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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of California

FOR IMMEDIATE RELEASE
Thursday, June 22, 2017

Former Labor Organizer Pleads Guilty To Taking Money From Businesses He Was Attempting To Organize

Former UFCW Employee Admits to Violating the Taft-Hartley Act, Committing Honest Services Fraud, and Conspiring to Structure and Launder Money

OAKLAND – Daniel J. Rush pleaded guilty in federal court today to three felony counts: receiving an illegal payment as a union employee; honest services fraud; and conspiracy to commit structuring and money laundering, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The plea was accepted by the Honorable Haywood S. Gilliam Jr., U.S. District Judge.

In pleading guilty, Rush, 56, of Crescent City, Calif. (formerly of Oakland, Calif.), admitted that between 2011 and 2015 he was employed by the United Food and Commercial Workers International (UFCW International) as the Organizing Coordinator for the unofficial medical cannabis and hemp division.  Rush had fiduciary duties to the UFCW International, and the UFCW International constitution prohibited him from accepting dual compensation or expenses related to the performance of his duties.  Notwithstanding these fiduciary duties, in today’s plea agreement, Rush admitted he violated the Taft-Hartley Act when he accepted compensation from employees in, or potentially in, a labor organization.  Rush also admitted he committed honest services wire fraud with the intent to deprive the UFCW of its right to his honest services and he conspired with attorney Marc TerBeek, 50, of Berkeley, Calif., to launder money and to evade reporting requirements in an effort to conceal the source of the money.  TerBeek pleaded guilty in February 2017 to making illegal payments to Rush in violation of the Taft-Hartley Act and to violating anti-structuring regulations.

According to Rush’s plea agreement, in January 2010, a marijuana entrepreneur loaned Rush $500,000 in cash, ostensibly to be used to develop pieces of real property under Rush’s control.  Rush promised to pay the entrepreneur $3,000 in interest per month for 5 years and then pay the balance in a lump sum in January 2015.  Rush knew that the money he borrowed had been earned in connection with illegal marijuana cultivation activities and that therefore the money was the proceeds of unlawful activity.  Rush acknowledged that he and TerBeek conspired to structure the loan proceeds into the banking system and they further agreed to falsely characterize the $3,000 per month payments as consulting fees.  

In January and February 2010, TerBeek made a series of deposits of less than $10,000 at Wells Fargo and Bank of America branches.  Once TerBeek had deposited sufficient funds, he paid off a $420,000 note on a property owned by Rush.  

TerBeek also began making the $3,000 monthly payments to the marijuana entrepreneur on Rush’s behalf.  In exchange for these payments and other compensation from TerBeek, Rush referred medical marijuana employers to TerBeek.  Terbeek provided assist to the employers regarding compliance and licensing.  The clients included owners of businesses in the marijuana industry that Rush was purporting to attempt to organize for the UFCW.  Rush did not disclose to the clients or the UFCW that he was receiving significant sums of money from TerBeek.  This kickback scheme violated Rush’s duty to provide his honest services to the UFCW.

By 2014, the individual who loaned money to Rush in 2010 was an employer in the medical marijuana industry that Rush was trying to unionize.  Rush used his position in the UFCW to make official recommendations to government entities for the individual’s marijuana business and accepted at least $250,000 of debt forgiveness from the individual.

The FBI’s investigation began with a tip from a medical marijuana dispensary owner regarding Rush’s activities.       

A federal grand jury indicted Rush on September 17, 2015.  He was charged with 15 felony counts, including one Taft-Hartley violation under 29 U.S.C. § 186(b)(1); ten counts of honest services fraud, in violation of 18 U.S.C. §§ 1341, 1343, and 1346; attempted extortion under color of law, in violation of 18 U.S.C. § 1951; conspiracy, in violation of 18 U.S.C. § 371; and money laundering by concealment, in violation of 18 U.S.C. § 1956(a)(1)(B)(ii).  Under the plea agreement, Rush pleaded guilty to the Taft-Hartley violation, one count of honest services fraud, and one count of conspiracy to commit structuring and money laundering.

For his part in the scheme, on February 15, 2017, TerBeek was charged by information with one count of making a payment to a union employee, in violation of 29 U.S.C. § 186(a), and one count of willful violation of anti-structuring regulations, in violation of 12 U.S.C. § 1956.  He pleaded guilty to both counts on February 16, 2017.  TerBeek is scheduled to be sentenced by Judge Gilliam on August 21, 2017.

Rush is currently on release on a $100,000 bond.  Judge Gilliam scheduled his sentencing hearing for October 2, 2017.  The maximum statutory penalty for the Taft-Hartley violation is 5 years’ imprisonment and a $15,000 fine; the maximum statutory penalty for the honest services fraud count is 20 years’ imprisonment and a $250,000 fine; and the maximum statutory penalty for the conspiracy is 5 years’ imprisonment and a $250,000 fine.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The prosecution is the result of an investigation by the FBI and the Internal Revenue Service-Criminal Investigation Division.
 

Topic(s): 
Financial Fraud
Labor & Employment
Updated June 27, 2017