Transit Union "Relieved" Embezzlement Case Is Over; W/UPDATE

An embezzlement case that cost a local labor union more than a quarter-million dollars shows that the organization has a "zero tolerance" policy for corruption, its officials said.

“We’re relieved that the legal process is over and happy that justice has been served,” Bob Bean, president of the Amalgamated Transit Union's Local 1433, told New Times in a written response to our request this morning for comment. "We are glad to close this dark chapter on our union."

As our article this morning related, one of the union's former top officials, Richard Wayne Johnson, pleaded guilty on Tuesday to charges of embezzling from a labor union, fraud, and forgery. He faces up to 16 years in prison when he's sentenced in August.

The Valley's bus, para-transit and light-rail operators are among those represented by the Local 1433, which was chartered in 1948 as part of the 190,000-member national ATU.

Johnson was a trusted officer of the local union from 2005 until his scheme was uncovered prior to his January 2012 resignation. Abusing the union's debit card frequently, he made tens of thousands of dollars in purchases, ranging from groceries to a $5,000 home sound system. He also cut checks to family members, ultimately siphoning about $273,000 from Local 1433's accounts.

Bean emphasized "that it was the local Union itself that discovered the stolen funds and disclosed the theft to the U.S. Attorney’s Office... We thank the prosecutor and investigators who rooted this out on behalf of all our members."

The plea deal requires Johnson to repay the money he stole, though it's unclear if he'll ever have the means to do so.

"We strongly condemn these corrupt actions and abuse of power,” ATU International President Larry Hanley added to the statement. “ATU has a zero-tolerance policy with regard to financial malfeasance and any illegal activity by its officers.”

The union said it was "asked not to comment" publicly on the case until now.

UPDATE: Not quite satisfied, (are we ever?), we asked the union to expound just a bit more about the impact of this crime.

Michael Cornelius, Local 1433's new secretary/treasurer, then made some additional comments for this article:

"Clearly he took advantage of our Local. We had been engrossed in a rather huge and public battle with Veolia (now doing business as Transdev). We believe that he took advantage of that distraction to abuse his position. As a result, our members have spent three years not certain who to trust. These types of crimes are terrible in that our primary job is to protect the interests of our members and he violated that trust. It has taken several years to build trust back. We have strengthened our internal controls, hired a new accounting firm and put into place policies that should prevent this from ever happening again. I will personally address the court and Mr. Johnson himself at his sentencing and offer an impact statement. I fully support that he serve the maximum allowable sentence under the law...

"On a personal note, the last three years have been terrible. Like any group, we have members who have refused to believe that our current President and myself had nothing to do with this. They have refused to believe facts. We would never have been allowed to maintain our positions had we had anything to do with it, and I personally was not even on the accounts when it happened. This was a well thought out scheme to steal. It was successful for a short amount of time, until myself and a President Bean uncovered it, reported it and followed through.

"I feel a great sense of pride to report that our local is on the path to full recovery."

UPDATE: Chuck Weigand, a former Local 1433 members and former secretary/treasurer for the organization in 1997, contacted New Times after this article ran to give us some more information. And vent his frustrations at the union. 

We won't get into all of his complaints, which Weigand assures us would require a book-length writing project to explain. But he did expound on some details we saw in Channel 5 News' 2012 article about the discovery of the embezzlement:

Weigand claims he'd been pushing for an audit of the Local 1433's books since 2005. The local union office pulls in about $200,000 a year, he says, (although New Times could not verify the figure.) He says he "constantly" called Department of Labor representative Tom Hayes demanded an audit. Finally, he claims, one was scheduled in 2011.

"When Bean told Johnson of the audit, a fire broke out in the union hall," Weigand says. "The audit was put on hold because Johnson told the (Labor Department) that the records had been destroyed."

Weigand didn't appreciate Cornelius' sentence above that says, "we have members who have refused to believe" Bean and Cornelius had nothing to do with the embezzlement. He doesn't know if they had anything to do with it, but argues they should have known about it sooner. He also says that Johnson shouldn't have been allowed to resign before an audit was completed.

We put those complaints to Cornelius, who sent the following detailed reply:

"I can tell you that Mr. Weigand was banned from membership many years ago, has no direct knowledge of what has transpired and has a rather huge ax to grind, which is why recently the NLRB issued a statement stating that they have investigated many of his claims made against us and found no violations. I would not count him as a credible source.

"As to his claims:

"1. It was the Union, namely Bob Bean and myself that uncovered it and contacted the authorities. Of course we also sent emails to our attorney, International and the DOL investigator. Almost all of our communications shortly after we uncovered it were in writing (via email) and not in dispute by anyone except him (Weigand). It may be important to point out that he was the oppositions “campaign manager” in our recent officer elections and has made slanderous claims publicly on a website that has since been taken down. The investigation was started by us, if he refuses to believe that and wishes to continue his public slander, then he may be the recipient of a law suit.

"2. One cannot prevent someone else from resigning. Absent putting a gun to his head, I am not sure how Mr. Weigand would have proposed that we prevent Mr. Johnson from resigning. If Mr. Weigand was paying attention, he would know that we immediately contracted a new accounting firm and immediately ordered an had an audit conducted. These are provable facts. Mr. Weigand has spent the better part of a decade trying to disband our Union under the false pretense that he actually is trying to help."

Looks like part of this story involves a mud bog of internal union politics.

UPDATE June 8: The Arizona Republic runs an article about the embezzlement. It contained a couple of details we didn't have, like the fact that Johnson and his wife have declared Chapter 7 bankruptcy.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.