IRS Criminal Investigation
05/31/2023 | Press release | Distributed by Public on 05/31/2023 14:05
Former president and former financial advisor of law enforcement union convicted of defrauding union’s annuity fund
Date: May 31, 2023
Contact:[email protected]
Damian Williams, the United States Attorney for the Southern District of New York, announced the conviction of 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"), and Andrew Brown, aka "Drew Brown," the former financial advisor for LEEBA, for defrauding union members by misappropriating money from LEEBA's annuity fund. Wynder was also convicted of personal income tax evasion and conspiring to evade federal taxes, including payroll taxes owed by LEEBA and its employees. 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. Wynder and Brown were convicted after a five-day jury trial before U.S. District Judge P. Kevin Castel and are scheduled to be sentenced on October 18, 2023, by Judge Castel.
U.S. Attorney Damian William said: "As the jury unanimously found, Kenneth Wynder and Andrew Brown raided a union-sponsored retirement plan for years, placing their personal interest over the union members they were duty bound to look out for. The jury also found that Wynder then evaded taxes on income he obtained from the union, including as a product of their theft from the union members' retirement accounts."
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.
Kenneth Wynder, Jr.
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.
Andrew 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 tax evasion
From at least in or about 2015 through 2019 Wynder participated in a conspiracy with LEEBA's then-treasurer, Steven 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 further conspired to ensure that such payments were made outside of LEEBA's payroll processor. Wynder then concealed these payments from the IRS - including off-the-books payments of more than $400,000 - in order to evade his own personal income taxes and to evade the payroll taxes that were owed by LEEBA and certain LEEBA employees.
Wynder, of Stroudsburg, Pennsylvania, and Brown, of Putnam Valley, New York, were each convicted of one count of conspiracy of commit wire fraud and one count of wire fraud, each of which carry a maximum penalty of 20 years in prison. Wynder was also convicted of one count of conspiracy to defraud the United States and four counts of tax evasion, each of which carry a maximum penalty of five years in prison.
On November 17, 2021, Whittick was sentenced to 28 months in prison for conspiring to commit tax evasion and making false statements and was ordered to pay $179,766.80 in restitution to the IRS.
Mr. Williams praised the outstanding work of IRS-Criminal Investigation, the Federal Bureau of Investigation, and the Department of Labor Office of Labor-Management Standards. Mr. Williams also thanked the New York City Comptroller's Office and the New York City Department of Investigation for their assistance.
The case is being prosecuted by the Office's Public Corruption Unit. Assistant U.S. Attorneys Eli J. Mark, Kedar S. Bhatia, Andrew Rohrbach, and David R. Lewis were assigned to the prosecution, with the assistance of Paralegal Specialists Connor Hamill and Lauren Scarff.