Ex-Benefits Administrator Charged in $40M Embezzlement Case

February 17, 2010 (PLANSPONSOR.com) – The former administrator of a New York union benefits fund was indicted for embezzling $40 million to support a lavish lifestyle.

Prosecutors in the case allege that the spending included $5 million for horses, $300,000 for women’s clothes at Neiman Marcus and about $1 million for jewelry. 

A news release from Preet Bharara, U.S. Attorney for the Southern District of New York, said Melissa G. King was charged in a 12-count indictment filed in federal court in New York with transferring the money out of the accounts of the Compressed Air and Free Air Foundations, Tunnels, Caissons, Subways, Cofferdams, Sewer Construction Workers Local 147 of New York, New Jersey States and Vicinity AFL-CIO between 2002 and 2008.

The news release said the funds were moved from Local 147 accounts to a Bank of America account controlled by King’s company, King Care, and that the checks ranged from $20,000 to $65,000 – sometimes several in a single day.  

The news release said King served as benefits administrator from September 2002 until December 2008 for the union, which had about 1,000 members in the New York City area. She received an annual salary of $540,000 for her work.

Under union contracts, the union provided various benefits to members including retirement benefits, pension annuities, workers compensation, severance payments, unemployment benefits, and certain medical expenses and death benefits.

King’s company was responsible for  various administrative tasks on behalf of the Local 147 Funds, such as collecting employer contributions, maintaining bank accounts, determining eligibility for benefits, paying claims to beneficiaries, filing reports with regulators, maintaining a general ledger of the funds’ income and expenses, and providing reports to the funds’ trustees, prosecutors said.