Fraud trial opens for United Public Workers state Director Gary Rodrigues was able to defraud union members and secretly funnel money to benefit himself and family members because of the control he exerted as the longtime head of one of the state's largest unions, according to federal prosecutors.
powerful UPW chief
Federal prosecutors say Gary
Rodrigues cheated his unionBy Debra Barayuga
dbarayuga@starbulletin.com"Gary Rodrigues is UPW," said Assistant U.S. Attorney Florence Nakakuni, one of two government attorneys prosecuting the federal case against Rodrigues and his daughter, Robin Haunani Rodrigues Sabatini.
Father and daughter are charged in a 102-count indictment with mail fraud, embezzlement, money laundering, conspiracy to commit money laundering and health care fraud, charges that revolve around the union's dental, medical and life insurance plans.
"This case is all about greed," Nakakuni said yesterday during opening statements in the jury trial before U.S. District Judge David Ezra.
Doron Weinberg, Rodrigues' San Francisco-based attorney, said the case is not about greed, embezzlement or misappropriation of UPW money, but about Rodrigues' loyalty to his family and the union.
"Gary Rodrigues always took care of the union and his members just as he's taken care of his family and children," Weinberg said.
Nakakuni said Rodrigues, as an officer and employee of the union, had a duty under the UPW constitution to avoid conflicts of interest and to manage the union's funds and property in the best interest of its members.
Rodrigues, state director since 1981, violated his fiduciary duty by negotiating alternative dental, medical and life insurance plans with inflated premiums for the union without the knowledge and consent of the state executive board and union membership, she said.
Nakakuni said Rodrigues embezzled union funds by arranging for consulting fees to be paid over an 18-month period beginning in October 1992 to a former UPW employee who has since died. Allan Loughrin, the stepfather of Rodrigues' then longtime girlfriend and secretary Georgietta Carroll, was allegedly paid consulting fees of $10,000 as repayment for a loan.
Between 1996 and 1998, consultant fees from Hawaii Dental Service, Pacific Group Medical Association and sister company Pacific Equity Growth and Management went to two companies owned by Sabatini -- Four Winds RSK on Kauai and Aulii Corp. -- although she did no consulting work, Nakakuni said.
Nakakuni said the evidence will show Sabatini used the fees to pay her salary, fund a pension plan and purchase a truck for Rodrigues in late 1996.
Rodrigues is also charged with accepting $117,000 in kickbacks from an agent of the life insurance company that provided benefits to union members. The agent, Herbert Nishida, is expected to testify he gave Rodrigues cash "to show his appreciation for the business," Nakakuni said.
According to Nakakuni, Nishida also said that Rodrigues told him, "This is cash, and nobody knows you gave me money," and that there was no proof Nishida had ever given him money.
While Rodrigues, a successful and powerful union leader, has done a lot of good for the state, he has also attracted his share of enemies, including union members who "begrudge Gary his power" and have made him a "target" of their aspirations and frustrations, Weinberg said.
Weinberg said the evidence will show that Rodrigues did not get the insurance companies to charge higher premiums so his daughter could receive consulting fees or that consulting fees resulted in higher premiums, but that the union got what it bargained for.
Rodrigues hired his daughter "where it was appropriate and legitimate for him to do so," and not at the expense of the UPW or its members, Weinberg said. Sabatini did the work and was compensated, he said. "Being paid significantly large sums of money is not a crime."
But Nakakuni said the evidence will show that Rodrigues' control over the union went so far as persuading the state executive board twice to purchase property adjacent to property that he had purchased and built a home on in Bend, Ore.
She said witnesses are expected to testify that everyone at UPW knew that when Rodrigues eventually retired, UPW would give him the property the union had purchased instead of paying him for unused sick leave and vacation time.
Nakakuni also said the jury will hear evidence that Rodrigues shredded documents from HDS listing consultants and consulting fees paid to Loughrin and Four Winds RSK upon learning of the government's investigation into the HDS contract.
Richard Hoke, attorney for Sabatini, reserved opening statements until after the government has presented its case.
Maximum penalties for mail fraud and embezzlement is five years' imprisonment and a $250,000 fine on each count. Defrauding a health benefit plan is punishable by a maximum 10 years' imprisonment and a $250,000 fine. Conspiracy to commit money laundering is punishable by a maximum of 20 years imprisonment and fines of up to $500,000.
The trial is expected to last between four and six weeks.