This is an AFFT exclusive investigation into how a New York union siphoned hundreds of thousands of dollars of union members’ money away from a health benefit fund. Benefit funds are way for an employer, in this case New York City, to hand off the administration of some employee benefits. Employees will receive their benefits regardless of their union membership status.
The union official who was charged with siphoning money out of an employee benefit fund to pay for a second home, car, clothing, and a trip to watch football games in Texas, managed to allegedly transfer hundreds of thousands of dollars out of the fund for years before city officials finally caught on, documents obtained in a recent freedom of information request reveal.
Kenneth Wynder, president of the Law Enforcement Employees Benevolent Association (LEEBA), was arrested for fraud after an FBI investigation uncovered transfers of hundreds of thousands of dollars of union funds to Wynder and the union’s treasurer, Steven Whittick, starting as early as 2012. Wynder is out on bail awaiting trial.
In July, Whittick, who was also a police officer for the New York City Department of Environmental Protection, pled guilty to tax evasion and to lying to federal investigators. Whittick admitted to taking more than $100,000 in off-the-books payments, and said he helped Wynder take over $400,000. He will be sentenced in November.
In response to a recent freedom of information request, New York City turned over several documents related to Wynder’s oversight of the benefit fund. Wynder was both the president of LEEBA and the fund administrator for the benefit fund, a troubling conflict of interest that reveals a gap in oversight by city bureaucrats.
As Wynder realized the FBI was closing in on him, he sent a series of frantic letters to LEEBA members and city officials.
Unions Failed To File Timely Audit Reports
The city contracted with LEEBA in 2007 to oversee the administration of some employee benefits, including prescription, life insurance, vision, dental, and annuities. Union officials were supposed to provide the city with an audit of the benefit fund on a yearly basis, but they did not file an annual report until 2017.
City employees in the bargaining units represented by LEEBA – which included police officers for the Department of Transportation, the Department of Environmental Protection, and the Sanitation Department – were left scrambling when the city stopped making payments to the union in September 2018, and the benefit funds quickly dried up. This left employees without prescription and other benefits, until the city stepped in to fill the gap in December 2018.
In a July 31, 2018 letter from Alaina Gilligo, first deputy comptroller in New York City, to Robert Linn, commissioner of the Office of Labor Relations (OLR), she said the union’s failure to file audit reports “effectively eliminates its public accountability for that money and leaves it at risk.”
“Despite LEEBA’s receipt of City benefit-contributions dating back to 2007, LEEBA never filed the annual reports required by Directive 12 and its CBAs until 2017,” she wrote (italics in original).
There is no indication why city administrators failed to enforce the audit requirement for years, or why they didn’t act immediately when auditors found red flags.
“Further, LEEBA’s own independent auditors noted in those filings that LEEBA had not properly segregated its union and welfare fund deposits or the respective administrative expense payments of each entity before 2016 and that steps were in progress to bring the LEEBA funds into compliance,” she wrote.
The city alerted Wynder in a letter dated September 25, 2018, that it would start to place benefit funds in an escrow account because the union had failed to provide an audit report, as required. Wynder wrote the city back on October 25, 2018, saying by stopping the payments the city was putting employee benefits at risk.
In a December 18, 2018 letter from OLR Commissioner Linn to employees represented by LEEBA, he told them the city put money for their benefits in an escrow account instead of turning the money over to the union because the union had not turned in the required audit reports.
“The city has contributed $1,755,897.32 into the LEEBA welfare fund since July 1, 2017, which is meant for the sole purpose of providing these ancillary benefits to union members and retirees,” Linn wrote. “Any well-run fund of this type should have sufficient reserves to continue providing benefits. Any questions as to why this is not the case for the LEEBA funds should be directed to Kenneth Wynder at [phone number].”
Shortly after sending this letter, the city added prescription drug benefits to the employees’ existing healthcare plans. Then in 2019, the city placed employees on the city’s managerial benefits plan, which included access to all of the benefits they previously had through the union.
LEEBA Members File Class-Action Lawsuit Against Union Leader
After the city stopped making benefit payments to the union, Wynder started sending angry letters to the Office of Labor Relations and to LEEBA members.
In an undated letter from Wynder to LEEBA members, he alleged that the city was taking benefit funds to “cause you as much harm as they can in order to turn you against your union and prevent LEEBA from achieving the raises you deserve….”
The letter also addressed the FBI’s investigation of Wynder, which started in early 2018.
“They cannot control LEEBA so they reached out to the FBI,” Wynder wrote. “Whenever a Black organization or Black Leader is trying to change a system that discriminates against minorities and women the FBI is always called in…. A dead man has a better chance of innocence before a Black man when it comes to the FBI and when that doesn’t work, history has shown their targets wind up dead [sic].”
“Without LEEBA there would be no one coming for you to help you,” he wrote.
After the George Floyd video was released, Wynder wrote another message to the city’s Office of Labor Relations alleging that the office took the actions it did against the union because of racism.
“We will no longer tolerate your racist systemic organization, and until OLR agrees to treat this Black owned and operated union justly and equally has you do your other white similar- situated owned and operated unions, LEEBA refuses to negotiate with this organization until it hires Black negotiators, Black arbitrators, Black hearing administrative judge and hires Black employees to hold titles of power within OLR to properly reflect the Black employees of the City of New York [sic],” he wrote in the message dated June 15, 2020.
““WE CAN’T BREATHE.” We have had enough, and we will bring this fight to your doorstep,” he wrote.
Wynder also faces a class action lawsuit filed by LEEBA members, who allege Wynder spent union money frivolously, that he did not hold regular elections, and that he changed the union’s bylaws without membership approval. It also accuses him of agreeing to contracts with the city without membership approval.
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