Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19760112_0040493.C02.htm/qx
Timestamp: 2018-03-23 17:06:00
Document Index: 207247868

Matched Legal Cases: ['§ 401', '§ 301', '§ 664', '§ 664', '§ 501', '§ 304', '§ 1027']

DOMINICK SANTIAGO, DEFENDANT-APPELLANT
Appeal from a judgment of the United States District Court for the Eastern District of New York, Thomas C. Platt, Judge, after a jury trial, convicting appellant of converting union general funds and welfare funds and making false statements in welfare fund financial reports.
During the period covered by the indictment (1968-72) appellant was president of Local 3108, AFL-CIO, a New York City labor organization subject to the provisions of the Labor-Management Reporting and Disclosure Act, 29 U.S.C. § 401 et seq. Appellant was also the administrator and a trustee of the union's Brotherhood Welfare Fund, a welfare fund within the meaning of the former Welfare and Pension Plans Disclosure Act, 29 U.S.C. § 301 et seq.*fn1
Appellant was convicted for violation of 18 U.S.C. § 664 which provides in pertinent part that "any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use or to the use of another" the funds or assets of a welfare plan which is subject to the provisions of the Welfare and Pension Plans Disclosure Act shall be fined and/or imprisoned. Appellant contends that the general fund of the union does not fall within the meaning of the term "another" as used in this statute. We disagree.
The District Court, correctly and without exception, charged that the Welfare Fund was not the asset or property of the union. It belonged to participants in the Fund and their beneficiaries.*fn2 Diversion of Welfare Fund assets into the union's general fund was a conversion for the benefit of the membership as a whole and differed only in degree from a diversion of such funds into the hands of a smaller group or an individual union member. The legislative history of § 664 clearly indicates that its intended purpose was to preserve welfare funds for the protection of those entitled to their benefits. 1962 U.S. Code Cong. and Admin. News 1532 (H.R. Rep. No. 998). This purpose would be ill-served if such a narrow meaning were ascribed to the term "another" as to exclude the general fund of the union from its scope.
Appellant was also convicted on another count of using Welfare Fund money to pay the salary of a union organizer and business agent. Although appellant has included this conviction within his omnibus claims of error, he has advanced no serious arguments to support this inclusion. We are satisfied that this was not the result of oversight. Cf. Brown v. Bullock, 294 F.2d 415, 420 (2d Cir. 1961). The checks were drawn upon the Welfare Fund in payment for services rendered to the union. The jury was entitled to find that they represented funds which had been converted to the use of "another."
The Government introduced evidence, uncontroverted by appellant, that he used money from the union's general fund to pay for personal purchases and traveling expenses. This was found to be in violation of 29 U.S.C. § 501(c) which provides that any officer of a labor organization who "embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another" any of the organization's funds or assets shall be fined and/or imprisoned.
Appellant concedes that his travel expenses to such varied locales as Switzerland, France and the Virgin Islands "appeared" to be personal in nature but argues that the Government's proof did not sufficiently preclude the possibility of subsequent ratification of these expenditures. Whether there can be ratification of the expenditure of union funds for non-union purposes is a question we need not now decide. See United States v. Goad, 490 F.2d 1158, 1166 (8th Cir.), cert. denied, 417 U.S. 945, 41 L. Ed. 2d 665, 94 S. Ct. 3068 (1974); cf. United States v. Dibrizzi, 393 F.2d 642, 645 (2d Cir. 1968). The trial judge instructed the jury to measure appellant's conduct by the test we approved in United States v. Ottley, 509 F.2d 667, 671 (2d Cir. 1975), viz, did appellant have a good-faith belief that the funds were being used for union business and that the union had properly authorized the expenditures or would properly ratify them. Measured by this test, appellant's conduct was found wanting. We see no error.
Although there was evidence that the union was indebted to appellant during the period in question, this did not require that he be absolved of liability for the unauthorized conversion of union funds, see United States v. Bryant, 430 F.2d 237, 239-40 (8th Cir. 1970), especially since none of the expenditures was credited against the outstanding indebtedness. A union in financial straits, as Local 3108 was, is entitled to make its own determination of how best to use its limited resources. At most, the indebtedness was an item which could be considered by the jury in determining the reasonable likelihood of ratification.
As administrator of the Welfare Fund, appellant was required by 29 U.S.C. § 304 to file annual financial reports. He was found guilty of violations of 18 U.S.C. § 1027 which makes it an offense if, in such document, one "makes any false statement or representation of fact, knowing it to be false, or knowingly conceals, covers up, or fails to disclose any fact the disclosure of which is required by such Act or is necessary to verify, explain, clarify or check for accuracy and completeness any report required by such Act to be published or any information required by such Act to be certified." These findings were based upon substantial understatements of the amount of employee contributions to the Welfare Fund. Appellant could not transfer the responsibility for these understatements to the accountant who prepared the reports because the accountant was not hired to make any audit or to verify the accuracy of the figures with which he was supplied. The trial court properly charged that the Government was required to prove beyond a reasonable doubt that appellant made the false statements knowing the same to be false. United States v. Ferrara, 451 F.2d 91, 96-97 n.10 (2d Cir. 1971). In view of the overwhelming proof that appellant knowingly diverted employee contributions intended for the Welfare Fund, we see little merit in his argument that the evidence did not support his conviction for knowingly understating the amount of employee contributions in the annual reports.
On June 24, 1970, appellant attended a compliance conference with representatives of the New York State Insurance Department. These officials advised appellant that expenses which should have been paid out of the general fund were being improperly paid from the Welfare Fund. Appellant agreed to correct this situation and thereafter wrote several letters relative to the proposed corrective measures. Proof of these facts was admitted as bearing upon the knowledge, intent or willfulness with which appellant did the similar acts charged in the indictment. Appellant contends that this was error, because the evidence involved the violation of State regulations rather than the Federal statutes at issue herein. This argument, we think, misses the point. It has long been the law of this Circuit that similar acts may be proved in order to show guilty knowledge. United States v. Seeman, 115 F.2d 371, 373 (2d Cir. 1940). Indeed, we have held that evidence of relevant similar acts, including other crimes, is admissible for all purposes except to show defendant's criminal ...