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Audit Says Union Lost $5 Million To Theft

Teachers Group Sues Eight From D.C. Local

By Justin Blum
Washington Post Staff Writer
Friday, January 17, 2003; Page A01

An audit released last night alleges that more than $5 million was looted from the Washington Teachers' Union over the last seven years by union officials and others, an amount far greater than previous estimates of improper spending.

The audit, prepared by a private firm at the request of the union's parent, the American Federation of Teachers, said three former union officers -- president Barbara A. Bullock, her assistant Gwendolyn M. Hemphill and treasurer James O. Baxter II -- diverted the money to themselves, their relatives and others for personal benefit.

Barbara A. Bullock, former president of the Washington Teachers' Union, is being sued by the parent union. (File Photo)

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The report said that because many records are still missing, the total amount of money found to have been misappropriated is likely to grow "and this increase could be substantial."

The AFT also filed a civil suit in U.S. District Court yesterday against Bullock, Hemphill, Baxter and five others, seeking to recoup the missing funds and other damages.

"The massive misappropriation of union funds and the betrayal of the members that are outlined in our audit are reprehensible and sickening," the president of the national union, Sandra Feldman, said in a statement. "The individuals responsible must be held accountable, and the AFT will do everything in its power to see that these funds are returned to the WTU and its members."

In an affidavit filed last month in a criminal investigation, the FBI said that more than $2 million in union money was misspent, much of it on luxury items such as furs, art, jewelry, silver and custom-made clothes.

The AFT's audit and lawsuit mention such purchases but also provide far more details of the alleged scheme. Forensic auditors said they uncovered a long trail of altered checks, evidence of forged signatures and an operation geared to converting checks to cash. The documents also provided a breakdown of how much each participant in the alleged fraud received.

Bullock, who was elected union president in 1994, made unauthorized and personal charges of at least $1.8 million to the union's corporate American Express cards and used an additional $381,000 for her personal benefit by writing checks to herself or others, the lawsuit said.

The suit alleged that Hemphill diverted at least $492,000 through unauthorized credit card charges or checks written to herself. Baxter is accused of diverting at least $537,000 to his personal use by making credit card purchases for art, clothing, theater and sporting tickets and other items, and by writing checks to himself, including some designated as "pension payments."

In addition, Bullock's chauffeur, Leroy Holmes, allegedly received more than 200 checks totaling more than $1.2 million from Hemphill. He cashed the checks, sometimes depositing the funds in Bullock's account and sometimes providing proceeds to Hemphill, who returned a portion to him, the audit said. It said Holmes believed that his 2001 salary as a chauffeur was $105,000, an amount higher than the salary of any other union employee besides Bullock.

Some of the checks Holmes cashed had been altered, with the name of the original payee -- such as Verizon or the D.C. treasurer -- crossed out and his name written in, the audit said. On one occasion, Holmes cashed a check for $20,000 and stuffed the cash in his pocket before returning to union offices, the audit said.

The others who allegedly benefited from the scheme and are named as defendants in the lawsuit are Hemphill's daughter, Cheryl Martin, and son-in-law, Michael Martin; Bullock's sister, Gwendolyn B. Clark; and Errol Alderman, a business associate of Michael Martin's.

Hemphill, Baxter, Holmes and the Martins declined to comment yesterday. Bullock, Alderman and Clark did not return phone calls.

The audit, prepared by Klausner, Dubinsky and Associates, was released as the parent union was considering placing the 5,000-member Washington Teachers' Union in an "administratorship," which would dissolve local leadership for as long as 18 months. A two-member panel appointed by the AFT held a hearing yesterday with members of the local union's executive board. Next week, the AFT governing board could vote on a takeover.

Esther S. Hankerson, who served as general vice president under Bullock and now is interim president, said in a statement yesterday that she supports a takeover. "An AFT administratorship will provide the resources, strength and guidance needed to begin to repair the damage and set us right," she said.

The parent union began the audit after a member of the local union complained about a dues overcharge last summer. After the AFT discovered a number of questionable transactions, Bullock, Hemphill and Baxter left their posts and the AFT referred the case to the U.S. attorney. No charges have been filed in the criminal investigation.

The alleged misspending went on for years with little oversight from either the parent union or the local union's governing board. The local union was required to conduct an audit every two years, according to the national union's rules, but the last audit it completed was in 1995.

Bullock and other leaders were supposed to provide regular financial reports to the union's members but rarely did so, according to sources familiar with union operations. When Baxter gave such reports, they were filled with false information and did not indicate any problems, the sources said.

Meanwhile, union rent and telephone bills often went unpaid, and teachers said the union failed to provide them with the type of services they expected. Some said Bullock refused to help pay legal bills to defend teachers who alleged they had been improperly terminated or mistreated by the school system.

Hankerson and members of the union's governing board have said they were unaware that money was being misspent.

Among the improper expenditures were political contributions, according to the audit. In 2000, Bullock contributed $9,000 to the Democratic National Committee and $2,000 to Hillary Rodham Clinton's U.S. Senate campaign and charged the payments to the union's American Express account, the audit said, adding that those funds have since been returned to the AFT.

The city's Office of Campaign Finance this week began investigating whether Mayor Anthony A. Williams's reelection campaign failed to report in-kind contributions from the union. The mayor and his staff have denied any wrongdoing.

The audit also cited "large payments to and improper health insurance premium payments of approximately $55,000 for attorney Curtis Lewis, Baxter's brother and legal counsel to the [local union], and another attorney in Lewis's law firm." Lewis has said that several employees of his firm were covered by the union's insurance policy but that his firm paid for that coverage.

Janise Mead, a sixth-grade reading teacher at Backus Middle School and a union member, said she was appalled at the new figures listed in the audit and supported the AFT takeover of the local union.

"Somebody's got to clean up the act," she said, "though I'm not sure I trust anybody now."

Staff writers Petula Dvorak, Valerie Strauss, Craig Timberg and Clarence Williams contributed to this report.

© 2003 The Washington Post Company
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