The former chauffeur for the Washington Teachers' Union has agreed to plead guilty to a federal conspiracy charge and cooperate with authorities investigating the alleged theft of millions of dollars in union money, sources familiar with the case said yesterday.
Leroy Holmes, 52, the only person charged so far in the scandal, is scheduled to appear today in U.S. District Court in Washington. The sources said they expect him to plead guilty to a charge of conspiracy to launder proceeds of an unlawful activity, which could carry up to a 20-year prison term and $500,000 fine. But according to terms of the agreement struck with prosecutors, the judge would consider his cooperation at sentencing, and Holmes could get a much lesser term, the sources said.
Holmes helped channel union money to then-union President Barbara A. Bullock, Bullock's executive assistant Gwendolyn M. Hemphill and others, according to an FBI affidavit. In charging papers filed against him last week, prosecutors said he conspired with former union officials to steal millions of dollars and cover up activities.
His cooperation -- which could include testifying before a grand jury or during a trial -- could be valuable to the government, which is preparing to charge more people in the scandal, possibly in coming weeks, sources said.
Federal investigators said Holmes was paid $90,000 a year as Bullock's driver. They maintain in court documents that he received an inflated salary because of his part in the alleged conspiracy. His pay was nearly four times the average for taxi drivers and chauffeurs in the Washington area, based on surveys by the federal Bureau of Labor Statistics.
Law enforcement sources said investigators have been talking with Holmes for weeks. He also is quoted at length in an audit released last month by the union's parent organization, the American Federation of Teachers. Holmes, who has declined to comment on the investigation, did not return a telephone message seeking comment yesterday. His attorney, Louis Martucci, also did not return phone calls.
The charge against Holmes was filed Jan. 27 in a document known as a criminal information, which can be filed only with the consent of the defendant, who waives a grand jury review of the evidence. Such a filing often is a signal that a defendant intends to plead guilty. A docket entry at the courthouse describes his appearance today before Judge Richard J. Leon as a "plea."
Holmes is described in charging documents, an FBI affidavit and the AFT audit as a pivotal figure.
The FBI affidavit, filed in December, said that Bullock, Hemphill, then-Treasurer James O. Baxter II and others misspent "well in excess" of $2 million in union money. The AFT's audit estimated that more than $5 million was misappropriated over the past seven years.
In recent months, the FBI, Internal Revenue Service and other agencies have been attempting to track where the money went, turning up instances in which the union leaders allegedly used union credit cards to buy expensive clothing, electronic equipment, artwork and other costly items. Many of those items were seized in raids in December.
Besides tracking credit card purchases, authorities have been investigating other ways in which union funds might have been diverted. In the charging documents filed against Holmes, prosecutors said the union's president, executive assistant and treasurer would write union checks to Holmes for several thousand dollars at a time, eventually exceeding $1 million.
Holmes would cash the checks, keeping some of the money and giving the rest to union officials, the court filing said. It alleged that Holmes deposited some of the money in Bullock's personal account.
Holmes also transported Bullock and others for "spending sprees" using union money and credit cards, according to the prosecutor's charging document. Holmes "made pick-ups and deliveries of clothing, art, and other items obtained unlawfully using union funds," the document alleges. The 5,000-member union not only paid his salary, the document says, but its money also helped him buy a Cadillac.
Channing D. Phillips, a spokesman for the U.S. attorney's office, declined to comment on the most recent developments.
Bullock, Hemphill and Baxter left the union last fall after questions arose about union finances. Bullock and Baxter have declined to discuss the case. Hemphill's attorney said she has cooperated by answering investigators' questions.