Union Vice President Enriches Himself Through Teamster Benefit Plan
Unions claim to benefit their workers, but many are victims of compulsory unionism, forced to pay dues in order to get or keep a job. When union officials take these dues for their own enrichment, especially from an employee benefit plan, rank and file members are robbed a second time.
On December 12, 2019, in the United States District Court for the Southern District of New York, John Ulrich, former Vice-President and Recording Secretary of Teamsters Local 812 (located in Great Neck, N.Y.), pleaded guilty to one count of conspiracy to solicit and receive bribes to influence the operation of an employee benefit plan, in violation of 18 U.S.C. 371. The guilty plea follows an investigation by the OLMS New York District Office, the Department of Laborâ€™s Inspector General, the Employee Benefits Security Administration, and the Federal Bureau of Investigation.
U.S. Attorney Geoffrey S. Berman said: â€œAs alleged, John Ulrich abused his position as the vice president of a labor union and trustee for its health plan by selling his influence to the Unionâ€™s health care administrator. As part of this alleged scheme, Ulrich betrayed the trust of the Union members who elected him in order to line his pockets with bribe money. This Office is committed to prosecuting those who abuse their positions of trust for their own financial benefit.â€
FBI Assistant Director William F. Sweeny Jr. said: â€œInstead of advocating for the best possible benefit programs for the union members he represented, Ulrich allegedly entered into a quid-pro-quo arrangement that served to advance his needs and the needs of the Planâ€™s third-party administrator. In his official role, he was charged with protecting the interests of his fellow union employees, but as we allege today, this trustee couldnâ€™t be trusted.â€
DOL-EBSA New York Regional Director Darren Cohen said: â€œTrustees of union sponsored health benefit plans have a fiduciary obligation to perform their duties solely in the interests of union members and plan participants. In this case, the plan trustee allegedly abdicated this responsibility in order to serve his own interest.â€
The Union has more than approximately 3,000 members, and represents workers in the beverage industry throughout the New York metropolitan area. The Unionâ€™s members are covered by the Plan, which provides, among other things, life insurance, health insurance, dental, vision, and disability benefits to Union members and their families. As the Planâ€™s third-party administrator, TPA-1 processed health insurance claims for participants in the Plan. At all times relevant to the Indictment, ULRICH was a member and officer of the Union and a trustee of the Plan.
In or about 2013, Ulrich was experiencing financial difficulties, and solicited bribe payments from an executive with TPA-1 (â€œExecutive-1â€) of $5,000 per quarter in exchange for using his influence to maintain TPA-1 as the Planâ€™s third-party administrator. Before Ulrich solicited these bribes, the Plan had issued a request for proposals for a new third-party administrator, and TPA-1 was at risk of losing the Planâ€™s business. Ulrich told Executive-1 that Ulrich would use his influence with the Union to ensure that the Plan continued to use TPA-1 to administer the Unionâ€™s health care plan. Executive-1 agreed to make $5,000 quarterly payments to Ulrich, and began doing so. Subsequently, despite receiving multiple bids from other third-party administrators, the Plan then continued to work with TPA-
In or about 2014, Ulrich demanded increased bribe payments from Executive-1. In part, Ulrich told Executive-1 that these increased bribe payments were needed for another trustee of the Plan, and Executive-1 began making such increased payments. On or about September 19, 2015, Ulrich again solicited additional bribe payments for this trustee.
After a special board meeting convened by the Plan in February 2016, Ulrich was terminated as vice president and trustee of the Union and Plan, respectively. In total, Ulrich demanded, and Executive-1 paid, tens of thousands in bribes before Ulrich was removed from office.