Boilermakers Union Leaders Convicted of RICO, Embezzling Millions in Dues

A federal jury convicted four former Boilermakers Union officials of racketeering and embezzlement. The scheme drained millions in member dues over 15 years.

Federal Jury Finds Four Former Boilermakers Officials Guilty in $7M Dues Theft Scheme

A federal jury has convicted four former leaders of the International Brotherhood of Boilermakers, Iron Ship Builders, Forgers, and Helpers of racketeering, fraud, and embezzlement, DOJ Justice News reports. The scheme, which spanned 15 years, involved no-show jobs, lavish international travel, unauthorized salary payments to family members, and a $7 million loan made to a union-affiliated bank without member authorization.

Newton Jones, 72, of Chapel Hill, North Carolina — the union's former president — his wife Kateryna Jones, 33, also of Chapel Hill, and former Secretary-Treasurer William Creeden, 78, of Kearney, Missouri, were each convicted of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act. All three, along with former Vice President Lawrence McManamon, 78, of Rocky River, Ohio, were also convicted on embezzlement counts.

No-Show Salary, Date Night Dinners, and Family Payouts

Trial evidence showed that Newton Jones hired his wife Kateryna for a union position in which she performed little to no work, collecting nearly $1.8 million in salary over nine years. The couple also charged more than $160,000 in meals at Chapel Hill restaurants to the union — described at trial as "date night" dinners.

Jones and Creeden additionally embezzled hundreds of thousands of dollars in salary and benefits for three of Jones' family members, and improperly paid out hundreds of thousands more in unearned vacation time.

The defendants also used union funds to finance international executive meetings at luxury hotels in Paris and Rome, described at trial as serving no apparent purpose beyond personal benefit.

Double Salaries at the Bank of Labor

Jones and Creeden used their senior positions at the union to secure executive roles at the Bank of Labor, an institution in which the Boilermakers Union holds a majority stake. While purportedly working full-time at the union, both men collected a separate full-time salary from the bank. Combined, the two received nearly $4 million in bank salary and $1.4 million in bank retirement benefits, according to trial evidence.

Prosecutors and Investigators React

"The Boilermakers Union members were supposed to get representation out of their hard-earned money used to pay union dues," said Assistant Attorney General A. Tysen Duva of the Justice Department's Criminal Division. "What they got instead is their money wasted on lavish trips and dinners, and unearned vacation payouts for the union leadership."

U.S. Attorney Ryan A. Kriegshauser for the District of Kansas called the conduct "disgraceful," adding that the defendants "thought they were unaccountable and were callously gallivanting on extravagant trips that spared no expense."

FBI Kansas City Special Agent in Charge Chris Omerod said the trial evidence "demonstrated an elaborate and willful deceit of the Boilermakers Union to fund the lavish lifestyle of their former leaders."

Department of Labor Office of Labor-Management Standards Director Elisabeth Messenger noted that the convictions "serve as a strong warning to those who abuse their responsibilities," and pointed to new DOL reporting requirements for large unions as a step toward protecting financial integrity.

DOL Employee Benefits Security Administration Assistant Secretary Daniel Aronowitz said EBSA would continue to pursue those who "engage in criminal schemes to defraud private sector benefit plans," emphasizing that Boilermakers officials had "put their own interests first and misused funds entrusted to them."

Sentencing Set for September

Sentencing is scheduled for September 1. McManamon faces a maximum of five years in prison on each count. Jones, Creeden, and Kateryna Jones each face a maximum of 20 years per count. A federal district court judge will set final sentences after consulting U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the Department of Labor and the FBI. Prosecution was handled by Senior Litigation Counsel Vincent Falvo and Trial Attorney Alexandra Swain of the Criminal Division's Violent Crime and Racketeering Section, along with Assistant U.S. Attorneys Faiza Alhambra and Jabari Wamble for the District of Kansas.

Source: DOJ Justice News