2 Convicted of Embezzling Union Funds : $1.5 Million Was Stolen From Teamster Local’s Health Plan

A federal jury convicted a San Clemente couple Wednesday on mail fraud, embezzlement and tax evasion charges stemming from the $1.5-million looting of a Long Beach Teamsters Union health plan fund. Another defendant, Elywn L. Raffetto, of Huntington Beach was acquitted of all charges.

The convicted couple, Nicholas M. Nicholson, 38, and his wife, Dana, 37, administered the Western Conference Benefits Trust and a related trust through a company called Far West Administrators Inc.

In all, six defendants were charged with embezzling the money from the trust between 1979 and 1981. Their actions left thousands of unpaid medical bills and forced the health plan into receivership, according to prosecutors.

After deliberating four days, the jury found Nicholas Nicholson guilty of 20 counts of mail fraud, one count of aiding and abetting embezzlement, one count of filing a false tax return and one count of failing to file a tax return. Dana Nicholson was found guilty of 14 counts of mail fraud, one count of filing a false income tax return and one count of failing to file a tax return.

The couple allegedly received about $552,000 from the trust and its related subsidiaries and used some of the money for a down payment on a home, according to prosecutors.

Raffetto, 50, was acquitted on all 11 counts with which he was charged last January. He was involved in marketing the health plan to non-Teamster employee groups, according to the federal grand jury indictment.

The health plan administrator, Matthew W. McCusker, 67, of Encino, asked U.S. District Judge Mariana R. Pfaelzer to hear the case against him simultaneously with the jury trial. McCusker is accused of embezzling more than $600,000 for his own use and for others, according to the indictment.

Pfaelzer said she would reach a verdict in McCusker’s case today. She set a Dec. 17 sentencing date for the Nicholsons, who were unavailable for comment after the verdict was read. They face up to five years in prison for each count.

Two defendants, Gordon and Sharon Eldredge of Malibu, became fugitives shortly after a federal grand jury handed down the 52-count indictment in January.

The health and benefit plans administered by the Nicholsons served members of Teamsters Local 911 in Long Beach. At its peak, the local represented 16,000 members. Local 911 had collective bargaining agreements with school districts, cities and parking lot companies, among others, according to court records.

During the trial, Assistant U.S. Atty. Leon W. Weidman told the jury that the defendants misrepresented the financial condition and size of the trust to prospective members. In 1979, he said, the defendants claimed the trust had $34.5 million in contributions, when the total was only $1.1 million. Weidman said the total membership was 3,692, but the defendants claimed a membership of 200,000 to 300,000.

“The people never would have signed on to the plan if they knew the true numbers,” Weidman said in his opening statement. “After defrauding these people, the defendants proceeded to loot the plan.”

Alva Dotson Bennett, the former secretary-treasurer of Local 911 and chairman of the trust, was not indicted in January but pleaded guilty last year to embezzling about $130,000 from the trust. He has not been sentenced.