Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Keechant Sewell, Commissioner of the New York City Police Department (“NYPD”), announced today that EDWARD D. MULLINS, the former President of the Sergeants Benevolent Association (“SBA”), the union that represents all current and former Sergeants of the New York City Police Department, was charged with one count of wire fraud in connection with a scheme to steal hundreds of thousands of dollars from the SBA, through the submission of fraudulent expense reports. MULLINS surrendered to the FBI in Manhattan this morning, and was presented before U.S. Magistrate Judge Gabriel W. Gorenstein. The case has been assigned to United States District Judge John G. Koeltl.
U.S. Attorney Damian Williams said: “As alleged, Edward Mullins, the former President of the SBA, abused his position of trust and authority to fund a lavish lifestyle that was paid for by the monthly dues of the thousands of hard-working Sergeants of the NYPD. Mullins submitted hundreds of phony expense reports to further his scheme, stealing hundreds of thousands of dollars from the SBA. This Office is committed to rooting out corruption at all levels of government, and that includes public officials like Mullins who use their positions of power to line their own pockets to the detriment of others.”
FBI New York Assistant Director-in-Charge Michael J. Driscoll said: “As public servants, members of the SBA pay dues to a union that’s supposed to represent their best interests. As SBA president, Mullins allegedly went above and beyond to best serve his own interests. Our NYPD sergeants expect and deserve more from their union leadership than they received. Today, thanks to the joint efforts of those on the FBI/NYPD Public Corruption Task Force, we’re righting that wrong.”
NYPD Commissioner Keechant L. Sewell said: “Ed Mullins allegedly violated the ethics and rules of this department, the trust of 13,000 Sergeants, active and retired whom he represented, and the laws of the United States. The NYPD’s Internal Affairs Bureau, has detectives assigned to the FBI’s Public Corruption Unit and works as a team with agents on matters involving the NYPD.”
According to the allegations in the Information[1] filed today in Manhattan federal court:
Overview
For nearly two decades, from in or about 2002 until in or about October 2021, EDWARD D. MULLINS served as President of the SBA, which is the union that represents all current and former Sergeants of the NYPD. As President, MULLINS was responsible for promoting the general welfare of the SBA’s membership. Instead, MULLINS orchestrated a scheme to steal hundreds of thousands of dollars from the SBA and its members.
Between in or around 2017 and in or around October 2021, MULLINS defrauded the SBA by using his personal credit card to pay for meals at high-end restaurants and to purchase luxury personal items, among other things, and then submitting false and inflated expense reports to the SBA, seeking reimbursement for those bills as legitimate SBA expenditures when in fact they were not. Altogether, MULLINS was reimbursed for over $1 million dollars in expenses from the SBA, the majority of which was fraudulently obtained.
The SBA
The SBA is the fifth-largest police union in the United States with its headquarters located in lower Manhattan. The SBA’s membership consists of all active and retired sergeants of the NYPD, with approximately 13,000 members as of October 2021. All members are required to pay dues to the SBA. For active members, dues are deducted bi-weekly from their paychecks, totaling approximately $1,300 annually for each member. For retired members, dues are required to be paid in a one-time payment of $600 within ninety days of retirement.
The SBA has a Contingent Fund, which is used to pay for the SBA’s “regular, fiscal, and miscellaneous expenses necessary for the transaction of the [SBA’s] business.” The Contingent Fund is funded primarily through member dues. Ninety cents of each dollar of member dues are deposited into the Contingent Fund, where they are supposed to be used for the benefit of the SBA and its members. The President of the SBA is authorized to use the Contingent Fund to “defray miscellaneous expenses incurred in the performance of duties, e.g., travel, lodgings, meals, et cetera.”
The SBA has a written expense reimbursement policy (the “Policy”). The Policy provides, among other things, that “the SBA will reimburse actual and reasonable meal expenses required to conduct SBA business or fulfill the SBA’s mission.” In order to be “reimbursable,” expenses “must be closely related to SBA business.” The Policy further provides that “[r]eceipts are required for any meal,” and that “[r]equests for reimbursement for meals in excess of $50.00 must be accompanied by an attendee list and the subject matter discussed.”
The SBA is governed by a Board of Officers, consisting of nine officers, including the President, Vice President, and Treasurer, among others, and fourteen directors. Beginning in or around 2002, MULLINS ran for and was elected President of the SBA for five successive four-year terms. After the 2014 election, the individual who had been elected Vice President of the SBA assumed responsibility for reviewing and approving the expense reports submitted by SBA officers, including MULLINS. The Vice President routinely scrutinized expense reimbursement requests and rejected certain expenses if they were too high or were not supported by receipts.
In or around 2017, the then-Vice President retired as an officer of the SBA. The Treasurer assumed primary responsibility for reviewing and approving expense reports submitted for reimbursement by SBA officers, including MULLINS. The Treasurer did not scrutinize the expense reports in the same manner as the prior Vice President had, and, in particular, did not regularly require receipts for MULLINS’s reimbursements in particular. As set forth below, between 2017 and 2021, the Treasurer approved hundreds of expense reports for MULLINS, totaling more than $1 million dollars.
The Scheme To Defraud the SBA
Beginning in 2017, MULLINS devised a scheme to fund his personal expenses through SBA dollars. Specifically, MULLINS charged his personal credit card for, among other things, hundreds of high-end meals, clothing, jewelry, home appliances, and a relative’s college tuition. MULLINS then submitted, typically by email, fraudulent and inflated expense reports to the Treasurer of the SBA, seeking reimbursement for such items purporting to be legitimate SBA expenditures when in fact they were not. MULLINS rarely included receipts.
The Treasurer processed the expense reports once they were received – almost always without obtaining any receipts – and issued SBA reimbursement checks to MULLINS from the Contingent Fund – i.e., the fund that was made up almost entirely of member dues. MULLINS then deposited the checks into his bank account or enlisted an individual at the SBA to deposit the checks on MULLINS’s behalf at a bank branch near the SBA’s headquarters in lower Manhattan. MULLINS then, usually immediately thereafter, paid down his credit card bills with the deposited funds.
As part of this fraudulent scheme, MULLINS made at least three types of misstatements on his expense reports. First, MULLINS included meals on his expense reports that were not SBA-related. Second, MULLINS inflated the costs of his meals – whether SBA-related or not. For example, if the actual cost of a meal was $522.55, MULLINS would seek reimbursement from the SBA for $822.55, and pocket the difference. At times, MULLINS would even write out these changes on his personal credit card statements that he maintained at his home – i.e., crossing off “522.55” and writing in “822.55”, thereby documenting his false statements. Third, MULLINS would take personal expenses like supermarket bills and claim them on his expense reports as SBA-related meals for which he also sought reimbursement.
For example, in November 2019, MULLINS submitted expense reports to the Treasurer for more than $3,000 at a high-end restaurant in Greenwich Village in Manhattan (“Restaurant-1”). Those charges, however, were not related to any work for the SBA. Instead, as reflected in text messages that MULLINS exchanged with an employee of Restaurant-1 (the “Employee”), MULLINS was paying, on two separate occasions, for his family members and personal associates to dine at Restaurant-1. Specifically, MULLINS, purchased two $300 gift cards for Restaurant-1 and then sought reimbursement from the SBA for the gift cards. Two weeks later, MULLINS texted the Employee to inform the Employee that a relative (“Relative-1”) and Relative-1’s partner “are coming in for dinner tonight” and “I gave [Relative-1] a gift card that I grabbed 2 weeks ago.” MULLINS sent a similar text message to the Employee the following night when a personal associate (“Associate-1”) was planning to dine at Restaurant-1 and use the other gift card that MULLINS had purchased with SBA funds.
As another example, in October 2020, MULLINS sent a text message to another personal associate (“Associate-2”) asking Associate-2, “Going to place an order at [the Steakhouse] what do u want[?]” Associate-2 responded by providing MULLINS with a list of several items on the menu. MULLINS’s October 2020 credit card statement in turn reflected a $744.59 expense at the Steakhouse on the same day. MULLINS later submitted this fraudulent $744.59 expense, without a receipt, to the Treasurer for reimbursement, claiming the expense as an SBA-related meal when in fact it was not.
In addition to submitting personal expenses for reimbursement, MULLINS inflated and altered his actual expenses in order to steal more money from the SBA. MULLINS maintained two copies of his credit card statements in his home office. The first copy, often labeled with a sticky note bearing the words “Clean Copy,” had no annotations or markings. The second copy, often labeled with a sticky note bearing the words “Work Copy” or “Work Sheet,” had MULLINS’s handwritten annotations and markings throughout. In the Work Copy, MULLINS changed the amount and, at times, the type of expense, from a lower amount to a larger amount, or from an item that could not be reimbursed – such as a supermarket bill – to a restaurant name, which would then be reflected in MULLINS’s reimbursement forms submitted to the Treasurer and the SBA.
For example, in April 2021, MULLINS changed a $45.92 charge to an $845.92 charge at a wine bar in New Jersey; a $609.89 charge to a $909.89 charge at the Steakhouse; and a $185.88 charge at a supermarket on Long Island to a $685.88 charge at an Italian restaurant in Manhattan. MULLINS then submitted those fraudulent expenses, without receipts, to the Treasurer for reimbursement. Likewise, in August 2021, MULLINS changed a $49.60 charge to a $89.60 charge for a diner on Long Island; a $53.56 charge to a $153.56 charge for a restaurant on Long Island; a $96.16 charge at a supermarket to a $396.16 charge at a restaurant on Long Island; a $152.42 charge to a $352.42 charge at a deli on Long Island; and a $464.00 charge to a $664.00 charge at a pizza place on Long Island. Once again, MULLINS submitted these fraudulent expenses, without receipts, to the Treasurer, who approved the reimbursements.
Altogether, as a result of the scheme, MULLINS received more than $1 million dollars in expense reimbursements from the SBA, the majority of which was fraudulently obtained.
MULLINS, 60, of Port Washington, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Williams praised the outstanding investigative work of the New York FBI.
This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys David Robles, Alexandra Rothman, and Andrew Rohrbach are in charge of the prosecution.
The charge contained in the Information is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.
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