March 2005

Introduction 

Safeguarding union democracy and assuring financial accountability for the millions of Americans 

who are union members is the mission of the Department of Labor’s Office of Labor-Management 

Standards (OLMS). Congress enacted the Labor-Management Reporting and Disclosure Act of 1959 

(LMRDA) to insure that these important goals are met. 

The LMRDA establishes a bill of rights for union members; reporting requirements for unions, union 

officers, union employees and others; rules for establishing and maintaining trusteeships; standards 

for the election of union officers; and safeguards for protecting union funds and assets. 

The OLMS mission to advance the goals of union democracy and fiscal responsibility is 

accomplished through investigations and audits, intensive compliance assistance, and information 

outreach programs. OLMS also administers Executive Order 13201, the notification of employee 

rights concerning payment of union dues or fees. 

Safeguarding Union Assets 

In addition to conducting compliance assistance sessions on financial reporting and recordkeeping 

for union members and officials, OLMS conducts investigations into possible embezzlements of 

union funds to protect and safeguard union funds and assets. During FY 2004, OLMS-initiated 

investigations led to 111 criminal convictions for crimes such as embezzlement, filing false reports, 

destroying records, bank fraud, theft, forgery, and federal racketeering. 

Financial Reporting and Recordkeeping 

With the first major revision in union financial reporting requirements in over 40 years, OLMS 

increased the transparency and accountability of labor organizations to their members, the public, 

and the government. These requirements took effect for fiscal years beginning July 1, 2004 and 

thereafter following extensive compliance assistance to train unions in the use of the electronic filing 

software and the requirements of the new forms. In addition to requiring more detailed information 

from unions, the new regulations require that all unions filing a Form LM-2 must do so 

electronically. 

OLMS has revamped its Web site to focus on all aspects of the new rule, posting copies of the new 

forms and instructions, and Frequently Asked Questions. An electronic message service was also 

created to disseminate up-to-date and uniform information about the rule.

Union Democracy 

Investigations of union officer elections may be initiated by OLMS on receipt of a timely filed 

complaint from a union member protesting the election. The union may rerun the challenged 

election under OLMS supervision or, if warranted, OLMS may take legal action seeking a new 

election if a union has been found to have violated the requirements of the LMRDA. During FY 

2004, OLMS completed 107 election investigations and supervised 28 union officer elections. 

2004 Program Highlights

Office of Labor-Management Standards

Employment Standards Administration 

U.S. Department of Labor 

Don Todd, Deputy Assistant Secretary
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Safeguarding Union Assets

Union officers have a duty to manage the funds and property of the union solely for the benefit of 

the union in accordance with its constitution and by-laws. A union officer or employee who 

embezzles or misappropriates union funds or assets commits a federal crime punishable by a fine 

and/or imprisonment. Following are highlights of some of the most significant cases brought by 

OLMS during 2004. 

New York City Construction Industry 

Investigation

An ongoing investigation of the New York 

City construction industry has resulted in 

more than 50 indictments and over 

30 convictions of union officers and members 

of Elevator Constructors Local 1 and other 

unions and their associates. The 

investigation uncovered violence and 

intimidation against union members as well 

as numerous instances of individuals being 

paid for work they did not perform at 

construction sites in New York. This scheme 

caused construction costs to be significantly 

inflated. 

In a related prosecution, a 43-count 

indictment was issued involving the 

Metropolitan Transportation Authority’s new 

headquarters in Manhattan. The ten 

defendants include the developer, a “soldier” 

in the Gambino organized crime family, a 

business agent with Laborers’ Local 79, as 

well as union officers and members. The 

indictment alleges that organized crime 

influence over the project led to fraudulent 

over-billing, extortion, and kickbacks in at 

least ten contracts. The indictment estimates 

that the monetary loss to the MTA and the 

building’s owner as a result of this corruption 

was “substantially in excess of $10 million.” 

Former City Councilman Admits to Union 

Embezzlement 

Daniel F. Kearney, a former Long Beach, New 

York, city councilman, has been sentenced to 

one year in federal prison after pleading 

guilty to embezzling nearly $150,000 from 

Local 79 of the Laborers Union while he was 

secretary-treasurer from 2000 to 2002. 

Among Kearney's misuse of union funds 

were unauthorized purchases at Radio City 

Music Hall, the Mirage Hotel in Las Vegas, a 

Macy's in Hawaii, and the San Diego Zoo. 

He also made a political contribution with 

stolen funds. Kearney was elected to the 

Long Beach City Council in November 2001, 

but resigned in June 2003 when questions 

began to surface about the union's finances. 

Washington Teachers Union Corruption 

Exposed 

An investigation of corruption within the 

Washington Teachers Union (WTU) has 

resulted in five individuals, including former 

WTU president Barbara Bullock, pleading 

guilty to embezzling more than $4.6 million 

from the union as well as conspiracy and 

money laundering. Four additional persons, 

including the union' s former secretarytreasurer, the former executive assistant to 

the president , and two outside accountants 

have been indicted and charged with 

embezzlement, wire fraud, mail fraud, 

money laundering, and conspiracy and are 

awaiting trial. 

Bullock and her Executive Assistant 

Gwendolyn Hemphill caused Hemphill’s 

son-in-law and a friend to establish a 

company called Expressions Unlimited. The 

union then wrote checks to Expressions 

Unlimited totaling more than $480,000. Some 

of this money was given to Hemphill or 

deposited directly into Bullock’s personal 

bank account in the form of kickbacks. 

Bullock and Hemphill should have filed 

Form LM-30, Labor Organization Officer and 

Employee Reports, disclosing these 

payments. 
3

Safeguarding Union Assets

Accountants Sentenced in Iron Workers 

Union Embezzlement Case

Francis J. Massey and Alfred S. Garappolo, 

both former CPAs and partners with the 

Thomas Havey Company accounting firm, 

were sentenced in the U.S. District Court for 

the District of Columbia for their role in 

concealing the true amount of money that the 

union disbursed for Iron Worker’s officers’ 

meal and entertainment expenses. Their 

sentences were reduced due to the assistance 

they provided to the federal government in 

the larger federal probe of corruption within 

the Iron Workers Union that resulted in 

seven union officials and an insurance 

executive pleading guilty to various fraud 

charges. 

UTU Officials Plead Guilty to RICO 

Conspiracy

An investigation of corruption in the United 

Transportation Union (UTU) resulted in the 

conviction of four union officials who pled 

guilty to conspiring with others to violate 

federal mail and wire fraud statutes and 

interstate transportation in aid of 

racketeering through commercial state 

bribery by using their positions of authority 

to solicit and collect cash payments and other 

things of value from attorneys doing business 

or seeking to do business as Designated Legal 

Counsels of the UTU. 

Former International Presidents Byron A. 

Boyd and Charles L. Little, as well as two 

other union officials, pled guilty to one count 

of RICO conspiracy. Boyd, Little, and one of 

the union officials admitted to embezzlement 

from a labor organization in their pleas. On 

July 9, 2004, Boyd and Little were each 

sentenced to 2 years in prison, followed by 

3 years of supervised probation. The two 

men were also ordered to forfeit $100,000 

each in racketeering proceeds and were fined 

$10,000. 

Union Official Pleads Guilty to Embezzlement 

and Making False Entries

Angelous “Smokey” Lineback, former 

international representative with the Retail, 

Wholesale District Council of the United 

Food and Commercial Workers International 

Union, was charged and subsequently pled 

guilty to embezzlement and making false 

entries in required union records for two of 

the North Carolina locals he was servicing. 

On May 3, 2004, Lineback pled guilty to 

embezzling $182,443 and $13,685 from 

Local 1050 and Local 1052, respectively. 

Lineback forged the signatures of the 

required signatories for each local and 

falsified numerous other union records to 

facilitate and conceal the embezzlement from 

each local. Lineback will be sentenced in 

March 2005. 

Union Official Convicted of Receiving 

Cash Kickbacks 

Darvin Collins, the former business manager 

for International Brotherhood of Electrical 

Workers Local 16 in Evansville, Indiana, was 

convicted of receiving cash kickbacks of 

$25,370 from Gerteisen Electric, a company 

that employs members of Local 16. Gerteisen 

Electric received money from a union fund 

used to help union contractors be more 

competitive when bidding on construction 

projects that would employ Local 16 

members. Collins was also convicted of 

receiving a shakedown payment of $1,434 

from Diversified Power Group, a non-union 

company performing construction work on a 

riverboat in Mt. Vernon, Indiana. Collins 

was sentenced to 10 months imprisonment 

and 2 years supervised release. Collins 

should have reported payments from both 

companies on Form LM-30, Labor 

Organization Officer and Employee Report. 
4

Financial Reporting and Recordkeeping

Union members are entitled to transparency and accountability regarding the finances of their 

unions. Under the LMRDA unions are required to file annual financial reports with OLMS. The 

reports and documents filed with OLMS are public information and any person may examine 

them or obtain copies. 

Revised Form LM-2 and New Form T-1 

The requirement for unions with $250,000 in annual receipts 

to file electronically the revised Form LM-2; and the Form T1, for trusts in which the union has an interest, became 

effective July 1, 2004. The new requirements will apply only 

to annual financial reports filed by unions for fiscal years 

beginning on or after the effective date. 

Compliance Assistance

OLMS provided comprehensive compliance assistance to 

unions following the publication of the Final Rule 

implementing these changes. During FY 2004 OLMS 

conducted 237 formal group compliance assistance sessions, 

and a special training session for 130 CPAs and union 

accountants. OLMS also offered approximately 60 national 

unions the opportunity to request a special briefing on the 

forms, which 24 unions accepted. Ongoing efforts by the 

OLMS district offices continue to provide assistance as 

unions develop familiarity with the new filing requirements. 

OLMS has also revamped and updated its Web site, 

www.olms.dol.gov, which presents a wealth of information 

about the new rule with quick links to tools that will help 

with compliance. An e-mail message list was created that 

allows OLMS to disseminate information about the rule 

widely and quickly. Currently, there are nearly one 

thousand organizations and individuals receiving these 

electronic updates. Unions are also able to access 

information about the new rule through the Department’s 

Help Desk at 1-866-4-USA-DOL. In calendar year 2004, the 

Department responded to more than 2336 inquiries through 

this telephone number. Questions that the Help Desk is not 

able to answer are forwarded to OLMS where they are 

handled by technical experts. OLMS continues to expand its 

outreach efforts, recently posting a new Web page to help 

officers and members of small unions understand and 

comply with the requirements of the LMRDA, and will be 

offering, in early 2005, Spanish translations of its more 

popular resources. 

 

The current Form 

LM-2, used to 

disclose a union’s 

financial 

information to its 

members, has 

been revised for 

the first time in 

over 40 years.
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Financial Reporting and Recordkeeping

Information Technology to Support the 

Revised Financial Reports 

To facilitate the electronic filing of the revised 

Form LM-2 and new Form T-1, OLMS 

developed electronic forms software, 

supporting information technology 

infrastructure, and a new Public Disclosure 

Web site. In addition, SRA International, an 

information technology consulting firm, was 

selected as the contractor to develop the 

business rules, requirements documents and 

user guides for the project. In April 2004 

OLMS made the Revised Form LM-2 and the 

new Form T-1 software available to the 

public for download through the OLMS Web 

site. The software is in an Adobe Acrobat 

PDF form. To assure the security of these 

electronic forms, they must be digitally 

signed by the appropriate union officers. 

Digital Certificates can be purchased through 

one of the certified ACES certificate 

providers. 

Electronic Report Auditing Program 

In 2003, OLMS implemented an electronic 

report auditing program (e.REAP). This 

program electronically audits every labor 

organization annual financial report to 

ensure that certain minimum reporting 

standards are met. When deficiencies are 

identified, OLMS investigators can take a 

variety of actions such as providing the filing 

union with an advisory letter based on the 

electronic audit results, or conducting a more 

detailed audit of the report and seeking an 

amended report. The e.REAP program has 

helped OLMS meet its performance goal to 

increase the percentage of union annual 

reports meeting the minimum reporting 

standards. In 2004, 94% of all reports met 

acceptability standards. 

Delinquent Reports Program

To further efforts to improve timely filing, 

OLMS sends certified letters to chronically 

delinquent Form LM-2 filers reminding them 

of the annual financial reporting requirement 

and advising them of possible legal action. 

When reports are not received by the 

specified date, the delinquent case is referred 

to the Office of the Solicitor of Labor for legal 

action. 

In-Depth Desk Audits 

In a new initiative to strengthen its 

compliance audit program, OLMS performed 

several in-depth desk audits of financial 

reports filed by International Unions. The 

reports were analyzed and compared with 

information obtained from various databases. 

Additional information, explanations of 

transactions and amended reports were 

requested as a result of these audits. 

Failure to file reports and 

irregularities in unions’ 

reports can result in direct 

financial harm to union 

members.
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Union Democracy

The LMRDA establishes democratic standards for conducting union officer elections, such as the 

frequency and method of elections, the right of members in good standing to be candidates, rights 

of candidates, and voting rights of members. Based on a timely filed complaint from a union 

member, OLMS may take legal action seeking a new election if the LMRDA elections provisions 

have been violated. The LMRDA also prescribes different intervals and methods for the officer 

elections required for each type of labor organization. On November 3, 2004, OLMS published a 

notice requesting information from the public to assist in evaluating its methods for determining 

when a labor organization constitutes a local, intermediate, or national or international labor 

organization. Twenty-four public comments were received by the January 3, 2005 deadline. 

Following are highlights of some of the most significant OLMS election cases during 2004. 

OLMS Investigation Prompts 25,000 

Member Flight Attendant Union to Install 

Properly Elected President 

The Association of Professional Flight 

Attendants (APFA) represents approximately 

25,000 flight attendants nationwide who are 

employed by American Airlines. An OLMS 

investigation of the March 2004 runoff 

election between two candidates for APFA 

president revealed that 16 eligible members 

were denied the right to vote when the union 

failed to count their ballots even though the 

16 members satisfied the union’s voter 

eligibility requirements. The union’s board 

of directors voluntarily recognized the results 

of the OLMS tabulation of these 16 ballots 

and installed the candidate that OLMS 

determined received a majority of the valid 

votes cast. Since the Title IV violation that 

occurred when the union failed to count 

these ballots was remedied by tabulating the 

ballots and installing the winning candidate, 

the Department and the union averted 

protracted and costly litigation. 

Department Settles Suit Seeking New 

Election in Brotherhood of Maintenance of 

Way Employees

An OLMS investigation of the election of 

Grand Lodge officers of the Brotherhood of 

Maintenance of Way Employees revealed 

that certain candidates used union funds, 

equipment, and staff to prepare campaign 

literature and that employer funds were used 

to pay the expenses of a candidate’s 

campaign consultant. Suit was filed on 

July 7, 2003 against the 45,000 member union. 

However, a settlement agreement was signed 

on September 1, 2004 that voided the 

disputed election and provided for new 

nominations and elections for certain 

positions to be conducted under the 

supervision of OLMS. 

Court Affirms Secretary’s Regulation on 

Election Notice and Orders Supervised 

Election 

The court agreed with the Department that 

United Food and Commercial Workers 

Local 538 in Madison, Wisconsin, provided 

inadequate notices of election in a union 

federation newspaper because the notices 

did not appear conspicuously on the front 

page of the newspaper and the newspaper’s 

front page did not conspicuously reference 

the inside page where the notice appeared. 

These requirements for notices of a labor 

union officer election are set forth in the 

Secretary’s regulations that interpret Title IV 

of the LMRDA. Pursuant to an order of the 

court, OLMS supervised a new election that 

was completed on May 7, 2004. The 

complainant was elected president. 
7

Union Democracy

Writers Guild Agrees to New Election for 

President 

The Writers Guild of America, west, which 

represents all writers for motion picture 

studios, network and cable television west of 

the Mississippi River, agreed to voluntarily 

rerun the election for the office of president. 

OLMS conducted an investigation of its 

September 2003 election of officers and found 

that the union failed to properly qualify 

candidates for president allowing one 

nominee to run and take office who did not 

meet the union’s eligibility requirements. 

OLMS supervised a new election on 

September 21, 2004. After investigating 

complaints arising from this rerun, the 

Department certified the results of the 

election on November 5, 2004. 

Postal Mail Handlers Local 307 Agrees 

to New Election 

In this mail ballot election of a statewide local 

with 1,532 members, the OLMS investigation 

established numerous violations, including 

up to 44 ballots being cast by persons other 

than the members to whom the ballots were 

issued. Other violations included denial of 

the right to have an observer, denial of the 

right to vote to an unspecified number of 

members, improper use of union funds in 

connection with campaign literature, and the 

improper disqualification of two candidates 

for office. When confronted with the 

investigative findings, Postal Mail Handlers 

Local 307 in Detroit agreed to invalidate the 

election and conduct a new election for the 

offices of president, vice president, recording 

secretary, treasurer, state executive board, 

and eight branch presidents under OLMS 

supervision. 

AFSCME Florida District Council Agrees 

to Supervised Election 

On November 22, 2004 AFSCME Florida 

Council 79, an intermediate body comprised 

of approximately 90 local unions 

representing roughly 18,000 members, 

entered into an agreement with the Secretary 

of Labor to conduct new nominations and a 

new election for the offices of trustees, 

conference board vice president for colleges 

& universities, Region 5 executive board, and 

all Council 79 convention delegates under 

OLMS supervision. The agreement resulted 

from an investigation by OLMS into the 

Council’s October 19, 2002 election. 

Investigation established that delegates from 

21 local unions were improperly selected 

when they were not elected by the 

membership, not elected by secret ballot, or 

not elected after proper notice was given to 

members. 

AFSCME Council 61 Agrees to 

Supervised Election 

A suit filed by the Department was settled by 

consent decree after OLMS investigated 

complaints arising from the AFSCME Iowa 

Council 61 election held on July 26, 2003. 

Investigation into the nomination and 

election of delegates in the 106 locals 

comprising the council revealed that local 

members were denied the right to vote when 

they were not mailed an election notice in 

violation of the LMRDA and were not 

provided nomination and election notices as 

required under the International’s 

constitution. The union agreed to OLMS 

supervision of new nominations and 

elections for delegates and all 25 council 

officer positions. 
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Executive Order 13201

Non-exempt government contractors and subcontractors are now required to inform their 

employees that they have certain rights related to union membership and use of union dues and 

fees. Under Executive Order 13201, government contracts and sub-contracts must include an 

employee notice clause that requires such non-exempt Federal contractors and subcontractors to 

post notices informing their employees of these rights. 

 

On September 30, 2003, the United States Court of Appeals for the District of Columbia Circuit 

issued its mandate in UAW-Labor Employment & Training Corporation v. Chao. The court’s 

April 22, 2003 decision in this case upheld Executive Order 13201 and reversed the January 2, 2002 

district court decision which had permanently enjoined the Department of Labor from enforcing 

the Executive Order. The Department issued a Final Rule implementing E.O. 13201 on March 29, 

2004. The Final Rule is jointly administered by OLMS and the Office of Federal Contract 

Compliance Programs. OLMS created a Web page about E.O.13201 that includes Frequently 

Asked Questions, the downloadable poster, a fact sheet, and other guidance. 

Rights of Federal Union Members

A regulation that would require federal unions to periodically inform their members of their 

democratic rights was proposed by OLMS on November 3, 2004. These rights are set forth in the 

standards of conduct provisions of the Civil Service Reform Act (CSRA) and the standards of 

conduct regulations. Among other things, they include the right to participate in union affairs, 

freedom of speech and assembly, and the right to nominate candidates for office and run for office. 

The requirements of the standards of conduct regulations are based on requirements of the 

LMRDA and incorporate pertinent court decisions. A total of 765 public comments on the Notice 

of Proposed Rulemaking were received by the January 3, 2005 deadline.