VICTORIOUS, BUT NOT OUT OF THE WOODS: District Council 37 Local 372 President Shaun Francois survived an election challenge to win a third term, but questions his rivals raised about  the local's declining finances and questionable overtime payments have prompted an audit by its national union and a possible investigation by the Manhattan District Attorney's Office. 

When a District Council 37 lifer was asked May 18 about the recent discovery that top officials of its Local 372 led by President Shaun Francois had split up to $600,000 in overtime pay, at least $400,000 of which they were definitely not entitled to, you could hear his weariness on the other end of the line.

Speaking about too many DC 37 officials who over the years got themselves jammed up over improper payments at a time when their legitimate salaries were more than they deserved, he said, "These people start to believe it's their money, and if people are telling you you're great, it's intoxicating. Charlie was a good dude, but he got caught up in that also."

He was referring to Charlie Hughes, the 30-year president of Local 372 who was ousted in 1998 for, among other things, collecting $1.6 million in overtime and unused vacation pay to which he was not entitled, along with questionable expense submissions, according to officials of the American Federation of State, County and Municipal Employees who pulled him out of the building.

Until then, it was unheard of for AFSCME under then-President Gerry McEntee to take strong action against DC 37 officials whose conduct warranted it. Charlie's situation was different for a couple of reasons. 

A Threat to DC 37's Power Structure

One almost certainly was political. A few months earlier, Mr. Hughes's membership, aided by a good relationship he had with Mayor Rudy Giuliani, swelled by several thousand workers who were hired to monitor safety in school cafeterias during student lunch hours, that pushed it past Local 1549 as DC 37's largest local. Mr. Hughes reportedly told then-DC 37 Executive Director Stanley Hill that he thought some changes should be made befitting his local's new status.

Mr. Hill took this to mean that Mr. Hughes had his eye on one of the two seats DC 37 had on its national union's board. One was occupied by Mr. Hill, the other by his closest political ally, Local 1549 President Al Diop. The AFSCME vice presidencies paid well and required no heavy lifting. They also meant special dispensations were given to their occupants in return for loyalty to Mr. McEntee; in Mr. Diop's case this had meant four consecutive years in which his local's books had not been audited by the Philadelphia accounting firm responsible for that work.  

The other, more-substantive reason was that Mr. Hughes had driven Local 372 deep into debt—$10 million worth, AFSCME discovered when it took a look at the local's books at Mr. Hill's urging.

The DC 37 executive director had good reason to know the local was in trouble: two years earlier, he and DC 37 Treasurer Bob Myers had restricted Mr. Hughes's ability to borrow against future per-capita dues he would be entitled to from their union and AFSCME because his fiscal situation had grown so shaky. Yet they had also continued signing off on invoices Mr. Hughes submitted for overtime pay and comp pay for unused vacation time, even though DC 37 local presidents were barred from receiving such payments. 

That policy has not changed over the past 23 years, according to Arthur Schwartz, an attorney who was aligned with the reform movement at DC 37 during that era and more recently served as the attorney for Local 372 before being dismissed by Mr. Francois in 2017, three years after he took office.

Mr. Schwartz now represents Paul Brathwaite, who is challenging Mr. Francois's re-election bid. During a prolonged court battle concerning both union spending and an effort to prevent Mr. Brathwaite and his allies from being listed on election ballots as a slateallowing supporters to vote for all of them by marking a single boxthe dissidents gained access to some of Local 372's financial records.

The Improper OT

The dissidents told this newspaper's Crystal Lewis that the documents showed Mr. Francois received $296,000 in overtime pay to which he was not entitled over a four-year period, on top of his $221,579 salary in 2018, the last year for which it has filed required financial reports. (According to Mr. Schwartz, its 2019 filing, which was delayed beyond the usual deadline by the pandemic, was due last November but has still not been submitted.)

Local 372's executive vice president, Donald Nesbit, reportedly received $111,166 in overtime, and Irma Canales, the local's former business manager, got more than $187,000. It was not clear whether, because hers was not an elected position, she would not have been covered by the overtime ban.

A spokeswoman for DC 37 Executive Director Henry Garrido, Freddi Goldstein, responded to a question to him about the situation in a May 20 statement by referring to an article and editorial that appeared in this newspaper earlier in the week.

"We have seen the allegations in The Chief," she wrote. "The local leadership vehemently denies any wrongdoing and has requested an audit by AFSCME. We will await the results of the audit."

A call to AFSCME President Lee Saunders produced  a statement from Selma Golding-Forrester, the national union's director of accounting and auditing, that it had received Local 372's audit request. "We will not comment on any allegations made, other than to say we take matters like this very seriously and members can trust that the audit will be thorough and fair," she said. 

The overtime payments were just part of the eyebrow-raising details of Local 372's finances that had played out in the courts over the past year. Its assets had declined from slightly more than $15 million in 2015Mr. Francois's first full year in officeto $10 million in 2018. In 2019, the local purchased a condo on West 33rd St. for $9.3 million to be used as office space after long being a tenant in DC 37's Barclay St. headquarters, carrying a $5-million mortgage.

Mr. Schwartz said it was unusual for a local that had steadily been losing money to spend that much of its cash assets to purchase office space, although Local 372 officials have defended it as a wise investment. He also wondered why AFSCME had not taken a close look at the local's books after its assets declined by one-third over a span of four years.

"Why does that not raise a red flag?" he said.

Deja Vu for Saunders?

Mr. Saunders during the original Local 372 debacle was a top aide to Mr. McEntee, and was brought in to get the local's finances under control following Mr. Hughes's removal from office in early 1998. Later that year, after the Manhattan District Attorney's Office raided DC 37 and found that a drop in that union's assets from $22 million to $4 million over just four years was largely due to its being looted by numerous local presidents, Mr. Saunders was given the task of getting that union stabilized, something that took 40 months to do.

The evidence pointed to lack of scrutiny by both Mr. McEntee and Mr. Hill, in part because the ringleaders of the pillagingMr. Hughes and Mr. Diophad been pivotal political supporters of both men. Between them, Locals 372 and 1549 accounted for roughly 42 percent of DC 37's 125,000 members. Mr. Hughes, a popular leader who had made major accomplishments for his members, had strong control of his delegateswho vote for DC 37's executive directorand so did Mr. Diop, although in his case it was due less to personal appeal than the kind of largesse in which he brought 300 union officials to the AFSCME convention in Hawaii less than three months before the DA's Office moved in.

That meant the two corrupt officials controlled enough delegate votes to perpetuate an executive director's time in office or vote out that person, which had given Mr. Hill good cause to proceed cautiously around both of them. Reformers said the scandal proved the argument that they had been making: that the way to eradicate the corrupt culture that had infested DC 37 was to allow members to directly vote for the union's officers.

But Mr. Saunders, apparently adhering to Mr. McEntee's wishes, did not order that change. Lillian Roberts, who became DC 37's executive director in early 2002 once the administratorship was lifted, publicly supported the concept of one person, one vote when she faced an election challenge in January 2004 from reformer Charles Ensley, but after winning by a narrow margin, she said she would leave the decision to the delegates themselves. 

Not surprisingly, the delegates did not want to surrender the electoral power that had won them perks including committee assignments for some worth nearly $10,000. The status quo worked well for them and Ms. Roberts and Mr. McEntee, who had an easier time buying loyalty than if they were dependent on individual members' votes.

Resisted Reformers

It was why Ms. Roberts in 2004, months after holding off Mr. Ensley, threw her support for the two AFSCME vice presidencies to two less-independent officials than the Local 371 leader. One of them was Joan Reed, a low-key president of Local 2054, which represented College Assistants employed by the City University of New York. 

Less than five years later, Ms. Reed stepped down from her local presidency in mid-term, tapping Colleen Carew-Rogers as her successor. She got a couple of extravagant going-away presents courtesy of Ms. Carew-Rogers: a party for which the tab was $30,000, and a new Cadillac, which cost the local $41,715. The Caddy cost twice the maximum salary of $20,800 then being received by senior College Assistants.

The justification for this largesse was that during her tenure, Ms. Reed had significantly increased salaries for her members and gotten the part-time employees the right to pensions.

She deserved at best minimal credit for both those achievements: she was not a prominent figure on the DC 37 bargaining committee, and the prime union mover in winning part-timers pension rights had been Mr. Hughes, a dynamic figure in both city politics and in Albany who for years had headed DC 37's political-action committee.

And so Local 2054 board members were not persuaded that the big send-off for Ms. Reed was justified, and in September 2009 voted to remove her from office, choosing reformers Carlton Berkley as president and Linda Bowman as vice president. The next day, when the two new officers came to the local's offices, they found Ms. Carew-Rogers shredding files.

At that point, Mr. McEntee's heavy hand intruded on the bid for a more-democratic local. A check of the books showed that Ms. Carew-Rogers had depleted the local's assets by $1 million by making some risky investments. But with the malefactor already banished by her board, AFSCME decided this was the ideal time to place the local in trusteeship. Three months later, an election was held, with Mr. Berkley disqualified from running because he had not been paying dues long enough.

A Very Tiny Turnout

AFSCME decided to hold an in-person election, turning down reformers' demand for a mail ballot that would greatly increase rank-and-file participation on the grounds that Ms. Carew-Rogers's bad investments had made such a vote unaffordable.

The logic was startling: a deposed president blows through $1 million of members' dues and the way to start fresh is to disenfranchise much of the membership because a mail ballot that Mr. Schwartzwho was representing the reformersestimated would have cost $14,000 was rejected because now was the time to be frugal. 

Seventy-five peopleless than 1.5 percent of Local 2054's 5,000-plus members—showed up at DC 37's headquarters and cast ballots, and a slate said to have been favored by AFSCME won office. (One of the delegates elected then, Dishunta Meredith, today is the local's president.)

In light of that situation, and another one involving Civil Service Technical Guild Local 375 after Mr. McEntee retired and Mr. Saunders succeeded him nine years ago, Mr. Schwartz was asked whether he was concerned that AFSCME might again put its big thumbs on the scale and either place Local 372 into administratorship before the ballot count begins early next month or do so afterward if Mr. Brathwaite and his allies won.

"It's quite possible," he said. "It's hard to stop an international from taking over a local."

But, he said in a subsequent interview May 19, "I talked to the DA today; they're definitely following up," referring to a conversation he had with someone in Cy Vance's Financial Crimes Unit.

Outside Scrutiny Helpful

That may ultimately be an equalizer for the Local 372 reformers. The last time the Manhattan DA took a hard look at the way DC 37 did business in the late 1990s, AFSCME acted like a union interested in cleaning out the rot, first with the takeover of Local 372 and later with the removal of Mr. Hill. As administrator then, Mr. Saunders restored the union's financial standing and its political activism after nearly a decade in which it was best known for a mix of criminal activity and cowering before the threat of layoffs by Mayor Giuliani, most notoriously by rigging its wage-contract vote on a deal that began with a two-year pay freeze to avoid arousing his wrath.

Maybe Mr. Saunders has learned from hard experience not to repeat Mr. McEntee's blunder in letting the union lose its muscle tone once the cops had left the building and AFSCME no longer faced national embarrassment for letting its largest district council fall into disgrace.  

The DC 37 lifer seemed skeptical, saying of the situation, "It's so disheartening. These are the lowest-paid workers in the Council. Those school-lunch ladies adored Charlie Hughes. Shaun isn't Charlie."

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(1) comment

Notorious IEB

In the interest of transparency there should also be an external audit in addition to the independent audit of AFSCME of DC 37 and all the locals in the council so members can be confident of the findings.

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