Dear Mr. Crump:

The United States Department of Labor, Employment Standards Administration, Office of Labor-Management Standards (OLMS) has been involved in an audit and investigation of UFCW Local 951. The period of this review included, but was not limited to, January 1, 1997, through December 31, 2000. This letter serves to highlight some of the areas of concern disclosed during the review of Local 951 financial procedures, and to inform you of the corrective action required by your organization at this time.

The Labor-Management Reporting and Disclosure Act of 1959, as Amended (LMRDA), requires that the officers of a labor organization manage and expend the assets and funds of the union in accordance with its constitution and bylaws and with federal law. In addition, Title II of the LMRDA establishes financial reporting and record keeping requirements for labor unions so that the required reports can be checked for accuracy and completeness. UFCW Local 951 failed to submit required financial reports that met the standards of acceptability under 29 USC 431. UFCW Local 951 failed to maintain records and documentation required under 29 USC 436. UFCW Local 951 Executive Board minutes, resolutions and other documentation failed to make clear that funds of the union were being handled in accordance with provisions under 29 USC 501(a).

On December 17, 1999, a $25,000 payment was made to UFCW Local 951 President, Robert Potter, from the UFCW Local 951 Automatic Data Processing (ADP-Payroll) account. A review of Local 951 financial records, Executive Board authorizations, and Executive Board meeting minutes, for the period immediately preceding and after the date of the payment, did not disclose the purpose or nature of the payment. The Labor Organization Annual Report Form LM-2 submitted by UFCW Local 951 for the fiscal year ending December 31, 1999 did not disclose this payment as a disbursement to Mr. Potter. This payment should have been supported with documentation in the union’s records in accordance with 29 USC 436, and clearly identified and explained in union records, such as in Executive Board meeting minutes, indicating that the payment was reviewed and approved by the UFCW Local 951 Executive Board.

UFCW Local 951 is required to submit an amended LM-2 report for 1999 which properly reflects the payment to Robert Potter in Schedule 9, All Payments to Officers.

From April 1998 to May 2000 over $32,000 in UFCW Local 951 funds were disbursed to lease, furnish and maintain an apartment in Northville, MI (Detroit area) for President Robert Potter. A review of Local 951 financial records, Executive Board authorizations, and Executive Board meeting minutes did not sufficiently disclose that the Northville apartment was for Robert Potter’s exclusive use, as was the case, or the costs associated with the apartment lease. The Labor Organization Annual Report Form LM-2 submitted by UFCW Local 951 did not attribute the apartment costs and expenses to Mr. Potter or denote the business or personal benefit derived by Robert Potter from the leasing, furnishing and maintenance of the apartment. When a union official derives personal benefit from the union’s funds and assets it is particularly important that discussions and resolutions regarding the matter be thoroughly reflected in Executive Board meeting minutes and other documents to reflect the proper authorization by the union’s governing body. UFCW Local 951 is required to amend the 1998, 1999, and 2000 LM-2 reports to reflect the business expense and/or personal benefit to Robert Potter for the apartment in Schedule 9, All Payments to Officers.

On July 3, 1998, Robert Potter received $132,300.00, Joseph Crump received $97,461.00, and Michael McMillan received $88,861.50 in UFCW Local 951 funds from the Local 951 Automatic Data Proceeding (ADP-Payroll) account. A review of Local 951 financial records, Executive Board authorizations, and Executive Board meeting minutes did not sufficiently disclose the purpose or nature of these payments. The Labor Organization Annual Report Form LM-2 submitted by UFCW Local 951 for the fiscal year ending December 31, 1998 did not attribute the payments to Robert Potter, Joseph Crump and Michael McMillan. Large and unusual disbursements to union officials should be specifically documented and be clearly approved by the governing body of the union at the time the disbursements are made to ensure that proper authorization procedures were undertaken in the expenditure of the funds. These payments should be supported with documentation in the union’s records in accordance with 29 USC 436 and be clearly identified and explained in union records and in Executive Board meeting minutes. UFCW Local 951 is required to amend the 1998 LM-2 report to reflect the payments to Robert Potter, Joseph Crump and Michael McMillan in Schedule 9, All Payments to Officers.

In January 1996, January 1997 and January 1998 Robert Potter received separate payments of $26,500 each year in Local 951 funds from the Automatic Data Processing (ADP – Payroll) account. In addition, in January of each of these years, and January of 1999 and 2000, Robert Potter received lump sum payments for two (2) weeks salary in lieu of vacation. The payment of salary in lieu of vacation does not appear to be within the scope of the UFCW Local 951 flexible benefit plan selected by Mr. Potter as an employee of the union. A review of Local 951 financial records, Executive Board authorizations, and Executive Board meeting minutes did not sufficiently disclose the purpose or nature of the payments or salary in lieu of vacation made to Mr. Potter in each of these years.

The Labor Organization Annual Report Form LM-2 submitted by UFCW Local 951 for the fiscal years ending December 31, 1996, 1997, 1998, 1999, and 2000 did not disclose the purpose or nature of these payments to Robert Potter. Large lump-sum salary payments and deviations from standard practice in paying vacation pay should be specifically noted in union records, such as in Executive Board meeting minutes. UFCW Local 951 is required to amend the 1998, 1999, and 2000, LM-2 reports to reflect and properly identify these payments to Robert Potter in Schedule 9, All Payments to Officers.

During the period of records review numerous expenditures were made to, for, or on behalf of Robert Potter ostensibly for the conduct of official union business. These expenses included, but were not limited to, expenditures for meals, travel, car rental, golf, luggage, gifts of wine and golf equipment, and for travel on behalf of Mr. Potter’s position as a Vice President for the UFCW International union. The expenditures were made using the UFCW Local 951 corporate American Express card or were reimbursed to Mr. Potter in cash. Many of these expenditures were not attributed to Mr. Potter on the Form LM-2 submitted by UFCW Local 961 in Schedule 9, All Payments to Officers. Rather, the expenditures were erroneously reported as Corporate Charges or Office and Administrative expenses. In addition, some of Mr. Potter’s expenses incurred for travel on behalf of the International union, and charged on the Local 951 American Express card, were reimbursed to Mr. Potter rather than the local union. UFCW Local 951 is required to amend the LM-2 reports for 1998, 1999, and 2000, to properly reflect the payment of all expenses incurred by Mr. Potter on Schedule 9, All Payments to Officers, of the LM-2 report. In addition, the reimbursements from Mr. Potter to Local 951 should be reflected on the LM-2 Report in Schedule 14-Other Receipts for the fiscal year in which they were made.

During the audit it was disclosed that Mr. Potter’s travel vouchers from 1997 through 2000 were changed, or “reproduced”, after the vouchers had been initialed, approved and processed by the finance department. The initials of authorizing officers and/or employees were placed on the new documents without their knowledge, and the original vouchers are no longer available. In the future such original records must be maintained with the changed or reproduced records with an explanation of why the changes were being made and why initials of reviewing officials were made without their knowledge. Also, officers or employees who incur meal or entertainment expenses must include in the supporting documentation for such disbursements the name(s) of the individuals who were in attendance (not about whom they were talking), the purpose of the meeting, and the union business that was conducted. LMRDA, Section 209, does not permit the falsification of information in travel documents for any reason. Officers or employees traveling at the union’s expense should indicate clearly on travel vouchers and other supporting documentation the specific purpose of the trip. Stating that a trip is to “attend meetings” does not satisfy the record keeping requirements under 29 USC 436.

In summary, UFCW Local 951 is deficient in compliance with many of the areas and requirements of the LMRDA and must improve record keeping and reporting practices. Please comply with all requests for reports and documents in this letter within 45 days of this date. If you have any questions please direct them to investigator Grant Thomas at 616/456-2335.