3 Sentenced for Looting Teamster Health Plan

A San Clemente man was given a three-year federal prison sentence Wednesday after being convicted on mail fraud, embezzlement and tax evasion charges. Prosecutors said he helped steal $1.5 million from a Long Beach Teamsters Union health plan fund and spent some of it on an expensive house, a yacht and furniture.

Nicholas M. Nicholson and two others, including his wife, were previously convicted for the theft from the union fund, which the Nicholsons administered through a company they owned.

In addition to the prison sentence, U.S. District Judge Mariana R. Pfaelzer ordered Nicholson to serve five years’ probation and pay $149,560 in restitution.

Probation and Restitution

Pfaelzer sentenced Nicholson’s wife and co-worker, Dana Nicholson, to five years’ probation. She was also ordered to perform 1,500 hours of community service and pay $83,623 in restitution.

A third defendant, Matthew McCusker of Encino, was sentenced to five years’ probation, ordered to perform 3,000 hours of community service and pay $259,118 in restitution. The judge said that if McCusker failed to repay the money, he would have to serve a three-year prison sentence.

Assistant U.S. Atty. Leon Weidman charged that “(Nicholson) stole the money and spent it on a $500,000 house, a yacht and $250,000 worth of furniture.” Weidman added that Nicholson “perjured himself in trial” and showed no remorse for his crimes. “All he did was steal from the companies he controlled.”

McCusker and the Nicholsons declined to comment after the sentencing hearing.

The trio operated two companies set up to administer trust funds. The funds were supposed to provide medical benefits to members of Teamsters Local 911, which represents school district employees and parking lot attendants, among others.

However, the government alleged, the defendants’ actions forced the trusts into receivership, leaving thousands of unpaid medical bills.

Misrepresented Trust

During the five-week trial in October, Weidman told the jury that the defendants misrepresented the financial condition and size of the trust to prospective members. In 1979, they claimed that the trust contained $34.5 million in contributions, when, in fact, 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 charged in his opening statement. “After defrauding these people, the defendants proceeded to loot the plan.”

The trust collapsed in 1981, prompting a civil suit by the U.S. Department of Labor that named several defendants and accused many of them of leaving the trust unable to pay hundreds of thousands of dollars in medical bills. That suit is still pending, Weidman said.

Pfaelzer, who heard McCusker’s case simultaneously with the jury trial, found him guilty of 16 counts of mail fraud, embezzlement and tax evasion. He was acquitted of 11 other charges.

The jury found Nicholas Nicholson guilty of 20 counts of mail fraud, one count of aiding and abetting an 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.

Another defendant, Elywn L. Raffetto of Huntington Beach, was acquitted by the jury of all 11 counts with which he was charged.

Two other defendants, Gordon and Sharon Eldredge of Malibu, became fugitives shortly after a federal grand jury handed down the indictment in January, 1986.