*Editor’s Note: This article was originally testimony submitted, on July 16, to the U.S. House Committee on Education and the Workforce, regarding a ‘Comprehensive Case for Strengthening LM2 Reporting and Union Financial Transparency.
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Distinguished members of the Committee. Thank you for the opportunity to submit testimony in support of modernizing the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) and strengthening LM-2 reporting requirements.
As a former union president and treasurer with more than sixteen years of leadership experience, my perspective is grounded not just in ideals, but in real-world experience. I’ve seen firsthand how union bureaucracy, over time, too often shifts away from representing members and toward preserving the institution itself. What begins as a mission to empower working people can evolve into a system that protects entrenched leadership, enables misconduct, and obscures financial abuse — often with the aid of taxpayer dollars.
Internal transparency is rarely a priority. In fact, in many unions, secrecy and insulation from scrutiny are deliberate features, not flaws. This isn’t just a matter of unethical individuals; it’s a systemic problem. As government agencies grow increasingly bureaucratic with age, unions can become more focused on maintaining their own structures than advocating for their members.
Federal tools like the LM-2 reports are intended to shine a light on union finances, but these reports are often inaccessible or unknown to most rank-and-file members. Internal audits and oversight mechanisms are often weak or ineffective. As a result, misconduct can flourish in the shadows.
Every year, somewhere in this country, a union member receives a sheepish, apologetic email informing them of a financial scandal involving their leadership. In many cases, these incidents become public only when the Department of Labor (DOL) steps in.
In 2024 alone, the DOL recorded 177 union enforcement actions involving fraud, embezzlement, wire fraud, and falsified records. These are only the crimes that rise to the level of federal prosecution. Far more ethical violations, financial misuses, and questionable behaviors fall below the radar leaving union members in the dark and are quietly buried through internal repayments, hush resignations, or legal threats — all without any formal DOL investigation or public accountability.
Despite 16 years as a union official, I did not become aware of the existence of LM-2 financial disclosure filings until our local filed a lawsuit against our state affiliate. Imagine that: even as a union president and past treasurer, I was unaware that both our state and national unions were required to submit LM-2 forms to the Department of Labor. If someone like me — deeply engaged in union governance — was kept in the dark, how can we expect average members to know their rights, much less exercise them?
The LM-2 is supposed to be the central financial transparency document for union members. It was created to deter fraud, provide oversight, and inform members how their hard-earned dues are being spent. Unfortunately, it has failed in one of its core missions—member awareness. The overwhelming majority of union members have never heard of an LM-2, don’t know where to find it, and even with access, they would lack the ability to comprehend it. This is a systemic failure in both policy and practice.
Part of the problem lies in how unions file these forms. Many purposely obscure their identity by using incorporated names or alternative titles unfamiliar to their own members. For example, members of the International Association of Fire Fighters (IAFF) know their organization by that name — or its abbreviation, IAFF. But on the LM-2, the union files as “Fire Fighters AFL-CIO.” The Connecticut state affiliate similarly files under “AFL-CIO Fire Fighters Local 7” — a name and number most firefighters have never heard of. Teachers’ unions follow the same trend. AFT Connecticut, known by its members as such, lists itself on LM-2s as “AFL-CIO Teachers.” You must dig deep into the document to realize it’s your state or local affiliate.
It is important to recognize that when the initial law was passed in 1959, unions both private and public were not as sophisticated as they are now. In today’s digital age it is not a burdensome requirement to post financials on the union’s website.
This would prevent the naming shell game, ensuring transparency in meeting the law’s original intent. The law should be amended to require all unions, including public sector, to post financial reports and LM 2s on the unions’ local, state, and national websites. Along with the union’s year-end credit card summaries, listing each cardholder and categorizing expenses such as:
- Dining and restaurants
- Travel and lodging
- Car service
- Retail/merchandise
- Groceries
- Entertainment
These problems aren’t theoretical — they have real financial consequences for members and the public alike. Many unions receive federal and state grant money, including taxpayer-funded union release time. When funds are misused, taxpayers and union members both bear the cost.
Take my own experience: I was involved in a lawsuit supported by the Fairness Center against our state union, the Uniformed Professional Fire Fighters of Connecticut (UPFFA Local 7). During court proceedings, attorneys uncovered what the judge described as “questionable expenditures,” including union members paying to fly girlfriends first class to exotic locations such as Hawaii and the Caribbean islands. This was coupled with errors in PAC fund balances, and an improper loan taken from a charitable affiliate. These discrepancies occurred despite the union conducting outside “independent” audits each year.
The audits, used by union leaders to reassure members, proved hollow. Despite the issues being raised in open court — no documentation was ever provided proving these travel expenses were ever repaid. This is why the inclusion of an end of year credit card summary is critical — every union member and citizen can comprehend them.
It is not hard to find examples of union corruption across the nation. In August 2024, a Texas United Steelworkers local president pleaded guilty in court for embezzling over $280,000 using a union debit card for personal expenses. That same year, in December, the treasurer of an American Postal Workers Union local in Pennsylvania was federally indicted for embezzling funds and filing false financial reports.
In April of 2025, the former President of American Federation of State, County and Municipal Employees (AFSCME) Local 2620 (located in Burbank, Calif.), was charged with six counts of wire fraud, in violation of 18 U.S.C. 1343. Meanwhile, in early 2025, the former general president of the International Union of Operating Engineers admitted to hiding over $315,000 worth of tickets and gifts from a vendor over several years.
Most recently CBS news reported that, “Three leaders of the Los Angeles Fire Department’s labor union were suspended on Monday after an audit found nearly $800,000 in misused union funds.”
Another issue is the lack of plain language on the LM 2 forms themselves. For example, they categorize money coming into the union as “receipts” yet to most union members a receipt is something you receive after paying for something. The forms should be at a grade 10 reading level and broken down in one line, a simple explanation.
This cuts to the core of another major issue: although LM-2s record funds coming in and going out, they fail to clearly explain the purpose of those transactions in a way that’s easy to understand. For example, it is well know that the IAFF President Edward Kelly is paid $423,747 a year. Beyond this lucrative salary, I was able to find a payment in federal files of $732,993 that even I didn’t understand. Looking through past LM 2s I was able to find a similar payment to a past president in 2021 that was in excess of $700,000. While unexpected, the payment may be lawful; nonetheless, members and taxpayers have a right to know how their money is being spent.
In another egregious case, the federal court denied motions to dismiss a lawsuit against the IAFF-Financial Corporation (IAFF-FC), which underscores credible allegations of corruption, self-dealing, and betrayal of trust — allegations that demand accountability. This development may be the true reason for the threats of violence.
The IAFF-FC, a nonprofit tasked with providing financial services like auto insurance and retirement planning to firefighters, is supposed to act as a fiduciary, prioritizing members’ financial security.
However, a federal lawsuit filed by John F. Hughes, a Harvard-educated financial advisor with decades of experience, paints a disturbing picture. Hired to lead the IAFF’s “Wealth Management Initiative” to tailor investment portfolios for members, Hughes discovered that the union’s leadership was less interested in optimal returns for firefighters than in securing “pay-to-play” deals for itself.
According to the amended complaint, IAFF COO Kurt Becker allegedly demanded $250,000 in kickbacks per investment firm, favoring a privately owned financial-services company willing to comply, despite knowing such arrangements could violate Securities and Exchange Commission (SEC) regulations.
Acting with integrity, Hughes warned IAFF leadership that this approach risked “harm for the union’s members, embarrassment for the organization, and negative media exposure.” Rather than putting firefighters first, Kelly responded by firing him.
Hughes made it clear that his obligations weren’t limited to warning IAFF’s leadership of the risks inherent in their behavior; he also had a duty to report any illegal activity to the SEC. Instead of changing course, Becker allegedly spread false and defamatory claims against him in an orchestrated effort to silence him.
Hughes refused a gag order and filed a lawsuit alleging tortious interference, Dodd-Frank Act violations, defamation, and wrongful termination. His SEC complaint further details how the IAFF betrayed the trust of rank-and-file firefighters. This filing echoes historical union corruption scandals, such as the Department of Justice’s investigation into Jimmy Hoffa’s Teamsters in the 1950s, which prompted the Labor Management Reporting and Disclosure Act to curb such abuses.
Most union members are unaware of legal filings, and a variety of loopholes have allowed IAFF leadership to obscure financial dealings from members. This law should be amended to require the Department of Labor to close this gap.
The federal court’s recent ruling to deny the IAFF-FC’s motions to dismiss validates the seriousness of Hughes’ claims, allowing the case to proceed and exposing the union’s alleged misconduct to greater scrutiny.
Hughes’ refusal to sign a gag order, despite pressure to secure severance and health insurance, sets a powerful example. Firefighters face physical flames daily; they shouldn’t fear being scorched by their union’s greed. Unions exist to stand up for the underdogs and protect the middle class.
Unions also hide behind service agreements and sponsorships that have become the new paper bag of cash. While some may be legal, most appear to be unethical. The Hughes case is not the only example of an agreement gone awry.
Union leaders need to be ethical and avoid even the appearance of impropriety. Yet the IAFF has been plagued by ethical lapses and embroiled in a variety of controversies. These range from FBI investigations, to allegedly using the talking points of a gear-and-textile manufacturer to address concerns of firefighters regarding potential cancer-causing PFOAs in their gear. Hidden in federal filings, it was revealed that the IAFF had accepted $100,000 sponsorships from the very same companies.
It looks like the firefighters’ watchdog was being walked, fed, and paid for by the very companies they were supposed to be watching.
It was only after I learned about LM2s that I was able to expose how the union has been taking money from the Muscular Dystrophy Association (MDA), leading firefighters to believe they were supporting kids and adults stricken with a debilitating disease. These funds, totaling over a million dollars, were collected through the “Fill the Boot” campaign, and funneled back to the IAFF.
Real Clear Investigations reported that, since 2005, the charity and its affiliates have contributed more than $10 million to IAFF headquarters. While it appeared that this practice was being curtailed following the article’s publication, the IAFF’s 2024 LM-2 filings — submitted in accordance with the Labor Management Reporting and Disclosure Act — show that the union received $9,000 from MDA in Canada, along with additional payments labeled “Service Reimbursement FY23” totaling $162,500 from the MDA charity. These transactions may warrant further scrutiny by the Department of Labor.
As a firefighter and former union president from New Haven, Connecticut., who collected money in the boot, I had no idea money was going back to the IAFF. Neither the MDA nor IAFF have public and/or press statements indicating that significant funds were going back to union coffers.
Ultimately, people should know how and where their charitable dollars are being utilized — because they give in good faith.
In addition to concerns about misused member dues, many unions also receive federal and state funding, along with taxpayer-funded benefits such as paid “union release time” for public employees. However, current LM-2 filings fail to clearly report the total amount of federal and state grants received. Both union members and taxpayers deserve full transparency on how public funds — not just union dues — are being used.
Furthermore, legal proceedings, such as the Hughes lawsuit or local conservatorships, involve significant legal expenditures that should be included in LM2 filings to truly track resource usage — as well signal to the Department of Labor and Justice department a need for an investigation.
The Hughes lawsuit alleges he was offered a severance package if he signed a non-disclosure agreement. Fortunately, Jack Hughes is a man of integrity, and he said no. But in our legal system it is not uncommon for cases to settle without fully adjudicating all the facts and with gag orders. Having legal actions disclosed on LM2s would alert investigators of potential criminal or civil violations of the act. LM 2s should require that unions disclose any funds spent to defend legal action brought against them.
The time has come for serious, actionable reform. Modernizing the LMRDA and strengthening LM-2 reporting requirements will help restore the core purpose of unions: to serve their members. Greater transparency and accountability are not threats to organized labor — they are essential to its integrity and survival.
