A businessman charged with looting a Long Beach Teamsters Union health plan fund was found guilty Thursday of 16 counts of mail fraud, embezzlement and tax evasion.
Matthew M. McCusker's actions while administrator of the plan forced it into receivership, leaving thousands of unpaid medical bills, according to government prosecutors.
The charges stemmed from the disappearance of $1.5 million from Western Conference Benefits Trust health plan that McCusker administered between 1975 and 1981 and from related benefit funds. The funds primarily served members of Local 911, which represented school district employees and parking lot attendants, among other Teamster Union members.
By diverting membership fees, McCusker, 67, of Encino allegedly embezzled about $600,000 for himself and others, according to the 53-count federal grand jury indictment issued in January. He was convicted by U.S. District Judge Mariana R. Pfaelzer on charges relating to about $260,000 of the embezzled funds.
He was acquitted by Pfaelzer of 11 other counts that alleged he skimmed $121,667 in insurance premiums.
Pfaelzer heard McCusker's case simultaneously with a jury trial for three other defendants. On Wednesday, a jury found two of those defendants guilty of similar charges and acquitted the third.
McCusker, who is scheduled to be sentenced on Dec. 15, declined to comment after the verdict was read. He could receive up to five years in prison on each count.
Michael P. Balaban, his attorney, said McCusker is unemployed. "He's out of business, so to speak," Balaban said.
Convicted after their jury trial were a San Clemente couple who worked with McCusker. Nicholas M. Nicholson, 38, and his wife, Dana, 37, administered a related health plan trust through a company called Far West Administrators Inc.
The jury found Nicholas Nicholson guilty of 20 counts of mail fraud, one count of aiding and abetting an embezzlement, one count of filing a false tax return and one count of failing to file a tax return. Dana Nicholson was found guilty of 14 counts of mail fraud, one count of filing a false income tax return and one count of failing to file a tax return.
Another defendant, Elywn L. Raffetto, 50, of Huntington Beach, was acquitted of all 11 counts he faced involving the receipt of money that he said was payment for services as a consultant.
Prosecutors had alleged that Raffetto, who helped market the health plan to people outside the Teamsters Union, received $64,900 of the embezzled funds.
The jury deliberated four days before announcing its verdicts.
2 Still at Large
Two other defendants, Gordon and Sharon Eldredge of Malibu, have been fugitives since they were named in the indictment.
During the trial, Assistant U.S. Atty. Leon W. Weidman told the jury that the defendants misrepresented the financial condition and size of the trust to prospective members. In 1979, the defendants claimed the trust had $34.5 million in contributions when the total was only $1.1 million. Weidman said the total membership was 3,692, but the defendants claimed a membership of 200,000 to 300,000.
"The people never would have signed on to the plan if they knew the true numbers," Weidman said in his opening statement. "After defrauding these people, the defendants proceeded to loot the plan."
The trust collapsed in 1981, prompting a civil suit by the U.S. Department of Labor accusing many of the defendants of leaving the trust unable to pay hundreds of thousands of dollars in medical bills. That suit is pending, Weidman said.
Balaban argued that McCusker worked under the direction of trust fund board chairman Alva Dotson Bennett and thought he was simply following guidelines of the fund.
Bennett, the former secretary-treasurer of Local 911, was not indicted, but he pleaded guilty last year to embezzling about $130,000 from the trust. He has not been sentenced.