KANSAS CITY, Kan. — A federal jury convicted four former leaders of the International Brotherhood of Boilermakers, Iron Ship Builders, Forgers, and Helpers of racketeering, fraud, and embezzlement in a scheme that drained millions of dollars in union-member dues through no-show jobs, luxury international travel, unearned vacation payouts, and an unauthorized $7 million loan to a union-related bank.
Newton Jones, 72, of Chapel Hill, N.C., the union’s former president, his wife Kateryna Jones, 33, also of Chapel Hill, and former Secretary Treasurer William Creeden, 78, of Kearney, Mo., were convicted of violating the Racketeer Influenced and Corrupt Organizations Act. Former Vice President Lawrence McManamon, 78, of Rocky River, Ohio, was convicted of embezzlement. Over a 15-year period, the defendants embezzled more than $5 million in unnecessary luxury international travel, nearly $2 million in salary and benefits for no-show jobs, over $100,000 in tuition, rent, and relocation expenses for Newton Jones’s family members, hundreds of thousands of dollars in fraudulent vacation payouts, and over $100,000 in restaurant charges.
“The Boilermakers Union members were supposed to get representation out of their hard-earned money used to pay union dues,” said Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division. “What they got instead is their money wasted on lavish trips and dinners, and unearned vacation payouts for the union leadership. Union dues must be handled with care and used for the benefit of the dues paying members. Union leadership that steals from the American worker will face prosecution, conviction, and prison time.”
Trial evidence showed Newton Jones hired his wife Kateryna for a job in which she performed little to no work and received nearly $1.8 million in salary over nine years — including two years of salary while she resided in Ukraine and was dating Newton Jones. The couple also embezzled over $160,000 for date-night meals in Chapel Hill and spent millions on lavish international travel, including executive meetings held for no apparent purpose at extravagant hotels in Paris and Rome.
“The absolute hubris and entitlement with which these defendants stole from American workers is disgraceful,” said U.S. Attorney Ryan A. Kriegshauser for the District of Kansas. “While union members were faithfully clocking-in and out of their jobs, these defendants thought they were unaccountable and were callously gallivanting on extravagant trips that spared no expense. With these convictions comes a reckoning, and we will be asking the Court to hold these defendants accountable for their criminal conduct and impose appropriate sentences of incarceration.”
Newton Jones and Creeden also used their executive positions to obtain high-level jobs at the Bank of Labor, where the union is the majority shareholder. While supposedly working full-time at the union, the two were paid nearly $4 million in salary and $1.4 million in retirement benefits from the bank, and they directed an unauthorized $7 million loan from the union to the bank. Newton Jones and Creeden also embezzled hundreds of thousands of dollars in salary and benefits for three of Newton Jones’s family members and spent union funds on unauthorized email surveillance of union employees to defend Newton Jones and McManamon from internal union charges.
“By using union funds for their private benefit, the fraud committed by these defendants strikes at the very confidence union members place in their leaders to represent their interests,” said Special Agent in Charge Chris Omerod of the FBI Kansas City Field Office. “The evidence presented in trial demonstrated an elaborate and willful deceit of the Boilermakers Union to fund the lavish lifestyle of their former leaders. The FBI will not tolerate this level of financial exploitation against hard working Americans.”
Department of Labor Office of Labor-Management Standards Director Elisabeth Messenger said the convictions “serves as a strong warning to those who abuse their responsibilities,” adding that “the department’s new reporting requirements for large unions will go a long way in protecting the financial integrity of labor unions.” DOL Employee Benefits Security Administration Assistant Secretary Daniel Aronowitz called the investigation a priority, saying officials “put their own interests first and misused funds entrusted to them to provide retirement and health benefits for union members and their families.”
McManamon faces a maximum penalty of five years in prison on each count. Creeden, Newton Jones, and Kateryna Jones each face a maximum of 20 years. Sentencing is set for Sept. 1.