Four former Boilermakers officers plead not guilty in alleged embezzlement scheme

Four former Boilermakers officers made their first appearances in federal court in Kansas City, Kansas, on Friday, pleading not guilty to charges that they were part of a $20 million embezzlement scheme .

The defendants are among seven former union members — two of them ex-presidents — indicted for conspiracy to commit offenses under the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as other charges including embezzlement, health care fraud, wire fraud and theft in connection with health care and retirement plans.

A federal grand jury returned the 57-count indictment on Aug. 21 following an investigation by the FBI Kansas City Field Office and the U.S. Department of Labor. The case is filed in the U.S. District Court for the District of Kansas. The union’s headquarters was in Kansas City, Kansas, for decades, but has recently relocated to Kansas City.

Those charged were former union president Newton B. Jones, 71; his wife, Kateryna Jones, 32; and his son, Cullen Jones, 35, all of Chapel Hill, North Carolina; former secretary-treasurer William Creeden, 76, of Kearney, Missouri; former president Truman “Warren” Fairley, 60, of Chapel Hill; former secretary-treasurer Kathy Stapp, 53, of Shawnee; and former vice president Lawrence McManamon, 76, of Rocky River, Ohio.

Friday’s court hearing was for Fairley, Creeden, McManamon and Stapp. The three Joneses — Newton, Kateryna and Cullen — are scheduled for a hearing on Tuesday.

As U.S. Magistrate Judge Teresa J. James began to go over the charges Friday, she said she wasn’t going to read the details of every charge for each defendant.

“We’d be here all day if I did that,” James said.

Embezzlement and wire fraud allegations

The charges allege that over 15 years, Jones and Creeden led the defendants in engaging in widespread embezzlement of Boilermakers funds, enriching themselves by spending millions of union dollars for personal gain. The money allegedly went toward salary and benefits for jobs some didn’t show up for, tuition, rent, luxury international travel, meals, vacation payouts and unauthorized loans.

Jones and Creeden also were charged with wire fraud in connection with their alleged demand and acceptance of “no-show employment” with the Bank of Labor, the Justice Department said, for which they were paid more than $3.4 million each in salary and benefits.

The government did not seek detention Friday for Creeden, Fairley, McManamon and Stapp, and James released all four with conditions that included surrendering their passports, possessing no firearms or other weapons and having no contact with victims, witnesses or co-defendants. She set their next court hearing for Oct. 10.

Creeden was denied a request to keep a BB gun at his residence for his grandchildren to play with. His attorney, Tom Bath, also requested that Creeden be allowed to maintain contact with co-defendants Jones and McManamon, saying they’d been friends for years and talked once a week.

Prosecutors opposed the request, saying it would be too difficult to ensure that the men didn’t discuss their criminal case if they were allowed to stay in touch.

James agreed, saying it would be impossible to monitor such a situation.

“You won’t be able to talk to your buddies — co-defendants,” she told Creeden.

The indictment came nearly 15 months after the union’s executive council voted to oust Jones as international president , accusing him of misusing union funds for personal gain — including funneling large sums of money to his Ukrainian wife for work she never performed. That led to a monthslong court battle over who controlled the union .

In August 2023, a federal judge upheld the union executives’ June 2 decision to remove Jones as president and replace him with Fairley , who had recently retired as an international vice president.

Resignations and retirements

Fairley announced his retirement as president on Aug. 20, effective immediately, according to a news release issued by the union. He was replaced by Timothy Simmons, one of the union’s five international vice presidents. Stapp, the union’s former human resources director who replaced Creeden when he retired as the secretary-treasurer last August, resigned on Sunday.

Fairley is charged with one count of racketeering conspiracy and seven counts of embezzlement from a labor organization.

Stapp faces one count of racketeering conspiracy; 45 counts of embezzlement from a labor organization; one count of health care fraud conspiracy; and three counts of theft in connection with health care.

McManamon is charged with one count of racketeering conspiracy and six counts of embezzlement from a labor organization.

Creeden faces one count of racketeering conspiracy; 47 counts of embezzlement from a labor organization; one count of health care fraud conspiracy; three counts of theft in connection with health care; one count of wire fraud conspiracy; and three counts of theft from an ERISA (Employee Retirement Income Security Act) program.

If convicted, the defendants face a maximum penalty of 20 years in prison, three years of supervised release and a $250,000 fine on the RICO conspiracy count. Federal law also says that if any person derived financial gain or loss because of the offense, the defendant may be fined twice the amount of that gain or loss.

The other charges carry maximum penalties of five to 20 years, and maximum fines of $10,000 to $250,000.

In May, another former union official, Tyler Brown, pleaded guilty to one count of racketeering conspiracy in the U.S. District Court for the District of Kansas. Brown, who served as the union’s chief of staff and as special assistant to Jones, was accused of scheming with “others known and unknown” to steal from the union. His sentencing is scheduled for November.