Damian Williams, the United States Attorney for the Southern District of New York, announced that KENNETH WYNDER Jr., a former New York State Trooper and the president of the Law Enforcement Employees Benevolent Association (“LEEBA”), a labor union for law enforcement officers employed by the City of New York (the “City”), was sentenced to 40 months in prison, and ANDREW BROWN, a/k/a “Drew Brown,” the former financial advisor for LEEBA, was sentenced to 18 months in prison, for defrauding union members by misappropriating money from LEEBA’s Annuity Fund. WYNDER was also sentenced for personal income tax evasion and conspiring to evade federal taxes, including payroll taxes owed by LEEBA and its employees. WYNDER and BROWN were convicted after a five-day jury trial before U.S. District Judge P. Kevin Castel, who imposed this sentence. In addition, STEVEN WHITTICK, LEEBA’s former treasurer and a former police officer for New York City’s Department of Environmental Protection (“DEP”), previously pled guilty to conspiring to commit tax evasion and making false statements to law enforcement and was sentenced to 28 months in prison.
U.S. Attorney Damian William said: “Kenneth Wynder and Andrew Brown raided union-sponsored retirement accounts for years, placing their self interest over the hard-working public servants they represented as the president and financial advisor of the union, respectively. Wynder also evaded taxes on cash, checks, and other income he obtained from the union, including as a product of their theft from the union members’ retirement accounts. Union officials and advisors who violate their duties to the union members they represent will face serious consequences for their abuse of trust.”
According to the Indictment, Superseding Indictment, the underlying complaints filed in this case, as well as other publicly available information, prior court filings, and evidence presented during the trial in Manhattan federal court:
Law Enforcement Employees Benevolent Association and the Annuity Fund
LEEBA is a labor union that has acted as the collective bargaining representative principally for law enforcement personnel at various City agencies and has entered into agreements on behalf of those law enforcement employees, including agreements for insurance and retirement benefits. The City agencies whose employees LEEBA represented included, at various times, DEP, the Department of Sanitation (“Sanitation”), and the Department of Transportation (“Transportation”).
The Annuity Fund is a LEEBA fund that received monthly contributions from the City for the benefit of LEEBA’s members and maintained separate accounts for each fund member. These accounts were functionally similar to employer-sponsored 401(k) retirement accounts. WYNDER was a Trustee of the Annuity Fund and signatory to agreements that governed the fund, and BROWN was a Plan Administrator and Financial Advisor of the Annuity Fund. Under the relevant agreements and plans, the money in the Annuity Fund could be used for no purpose other than funding individual members’ retirement accounts and defraying reasonable administrative expenses of the Annuity Fund itself.
WYNDER
WYNDER, a former New York State Trooper, is the founder and former President of LEEBA and a former member of LEEBA’s board of directors. WYNDER also formerly served as the Fund Administrator of the Annuity Fund and as a member of the board of trustees of the Annuity Fund, pursuant to which he owed a fiduciary duty to act in the best interests of the Annuity Fund and its account holders. WYNDER also was on the board of trustees of the LEEBA Welfare Fund (the “Welfare Fund,” and collectively with the Annuity Fund, the “LEEBA Funds”), which provided supplemental insurance benefits to its members. While occupying those positions, WYNDER centralized and controlled major decision-making authority for LEEBA and the LEEBA Funds, often acting without the proper approval of their respective boards of directors or trustees. WYNDER’s de facto dominance of LEEBA and the LEEBA Funds enabled him to make decisions in his own self-interest and contrary to the interests of the Annuity Fund and individual members.
BROWN
BROWN, the founder of a Westchester-based financial services company, is the former Benefits Administrator and insurance broker for LEEBA and the LEEBA Funds. As a LEEBA Annuity Fund Plan Administrator and Financial Advisor, BROWN helped manage the investments in the Annuity Fund, receiving a commission for his services, and had a responsibility to act in the best interest of LEEBA’s members.
WYNDER’s and BROWN’s Fraud Scheme
From at least in or about 2012 up to and including 2020, WYNDER and BROWN participated in a scheme to steal, embezzle, and misappropriate money from the Annuity Fund and individual members’ retirement accounts. Specifically, WYNDER and BROWN made hundreds of thousands of dollars of fraudulent transfers from the Annuity Fund to LEEBA’s operating account, which WYNDER controlled, and WYNDER regularly used the funds, once transferred from the Annuity Fund, to enrich himself at union members’ expense, including through unauthorized and excessive checks to himself and cash withdrawals for his own benefit and to pay insurance benefits for which BROWN received commissions. In addition, WYNDER caused the union to pay for various personal expenses such as the purchase of a Lexus automobile, travel expenses to Dallas to watch a Dallas Cowboys football game, and a sailing trip, all paid for by the union, and none of which were contemporaneously reported to the Internal Revenue Service (“IRS”), as required.
To accomplish this fraudulent scheme, WYNDER and BROWN, acting in their capacity as the Annuity Fund’s Plan Administrators, repeatedly made false and misleading statements to a third-party retirement plan manager that served as the custodian for the Annuity Fund and the retirement accounts of individual union members, including through emails and faxes that WYNDER and BROWN used to withdraw increasingly large sums of money from the Annuity Fund, effectively causing such withdrawals to be made from the retirement accounts of individual members. From in or about 2014 through in or about 2019, WYNDER and BROWN caused the withdrawal of more than $500,000 from the individual retirement accounts that constitute the Annuity Fund, thereby wiping out the entire balance of certain members’ accounts. Without these improper withdrawals from the Annuity Fund, the LEEBA operating account would have been insolvent and would have had insufficient funds to pay for WYNDER’s excessive checks to himself and cash withdrawals and the personal expenses he caused to be charged to that account, as well as to pay for benefits for which BROWN made commissions as an insurance broker.
In addition, throughout the duration of this scheme, WYNDER and BROWN repeatedly made and approved false and misleading statements to LEEBA’s members and prospective members about how they were purportedly using and protecting their retirement accounts and the LEEBA Annuity Fund. WYNDER further concealed the scheme by causing LEEBA to fail to timely file mandatory reports and financial disclosures with the City and public reports to the Annuity Fund’s members and by making false statements to the Annuity Fund’s auditors and accountants.
WYNDER’s and WHITTICK’s Tax Evasion Scheme
From at least in or about 2015 through 2019, WYNDER participated in a conspiracy with LEEBA’s then-Treasurer, WHITTICK, to cause LEEBA to make payments to WYNDER and WHITTICK, by check and in cash, and to conceal those payments from the IRS. WYNDER and WHITTICK further conspired to ensure that such payments were made outside of LEEBA’s payroll processor. WYNDER and WHITTICK then concealed these payments from the IRS — including off-the-books payments to WYNDER of more than $400,000 — in order to evade their own personal income taxes and to evade the payroll taxes that were owed by LEEBA and certain LEEBA employees.
WHITTICK’s False Statements to Federal Agents
In or about October 2019, while serving as LEEBA’s Treasurer and after learning of a federal investigation into LEEBA’s finances – including the investigation of an alleged embezzlement scheme that ultimately resulted in wire fraud charges against WYNDER – WHITTICK repeatedly lied to federal agents in an effort to obstruct that investigation. WHITTICK did so despite personal involvement in some of the financial improprieties with which WYNDER was convicted. For example, on at least two occasions, on or about February 1, 2018, and March 30, 2018, WHITTICK withdrew $16,000 in cash from a LEEBA bank account and on each occasion deposited $15,000 cash into Wynder’s personal bank account and $1,000 cash into WHITTICK’s own personal bank account.
After the FBI executed a search warrant of LEEBA’s offices in September 2019, WHITTICK attempted to obstruct and to influence the ongoing federal investigation by making, in two different interviews with law enforcement agents, false statements about, among other subjects, cash withdrawals he made from LEEBA’s bank accounts, unauthorized withdrawals from LEEBA’s Annuity Fund and from the individual retirement accounts of Fund participants, and LEEBA’s payment for certain travel and entertainment expenses for union officers, including WHITTICK and WYNDER.
In addition to his prison term, WYNDER, 60, of Stroudsburg, Pennsylvania, was ordered to forfeit $529,000 and to pay $838,683 in restitution.
In addition to his prison term, BROWN, 56, of Putnam Valley, New York, was ordered to forfeit $3,049 and to pay $529,000 in restitution.
On November 17, 2021, WHITTICK, 54, of Kingston, New York, was sentenced to 28 months in prison and ordered to pay $179,766 in restitution.
Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the Department of Labor Office of Labor-Management Standards, and IRS, Criminal Investigation. Mr. Williams also thanked the New York City Comptroller’s Office and the New York City Department of Investigation for their assistance.
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