Local 5 wants former head Tony Rutledge banned from union jobs.

Union wants
Rutledge ban

Local 5 charges its former
leader took part in a scheme
to defraud the organization

A hotel workers union review board is seeking to bar Tony Rutledge, former head of Local 5, from working for the union again, over allegations that Rutledge took part in a scheme to defraud the union with an investment consultant who was later convicted of mail fraud.

Rutledge, Local 5's financial secretary-treasurer from 1986 to 2000, already faces separate federal tax evasion and fraud charges with his son, Aaron Rutledge, stemming from an August indictment. A jury trial is scheduled for Dec. 2.

The Public Review Board of the Hotel Employees & Restaurant Employees International Union filed disciplinary charges against the elder Rutledge and Local 5 President Orlando Soriano in July. No hearings are scheduled. The union established the Public Review Board in 1998 following an organized-crime lawsuit.

The disciplinary charges against Rutledge largely stem from the activities of Anthony G. DiPace, an Albany, N.Y., investment consultant found guilty in 2000 of misrepresenting his qualifications so he could be hired as Local 5's pension fund monitor. The charges against Rutledge have not been made public, but were provided to the Star-Bulletin by the Hawaii State AFL-CIO, of which Local 5 is a member.

Rutledge and DiPace met in 1995, became friends, and Rutledge later participated in a scheme to mislead the Local 5 pension fund about DiPace's credentials, according to the charges. DiPace told the union he had represented 40 Taft-Hartley employee benefit plan clients, one-quarter of which had pension assets exceeding $100 million, when he really had three Taft-Hartley clients and none had assets that large.

DiPace would have been paid more than $300,000 per year. After DiPace's indictment, Rutledge posted half of DiPace's $100,000 bond.

A federal jury found DiPace guilty of 11 counts of mail fraud. The 9th Circuit Court of Appeals has affirmed DiPace's conviction, though he faces resentencing in January.

In addition, Rutledge associated with DiPace after his conviction, which violated the union's constitution and the consent decree, according to the union charges.

The charges also include allegations that Rutledge and Soriano didn't disclose several thousand-dollar loans made to Local 5 employees in 1998 and 1999, and made false entries in federal annual financial reports.

The charges stem from an investigation conducted by Howard E. O'Leary Jr., a Washington, D.C., private attorney.

Rutledge, president and chief executive of the $60 million Unity House nonprofit organization, did not return a call seeking comment.

Rutledge and Soriano last year sued the Public Review Board and the union's international leadership for not taking action on charges filed in 2000 against Eric Gill, shortly after Gill unseated Rutledge as financial secretary-treasurer. A federal judge threw out the case earlier this year, saying it wasn't a matter for the courts. The matter is now before the 3rd Circuit Court of Appeals.


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