LAWFUEL – The Law News Network – Federal and state charges have been filed against two former heads of prominent labor organizations in connection with a scheme to embezzle money from Service Employees International Union Local 99 to help finance the successful Los Angeles City Council campaign of one of the defendants, United States Attorney Debra Wong Yang and Los Angeles County District Attorney Steve Cooley announced today.
The charges, brought in separate cases filed in federal and state courts, result from federal, state and local investigations into the City Council campaign of Martin Ludlow, who was elected to the City Council in 2003 and resigned last year to head the Los Angeles County Federation of Labor. Ludlow resigned that post late last month, citing the investigations.
The federal charges involve the use of union funds to pay expenses for Ludlow’s political campaign. The state charges stem from violations of campaign laws.
Ludlow and Janett Humphries, former Local 99 president, were charged in both jurisdictions. The state case against Ludlow and Humphries was filed today. Humphries, 63, is scheduled to appear after 1:30 p.m. today for arraignment in Division 30, Los Angeles Superior Court, 210 W. Temple St. Ludlow, 41, is to appear on Monday in the same court. Both defendants were charged with one count of conspiracy to exceed the $500 campaign contribution limit, a felony. Humphries was charged with a second felony count of conspiracy to conceal campaign contributions.
Ludlow was charged with two additional misdemeanor counts of violating campaign laws.
The United States Attorney’s office this morning filed charges and a related plea agreement in federal Court in which Ludlow agreed to plead guilty to a felony charge of conspiring to violate federal labor laws that outlaw embezzling from a labor organization.
Humphries was indicted by a federal grand jury today for her alleged role in the scheme to embezzle union funds and her alleged efforts to cover up the illegal activity. The 18-count indictment charges Humphries with one count of conspiracy and 17 substantive counts of embezzling union funds to pay Ludlow’s campaign workers and his cell phone bills, as well as to finance lavish travel for Humphries, her friends and family.
Humphries was ousted from her leadership post in Local 99 when SIEU International took over the union in 2004.
In 2002, Ludlow was part of a hotly contested race to fill the 10th District seat on the Los Angeles City Council. According to court documents, Ludlow went to his friend Humphries, who at the time was president of SEIU Local 99, for help in the campaign. The two allegedly developed a plan to funnel money into Ludlow’s campaign by placing campaign workers on the union’s payroll. The campaign workers allegedly were paid more than $30,000 in salary and benefits.
Local elections laws place a $500 limit on campaign contributions, making the alleged surreptitious payments Illegal. The paying of the Ludlow campaign workers allegedly also amounted to an embezzlement of the union’s money, as neither the union’s Board of Trustees nor Executive Board approved the expenditures.
When the unlawful payments came to light shortly after the primary election, Ludlow and Humphries allegedly tried to cover them up. The two defendants allegedly fabricated documents, altered union records and had two of the campaign employees create bogus work product to make it appear that they had actually performed work for the Union.
Ludlow has agreed to plead guilty to one count of conspiracy to violate the Labor Management Reporting and Disclosure Act, which makes it a crime for an officer of a labor organization – in this case, Humphries – to embezzle union funds. Ludlow is expected to be arraigned on the charges on March 27.
The plea agreement does not contemplate jail time for Ludlow, but a federal judge will make the final determination if jail is appropriate. The plea agreement does include a provision that bars Ludlow from working with any labor organization for 13 years. It also requires him to pay $36,492 in restitution to the union.
Gordon S. Heddell, Inspector General, United States Department of Labor, stated: “Using union funds to illegally aid a political campaign represents a betrayal of union members’ trust and weakens the public trust. This indictment and plea agreement highlights my office’s determination to investigate corrupt entities who misappropriate union coffers for personal gain. We will continue to work with other law enforcement agencies and DOL agencies to safeguard union employee benefits.”
John Heaney, regional director of the U.S. Department of Labor’s Office of Labor-Management Standards, said: “This investigation reflects OLMS’ commitment to safeguard union assets by ensuring that members’ hard-earned dues are spent for properly authorized, union-related purposes. These officials will be held accountable for their actions.”
Humphries is scheduled to be arraigned on the federal indictment on March 20. If she is convicted, Humphries faces a maximum possible sentence of five years in federal prison for each of the 18 counts.
An indictment or a complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The cases against Ludlow and Humphries were investigated by the Department of Labor and the Los Angeles County District Attorney’s Bureau of Investigation after the City Ethics Commission referred a case to the District Attorney’s Public Integrity Division. The City Ethics Commission’s findings on its investigation into Ludlow are expected to be announced at a later date.
CONTACT: Assistant United States Attorney Craig H. Missakian
Public Corruption and Civil Rights Section