Michigan Benefit-Plan Official Pleads Guilty to Accepting Kickbacks

On Monday, May 16, 2011, Walter Ralph Mabry, the former leader of the Michigan Regional Council of Carpenters Union and Chairman of the Board of Trustees of the Carpenters’ Pension Trust Fund, pleaded guilty to taking kickbacks in connection with his fiduciary duties with the union’s pension plan. Mabry now faces up to three years in prison and maximum fine of $250,000.

At a hearing before United States District Court for the Eastern District of Michigan, Judge Arthur Tarnow, Mabry admitted to accepting between $5,000 and $10,000 in kickbacks for hotel and entertainment expenses between April 2004 and September 2006. Mabry accepted the money from John Orecchio, an executive at AA Capital Partners, which was the investment manager for the union’s pension trust fund, and Joseph Roxlyn Jewett, a consultant AA Capital Partners hired after the pension trust fund invested in the construction of a casino in Mississippi. Earlier this year, the United States District Court in the Northern District of Illinois convicted Orecchio of embezzling $24 million from the pension trust fund, while the Eastern District of Michigan convicted Jewett of agreeing to give Mabry a kickback of $266,000 for Mabry’s action in persuading Orecchio to hire Jewett as the consultant on the casino construction project. Judge Tarnow will decide whether Mabry agreed to accept the additional $266,000 kickback from Jewett, which could lengthen Mabry’s prison sentence.

The reactions of officials of various government agencies to this case demonstrate their willingness to seek out and prosecute corruption and wrongdoing by employee benefit plan officials. For example, the Employee Benefits Security Administration’s Regional Director Paul Baumann announced that the Administration was “committed to vigorously enforcing the law” to prevent officials involved with employee benefits plans from engaging in activities, such as kickbacks and secret deals, that influence the officials’ decisions and have the potential of harming the interests of the beneficiaries of the plan. Officials from the FBI, the U.S. Attorneys’ Office, and the Department of Labor offered similar sentiments, promising to aggressively investigate and pursue cases concerning embezzlement of union resources and union leaders’ abuse of their positions for personal gain. According U.S. Attorney Barbara McQuade, the charges in this case were intended to deter other labor officials from abusing their positions.

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