Union exec: Boilermakers funds covered Maui suites, alcohol and no-show family jobs
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- Former Boilermakers executive testified that union funds paid for Maui suites and alcohol.
- Stapp said Jones hired his relatives and some received large salaries for little work.
- Seven union employees were charged in August 2024 with conspiring to embezzle millions.
Eight nights in the presidential suite at the Sheraton Maui Resort and Spa. Flights on a private jet. Hundreds of thousands of dollars in payouts for unused vacation days. Reimbursement for “significant” amounts of alcohol.
Those were among a long list of expenses that a former officer of the International Brotherhood of Boilermakers said in federal court Thursday raised serious concerns about the misuse of the Kansas City-based union’s funds.
Over and over, prosecutor Faiza Alhambra asked Kathy Stapp if any of the expenses were necessary for the benefit of the union.
And Stapp repeatedly replied, “No.”
Stapp, the union’s former human resources director and most recently its international secretary-treasurer, was testifying as a government witness after pleading guilty in December 2024 to one count of racketeering conspiracy involving the alleged theft of union funds.
She was among seven union employees charged in August 2024 with allegedly conspiring to use the union as their personal piggy banks, embezzling millions that went toward salary and benefits for no-show jobs, extravagant international travel, fine dining, vacation payouts and unauthorized loans.
Four of the seven ex-Boilermakers, including former International President Newton Jones, are now on trial on racketeering and other felony charges. The trial, in federal court in Kansas City, Kansas, is expected to last several weeks.
The defendants’ attorneys contend that the government doesn’t have the evidence to prove beyond a reasonable doubt that there was intent to join a criminal racketeering conspiracy. They say the defendants’ actions were in accordance with the union’s constitution and that union officers were merely doing their jobs, which included building a worldwide brand and attracting mergers.
On Thursday, the defense also raised questions about Stapp’s motives, stressing that her plea agreement required her to provide “substantial assistance” to the prosecution in order for the government to request a reduced sentence.
In addition to Newton Jones — who was removed from office by his executive council in 2023 for allegedly misusing union funds — those on trial are his wife, Kateryna; former International Secretary-Treasurer William Creeden; and former International Vice President Lawrence McManamon. All were indicted for conspiracy to commit offenses under the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as other felonies.
Two others who were charged in the case pleaded guilty in March to one count of racketeering conspiracy and one count of embezzlement from a labor organization.
Warren Fairley — who took over for a short stint as Boilermakers president in 2023 after Jones was removed — and Jones’ son, Cullen Jones, are scheduled for sentencing on June 30.
Stapp is scheduled to be sentenced on July 7.
Dinner and drinks
Much of Stapp’s testimony Thursday focused on Newton Jones’ expenditures. Alhambra displayed receipts for expensive meals in and near his home town of Chapel Hill, North Carolina, that were charged to Newton or Kateryna Jones’ union-issued American Express cards.
One receipt was a $510 meal expense for the couple at the Siena Hotel in Chapel Hill. On one $404 meal receipt, Kateryna wrote that the purpose was for scheduling meetings. Some of the restaurant receipts included Newton Jones’ son, Cullen, and daughter, Shae.
“Did many of these receipts include a significant amount of alcohol?” Alhambra asked.
“Yes, they did,” Stapp said.
Alhambra asked Stapp whether prior to 2022 — when the government subpoenaed the union’s records — Newton Jones ever reimbursed the union for restaurant expenses for him and his children.
“No,” Stapp said.
Did he reimburse the union for any alcohol expenses?
“No.”
Stapp said she raised the issue with Creeden, who was her boss at the time. Alhambra asked her what came of it.
“Essentially, nothing,” Stapp said.
Alhambra asked Stapp if she felt uncomfortable raising those issues.
“I feared for my job,” Stapp said. “I feared at times for other people’s jobs.”
Jobs for family members
Stapp said after Newton and Kateryna Jones were married in 2011 and Newton wanted to hire his wife, the union’s law firm said the Boilermakers couldn’t pay her because she didn’t live in the United States. The firm recommended the union hire her as an independent contractor.
But she was given an offer of employment in the summer of 2013, while she was still living in Ukraine, Stapp said.
“Do you know of any work she performed while she was in Ukraine?” Alhambra asked.
“No, I do not,” Stapp replied.
Kateryna moved to the U.S. in 2015, Stapp said, and Creeden asked Stapp to fly to a Boilermakers meeting in Florida to take her the employment paperwork. Stapp said after she arrived in Florida, she had to wait for two days because the Jones’ flight was delayed.
Stapp said she stayed in Florida three or four days, with the union footing the bill. But Kateryna didn’t end up signing the paperwork, Stapp said, because Newton Jones said they were too tired to deal with it.
In August 2015, Stapp said, she was told to pay Kateryna for the time she was in Ukraine. The order was given at the direction of Newton Jones, she said.
The back pay, Stapp said, totaled more than $120,000. She said she never did know exactly what Kateryna Jones did to earn it.
Newton Jones also hired his son, Cullen, as a videographer for the union, Stapp said. She said, however, that “I saw no work product from him.”
She said Newton Jones fired Cullen once, hired him back and then let him go again.
Newton Jones hired his daughter, Shae, and her boyfriend, Derek Zurowski — who is now her husband — right out of college, Stapp said. Newton Jones created the positions for them, she said, adding that the only reason they were hired was because of their relationship to Jones.
Huge vacation payouts
Stapp said the union changed its vacation policy in 2015 to require employees to use two weeks of vacation each year instead of allowing it to accumulate and then getting reimbursed at a later time. But she said the policy was ignored.
Moreover, she said, Newton Jones never used up any vacation time even though a lot of the conferences he attended included side trips that were actually vacations. And Creeden went on vacations such as hunting and fishing trips to the Bahamas and Iceland, she said, but didn’t submit them as vacation time.
After the union’s executive council removed Newton Jones as president, Stapp said, Creeden requested a payout for 74 weeks of accrued vacation. The union complied, she said, paying him $484,800. She said McManamon requested a payout for five weeks of vacation, and Kateryna Jones received a payout of $111,057 when she resigned.
“Since her employment began, she had never used one day of vacation,” Stapp said of Kateryna Jones, even though she wasn’t doing full-time work and had taken numerous vacations.
Ocean-front suites and plentiful alcohol
Prosecutors asked Stapp about several high-dollar union conferences and meetings. In 2019, Newton Jones took 39 people to Hawaii for an International Executive Council meeting, which was “an enormous expense,” Stapp said. The council is composed of the international president and five international vice presidents.
The group stayed at the Grand Wailea, an upscale beachfront hotel on Maui. The receipt for the hotel was $154,653. Stapp said that didn’t include airfare, per diem for those attending, car rentals and hotel costs for those not on the union’s master account.
Among those who attended were Shae and Cullen Jones, Stapp said.
The union also held an executive council meeting in Maui in late 2018. The receipts from the Sheraton Maui showed reservations for four ocean suites, two deluxe ocean front suites and one presidential suite for Newton and Kateryna Jones for eight nights. The cost of the suite was $1,900 a night.
The total cost for hotel rooms for that meeting, Stapp said, was $59,220.
Alhambra asked Stapp if Newton Jones regularly charged alcohol to the union’s master account. Stapp said he did. She said he would supply alcohol for a hospitality room at the meetings and then would either order her to send additional alcohol to his room or he would go get it and charge it to the union. She said the union incurred a “significant cost” for the alcohol.
Stapp said those who traveled on international trips with Jones got special perks. If the trip was for seven days or less, she said, they got a $1,000 allowance in addition to their per diem plus an additional day off for jet lag. If the trip was longer than seven days, they received a $2,000 allowance.
Jones was “a generous tipper” with the Boilermakers’ money, Stapp said. In 2018, she said, he turned in $18,000 in out-of-pocket expenses for reimbursement, and the majority was for tips.
Alleged health care fraud
Another area of focus Thursday was alleged health care fraud. Both Newton Jones and Creeden were personal friends of a man who served on the board of directors of the union-affiliated Bank of Labor and had been diagnosed with terminal brain cancer.
Stapp said that in April 2018, Jones asked her to add the man to the union payroll as an assistant to the president. She said she knew he was ill at the time, but only later learned that it was terminal.
Stapp back-dated the man’s appointment letter to Jan. 1, 2018, so he and his family could receive immediate coverage. She said doing that “made my stomach hurt.”
“Did you understand that this was illegal?” Alhambra asked. Stapp said she did understand, but did it “because I was directed to and I feared for my job if I didn’t comply.”
The union offered the man $175,000 a year and paid him $73,930 for April and May, Stapp said. He also was given full health and pension benefits and a life insurance policy. After he died on June 1, 2018, the union paid an additional month’s salary plus five weeks’ vacation, she said. The action was approved by Newton Jones and Creeden, she said.
To be eligible for the union’s health care plan, staffers had to be employed for 90 days and work at least 30 hours a week, Stapp said. Because of his illness, the man had done neither. But prosecutors said Creeden sent a letter to the man’s wife saying the family’s health care coverage would continue for her for life and for their children until they turned 21.
Trying to ID the whistleblowers
At an executive council meeting in Marco Island, Florida, in February 2023, Stapp said she told International Vice President John Fultz and Tim Simmons, the union’s newest international vice president, about some of Newton Jones’ questionable expenses. She said Fultz had received a spreadsheet of Newton and Kateryna Jones’ expenses and “all three of us thought it would have to be addressed.”
In March 2023, Stapp said, Simmons asked her about the back pay for Kateryna Jones. Stapp said she then provided him with some documentation about her concerns with the spending practices.
That led to internal charges being filed against Newton Jones, and the executive council voted to remove him as president in June 2023. McManamon was the only international vice president who took Jones’ side, Stapp said.
When the internal charges were filed, Stapp said, Jones and Creeden hired a forensic firm to try and find out who the whistleblowers were. They had video cameras installed in the office, she said, along with computer monitoring programs. Stapp said she found out what was going on when she got a bill for $182,000 from the company that had been hired to investigate.
Challenge from defense
During cross-examination, Newton Jones’ attorney, Dan Nelson, went over portions of Stapp’s plea agreement, pointing out that she’d been charged with 50 federal counts. The maximum prison time she could have gotten if convicted on all counts, he said, was 296 years.
He said prosecutors told Stapp there would be no plea deal unless she admitted knowing she was involved with others in criminal activities.
When Stapp approved expenses for the trips, Nelson asked, were there rules and guidelines from the federal government on where union members should stay? Or were there any rules on the maximum amount the union could spend on hotels? Stapp said no.
Nelson also asked Stapp if union members attending the conferences often network with each other and if business gets conducted at the events. Stapp said yes. Nelson said that 23 of the 32 union trips identified in the case involved just three or fewer people.
He also brought up the issue of Newton Jones and alcohol, asking if it was fair to say that alcohol is a part of the Boilermaker culture and noting that there’s even an alcoholic drink called a boilermaker.
Nelson asked Stapp if she got a raise when she replaced Creeden as the international secretary-treasurer in 2023. She said she did, and it was about $100,000.
Creeden’s attorney, Andino Reynal, challenged Stapp’s testimony that the union’s constitution requires expenses to be approved by the international president and the secretary-treasurer. When Stapp couldn’t find it in the constitution, she said that “it’s a long-established practice within the union.”
Reynal also took issue with Stapp’s contention that Creeden wasn’t responsive to her at times.
When Creeden left the union, Reynal said, he kept a copy of his emails. Would Stapp be surprised, he asked, if he told her they had exchanged 13,661 emails? In 2020, he said, Creeden sent her more than 500 emails, and she sent him 388.
Reynal said Stapp’s relationship with the Creedens dated back to the 90s. They were even in her wedding, he said. Then he introduced into evidence a photo of Stapp, Creeden’s wife and his former assistant at a New Year’s party at the Stapp’s home in 1998.
“Bill Creeden was good to you as a boss?” he asked.
“For the most part,” Stapp said.
