Trucking Company Owners, Employees and Shop Steward Indicted on Embezzlement, Unlawful Payments and Health Care Fraud Charges
A five-count superseding indictment was unsealed in federal court in Brooklyn this afternoon charging John Farnsworth, Toni Thomson, William Taylor, Stephen Tripodi and Nicholas Farnsworth with crimes including embezzlement, unlawful payments and health care fraud.1 The defendants’ arraignments are scheduled later today before United States District Court Judge Allyne R. Ross at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The case was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Robert Panella, Special Agent-in-Charge, U.S. Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region, Jonathan Kay, Regional Director for the New York Regional Office of the United States Department of Labor, Employee Benefits Security Administration, and Shari C. Hyman, Commissioner, New York City Business Integrity Commission.
As alleged in the indictment, between 2007 and 2011, John Farnsworth operated several trucking companies using nominal owners, including Toni Thomson, Nicholas Farnsworth and Stephen Tripodi, to truck construction and demolition debris between construction sites and landfills in Long Island, New York City, New Jersey and elsewhere. During 2007 and 2011, John Farnsworth, on behalf of Greenwood 2, L.L.C. (Greenwood), entered into a collective bargaining agreement with the International Brotherhood of Teamsters, Local 282 (Local 282), the truck drivers’ union, in order to be eligible to enter into certain valuable contracts. This agreement obligated the defendants to pay specific hourly wages to their drivers and to make payments to Local 282’s welfare, pension, annuity, job training, and vacation and sick leave trust funds (the Union Benefit Funds).
As detailed in the indictment, in violation of the agreement, the defendants avoided paying the required hourly wages and Union Benefit Funds contributions by running a “double breasted” operation in which they illegally conducted a substantial portion of their trucking business through a non-union trucking company named Rainbow Transport Corp. and other affiliated non-union trucking companies. The charged scheme enabled the defendants to embezzle money from Local 282’s Union Benefit Funds and further enrich themselves by under-reporting the true number of hours worked by the truck drivers, thereby depriving the Union Benefit Funds of financial contributions otherwise required under the collective bargaining agreement. In total, the defendants succeeded in embezzling more than $5,000,000 in Union Benefit Funds payments by 2011.
The indictment also alleges that from 2008 to 2010, John Farnsworth unlawfully paid more than $20,000 to Stephen Tripodi at a time when Tripodi was serving as the Local 282 shop steward for Greenwood, and that William Taylor, who worked as a dispatcher for Rainbow, fraudulently received health care benefits from Local 282’s health care plan from 2009 to 2010. During that period, Taylor was falsely listed as a union truck driver for Local 282.
“As charged in the indictment, in these difficult economic times these defendants conspired to steal the pension and welfare benefits of hardworking truck drivers depriving them of retirement and health benefits they rightfully earned. Holding the defendants accountable puts others on notice that such conduct will not be tolerated. Every worker who puts in an honest day’s labor deserves no less,” stated United States Attorney Lynch. Ms. Lynch extended here grateful appreciation to the City of New York Business Integrity Commission, U.S. Department of Transportation, MTA Office of the Inspector General, Office of the Inspector General of the Port Authority of New York and New Jersey and the Internal Revenue Service for their assistance.
DOL-OIG Special Agent-in-Charge Panella stated, “The defendants’ alleged actions are in violation of Federal law and violate their obligations to Local 282 and its members. The Office of Inspector General will continue to work with our law enforcement partners to vigorously investigate labor racketeering in the nation’s labor unions.”
DOL-EBSA New York Regional Director Kay stated, “By establishing pension and welfare benefit plans with unions, employers make a promise to provide such benefits to their employees. Where, as here, employers intentionally and repeatedly break that promise in order to serve their own interests, EBSA will pursue strong enforcement action against those responsible for depriving employees of the benefits to which they are entitled.”
NYC-BIC Commissioner Hyman stated, “Ensuring a level playing field for businesses that operate legitimately and fairly is our mandate, and this case exemplifies the continuing need for the Commission’s vigilance in protecting open and honest competition. I applaud U.S. Attorney Loretta Lynch and her office on this indictment as well as our partners at U.S. Department of Labor, U.S. Department of Transportation, the Internal Revenue Service, the Port Authority of NY/NJ and the Metropolitan Transportation Authority for their contributions to this investigation.”
If convicted, the defendants face maximum sentences ranging from 5 to 20 years of imprisonment on each count of the indictment.
The government’s case is being prosecuted by Assistant United States Attorney Anthony M. Capozzolo.
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