D.C. Teachers' Union's Corruption Scandal Reaches Another Milestone

Another chapter closed in the on-going saga involving the Washington Teachers’ Union when two former union officials were convicted of aiding the union president in a wide-scale embezzlement case. The former union president is currently serving a nine year sentence for stealing union funds and was the major witness against the two convicted. An accountant, who was jointly tried, was acquitted.  See Washington Post article, here.

The Washington Teachers’ Union case has an interesting history. While it is an extreme example of union corruption some important developments rose out of the case. These events are well chronicled in the Washington Post and other places but here is a short synopsis.

Back in December 2002 the FBI conducted an investigation of the union after an audit returned a host of irregularities going back to 1996. The following year the union president, Barbara Bullock, an aide to the president, Gwendolyn Hemphill, the union treasurer, James Baxter and the accountant were indicted. The FBI disclosed that, at the time of her arrest, Bullock had, in her possession, 35 handbags a 288-piece set of Tiffany silverware, a Tiffany white pearl necklace, a silver Tiffany ring, a silver Tiffany watch, a black cashmere cape with fox trim, a long ranch mink coat, one three-piece mink scarf set, 40 pairs of shoes (mostly Bruno Magli and Salvatore Ferragamo), and 11 wigs, all allegedly bought with union funds.

The AFT then took over the local.
At the time a union dissident, Nathan Saunders, commenced a federal lawsuit against the then current union leadership including all of the executive board members, personally.  Saunders claimed that the leadership was directly responsible for the corruption and that they violated their fiduciary responsibilities under Landrum-Griffin, the federal law that provides redress for improper union conduct.

In an incredible victory Saunders won the right to sue the individuals but refused to permit to continue his claim against the AFT. Saunders v. Hankerson, 312 F. Supp. 2d 46, 62 (D.D.C. 2004). Saunders recounts some of his experiences here. The litigation history is here.

In 2003 Bullock pleaded guilty to embezzling $2.5 million and received a nine year sentence. Right after her plea U.S. Department of Labor Secretary Elaine Chao appeared outside the U.S. Courthouse in Washington, D.C. and cited the WTU embezzlement scandal to illustrate why the new rules for union financial disclosure were needed. She stated that "the current financial disclosure forms . . . provide little value to rank-and-file members about their unions' finances and operations, and they have failed as an effective deterrent against financial misconduct." The U.S. Department of Labor requires all unions to file form LM-2, annually, disclosing the union’s finances. These forms are available on the web here and were effective January 1, 2004. (The last LM-2 for the UFT is only posted for 2003).

The changes include:

The forms must be filed by any union with annual receipts of $ 250,000

Unions will be required to break down expenses by certain functional categories including a new “representational activities” category, which includes expenses for contract negotiation, administration, and organizing.

There's also a category combining expenses for political activities and lobbying, along with a new "union administration" category. A category for "other disbursements," listed in the old version of the LM-2, which many argued was frequently abused, will be eliminated.

The unions must itemize any receipt of $5,000 or more.Last year an election was held to put an end to the AFT’s control over the local. 6 votes separated the candidates running for president, George Parker, who ran with Saunders as a reform candidate and Rachel Hicks, a former union official with ties to the convicted Bullock. A run-off was required and Parker and Saunders now head the union. In the original election only 1,358 out of 4,440 ballots mailed were returned. The election is being challenged.