2011 District 2 caucus with nominations and an election of National Vice President that satisfied LMRDA requirements and generated no complaints from the union membership.

Voluntary Agreement for New Election in Operating Engineers Local 310

In February 2011, OLMS entered into a voluntary compliance agreement with the International Union of Operating Engineers (IUOE) Local 310, located in Green Bay, Wisconsin, concerning its election of officers conducted in August 2010.  The OLMS investigation of the election disclosed that Local 310 failed to mail an election notice to all members, denied members the opportunity to vote, and allowed ineligible members to vote.  IUOE Local 310 agreed to conduct a new election, under OLMS supervision, for the offices of business manager, district director of the power plant, and three trustees.  The supervised election was conducted by mail ballot with the tallying completed in May 2011.  The race for trustee was decided by only one vote.

Source: Office of Labor-Management Standards 2011 Annual Report

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