WASHINGTON -- With the completed forensic audit of the Washington Teachers Union (WTU) in hand, the American Federation of Teachers (AFT) today filed a federal lawsuit under the RICO (Racketeer Influenced Corrupt Organizations) Act and other federal and state statutes, seeking restitution on behalf of the nearly 5,000 members of the WTU for the misuse, misappropriation and conversion of more than $5 million in union funds. 

The lawsuit, filed in Federal District Court here, alleges that eight individuals, including Barbara A. Bullock, the former WTU president; James O. Baxter, the WTU’s former treasurer; and Gwendolyn M. Hemphill, the former assistant to Bullock, "in their positions as Union officers, agents, representatives and employees, or through their relationships with Union officers, agents, representatives and employees, aided and abetted, participated in, and used the Union as part of their conspiracy to embezzle and convert funds of the Union."  

"The massive misappropriation of union funds and the betrayal of the members that are outlined in our audit are reprehensible and sickening," said AFT president Sandra Feldman. "The individuals responsible must be held accountable, and the AFT will do everything in its power to see that these funds are returned to the WTU and its members."

The lawsuit and audit detail a scheme to defraud the union and its members, embezzle WTU funds and convert those funds for personal use.  The legal complaint charges that defendants conducted their scheme to defraud the union through the use of union checks that were unauthorized, forged, illegally converted, and otherwise misappropriated, and that some of the individuals personally benefited from "substantial unauthorized purchases" made through the misuse of the union’s American Express credit cards.

The AFT first began an investigation in July 2002, after the AFT was notified by a WTU member of an overcharge of union dues.  The AFT directed its financial services department to conduct a review of WTU’s financial records; the audit determined that there were a significant number of irregular and questionable transactions.  The AFT then referred the matter to the U.S. Attorney’s Office and retained the independent auditing firm of Klausner, Dubinsky and Associates, to conduct a thorough forensic audit of WTU finances.

"Ever since the AFT made the initial discovery of misappropriated funds, we have sought the return of those funds and items belonging to the WTU," said Edward J. McElroy, secretary-treasurer of the AFT.  "But all efforts were rebuffed.  Today, we are filing this lawsuit to ensure that the WTU members are made whole."

Jurisdiction for the lawsuit comes under several different state and federal statutes, including the Landrum-Griffin Act, governing relations between unions and their members and the RICO Act, which provides treble damages and attorney’s fees.