May 6, 1999
6 Former Union Officials Charged in
Theft of Funds
Forum
Join a Discussion on Unions and the Labor
Movement
By STEVEN GREENHOUSE
rosecutors Wednesday announced the indictments of six
former officials of a large New York City union local, who
are accused of stealing $2.7 million in union money, including
$78,000 that was used for Super Bowl tickets.
District Attorney Robert M. Morgenthau of Manhattan said that
Charles Hughes, former president of the local representing
school crossing guards and cafeteria workers, was accused of
stealing more than $2 million.
The indictment charges Hughes -- not long ago one of the city's
most prominent and powerful labor leaders -- with running up
$340,000 in personal charges, including some at Victoria's
Secret, with his union credit card. Among other accusations,
Hughes is charged with paying $97,000 to friends in Georgia
who had no-show jobs and with embezzling $100,000 to pay for
a trip for himself and 14 friends and relatives to Egypt, Israel,
Prague, Paris and London.
The indictments were the most sweeping charges brought in
Morgenthau's far-reaching investigation of District Council 37,
the umbrella union representing nearly 125,000 city workers
and 56 locals, including the one Hughes headed until a union
judicial panel expelled him last year.
Hughes, who faces up to 25 years in prison, pleaded not guilty
Wednesday in State Supreme Court in Manhattan. His lawyer,
Gerald Shargel, declined to discuss the case, but has previously
argued that the money could not be considered stolen because
his union's board had approved all of the spending.
Morgenthau announced indictments of five other former officials
of Local 372 of the American Federation of State, County and
Municipal Employees. They included Hughes's son, Martin, a
union vice president charged with stealing $350,000, and
son-in-law, James Rose, a former editor of the local's
newspaper accused of embezzling more than $150,000.
Martin Hughes, Rose, and two other officials -- Joseph Alfano
and Richard Louis -- were charged with conspiring to defraud
Local 372 of more than $670,000 by charging personal items to
union credit cards. Those charges, the indictment said,
included the Super Bowl tickets, $5,250 for tickets to the
N.C.A.A.'s 1996 Final Four tournament, and $2,200 at a topless
club in May 1997.
"These defendants treated the Local 372 treasury as their own
private candy store," Morgenthau said. "Funds contributed by
hard-working municipal employees were looted for the
defendants' personal benefit to support a life style no union
member could afford."
Morgenthau said it was especially appalling that the union's
leaders engaged in such extravagant spending when the local's
members earn only $10,000 to $20,000 a year and have to pay
high union dues, usually $910 a year.
Morgenthau also said that Hughes's profligacy had forced the
25,000-member local into $10 million in debt even though it
collected $19 million a year in dues. Asserting that other money
was missing, the prosecutor said he was continuing to
investigate the local, including its relationships with vendors.
The indictment also charged Hughes with stealing $700,000 in
unearned back overtime pay and $163,000 in petty cash for
which no documentation was given. He was also accused with
wrongly receiving $590,000 in unauthorized payments for
attending the local's board meetings.
Last year Shargel asserted that Hughes had requested these
payments, that they had been approved and and that he had
then accepted the money, all without criminal intent. Shargel
also maintains that Hughes suffered from bipolar disorder,
which impaired his judgment and prevented him from having the
necessary criminal intent to be considered guilty.
But prosecutors said that the large payments to Hughes were
never properly approved and that Hughes and the local's former
treasurer, Mildred Stephens, falsified records to show that the
payments had been approved.
Ms. Stephens was indicted on charges of falsifying records and
assisting Hughes's stealing. She pleaded not guilty, and her
lawyer, Trevor Headley, said, "The allegations against her are
unfounded."
Hughes, who headed the local for 27 years, was once known as
a progressive leader who obtained for his members some of
the best benefits in the nation, including health insurance for
part-time workers. But union leaders say his behavior changed
sharply several years ago when he started driving BMW's and
taking trips abroad.
In 1997, Hughes was so close to Mayor Rudolph W. Giuliani that
he held a fund-raiser at his house for the Mayor's re-election and
appeared in a television commercial supporting him.
At a news conference Wednesday, Giuliani had kind words for
Hughes.
"He's a very religious man, he's a very nice man," Giuliani said,
adding that he found it hard to believe that Hughes would do
anything dishonest.
Alfano pleaded not guilty, and his lawyer, Morton Katz, would
say only that he would defend the matter in court. The
arraignments of Martin Hughes, Rose and Louis were
postponed to Monday because they did not yet have lawyers.
Speaking on behalf of Hughes's son and son-in law, Shargel
said they were not guilty. Louis could not be reached for
comment.
Copyright 1999 The New York Times Company
