Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Helena on November 12, 2009, before Senior U.S. District Judge Charles C. Lovell, LAURA ANN BROWN, a 42-year-old resident of Butte, pled guilty to labor union embezzlement. Sentencing is set for March 11, 2009. She is currently released on special conditions.

In an Offer of Proof filed by Assistant U.S. Attorney Carl E. Rostad, the government stated it would have proved at trial the following:

BROWN worked full-time at Acadia, a mental health facility for children located in Butte, for approximately ten years. Teachers (AFT) Local 5095 has about 100 members who are patient case managers, therapists, mental health care workers, and administrative personnel at Acadia.

BROWN was the Local 5095 president for 41/2 years. As president, BROWN handled contract negotiations, presided over membership meetings, and attended quarterly American Federation of Teachers (AFT) meetings in Helena. BROWN removed S.B. as Treasurer in 2005. Since that time, BROWN alone authorized, deposited, and disbursed union funds with no oversight from elected officers or members.

AFT Local 5095 is governed by its own constitution which BROWN wrote and signed on February 25, 2004. The local executive board consisted of the president, vice president, treasurer, and secretary. The treasurer is required to hold union funds, disburse them upon authorization, maintain records of all income and disbursements, and prepare financial reports for membership meetings. However, after BROWN removed S.B. as Treasurer in 2005, BROWN took on all the Treasurer duties herself.

Union income is derived from membership dues. The union has one checking account, at the Glacier Bank in Butte, and all of the union's deposits and disbursements were transacted through this account. Only one signature is required on union checks. BROWN and S.B. were the only account signatories, although, as noted, S.B. was removed in 2005.

In 2006, the Montana Education Association-Montana Federation of Teachers (MEA-MFT) audited the local's 2004 and 2005 financial records because the local became delinquent in paying dues to AFT and MEA-MFT. The MEA-MFT concluded that local 5095 had a dues deficit of over $6,000, which the intermediate body subsequently collected from the local. The audit also disclosed that BROWN converted over $4,000 in local funds to her personal use by making inappropriate expenditures from the union account.

Through interviews with former and current officers, MEA-MFT's internal investigation, and the OLMS review of bank and union records, it was discovered that from December 31, 2004, to December 31, 2008, BROWN embezzled $7,731.54 in union funds by converting them to her own personal use.

On May 5, 2009, BROWN was interviewed by a Department of Labor, Office of Labor and Management Standards investigator and admitted that she intentionally converted $7,731.54 in union funds to her personal use by using EFT transfers from the union account to pay personal debts, writing union checks for her personal benefit, making cash withdrawals from the union account and converting the proceeds to personal use and benefit, and writing union checks to pay personal debts. BROWN explained that she embezzled the funds because she did not have the money of her own when she was faced with emergency situations.

AFT Local 5095 is a labor organization required to file annual financial reports with the Secretary of Labor. The union is required to identify all income and disbursements and any loss of union funds on its annual reports. The report that BROWN signed on June 29, 2008, reflects no receipts or disbursements for fiscal years ending December 31, 2007, and December 31, 2008, although the union had both received and disbursed funds during that period. BROWN also failed to report the loss of local union funds from her theft. Bank records show the union had $4,565.30 in receipts and $4,707.98 in disbursements during 2007, and it had $1,520.33 in receipts and $1,454.40 in disbursements during 2008.

During the investigation, BROWN claimed she did not intentionally file false reports when she reported zero for the union's 2007 and 2008 income and disbursements because all of the local's funds went to MEA-MFT. BROWN knew the union had received money, however, because she deposited dues checks she received from MEA-MFT and she wrote checks for union expenses.

BROWN faces possible penalties of 5 years in prison, a $10,000 fine and 3 years supervised release.

The investigation was a cooperative effort between the U.S. Department of Labor and the Montana Education Association-Montana Federation of Teachers.

A copy of the Offer of Proof can be obtained by contacting Sally Frank at (406) 247-4638.

 

 

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