Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, announced today that Michael P. Kelly, age 61, of Crestline, Ohio, was sentenced to imprisonment for one year and a day for embezzling approximately $97,971 from the United Transportation Union (UTU), Local 586, while serving as Local 586’s Secretary-Treasurer from January 2004 through November 2006. Local 586 members were employed at CSX Transportation, Inc., at locations in northeast Ohio, including Crestline, where the defendant also worked. The sentence was imposed by Senior United States District Judge Lesley Wells, who also ordered Kelly to serve three years of supervised release following his incarceration, with a condition that he pay restitution totaling $93,268.13, payable first in the amount of $18,268.13 to Local 586, and then in the amount of $75,000 to Great American Insurance Group as reimbursement for payments to the union under a dishonest employee bond. Kelly began making restitution payments in 2007 under an arrangement with Great American.

Kelly pleaded guilty to a one-count Information in July 2009. The Information charged that Kelly mis-used his position as union officer to embezzle the funds by: (a) issuing numerous checks payable to himself, recorded as “salary and expenses” payments on union records, that he knew were either totally unauthorized or in amounts substantially beyond his authorized salary and expense reimbursements; (b) issuing or causing numerous other checks to be issued payable to him, and in one case making an automated withdrawal from an account, that he knew were totally unauthorized; and (c) in a few instances issuing checks to a family member or third party on behalf of a family member, that he knew were unauthorized. Kelly received the personal benefit of these unauthorized payments either directly by negotiating the checks personally, or indirectly by allowing family members to negotiate the checks and/or use the proceeds of the checks. To make and conceal these unauthorized expenditures, Kelly used various devices, including: (a) forging the signature of the local union president on most of the checks; (b) issuing and negotiating some checks containing only his signature as maker; (c) falsely recording the payee’s name on the local union’s disbursement control ledger for some checks; and (d) allowing family members to make and forge his name as signer on some of the checks.

The government’s case was being prosecuted by Assistant United States Attorney John M. Siegel, following an investigation by the U.S. Department of Labor, Office of Labor-Management Standards, Cleveland, Ohio.