BLADEN COUNTY, NC (WECT) - Two former top officers of the union representing thousands of workers at Smithfield Foods siphoned off hundreds of thousands of dollars in union funds for personal use.
Internal union records obtained by WECT show the officers used funds for a variety of expenses, including trips to an all-inclusive resort in the Dominican Republic and to SeaWorld.
Terry Slaughter, the former secretary-treasurer of the United Food and Commercial Workers (UFCW) Local 1208 – which has approximately 3,600 members – pleaded guilty this week to one count of embezzlement of assets by a labor organization officer, according to the U.S. Attorney’s Office for the Eastern District of North Carolina. He was initially charged on Jan. 8, 2019.
The union’s 2014 financial statement states Slaughter and then-union president Keith Ludlum “engaged in various financial improprieties” between January 2012 and March 2015. Ludlum has not been publicly charged with any crime at this point. However, a related case in the Eastern District of North Carolina remains sealed.
As secretary-treasurer, Slaughter had financial oversight of the Local 1208’s expenditures, bills, staff benefits and payroll and acted as a counter signature on union checks. He also was responsible for providing monthly financial statements to the executive board as well as writing/maintaining the minutes from membership meetings.
In that role, Slaughter reportedly embezzled more than $62,000.
“The dollar amounts of the benefits attributable to the two officers resulting from the financial improprieties amounted to $106,719 in 2012-2013, $124,198 in 2014 and $47,936 in 2015,” the union’s statement states. “The totals per officer for that period of time were; Keith Ludlum $216,344 and Terry Slaughter $62,509.”
After a more than 15-year battle between UFCW and Smithfield, workers at the world’s largest pork slaughterhouse located in Tar Heel voted in December 2008 to unionize. Local 1208, the Bladen County branch of the UFCW International Union, was chartered in February 2009, and Ludlum and Slaughter were elected as president and secretary-treasurer, respectively, in 2011.
Union records show the pair, both of whom were Smithfield employees, served in those roles until an audit conducted in 2015 by the international arm of the organization identified numerous instances of questionable spending.
“[A]n audit and review of the Local Union’s finances, governance, and operations revealed that the Local Union’s two top officers have engaged in financial malpractice, including mishandling Local Union funds, violating Local 1208 bylaws, the International Constitution, and federal laws relating to union expenditures and the reporting of those expenditures, and attempting to obstruct investigations into these matters,” International President Marc Perrone wrote in a March 31, 2015 letter to local union members.
After the audit, the international union placed the local union under a trusteeship, thereby removing Ludlum, Slaughter, and the union’s other officers.
Once the international union had effectively taken over, it held a hearing to determine the scope of the alleged embezzlement. Through witness testimony, the hearing found:
- Ludlum and Slaughter used union funds to pay for a week-long trip to an all-inclusive resort in the Dominican Republic for themselves and other officers/members of Local 1208. “There was no training, team building, or other union business purpose for the trip; it was a vacation for the officers,” a memo to the International Union’s Executive Committee states. The trip cost more than $5,000.
- Ludlum and his girlfriend, who was a member of Local 1208, took a trip to SeaWorld for the purpose of “relieving stress and unwinding.” Ludlum used the union debit card to charge $469.99 for the cost for the hotel and facility passes.
- Ludlum and Slaughter spent union funds on recreational vehicles, hunting supplies, and furniture for personal use, including: two ATVs, auxiliary items and a storage trailer at a total cost of $20,555.15; a shotgun and other hunting supplies in excess of $1,000; a sofa, loveseat and rocker/recliner at a cost of $1,283.96.
- Ludlum wrote a series of checks totaling more than $14,000 to the mother of his then-girlfriend for “research and consulting.” “The payments did not serve a legitimate business purpose,” the memo states.
- Ludlum used union funds to pay for a rental car for personal use by his son or stepson.
- Ludlum made at least three cash withdrawals of several hundred dollars from the union’s account while visiting his then-girlfriend’s mother on a non-business trip.
- Ludlum charged expenses to the union’s credit card at, among other establishments, a men’s store, a shoe store, a Toys-R-Us, and a hotel during a three-day trip in New Jersey. The purchases amounted to $1,684.
- Slaughter purchased a Samsung television and sound bar using $1,793.29 in union funds.
- Slaughter failed to maintain required financial records and concealed his embezzlement by destroying monthly meeting minutes.
Ludlum saw the audit and takeover as a political response to disagreements over the local union’s leadership and filed a civil lawsuit in April 2018 against the international organization.
He initially claimed the international organization “did fraudulently and with malice" force the trusteeship over Local 1208. He later amended his complaint by alleging leaders of the international union conspired to have him arrested on domestic violence charges days before placing the local under trusteeship to try to pressure him into resigning.
Submitted as evidence with the amended complaint was an affidavit written by Ludlum’s ex-girlfriend. In the document, she claimed International Union leaders told her lies about Ludlum having other relationships and persuaded her to have him arrested for domestic violence.
“On the evening of March 6, 2015 I went to Keith’s house and started an argument and began hitting him,” Ludlum’s ex-girlfriend’s affidavits states. “He grabbed my arms and wrists to stop me from hitting him. I then called the police and lied that he had hit and choked me. They placed him under arrest.”
“(International Union leader) later took me to the law firm of Johnson & Johnson and had me hire them help prosecute Keith,” she added. “She gave me $1,000 cash to retain the lawyers”
His suit seeks nearly $500,000 in damages – primarily the wage and benefits (plus interest) he missed out on due to being removed as president of the local union. Financial records show between 2012 and 2014 Ludlum was compensated between $97,596 and $186,502 annually.
In response to the lawsuit, the international union filed numerous exhibits detailing Ludlum and Slaughter’s alleged mishandling of funds. Those same documents say evidence was discovered that Ludlum and Slaughter sought to obstruct the ongoing federal investigation of the local union’s finances.
Ludlum’s suit is still pending in federal district court.
As part of his plea, Slaughter agreed to pay restitution to the Local 1208 in the amount of $62,315.38, according to the U.S. Attorney’s Office for the Eastern District of North Carolina. He faces a maximum of five years imprisonment, a $10,000 fine and three years of supervised release.
A spokesperson for the union’s international arm provided the following statement in response to Slaughter’s plea:
“We hold all our Local officers and staff to the highest ethical and professional standards. When a member reached out to us with a concern, we launched an investigation to determine the full extent of the situation. When the claims were verified, we acted to hold accountable those individuals who were responsible and removed them from their positions. We have zero tolerance for any actions that exploit our members or diminish the contributions our union family makes to our community. Listening and responding to our members, whom we have the privilege to serve, was our top priority throughout the process. We worked closely with our members to transition Local 1208 to new leadership and ensure that they would have the strong representation they have earned and deserve.”
The investigation was conducted by the U.S. Department of Labor, Office of Labor-Management Standards.
“Terry Slaughter held a position of trust on behalf of the thousands of members of the United Food and Commercial Workers Union across North and South Carolina,” U.S. Attorney Robert Higdon Jr. said in a release. “This prosecution is part of the Department of Justice’s ongoing effort to ensure honesty and integrity for the members of our union community.”
While Slaughter faces sentencing in the coming weeks, a spokesperson for the U.S. Department of Labor could “neither confirm nor deny” the existence of an investigation into Ludlum’s alleged financial mishandling.