Union rocked by $2m fraud scandal

10th January 2003 at 00:00
United States. FBI raids find fur coats and alligator shoes in leaders' homes allegedly bought with teachers' money. Stephen Phillips reports.

In a case assuming the dimensions of the corporate scandals that have rocked America, the FBI has raided the homes of former top officials of the Washington teachers' union and recovered luxury items allegedly paid for with membership funds.

The extent of the alleged fraud at the union, a chapter of the American Federation of Teachers, is put at more than $2m (pound;1.5m). Agents suspect a spending spree over some seven years by ex-president Barbara Bullock, her aide Gwendolyn Hemphill, and then-treasurer, James Baxter.

Alleged loot recovered from Bullock and Hemphill's homes includes some half-a-million dollars of designer clothing - fur coats, wigs and alligator shoes - a $57,000 tea set, $13,000 plasma screen television and $6,800 ice bucket.

Bullock and Hemphill resigned last October when financial irregularities first emerged. Baxter was fired. The accusations have been filed with the US district court in Washington DC, which must now decide whether to press charges.

Bullock's chauffeur was also allegedly in on the scam. He claimed a $90,000 annual salary and bankrolled his passion for cars using union funds, according to court papers lodged by the FBI.

Hemphill's son-in-law is also implicated. The FBI accuses him of invoicing the union for fictitious work, the documents say.

At the same time, members' health insurance costs went unpaid, leaving retired teachers to foot bills for glasses' prescriptions and some other services themselves. The union is also investigating missing pension funds.

This alleged fraud only came to light last year. The national AFT drafted in auditors to comb the Washington union's books last year after it mistakenly docked $160 in dues instead of $16 from its teachers' pay packets. During their audit they discovered suspicious transactions and the union called in the FBI.

Interim Washington president, Esther Hankerson, said the alleged plundering had gone undiscovered for so long because the death of the union's long-time accountant in 1997 made it difficult to pull together paperwork, delaying an audit.

"When we found out about (the allegations), we took corrective action immediately," she said.

Ms Hankerson herself recently repaid around $1,500 to the union after her assistant inadvertently billed her granddaughter's travel expenses on her union credit card instead of her personal one.

The scale of the alleged embezzlement has sent shockwaves through staffrooms in the US capital. It has also prompted secondary history teacher Nathan Saunders to sue the union's entire executive team for negligence.He is asking the court to force them to quit.

The AFT said proceeds from an auction of misappropriated items could be used to plough funds back into the union's depleted coffers.

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