Washington Teachers Union Case
Amended indictment of James Odell Baxter, II,  James Goosby, Jr., and Gwendolyn M. Hemphill
August 2005

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[Note: after the original indictment, filed on November 30, 2003, Robin J. Klein pled guilty, and she was dropped from this indictment. In addition, counts 2, 3, 4, and 6 in the original indictment were dropped.] 

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Holding a Criminal Term
Grand Jury Sworn in on March 3, 2003

UNITED STATES OF AMERICA V. JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL, Defendants.

CRIMINAL No.: 

VIOLATIONS: 

18 U.S.C. § 371 (Count 1), Conspiracy
18 U.S.C. §§ 1343 & 1346 (Count 2) Wire Fraud and Deprivation of Honest Services
18 U.S.C. §§ 1341 & 1346 (Counts 3-5) Mail Fraud and Deprivation of Honest Services
18 U.S.C. § 1001 (Counts 6-7) False Statements
29 U.S.C. § 501(c) (Counts 8-13) Embezzlement from Labor Organization
18 U.S.C. § 1956(h) (Count 14) Money Laundering Conspiracy
18 U.S.C. § 1956(a)(1)(B)(i) (Counts 15-19) Money Laundering
29 U.S.C. § 439(c) (Counts 20-21) Making a False Record
D.C. Code §§ 22-3211 & 3212(a) (Count 22) First Degree Theft
26 U.S.C. § 7206(2) (Count 23) Fraud and False Statements in Relation to Internal Revenue Laws
18 U.S.C. § 2 Aiding and Abetting and Causing an Act to be Done

Indictment

The Grand Jury charges that:

COUNT ONE
(Conspiracy)

At all times material to the Indictment:

Introduction

1. The Washington Teachers' Union ("WTU" or "the union") was a labor organization, or labor union, engaged in an industry affecting commerce and representing, among other persons, approximately 5,000 teachers and retired professionals of the District of Columbia Public School ("DCPS") system, and was the Washington, D.C., local affiliate of the American Federation of Teachers ("AFT"). WTU received most of its funds from dues collected from the paychecks of its schoolteacher members. WTU was also a federal tax-exempt organization.

2. WTU's finances were overseen by officers and employees, including defendants JAMES ODELL BAXTER II ("BAXTER") and GWENDOLYN M. HEMPHILL ("HEMPHILL"), who occupied positions of trust in relation to WTU and its individual members and who, therefore, owed a fiduciary duty to hold the money and property of WTU solely for the benefit of WTU and its members and to manage, invest, and expend the money and property of WTU for official union purposes, and not for the personal benefit of the officers and employees, or the personal benefit of the officers' and employees' friends and relatives.

3. The Department of Labor ("DOL") was a Department within the Executive Branch of the United States Government with regulatory oversight responsibilities for labor unions in the United States. Among other things, DOL required certain labor organizations to submit information about their finances and expenditures on an annual basis to DOL headquarters in Washington, D.C.

4. As a labor organization in an industry affecting commerce, WTU was regulated by, and under the oversight of, DOL. As a regulated union, WTU was required annually to submit reports of its financial condition ("Forms LM-2") to DOL. WTU did prepare and file Forms LM-2 with DOL, although these filings were not always timely.

5. Forms LM-2 required truthful disclosure of, among other things, a) the full amount of union funds disbursed to each officer or employee, including payments of salary, wages, reimbursement of officers and employees for official union business, and payments made through credit arrangements to purchase goods and services received by, or on behalf of, the officer or employee; b) the total amount of disbursements for professional services, such as accounting and legal fees; c) the total amount of disbursements for employee benefits; and d) the total amount of disbursements for loans to officers and employees.

6. Forms LM-2 called for the signatures of the labor union's president and treasurer. Above the signature lines on the Forms LM-2 was the declaration, "Each of the undersigned, duly authorized officers of the above labor organization, declares under the applicable penalties of law, that all of the information submitted in this report (including the information contained in any accompanying documents) has been examined by the signatory and is, to the best of the undersigned's knowledge and belief, true, correct, and complete."

7. The Internal Revenue Service ("IRS"), an agency within the United States Department of the Treasury, required tax-exempt labor organizations to file annually federal tax returns known as Forms 990. Forms 990 called for, among other information, disclosure of officers' and employees' compensation and benefits, as well as an accounting of the organization's receipts and expenditures of funds for other purposes. Federal law required that filers of Forms 990 maintain copies of completed Forms 990 for three years within their office space for inspection by the public. WTU did prepare and file Forms 990 with the IRS, although these filings were not always timely.

8. Forms 990 called for the signature of an officer of the filing organization, along with any paid preparer of the Form 990. Above the signature lines of the Form 990 was the following: "Under penalties of perjury, I declare that I have examined the return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than officer) is based on all information of which preparer has any knowledge."

The Defendants

9. From in or about 1994 through in or about September 2002, defendant BAXTER was the treasurer of WTU. Defendant BAXTER was at times a full-time, salaried official of WTU. From in or about July 1997 through in or about June 2000, defendant BAXTER was in fact a full-time, salaried employee of the Government of the District of Columbia. After he left WTU's employment in or about 1997, defendant BAXTER was not entitled to receive either a WTU salary or other compensation for his services as treasurer other than a nominal hourly fee.

10. From in or about 1996 through in or about September 2002, defendant HEMPHILL worked at WTU as executive assistant to the union's president and, at various times, as WTU's office manager and as its lobbyist with the District of Columbia Government.

11. Robin Klein was a certified public accountant located in the State of Maryland who performed accounting services for WTU, including preparation of a trial balance for WTU, which was a report of account balances showing, among other things, WTU revenues, expenditures, assets, and liabilities for the fiscal year ending September 30, 1998. Klein also prepared, and assisted in the preparation of, Form LM-2 for the WTU fiscal year ending September 30, 1998. WTU paid defendant Klein at least $48,700 for her services.

12. Defendant JAMES A. GOOSBY, JR., ("GOOSBY") was a tax preparer located in the State of Maryland. On or about August 10, 2001, on behalf of WTU, defendant HEMPHILL signed a contract with defendant GOOSBY, d/b/a Goosby Income Tax Service, pursuant to which WTU agreed to pay defendant GOOSBY $5,000 per month, in exchange for the services of Goosby Income Tax Service in establishing a WTU accounting system, preparing WTU financial statements and reports, and preparing WTU's Forms LM-2 and 990. Defendant GOOSBY prepared several WTU profit and loss statements, also known as income statements, which were accounting documents showing revenues and expenditures by account, as established by defendant GOOSBY and WTU. Defendant GOOSBY also prepared, and assisted in the preparation of, Form LM-2 for the WTU fiscal year ending September 30, 2001, and Form 990 for the same period, among other Forms 990.

13. Having been retained by WTU to prepare WTU trial balances and/or income statements reflecting WTU's expenditures and receipts during particular reporting periods, as well as to assist WTU in the preparation of reports to the government, Robin Klein and defendant GOOSBY each owed a fiduciary duty to WTU and its members to perform her or his accounting services honestly and without fraud, deceit, or misrepresentations of fact.

Bullock, Holmes, Martin, Alderman, and Expressions Unlimited

14. Barbara Bullock was the president of WTU from in or about 1994 through in or about September 2002 and, as such, was a full-time, salaried WTU official responsible for the administration of all of the union's affairs.

15.   Leroy Holmes was a WTU employee whose duties included serving as Barbara Bullock's chauffeur and performing other administrative functions in the WTU office.

16.   Michael Martin was Barbara Bullock's sometime hairdresser and personal shopper, as well as defendant HEMPHILL's son-in-law.

17. Errol Alderman was an acquaintance of Michael Martin, who opened a depository account at a federally-insured financial institution in the District of Columbia in the name of a fictitious company called "Expressions Unlimited."

18. Defendants BAXTER and HEMPHILL, along with Barbara Bullock, wrote WTU checks totaling at least $490,000 to Expressions Unlimited, which provided no goods or services to WTU and was operated by Michael Martin, Errol Alderman, and Michael Martin's wife (defendant HEMPHILL's daughter).

WTU/AFT Internal Governance

19. AFT, along with its local affiliates, was governed in part by a constitution and by-laws calling for local affiliates to pay a fee, known as a per capita tax, to AFT for each member of the local affiliate. WTU collected monthly dues for itself, as well as an amount designated for the AFT per capita tax, through bi-weekly payroll deductions for WTU's schoolteacher members.

20. WTU was governed in part by a constitution designating the president, general vicepresident, six vice-presidents, and a recording secretary as the elected officers of the union. In addition, the constitution designated as union officers the treasurer and a three-member Board of Trustees. WTU's by-laws called for its operations to be overseen by an Executive Board consisting of the elected officers, along with at least twelve other members drawn from elected representatives of individual schools and other sources.

21. WTU's by-laws provided that the person occupying the office of treasurer was responsible for, among other things, receiving and disbursing funds, countersigning all checks, maintaining financial records, and, in consultation with the Board of Trustees, preparing and submitting periodic financial reports to the Executive Board and the membership.

22. WTU was governed in part by by-laws that expressly prohibited the fraudulent receipt or use of union funds, or misappropriation of union funds, by WTU members.

23. To be valid, WTU checks required the signatures of two of the persons occupying the offices of president, general vice-president, and treasurer. Barbara Bullock delegated to defendant HEMPHILL authority to affix a stamp of Barbara Bullock's signature to WTU checks. Defendant HEMPHILL did, in fact, write many WTU checks, stamp Barbara Bullock's signature, and obtain defendant BAXTER's actual signature.

The Conspiracy

24. Beginning in or about November 1995 and continuing through in or about October 2002, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER 11, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL, did knowingly combine, conspire, confederate, and agree with each other and others known and unknown to the Grand Jury to commit offenses against the United States, that is:

a. embezzlement from a labor organization, by stealing, embezzling, and unlawfully and willfully converting, and abstracting to their own use and the use of another, any of the moneys, funds, securities, property, and other assets of WTU, a labor organization of which defendants BAXTER and HEMPHILL were officers and were employed, in violation of Title 29, United States Code, Section 501(c);

b. wire fraud and deprivation of honest services, by devising a scheme and artifice to defraud WTU and its members and to obtain their money and property by means of materially false and fraudulent pretenses, representations, and promises, and to deprive WTU and its members of their intangible right to the honest services of defendants BAXTER, GOOSBY, HEMPHILL, and KLEIN, performed free from deceit, dishonesty, self-enrichment, and self-dealing, and for the purposes of executing the scheme and artifice, and attempting to do so, to transmit and cause to be transmitted by means of wire communication in interstate and foreign commerce, any writings, signs, pictures, and sounds, in violation of Title 18, United States Code, Sections 1343 and 1346;

c. mail fraud and deprivation of honest services, by devising a scheme and artifice to defraud WTU and its members and to obtain their money and property by means of materially false and fraudulent pretenses, representations, and promises, and to deprive WTU and its members of their intangible right to the honest services of defendants BAXTER, GOOSBY, and HEMPHILL, performed free from deceit, dishonesty, self-enrichment, and self-dealing, and for the purposes of executing the scheme and artifice, and attempting to do so, to place in any post office and authorized depository for mail matter, any matter and thing to be sent and delivered by the Postal Service, and to deposit and cause to be deposited any matter and thing whatever to be sent and delivered by any private and commercial interstate carrier, and knowingly to cause to be delivered by mail and such carrier according to the direction thereon, any such matter and thing, in violation of Title 18, United States Code, Sections 1341 and 1346;

d. false statements, by making materially false, fictitious, and fraudulent statements and representations, and making and using false writings and documents, knowing the same to contain materially false, fictitious, and fraudulent statements and entries, in matters within the jurisdiction of the Executive Branch of the Government of the United States, in violation of Title 18, United States Code, Section 1001.

Purpose of the Conspiracy

25. It was the purpose of the conspiracy for the defendants to enrich themselves and others known and unknown to the Grand Jury by stealing millions of dollars from WTU and its individual members, and to hide and cover up the conspiracy, its objects, and the actions taken in furtherance of it.

Manner and Means of the Conspiracy

26. It was a part of the conspiracy that defendants BAXTER and HEMPHILL, along with others known and unknown to the Grand Jury, used credit card accounts, including a WTU business American Express card account, to make personal and unauthorized purchases amounting to more than $1.5 million, which were paid for by WTU or for which WTU was obligated to pay.

27. It was further a part of the conspiracy that defendants BAXTER and HEMPHILL stole at least $500,000 in WTU funds by writing and causing to be written to themselves WTU checks, sometimes writing falsely and fraudulently that the checks were payment for, among other things, "pension," "professional services," "professional fees," and "reimbursement."

28. It was further a part of the conspiracy that defendants BAXTER and HEMPHILL stole WTU funds by writing and causing to be written approximately $1.4 million in WTU checks to Leroy Holmes, who would either cash these checks and return a substantial portion to defendant HEMPHILL or engage in financial transactions by depositing cash directly into the personal bank account of Barbara Bullock.

29. It was further a part of the conspiracy that defendants BAXTER and HEMPHILL stole WTU funds by writing and causing to be written WTU checks totaling at least $570,000 to Michael Martin, Errol Alderman, and Expressions Unlimited for the express purpose that a portion of these funds would be returned to Barbara Bullock or deposited into Barbara Bullock's personal bank account and most of the remainder used for the personal benefit of defendant HEMPHILL, Michael Martin, Michael Martin's wife (defendant HEMPHILL's daughter), and, to a lesser extent, Errol Alderman.

30. It was further a part of the conspiracy that Michael Martin and his wife (defendant HEMPHILL's daughter) sometimes would forge the endorsement of Errol Alderman and deposit WTU checks into the Expressions Unlimited bank account and deposit checks from Expressions Unlimited into Barbara Bullock's bank account.

31. It was further a part of the conspiracy that defendant HEMPHILL and Barbara Bullock used a portion of the WTU funds funneled into their personal accounts through Expressions Unlimited, Errol Alderman, Leroy Holmes, Michael Martin, and Michael Martin's wife (defendant HEMPHILL's daughter) to write personal checks to pay WTU's American Express bill, as well as one or more other credit cards, so as to make it appear that they were reimbursing the union for their personal and unauthorized expenditures of union funds, as well as for other personal purposes.

32.   It was further a part of the conspiracy that defendants BAXTER and HEMPHILL made and caused to be made false and misleading reports of WTU's expenditures to WTU members.

33. It was further a part of the conspiracy that defendant GOOSBY and Robin Klein prepared and assisted in preparing, and that defendants BAXTER and HEMPHILL and Barbara Bullock filed and caused to be filed with the United States Government, false and fraudulent WTU financial reports.

34. It was further a part of the conspiracy that the conspirators caused WTU not to pay Leroy Holmes through the ordinary WTU payroll system and that checks written to Leroy Holmes were not characterized as employee salary on WTU's internal financial reports, Forms LM-2, and Forms 990.

35. It was further a part of the conspiracy that defendant GOOSBY, who also prepared the personal federal income tax returns for Barbara Bullock and Leroy Holmes, assisted in concealing the conspiracy by failing to designate as income to Barbara Bullock and Leroy Holmes the WTU checks that he knew had been written to them outside the WTU payroll system and otherwise assisted Barbara Bullock and Leroy Holmes in filing false and fraudulent personal federal tax returns.

36. It was further a part of the conspiracy that the conspirators devised and created false and fraudulent expense vouchers and invoices to support the payment of WTU checks to themselves and others.

Overt Acts

37. In furtherance of the conspiracy and to effect the objects thereof, the defendants and other co-conspirators, known and unknown to the Grand Jury, committed the following overt acts, among others, in the District of Columbia and elsewhere:

a. On or about December 19, 1997, defendants BAXTER and HEMPHILL, who affixed Barbara Bullock's signature stamp, prepared and signed a $3,250 check to Leroy Holmes, which stated falsely on the memo line that it was for "repairs-material."

b. On or about December 19, 1997, Leroy Holmes cashed the $3,250 check, kept a portion of the funds for himself, and returned the remainder of the funds to defendant HEMPHILL.

c.   On or about December 20, 1997, defendant HEMPHILL deposited $2,700 in cash into her personal bank account at Chevy Chase Bank.

d.   On or about December 28, 1998, Robin Klein faxed to defendant BAXTER a false and fraudulent WTU financial report on which Klein divided in half $553,958.68 in American Express charges from the WTU fiscal year October 1, 1997 through September 30, 1998, categorizing $276,979.34 as "Employee Benefit Expense," and $276,979.34 as "Travel and Meeting Expense," and re-categorizing $141,797.38 in WTU checks paid to defendant HEMPHILL, Leroy Holmes, and another WTU employee from the category "Temporary Help" to "Employee Benefit Expense."

e. On or about December 30,1998, defendant KLEIN handwrote false accounting journal entries for information to be included on WTU's Form LM-2, among which was an entry for "Travel Mtg" that included $276,979.34 in American Express charges from the WTU fiscal year October 1, 1997 through September 30, 1998.

f. On or about December 31, 1998, defendant BAXTER and Barbara Bullock filed Form LM-2 with DOL, incorporating numerous false and misleading entries, including but not limited to those described in subparagraphs d. and e. above.

g. On or about April 22,1999, Robin Klein billed WTU $4,108.75 for 43.25 hours spent on preparation of and research related to the Form LM-2 filed on or about December 31, 1998, and $5,700 for 60 hours spent in December 1998 compiling and identifying $240,902.84 in personal expenditures by Barbara Bullock on WTU's American Express credit card account, which appeared on American Express statements for the months October 1997 through June 1998.

h. On or about August 26, 2000, defendants BAXTER and HEMPHILL wrote and caused to be written a WTU check in the amount of $60,000 to Expressions Unlimited, which was deposited into the Expressions Unlimited bank account.

i. On or about September 5, 2000, Errol Alderman obtained a $55,000 cashier's check from the Expressions Unlimited bank account and deposited the check into Barbara Bullock's personal bank account.

j. On or about September 13, 2000, Barbara Bullock wrote a $60,000 check from her personal bank account to WTU's American Express account.

k. On or about November 30, 2000, defendant HEMPHILL's daughter deposited into Barbara Bullock's personal bank account a check from Expressions Unlimited in the amount of $7,500.

l. On or about December 14, 2000, defendant HEMPHILL's daughter deposited into the Expressions Unlimited bank account a WTU check to Expressions Unlimited in the amount of $4,400.

m. On or about December 18, 2000, Leroy Holmes cashed a $15,000 WTU check at WTU's bank and, in turn, deposited the cash proceeds into Barbara Bullock's personal bank account.

n. In or about September 2001, defendant BAXTER incurred $31,360 in charges on his WTU American Express card to pay for four club-level Washington Wizards season tickets held in defendant BAXTER's name and mailed to him at his home address.

o. On or about November 28, 2001, defendant HEMPHILL incurred a charge of $6,439 on her WTU American Express card to pay for dental implants, which was the final installment in a total of $29,386.37 between May 5, 2000, and November 28, 2001, paid to The Dental Group in Riverdale, Maryland, for dental work on defendant HEMPHILL and her husband.

p. On or about December 29,200 1, defendant GOOSBY prepared a WTU income statement for the fiscal year October 1, 2000 through September 30, 2001, in which he mischaracterized $750,883.12 in WTU checks in fact written to American Express as expenditures for legitimate-sounding purposes, including "Postage and Delivery" and "Dues/Refund."

q. On or about January 2, 2002, defendant BAXTER and Barbara Bullock filed Form LM-2 for the fiscal year October 1, 2000 through September 30, 2001, with the Department of Labor, incorporating false categorizations of American Express charges from the December 29, 2001, income statement prepared by defendant GOOSBY.

r. On or about February 5, 2002, defendant GOOSBY, assisted by defendants BAXTER and HEMPHILL, filed Form 990 for the fiscal year October 1, 2000 through September 30, 2001, with the IRS, incorporating false categorizations of American Express charges from the December 29, 2001 income statement prepared by defendant GOOSBY.

s. On or about March 7, 2002, defendant GOOSBY faxed, or caused to be faxed, to WTU a bill for $5,000 for his services.

t. On or about February 11, 2002, defendant BAXTER made a false and misleading report about WTU expenditures for the quarter October through December 2001 to the WTU Board of Trustees, understating the true amount of income and expenditures for the period and misrepresenting the amounts spent on the various accounting categories reported.

u. On or about April 17, 2002, defendant BAXTER and Barbara Bullock prepared a letter to the District of Columbia Office of Pay and Retirement containing instructions to withhold $160.09 in dues from DCPS teachers as retroactive dues owed on account of the 2002 collective bargaining agreement (which called for retroactive salary increases to October 2001), when the true amount of the retroactive dues increase was $16.09.

v. On or about April 18, 2002, Barbara Bullock mailed, or caused to be mailed, to the District of Columbia Office of Pay and Retirement instructions to withhold $160.09 in dues from DCPS teachers as retroactive dues owed on account of the 2002 collective bargaining agreement (which called for retroactive salary increases to October 2001), when the true amount of the retroactive dues increase was $16.09.

w.   On or about April 22, 2002, Leroy Holmes cashed a WTU check for $10,900 and gave most of the proceeds to defendant HEMPHILL.

x.   On or about April 23, 2002, defendant HEMPHILL deposited $9,200 in cash into her personal bank account.

y. In or about June 2002, defendants BAXTER and HEMPHILL, and others known and unknown to the Grand Jury, spent the "dues" obtained unlawfully, as described in Overt Acts u. and v. above, by writing WTU checks to themselves and others, including but not limited to: i) $28,939.22 to defendant BAXTER; and ii) $18,805.02 to defendant HEMPHILL.

(Conspiracy and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Sections 371 & 2).

COUNT TWO 
(Wire Fraud and Deprivation of Honest Services)

38. Paragraphs 1 through 23 of the Indictment are re-alleged as though fully set forth herein.

The Scheme to Defraud

39. Beginning in or about November 1995 and continuing through in or about October 2002, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL, aided and abetted by each other and others known and unknown to the Grand Jury, knowingly and willfully did devise and intend to devise a scheme and artifice to defraud WTU and its members, and to obtain their money and property by means of materially false and fraudulent pretenses, representations, and promises, and to deprive WTU and its members of their intangible right to the honest services of defendants BAXTER, GOOSBY, and HEMPHILL, performed free from deceit, dishonesty, self-enrichment, and self-dealing.

Purpose of the Scheme

40. It was the purpose of the scheme for the defendants to enrich themselves and others known and unknown to the Grand Jury by stealing millions of dollars from WTU and its individual members, and to hide and cover up the scheme, its objects, and the actions taken in furtherance of it.

Manner and Means of the Scheme

41. It was a part of the scheme that defendants BAXTER and HEMPHILL, along with others known and unknown to the Grand Jury, used credit card accounts, including a WTU business American Express card account, to make personal and unauthorized purchases amounting to more than $1.5 million, which were paid for by WTU or for which WTU was obligated to pay.

42. It was further a part of the scheme that defendants BAXTER and HEMPHILL stole at least $500,000 in WTU funds by writing and causing to be written to themselves WTU checks, sometimes writing falsely and fraudulently that the checks were payment for, among other things, "pension," "professional services," "professional fees," and "reimbursement."

43. It was further a part of the scheme that defendants BAXTER and HEMPHILL stole WTU funds by writing and causing to be written approximately $1.4 million in WTU checks to Leroy Holmes, who would either cash these checks and return a substantial portion to defendant HEMPHILL or engage in financial transactions by depositing cash directly into the personal bank account of Barbara Bullock.

44. It was further a part of the scheme that defendants BAXTER and HEMPHILL stole WTU funds by writing and causing to be written WTU checks totaling at least $570,000 to Michael Martin, Errol Alderman, and Expressions Unlimited for the express purpose that a portion of these funds would be returned to Barbara Bullock or deposited into Barbara Bullock's personal bank account and most of the remainder used for the personal benefit of defendant HEMPHILL, Michael Martin, Michael Martin's wife (defendant HEMPHILL's daughter), and, to a lesser extent, Errol Alderman.

45. It was further a part of the scheme that Michael Martin and his wife (defendant HEMPHILL's daughter) sometimes would forge the endorsement of Errol Alderman and deposit WTU checks into the Expressions Unlimited bank account and deposit checks from Expressions Unlimited into Barbara Bullock's bank account.

46. It was further a part of the scheme that defendant HEMPHILL and Barbara Bullock used a portion of the WTU funds funneled into their personal accounts through Expressions Unlimited, Errol Alderman, Leroy Holmes, Michael Martin, and Michael Martin's wife (defendant HEMPHILL's daughter) to write personal checks to pay WTU's American Express bill, as well as one or more other credit cards, so as to make it appear that they were reimbursing the union for their personal and unauthorized expenditures of union funds, as well as for other personal purposes.

47.   It was further a part of the scheme that defendants BAXTER and HEMPHILL made and caused to be made false and misleading reports of WTU's expenditures to WTU members.

48. It was further a part of the scheme that defendants GOOSBY and Robin Klein prepared and assisted in preparing, and that defendants BAXTER and HEMPHILL and Barbara Bullock filed and caused to be filed with the United States Government, false and fraudulent WTU financial reports.

49. It was further a part of the scheme that defendants BAXTER, HEMPHILL, and others known and unknown to the Grand Jury caused WTU not to pay Leroy Holmes through the ordinary WTU payroll system and that checks written to Leroy Holmes were not characterized as employee salary on WTU's internal financial reports, Forms LM-2, and Forms 990.

50. It was further a part of the scheme that defendant GOOSBY, who also prepared the personal federal income tax returns for Barbara Bullock and Leroy Holmes, assisted in concealing the scheme by failing to designate as income to Barbara Bullock and Leroy Holmes the WTU checks that he knew had been written to them outside the WTU payroll system and otherwise assisted Barbara Bullock and Leroy Holmes in filing false and fraudulent personal federal tax returns.

51. It was further a part of the scheme that defendants BAXTER, HEMPHILL, and others known and unknown to the Grand Jury devised and created false and fraudulent expense vouchers and invoices to support the payment of WTU checks to themselves and others.

Use of the Wires in Furtherance of the Scheme

52. On or about the date of each count listed below, in the District of Columbia and elsewhere, the defendants listed in each count, aided and abetted by each other, and others known and unknown to the Grand Jury, for the purpose of executing the above-described scheme and artifice to defraud and deprive, and attempting to do so, did transmit and cause to be transmitted by means of wire communications in interstate commerce, certain writings, signals, and sounds listed below:

COUNTS THREE THROUGH FIVE
(Mail Fraud and Deprivation of Honest Services)

53. Paragraphs 1 through 23 of the Indictment are re-alleged as though fully set forth herein.

The Scheme to Defraud

54. Beginning in or about November 1995 and continuing through in or about October 2002, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL, aided and abetted by each other and others known and unknown to the Grand Jury, knowingly and willfully did devise and intend to devise a scheme and artifice to defraud WTU and its individual members and to obtain their money and property by means of materially false and fraudulent pretenses, representations, and promises, and to deprive WTU and its members of their intangible right to the honest services of defendants BAXTER, GOOSBY, and HEMPHILL, performed free from deceit, dishonesty, selfenrichment, and self-dealing.

The Purpose of the Scheme

55. The allegations contained in Paragraph 40 of Counts Two through Six of this Indictment are re-alleged as though fully set forth herein as constituting the purpose of the scheme employed by the defendants and others.

Manner and Means of the Scheme

56. The allegations contained in Paragraphs 41 through 51 of Counts Two through Six of this Indictment are re-alleged as though fully set forth herein as constituting the manner and means of the scheme employed by the defendants and others.

Use of the Mails in Execution of the Scheme

57. On or about the date of each count listed below, in the District of Columbia and elsewhere, the defendants listed in each count, aided and abetted by each other and others known and unknown to the Grand Jury, for the purpose of executing the above-described scheme and artifice to defraud and deprive, and for obtaining money and property by means of false and fraudulent pretenses, representations, and promises, and attempting to do so, did place and cause to be placed in any post office and authorized depository for mail matter, any matter and thing whatever to be sent and delivered by the Postal Service, as described below:

COUNT SIX
(False Statements)

58.   Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

59.   On or about December 31,1998, within the District of Columbia, in a matter within the jurisdiction of the Executive Branch of the Government of the United States, that is, the Department of Labor, defendant JAMES ODELL BAXTER II, Robin Klein, and defendant GWENDOLYN M. HEMPHILL, aided and abetted by others known and unknown to the Grand Jury, did knowingly and willfully make a materially false, fictitious, and fraudulent statement and representation, and did make and use a false writing and document knowing the same to contain a materially false, fictitious, and fraudulent statement and entry, in that, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL filed and caused to be filed with the Department of Labor a Form LM-2 that, among other false, fraudulent, and misleading reporting: a) identified as disbursements to defendant HEMPHILL and Barbara Bullock only those amounts paid to them as salary and omitted at least $80,000 in other checks; b) falsely accounted for personal credit card purchases paid for by WTU by classifying them as, among other things, "Travel & Mtg" and "Member Svcs/Optical/Dental/lgl benefits" expenses; and c) failed to disclose $118,208 in payments to Leroy Holmes.

(False Statements, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Sections 1001 & 2).

COUNT SEVEN 
(False Statements)

60. Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

61. On or about December 27, 2001, within the District of Columbia, in a matter within the jurisdiction of the Executive Branch of the Government of the United States, that is, the Department of Labor, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL, aided and abetted by others known and unknown to the Grand Jury, did knowingly and willfully make a materially false, fictitious, and fraudulent statement and representation, and did make and use a false writing and document knowing the same to contain a materially false, fictitious, and fraudulent statement and entry, in that, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL filed and caused to be filed with the Department of Labor a Form LM-2 that, among other false, fraudulent, and misleading reporting: a) identified as disbursements to defendant HEMPHILL and Barbara Bullock only those amounts paid to them as salary and omitted at least $100,000 in other checks; b) falsely accounted for $750,883.12 in credit card purchases paid for by WTU and other funds embezzled from WTU as, among other things, "postage and delivery," "advertising," "office supplies," "membership services," "employee pension," "negotiation," "dues/refund," and "per capita taxes"; c) failed to disclose disbursements of approximately $400,000 to Leroy Holmes; and d) failed to disclose $62,136.64 in disbursements to defendant BAXTER.

(False Statements and Aiding and Abetting and Causing an Act to be Done, in violation of Title 18, United States Code, Sections 1001 & 2).

COUNTS EIGHT THROUGH THIRTEEN
(Embezzlement)

62. Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

63. On or about the dates listed below, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL, aided and abetted by each other and others known and unknown to the Grand Jury, while officers, agents, and persons employed, directly and indirectly, by WTU, a labor organization engaged in an industry affecting commerce, did embezzle, steal, and unlawfully and willfully abstract and convert to their own use and the use of another any of the moneys, funds, securities, property, and other assets of WTU in the approximate amounts listed:

COUNT FOURTEEN
(Conspiracy to Commit Money Laundering)

64.   Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

65. From in or about December 1997, the exact date being unknown to the Grand Jury, through in or about October 2002, within the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL did unlawfully, willfully, and knowingly conspire, confederate, and agree, together with others known and unknown to the Grand Jury, to commit offenses defined in Title 18, United States Code, Section 1956, as follows:

knowingly conducting and attempting to conduct a financial transaction affecting interstate and foreign commerce, which involved the proceeds of specified unlawful activity, to wit: a) wire fraud, in violation of Title 18, United States Code, Sections 1343 &1346; and b) embezzlement from a labor organization, in violation of Title 29, United States Code, Section 501(c), knowing that the transaction was designed in whole and in part to conceal and disguise the source, ownership, and control of the proceeds of said specified unlawful activity and knowing that the property involved in the financial transaction represented the proceeds of some form of unlawful activity.

The Purpose of the Conspiracy

66. It was the purpose of the conspiracy for defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL and others known and unknown to the Grand Jury, to enrich themselves and others by stealing millions of dollars from WTU and its members and to secrete their unlawful conduct by engaging in financial transactions designed to conceal and hide the unlawful source of their ill-gotten gains.

Manner and Means of the Conspiracy

67. The allegations contained in Paragraphs 26 through 36 of Count One of this Indictment are re-alleged as though fully set forth herein as constituting the manner and means of the conspiracy to launder money employed by the defendants and others.

Partial List of Financial Transactions Undertaken in Furtherance of the Conspiracy

68. In furtherance of the goal and object of the conspiracy, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL and their co-conspirators known and unknown to the Grand Jury, did conduct, within the District of Columbia and elsewhere, the following financial transactions, among many others:

COUNTS FIFTEEN THROUGH NINETEEN
(Money Laundering)

69. On or about the dates listed below, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL, aided and abetted by others known and unknown to the Grand Jury, did knowingly conduct and attempt to conduct a financial transaction affecting interstate and foreign commerce, as described below, which involved the proceeds of a specified unlawful activity, that is a) wire fraud, in violation of Title 18, United States Code, Sections 1343 & 1346, and b) embezzlement from a labor organization, in violation of Title 29, United States Code, Section 501(c), knowing that the transaction was designed in whole and in part to conceal and disguise the source, ownership, and control of the proceeds of said specified unlawful activity and knowing that the property involved in the financial transaction, that is, monetary instruments in the amounts set forth below, represented the proceeds of some form of unlawful activity:

COUNT TWENTY
(Making a False Record)

70.   Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

71. On or about December 28, 1998, in the District of Columbia and elsewhere, defendant JAMES ODELL BAXTER II, Robin J. Klein, and defendant GWENDOLYN M. HEMPHILL willfully did make a false entry in and willfully conceal, withhold, and destroy any books, records, reports, and statements required to be kept by any provisions of the Labor-Management Reporting and Disclosure Act, to wit: WTU trial balance and accounting journal entries for the WTU fiscal year October 1, 1997 through September 30, 1998.

(False Record Keeping, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 29. United States Code, Section 439(c), and Title 18, United States Code, Section 2).

COUNT TWENTY-ONE 
(Making a False Record)

72. Paragraphs 1 through 23 of Count One of the Indictment are re-alleged as though fully set forth herein.

73. On or about December 29, 2001, in the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL willfully did make a false entry in and willfully conceal, withhold, and destroy any books, records, reports, and statements required to be kept by any provisions of the Labor-Management Reporting and Disclosure Act, to wit: WTU income statements for the fiscal year October 1, 2000 through September 30, 2001.

(False Record Keeping, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 29. United States Code, Section 439(c), and Title 18, United States Code, Section 2).

COUNT TWENTY-TWO
(First Degree Theft)

74. Paragraphs 1 through 23 of the Indictment are re-alleged as though fully set forth herein.

75. Between on or about April 18, 2002, and June 19, 2002, within the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL, aided and abetted by others known and unknown to the Grand Jury, did wrongfully obtain and use the property of another with intent to deprive the other of a right to the property and a benefit of the property and to appropriate the property to his and her own use and to the use of a third person, in that defendants JAMES ODELL BAXTER II and GWENDOLYN M. HEMPHILL did steal and cause to be stolen, and use to conceal and cover up their embezzlement of WTU funds, $144 from the paycheck of each and every member of WTU paid through the District of Columbia Office of Pay and Retirement, resulting in an aggregate theft loss of approximately $720,000. (Theft in the First Degree, in violation of D.C. Code Sections 22-3211 and 22-3212(a)).

COUNT TWENTY-THREE
(Aiding and Assisting Preparation of False Tax Return)

76. Paragraphs 1 through 23 of the Indictment are re-alleged as though fully set forth herein.

77. Between on or about December 20, 2001 and on or about February 5, 2002, within the District of Columbia and elsewhere, defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL did willfully aid and assist in, and procure, counsel, and advise the preparation and presentation under, and in connection with any matter arising under the internal revenue laws, of a return, which was fraudulent and was false as to a material matter, to wit: WTU Form 990 for the fiscal year ending September 30, 2001, which return, as defendants JAMES ODELL BAXTER II, JAMES A. GOOSBY, JR., and GWENDOLYN M. HEMPHILL well knew, was false and fraudulent as to material matters, in that the return made it appear that embezzled and stolen WTU funds were being used for legitimate business purposes by hiding and concealing unauthorized, personal expenditures of WTU funds within seemingly business-related accounting categories.

(Aiding and Assisting the Filing of a False Return, and Aiding and Abetting and Causing an Act to be Done, in violation of Title 26, United States Code, Section 7206(2) and Title 18, United States Code, Section 2).

A TRUE BILL

FOREPERSON

ATTORNEY FOR THE UNITED STATES IN AND FOR THE DISTRICT OF COLUMBIA