Mr. Don Todd
Deputy Assistant Secretary
Office of Labor-Management Standards
United States Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Dear Deputy Assistant Secretary Todd:
RE: Thomas Havey LLPThe National Legal and Policy Center (NLPC) requests that the Office of Labor-Management Standards (OLMS) use its International Compliance Audit Program (I-CAP) and Compliance Audit Program (CAP) to audit every union that employs the services of the accounting, auditing, and consulting firm of Thomas Havey LLP.
Since 1997, NLPC has been dedicated to investigating and exposing union corruption at every level. In publishing the fortnightly newsletter, Union Corruption Update, we have observed hundreds of cases of union embezzlement and other union-related crimes. For more information about NLPC, please visit http://www.nlpc.org.
As you are aware, on or about June 4, 2002, Alfred S. Garappolo, a partner in the Havey firm pled guilty to two felony counts arising from a growing criminal probe into the International Association of Bridge, Structural, Ornamental & Reinforcing Iron Workers and its related training and employee benefit funds. First, Garappolo confessed to being an accessory after the fact to embezzlement from an employee benefit plan in violation of 18 U.S.C. § 3. He pled guilty to assisting Kerry J. Tresselt, a bookkeeper and daughter of former Iron Workers' vice-president Raymond J. Robertson, in order to hinder or prevent her apprehension, trial, and punishment for her embezzlement from the union training fund. Tresselt pled guilty in November 2001 to embezzling some $350,000.
Second and more importantly, Garappolo reportedly admitted to concealing and covering up a material fact in a matter within the Department of Labor's (DOL) jurisdiction in violation of 18 U.S.C. § 1001. Shockingly, Garappolo admitted to knowingly and willfully concealing and failing to disclose to OLMS agents statements made at a September 1992 meeting by the Iron Workers' former general counsel Victor Van Bourg to the union's ex-president and current president emeritus Jacob "Jake" West. Allegedly, Van Bourg told West that the Havey firm should be replaced if Havey accountants did not assist the scheme to underreport and conceal the true nature and amount of the union's disbursements for its officers on the union's annual financial report (LM-2) filed with DOL.
Further, the plea agreement documents reportedly charge that after the meeting, Havey accountants aided and assisted in the preparation of union reports that concealed the true amount of union disbursements for Iron Workers' officers West, LeRoy Worley, and James E. Cole. While Cole, a former Iron Workers' general secretary, has pled guilty to union corruption crimes, West and Worley, also former general secretary, are awaiting trial on assorted union corruption charges.
Moreover, according to reports of Robertson's guilty plea, other Havey employees may have been involved in the corruption. Robertson pled guilty April 11 to eight felony counts linked to a series of thefts from the National Ironworkers and Employers Apprenticeship Training and Journeyman Upgrading Fund. He agreed to pay a $30,000 fine and $103,170 in restitution. Through several different types of schemes, Robertson stole or helped cover up thefts of more than $100,000 from the Fund. In January 1999, Havey accountants audited the Fund. After receiving a tip from a staffer, a Havey auditor found that payroll checks had been issued to Tresselt's husband even though he had not been working for the Fund. Then a Havey partner in charge of the audit allegedly informed Robertson that Tresselt was issuing bogus payroll checks, which even included overtime.
Despite learning in January 1999 that Tresselt had stolen the money, Robertson and the Havey partner allegedly failed to disclose the thefts to other Fund trustees. Also, in February 1999, Robertson and the Havey partner allegedly told the other trustees that the Funds' accounts of the Fund were in good order. Further, until May 2001, Robertson and the Havey firm allegedly continued to conceal Tresselt's thefts and assure the trustees that the Fund's operations and controls were in excellent order.
The Havey firm's alleged conduct in this case is reprehensible. Further, the fact one Havey employee has now pled guilty raises some very troubling issues. There is now a reasonable suspicion that what happened in this case may have also taken place within other labor union organizations employing the Havey firm.
Havey currently enjoys a pervasive presence in the market for labor union and employee benefit fund accounting services. According to Havey's website (http://www.havey.com), it is the auditor for "over 700 collectively bargained, multi-employer and single-employer plans with total assets of over $42 billion and annual benefit payments in excess of $3 billion." The firm brags also "Labor is our specialty. [Our firm] is proud of its long and rewarding association with the organized labor movement."
The "niche" firm further states that it is "extremely knowledgeable with regard to the Department of Labor's . . . 'hot spots,'" and it pledges: "Should your Union's LM-2 be selected for examination [by the Department's audit program], our . . . Professionals are available to represent your Organization with the objective of making the process as painless as possible." Perhaps that is a reason why the firm can state that it "serves more international and local labor organization clients than any other CPA firm in the country . . . bar none."
As noted in NLPC's May 20, 2002, rulemaking petition (footnote 89), recent LM-2s filed with DOL reveal that in addition to the troubled Iron Workers, the Teamsters, Laborers, Hotel and Restaurant Employees, Service Employees, and Communications Workers all use Thomas Havey, LLP. A comprehensive review of annual financial reports will undoubtedly reveal many more Havey clients. Such a review could be completed first by determining all the unions which check "Yes" on LM-2 Line 14: "During the Reporting Period Did Your Organization: . . . Have an audit or review of its books and records by an outside accountant or by a parent body auditor/ representative?", and second by unions listing "Thomas Havey" in response to Question 75 Line 14.
Therefore, OLMS should investigate the Havey firm's "rewarding association" with its other union clients. Given that the I-CAP and CAP afford OLMS the discretion to determine which unions will and will not be subject to compliance audits, OLMS should now increase its scrutiny of any union employing the "services" of Thomas Havey LLP. Specifically, OLMS should begin with I-CAP audits of all international unions using Havey and then proceed with CAP audits of intermediate and local union organizations that are Havey clients.
Thank you for your time and consideration of this complaint. If we can be of any additional assistance, please contact NLPC at 703-237-1970.
Sincerely,
s/Kenneth F. Boehm
Chairman
cc:
Representative John Boehner
Representative Sam Johnson
Representative Charles Norwood
Secretary of Labor Elaine Chao
Deputy Secretary of Labor D. Cameron Findlay
Assistant Secretary of Labor Ann L. Combs, Pension & Welfare Benefits
Administration
Enclosures:
3) "Crime & Justice," Washington Post, June 7, 2002, at B2.
Related Complaint to Pension & Welfare Benefit Administration
Organized Labor Accountability Project