Opinion ID: 312744
Heading Depth: 1
Heading Rank: 2

Heading: The Sec. 501 Conviction

Text: 34 Appellant allegedly violated 29 U.S.C. Sec. 501(c) (1970), which provides that 35 any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer . . . [will be subject to fine or imprisonment]. 36 The jury found that appellant violated this law by ordering the transfer of the $5,000 loan described above from the UMW general treasury to the League treasury with the knowledge and for the purpose of making a political contribution. Appellant does not contest that the transfer was a conversion of union funds to the use of another. Rather, appellant argues that for two reasons this conversion was not unlawful. 37 First, relying on the Second Circuit's opinion in United States v. Silverman, 24 appellant argues that such a transfer violates Sec. 501(c) only if the jury finds that (1) the conversion was made without a bona fide authorization by the union, or (2) that the union derived no benefit from the transfer. Appellant's reliance upon the Silverman rationale is misplaced. The use to which the money was converted in that case, support of a candidate for state office, was not unlawful. The court stressed that there was no legal bar to the use if the transfer was properly authorized by the union. 25 38 Regardless of the validity of the Second Circuit's analysis in situations where the use is lawful, the holding in Silverman has no relevance here. In the instant case the use to which the money was converted could not have been lawful. As we have seen, the contribution of the $5,000 constituted a violation of Sec. 610. Neither authorization by any union officer or body, nor any resulting benefit to the union, would have rendered lawful the transfer of general union funds to a federal political campaign. In Pipefitters 26 the Supreme Court specifically reserved the question whether even a unanimous vote of all union members could validate a union political contribution under Sec. 610. 39 Thus, approval or benefit cannot make the conversion to the use of another in this case any less unlawful. If the use to which the money is knowingly transferred is unlawful, then the transfer constitutes a violation of Sec. 501(c). The jury was properly instructed that this was the applicable standard, that it had to find the appellant authorized the transfer knowingly for the purpose of making indirectly a political contribution, and there was sufficient evidence to support its conclusion. 27 40 Second, appellant seems to argue that Sec. 501(c) was intended to punish union officials only if the jury finds that the officer did not have at the time a bona fide belief in the legality of his action . . . 28 The argument is that the statute is intended to punish only knowingly illegal or ultra vires expenditures, and that union officials will be granted great latitude in forming their bona fide beliefs as to whether an expenditure is within the legal objectives of the union organization. Under this reading, Sec. 501(c) would never punish for a transfer, even if the official knew that the money was to be used for an unlawful purpose, if the official could have reasonably believed that the transfer was authorized under the union's constitution, bylaws, and procedure. Appellant contends that he was prejudiced by the court's refusal to permit him to argue as a defense that he believed the transfer was authorized. 41 This interpretation is founded upon passages in the Congressional debates on the statute in which individual Congressmen discussed, in general terms, the Labor-Management Reporting and Disclosure Act of 1959, of which Sec. 501(c) is a small part. 29 The thrust of the dialogue relied upon is that the Act will not punish an officer for an expenditure 42 [i]f it is made in accordance with, and for a purpose permitted by, the constitution, bylaws or regularly adopted resolutions of the union's constitutional governing bodies, the officer or employee will not be required at his peril to determine whether or not the constitution, bylaws or resolution goes beyond the legitimate purposes and objectives of the organization. 30 43 The relevance of this language in this context is at best ambiguous, and the remarks by individual Congressmen made during a floor debate are not the most persuasive form of legislative history. We believe, in any case, that the remarks relied upon do not support appellant's reading of the statute. The passage simply says that a transfer will not be deemed unlawful merely because it is made for a purpose that is ultra vires what the court determines to be the legitimate functions of a union. 44 As we have noted, however, the transfer in this case was not for a purpose that was ultra vires, but rather for a purpose that was itself a crime. There is no hint in either the statute or its legislative history that indicates a Congressional intent to excuse from the ambit of Sec. 501(c) transfers for a criminal purpose. No officer or union governing body could in all logic believe that a transfer for a criminal purpose was for a legitimate union purpose, was authorized by the union constitution or bylaws, or was for the union's benefit. 45 Appellant argues that our construction means that Sec. 501(c) duplicates 18 U.S.C. Sec. 610, which was discussed above. The argument is that Congress could not have intended to enact two statutes that punish officers for contributions to federal political campaigns, and hence Sec. 501(c) must be construed as requiring something that is not required for a violation of Sec. 610-specifically, knowledge that the act is unauthorized. 46 This argument fails, because the statutes as we construe them do not punish identical conduct. Section 610 punishes officers who consent to political contributions. Section 501(c) punishes, in this case, an officer who abstracts or converts union funds to use in a federal political campaign. The first statute is violated by an officer who simply knows of and acquiesces in the expenditure of union funds for a political campaign; the second requires some affirmative action to transfer union funds for this or any other unlawful purpose, and the unlawful objective may or may not have anything to do with prohibited union political contributions. 47