Loose expense reimbursement rules at the Sergeants Benevolent Association — detailed in the indictment of its longtime president, Ed Mullins — have many of its 12,600 members asking whether other union officials improperly spent union money.
Federal prosecutors said Wednesday Mullins didn’t submit receipts for “hundreds” of expenses he claimed between 2017 and 2021 that totaled roughly $1 million. Some of the money was spent on restaurant meals, clothing, jewelry, home appliances, and even a relative’s tuition, the feds say.
“I don’t see how what they charged Mullins with wasn’t also being done by other board members,” one veteran sergeant said. “That place was like their own private club. When you went in there, it was like they owned the place, and you were an outsider.”
The SBA treasurer, a longtime Mullins ally named Paul Capotosto, simply approved Mullins’ undocumented reimbursement requests, the feds said.
A second sergeant believes Capotosto will ultimately retire as a result of the case.
“Ed was about Ed,” this sergeant said. “He projected himself as a good leader but actually didn’t give a s—t about anyone or anything except himself and his ego.”
Some members wonder whether the union’s management could be taken over by outsiders picked by the federal government. Said a third sergeant: “The biggest fear I have is more guys go down and the feds come in and take over the union. It could happen to us.”
Capotosto’s unelected tenure as treasurer ended in 2021, but he is still on the union’s powerful board now listed as “citywide secretary.” He did not respond to an email. A clerk asked to put Capotosto on the phone said: “Paul is not available. Thank you,” before hanging up.
Edwin Stier, a former federal prosecutor tapped in 2013 to reform a Teamsters local, said a receiver could come in if the feds find “systemic” issues with the SBA’s spending and proof of a “corrupt conspiracy.”
But receivership is considered a last resort.
“When it reaches a level where it’s systemic, the government will step in under those circumstances and use civil provisions — the RICO [Racketeering Influenced and Corrupt Organization Act] — and ask for the imposition of some form of trusteeship,” Stier said.
“It’s only when the members are not capable of dealing with corruption — remedying corruption problems — that you would step in and impose trusteeship.”
Questions have been raised before about the SBA’s administrative expenses.
A report in January by city Comptroller Brad Lander on spending by city unions found that from 2018 to 2019, some SBA administrative spending on funds meant to provide benefits to its members nearly doubled.
In accord with the SBA’s contract, the city provided the union with about $20 million in 2019 for its various health, welfare and pension funds, the comptroller report says.
The report says that some of the funds had notably higher administrative costs than similar funds operated by other unions.
For example, the comptroller reported, the SBA’s annuity fund, which pays for some retirement benefits, spends about 8% of the city’s contribution on administrative costs. The average for similar funds operated by other unions is 3%, the comptroller said.
The money Mullins is accused of misspending came from the union’s “contingent fund,” composed entirely of membership dues “for the benefit of the SBA or its members.”
A “contingent” or “contingency” fund in common usage is often for unforeseen or emergency expenses, but SBA officials used it to “defray miscellaneous expenses incurred in the performance of duties — including travel, meals and lodging.”
Under the SBA constitution, only the president, vice president and or treasurer could approve expenses with signatures required of two of the three. A loophole allowed the president to sign off on his own expenses.
A written expense policy, the indictment said, first came into being in 2013 around the time Mullins received a strong challenge for the president’s seat from Robert Johnson, now retired, and questions were raised about union spending that led to an earlier federal probe that ended without charges being filed.
The policy said the SBA will reimburse “actual and reasonable meal expenses required to conduct SBA’s business or fulfill [the] SBA’s mission.” To get reimbursed for expenses above $50, officials were supposed to include a list of attendees along with the receipt.
The vice president at the time, Robert Ganley, took charge of reviewing expenses and he rejected expenses he thought were too high or submitted without receipts, the indictment said.
But Ganley retired in 2017. He later worked for the NYPD as a deputy commissioner for administration before stepping down recently. He could not be reached for comment.
After Capotosto took over in 2017, the union’s own expense policy was allegedly violated on a routine basis, the feds said.
“The treasurer did not scrutinize the expense reports in the same manner the prior vice president had and did not regularly require receipts for Mullins’ reimbursements,” the federal indictment says. “The treasurer approved hundreds of expense reports for Mullins … Mullins rarely included receipts.”
Vincent Vallelong, the current SBA president, did not respond to an email. He said in a statement Wednesday the board was “appalled” by the charges against Mullins and knew nothing more. SBA Controller Dennis Ostermann did not respond to a call and a text message.
Mullins’ lawyer Marc Mukasey declined to comment on the case.
Vallelong was treasurer when Ganley was there and then became vice president when Ganley retired before rising to president when Mullins was ousted — facts which have put him under the microscope as well.
“The whole case doesn’t surprise me — they are all drinking buddies,” said the first sergeant. “Mullins appointed all of his friends to that board, and they would never question him. Anyone who did question him, they kicked out of the union.
“They didn’t want anyone who would raise questions. And they would go to any lengths to keep control of that union.”