News and Press Releases

Former President of Union Local Arrested for Accepting Hundreds of Thousands of Dollars in Kickbacks Embezzled from Union Welfare Fund

FOR IMMEDIATE RELEASE
September 18, 2012

A 15-count indictment was unsealed in federal court in Brooklyn this morning charging Hector Lopez, the former president of the Metal Polishers Union (Local 8A-28A) and Chairman of the Board of Trustees of the Local 8A-28A welfare fund, with accepting more than $740,000 in kickbacks embezzled from the union local’s welfare fund.1 The defendant was arrested earlier today, and his arraignment is scheduled this afternoon before United States Magistrate Judge Marilyn D. Go, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The indictment and arrest were 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; Andriana Vamvakas, District Director, Department of Labor Office of Labor-Management Standards, New York; Toni Weirauch, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York; and Jonathan Kay, Regional Director of the Employee Benefits Security Administration, New York.

The crimes charged in the indictment include conspiracy to embezzle from an employee benefit plan, mail and wire fraud, money laundering, structuring financial transactions, and tax evasion. As alleged, the defendant engaged in several schemes to obtain money from the local’s welfare fund, including:

(1) accepting over $740,000 in kickbacks from the third-party administrator of the welfare fund in exchange for ensuring the continued retention of that administrator,

(2) accepting kickbacks from an employer trustee of the local’s welfare fund (“the employer trustee”) in exchange for authorizing the welfare fund to pay fraudulent invoices for a union hall renovation performed by a company owned by the employer trustee, and

(3) accepting a kickback from the employer trustee in exchange for rigging the bidding process to ensure that a sprinkler installation job was awarded to a company controlled by the employer trustee.


The indictment also charges that the defendant violated the Taft-Hartley Act by living rent-free with his family in a New Jersey home owned by the employer trustee whose company had a collective bargaining agreement with the local, and that the defendant structured over $82,000 in cash deposits at local banks to evade federal reporting requirements.

United States Attorney Lynch stated, “As detailed in the indictment, Hector Lopez was entrusted with ensuring the sound management of the welfare fund for the benefit of union members. Instead, he turned the fund into a personal piggy bank, lining his pockets with the fruits of their labors. In doing so, he betrayed the trust of the union members who had elected him and abused his power for personal profit. His illicit gain was the union member’s loss. The defendant will now be held to account for his actions.” Ms. Lynch expressed her grateful appreciation to the agencies that participated in the government’s investigation.

DOL-OIG Special Agent-in-Charge Panella stated, “The defendant in this case allegedly embezzled from the union’s health and welfare benefit fund – a violation of federal law and of his obligations to the union members he was elected to represent. The OIG will continue to work with our law enforcement partners to protect the assets and benefits of hard-working union members.”

DOL-OLMS District Director Vamvakas stated, “Union officials occupy positions of trust and, therefore, must ensure that the union’s funds and other assets are used solely for the benefit of the union and its members. The U.S. Department of Labor’s Office of Labor Management Standards is committed to rooting out and helping bring to justice those officials who would betray their members’ trust and benefit themselves at their members’ expense.”

IRS Acting Special Agent-in-Charge Weirauch stated, “IRS-Criminal Investigation is always eager to apply its financial investigative expertise to the investigation of all different kinds of financial crimes, including the alleged theft of funds by people in positions of trust, whether they are union officials, people elected to public office or appointed officials. We are committed to working with our law enforcement partners to ensure that those who abuse their fiduciary duties for personal financial gain are held accountable.”

“This is an excellent example of federal agencies working together to protect employee benefit plans from those who allegedly would use them for their own benefit,” said Regional Director Kay of the Employee Benefits Security Administration. “When a plan official not only fails to protect employee benefits, but consciously misuses plan funds, this agency will take all necessary action to get justice for workers.”

If convicted of the most serious offense, the defendant faces a maximum term of 20 years’ imprisonment.

The government’s case is being prosecuted by Assistant United States Attorneys Charles Kleinberg and Marisa Megur Seifan.

The Defendant:

Name: HECTOR LOPEZ
Age: 54
Residence: Oakland, NJ

 

 

_____________________________

1 The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.



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