Special Report from Business Manager Dan Reding: IT Investigation Update
At the Semi-Annual Meeting in March of 2018, we promised to keep you updated regarding the investigation of former OE3 IT employees. As you know, on August 15, 2018, we authorized the filing of a civil lawsuit in Federal District Court against former OE3 employees Scott Wilson, Dennis Kelsey and Eugene Romero as well as Wilson’s wife, his brother-in-law and his long-time friend. Throughout this process, we continued to cooperate with Federal law enforcement on this matter.
Now, nearly two years later, I am pleased to inform you that on Friday, June 26, 2020, the United States Federal Bureau of Investigation arrested former OE3 IT director Scott Wilson in Corsicana, Texas. At the time of his arrest, he was living in a Corsicana house which it is alleged he built with funds stolen from the OE3 membership. The United States Attorney’s Office in the Northern District of California formally charged Wilson with Mail Fraud and Aiding and Abetting (18 U.S.C. §§ 1341-1342) and Forfeiture (18 U.S.C. § 981 and 28 U.S.C § 2461).
OE3, via its counsel, has been fully cooperating with and supporting a joint Federal Bureau of Investigation (FBI) and United States Department of Labor (DOL) investigation for more than two years, as well as prosecuting a civil case for these acts against Scott Wilson, former OE3 employees Dennis Kelsey and Eugene Romero, and other defendants.
While we have provided regular updates to this membership regarding our efforts to investigate and seek justice regarding the full extent of harm caused by Wilson, Local 3’s IT Director from 2011 through 2017, and the others we believe were involved with this substantial embezzlement scheme, I wanted to share a summary below.
In 2017, consistent with our fiduciary obligations as a labor union under Federal law, we began and thereafter maintained our own investigation to determine the extent of the monetary loss to OE3 and its membership, and to collect and analyze a substantial amount of evidence in order to allow OE3 to seek recovery of its loss as well as to provide significant and ongoing support to law enforcement.
Our investigation discovered that, over many years, Wilson and others executed a carefully calculated and deliberate scheme through a sophisticated system of fraudulent invoicing by their shell companies, often for highly technical IT goods and services. Throughout these activities, Wilson concealed his ownership interests and control of the companies from OE3, all while Wilson was entrusted with oversight of IT department procurement. These deceptive practices also entailed false statements to auditors and OE3’s officers, formation of shell companies, fictitious vendor employees and middlemen, backdated and fraudulent contract documents, aliases, data shredding software, and encrypted data and communications. These actions took place in California, Texas, North Carolina, South Carolina and Wyoming. Wilson and others intended to, and did, steal from and do harm to OE3 and its membership, as more fully alleged in the civil complaint we filed.
We are extremely thankful to the United States Attorneys Office for their decision to prosecute Wilson and bring him to justice and to the FBI and the DOL for their investigative diligence. While the arrest and charges are a significant milestone regarding OE3’s effort to seek restitution and damages that Wilson and others owe to OE3 and our members, and to obtain justice for our membership, we are mindful that the criminal proceedings will likely take some time to conclude. In the meantime, we will continue to cooperate with any requests from law enforcement and will monitor the criminal proceedings to bring you updates as the criminal prosecution progresses.
For now, please understand that we cannot comment further in light of the ongoing criminal prosecution.