Former Boilermakers officer pleads guilty in $20 million union embezzlement scheme
A former officer of the Kansas City-based International Brotherhood of Boilermakers has pleaded guilty to racketeering conspiracy in an alleged $20 million embezzlement scheme involving union funds.
Kathy Stapp, who was the union’s secretary-treasurer, entered a guilty plea Thursday in U.S. District Court in Kansas City, Kansas.
“By entering into this plea agreement, the defendant admits to knowingly committing the offense, and to being guilty of the offense,” said the document, which was signed by Stapp.
Her sentencing is scheduled for March 27. She faces a maximum sentence of 20 years in prison, three years of supervised release and a $250,000 fine. Federal law also says that if any person derived financial gain or loss because of the offense, the defendant may be fined twice the amount of that gain or loss.
Stapp was charged with one count of racketeering conspiracy, 45 counts of embezzlement from a labor organization, one count of health care fraud conspiracy and three counts of theft in connection with health care. In return for her guilty plea, the government dropped the 49 other counts and agreed not to recommend a fine or restitution.
Stapp’s attorney, P.J. O’Connor, declined to comment on the plea deal.
In a statement issued Friday, International President Timothy Simmons said the union’s new leadership has implemented procedures and safeguards to ensure that the misuse of Boilermakers’ funds can’t happen again.
“Our leadership is committed to repairing the damage from the past while positioning the union for the future,” Simmons said. “We will never allow the misdeeds of our former leaders to tarnish the hard work and dedication of our members.”
Stapp, 53, of Shawnee, was among seven former union members — two of them ex-presidents — indicted in August for conspiracy to commit offenses under the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as other felonies.
A federal grand jury returned the 57-count indictment following an investigation by the FBI Kansas City field office and the U.S. Department of Labor. The case is filed in the U.S. District Court for the District of Kansas. The union’s headquarters was in Kansas City, Kansas, for decades, but has relocated to Kansas City.
The others facing charges are former union president Newton B. Jones; his wife, Kateryna Jones; and his son, Cullen Jones, all of Chapel Hill, North Carolina; former secretary-treasurer William Creeden, of Kearney, Missouri; former president Truman “Warren” Fairley, of Chapel Hill; and former vice president Lawrence McManamon, 76, of Rocky River, Ohio.
Those six have pleaded not guilty, and a status conference on their cases is scheduled for Jan. 16.
Millions embezzled in widespread scheme
The indictment alleges that over 15 years, Jones and Creeden led the defendants in engaging in widespread embezzlement of Boilermakers funds, enriching themselves by spending millions of union dollars for personal gain. The money allegedly went toward salary and benefits for jobs some didn’t show up for, tuition, rent, luxury international travel, meals, vacation payouts and unauthorized loans.
Jones and Creeden also were charged with wire fraud in connection with their alleged demand and acceptance of “no-show employment” with the Bank of Labor, the Justice Department said, for which they were paid more than $3.4 million each in salary and benefits. The union is a majority owner of the bank.
Stapp’s plea agreement said she began working full time for the Boilermakers Union in 2010 as special assistant to secretary-treasurer Creeden and director of human resources and benefits. Because Creeden traveled extensively, the document said, Stapp served for several years as the day-to-day financial officer in his absence and implemented his directives.
“During the course of her employment, she approved expenses that she knew were not necessary under the terms of the Boilermakers Union Constitution and otherwise had no legitimate union purpose,” the plea agreement said.
Examples of unnecessary expenses Stapp approved, according to the document:
— Union meetings involving up to 38 people that included lavish accommodations and food and drink for periods where no legitimate union business was conducted
— Dozens of international trips for union officers, employees and guests to destinations in Europe, Asia and South America, including travel of large groups to Italy on at least seven occasions between 2014 and 2022
Those trips involved unnecessary people, expensive accommodations and side excursions during times when no legitimate union business was conducted, the document said.
— Union employment for Kateryna Jones, Cullen Jones and other members of the Jones family with full benefits and reimbursed expenses when they weren’t required to work full time and their salaries “were far in excess of market compensation” for their positions
— Relocation expenses for Cullen Jones and other members of the Jones family in violation of union policies
— Placement of ineligible people on the union’s health care plan, including Kateryna and Cullen Jones, along with an unnamed person and his dependents, so they could get reimbursement for medical care to which they weren’t entitled
— Cash payouts for unused vacation time for numerous union employees, including Newton and Kateryna Jones and Creeden, in violation of union policy and when Stapp knew they had already used that vacation time
“In July 2023, at Creeden’s direction, Stapp approved direct deposits to Newton Jones for $107,733.52, William Creeden for $484,800.74 and Kateryna Jones for $111,057.62, purportedly for unused vacation,” the plea agreement said. “Stapp made those payments for unused vacation balances despite knowing that Newton Jones, Kateryna Jones and Creeden were not entitled to vacation payouts because she knew they did not draw down their vacation balances for the vacations they took or time they spent not working.”
Multiple Boilermakers face indictments
The indictment against the seven prominent Boilermakers came nearly 15 months after the union’s executive council voted to oust Jones as international president, accusing him of misusing union funds for personal gain — including funneling large sums of money to his Ukrainian wife for work she never performed. That led to a monthslong court battle over who controlled the union.
In August 2023, a federal judge upheld the union executives’ decision to remove Jones as president and replace him with Fairley, who had recently retired as an international vice president.
Fairley’s reign as president was short-lived. After he was indicted, Fairley announced his retirement as president and was replaced by Simmons, one of the union’s five international vice presidents. Stapp, who replaced Creeden when he retired as the secretary-treasurer in August 2023, resigned Aug. 26 of this year.
Another former union official faces a racketeering charge in a separate case filed last spring.
Tyler Brown pleaded guilty in May to one count of racketeering conspiracy. Brown, who served as the union’s chief of staff and as special assistant to Jones, was accused of scheming with “others known and unknown” to steal from the union. His sentencing is scheduled for Feb. 13.
This story was originally published December 20, 2024 at 6:10 AM with the headline "Former Boilermakers officer pleads guilty in $20 million union embezzlement scheme."
