4 Go to Trial on Charges of Embezzling Teamster Funds

LOS ANGELES —  Three Orange County residents and one Los Angeles man went on trial in federal court Wednesday on charges of embezzling $1.5 million from a Long Beach Teamsters Union health plan fund.

Government prosecutors allege that the defendants forced the fund into receivership, leaving thousands of unpaid medical bills when it collapsed in 1982.

Dana and Nicholas Nicholson of San Clemente and Elwyn L. Raffetto of Huntington Beach are charged with looting the Western Conference Benefit Trust between 1979 and 1981. All three worked for the trust and various companies involved in managing and marketing its programs.

Indictment’s Charges

Matthew W. McCusker of Encino, who was the trust administrator, is accused of embezzling more than $600,000 for himself and others during those years, including $64,900 diverted to Raffetto, according to the indictment.

Established in 1974, the health and benefit plan served members of Teamsters Local 911 in Long Beach and had collective bargaining agreements with school districts, cities and parking lot companies, among others.

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 that the trust had $34.5 million in contributions, when the total was only $1.1 million, Weidman said. He said the total membership was 3,692, but the defendants claimed 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.”

Malibu Couple Named

He said the Nicholsons, who operated a management company called Far West Administrators Inc., allegedly received about $552,000 from the trust and its subsidiaries. Some of the money was used for a down payment on a home, he said.

The 52-count grand jury indictment handed down in January also named Gordon and Sharon Eldredge of Malibu, who have since become fugitives. The indictment accused Gordon Eldredge of embezzling $965,558, including $469,560 allegedly paid to Nicholson. The pair marketed the trust program for employee groups through a company named Westwide Financial Services.

Alva Dotson Bennett, the former secretary-treasurer of Local 911, and chairman of the trust, was not indicted but pleaded guilty last year to embezzling about $130,000 from the trust. He has not been sentenced.

U.S. District Judge Mariana R. Pfaelzer told the jury this was a “major case” expected to last for four to six weeks.