8.27.22 – Supplemental Arbitrator Decisions for Article VII Charges Received

Saturday, August 27, 2022

Supplemental Arbitrator Decisions for Article VII Charges Received

On March 24, 2022, we posted a hotline notifying APFA members of the issuance of arbitration decisions in connection with the charges filed by APFA members against former APFA National President Bob Ross and former APFA National Treasurer Eugenio Vargas under Article VII of the APFA Constitution.

In both decisions, Arbitrator Ruben R. Armendariz ordered the APFA Board of Directors (BOD) or the APFA Executive Committee (EC) to hire an Independent Forensic Auditor to audit various charges and expenses by Ross and Vargas. The audits are now complete. As a result of the auditor’s findings, on August 24, 2022, Arbitrator Armendariz issued a Supplemental Decision and Remedy Modification in each case, which modified the remedies in both of the original decisions to reflect the Independent Forensic Auditor’s identified items.

To view the Supplemental Decision and Remedy Modification for former APFA National President Bob Ross, click here.

To view the Supplemental Decision and remedy Modification for former National Treasurer Eugenio Vargas, click here.

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Independent Forensic Auditor Findings
for Former National President Bob Ross

In his March 19, 2022, decision in connection with the charges against Bob Ross, Arbitrator Armendariz ordered as one aspect of the remedy that:

“The APFA will hire an Independent Forensic Auditor to audit Robert Ross’ weekly reports, monthly reports and APFA credit card charges from April 1, 2016, through July 2018 and perform the following tasks:

Specifically:

1. The Auditor shall inspect the receipts for the Ross family vacation taken in the Grand Canyon in August 2016. Ross claimed all of hotel stays, meals and mileage charges as relocation moving expenses when some are for a personal vacation. Please determine what costs should not have been claimed as relocation moving expenses. Ross is liable for the excess cost and is hereby Ordered to repay APFA for all inappropriate charges!
2. The Auditor shall inspect Ross’ APFA credit card usage for personal and group meals and purchases for personal items such as tools, toiletries, bath towels, and candy from April 1, 2016, through July 2018 and determine the cost of all inappropriate charges. If no documentation was provided to support each purchase was a union related business cost, then Ross is liable for all inappropriate charges and is hereby Ordered to repay the APFA for all inappropriate charges!
3. The Auditor shall inspect all of Ross’ rental car usage from April 1, 2016, through October 16, 2016, and determine if these rentals were for union related business. APFA paid for the rental cars but there should be documentation to show if it was for union related business. If not, Ross is to be assessed the cost of the rental cars during the above period and is hereby Ordered to repay APFA for inappropriate rental car usage!
4. The Auditor shall inspect all of Ross’ claimed mileage from the Sacramento Airport to his residence (42 miles) and return (42 miles) as well as all monthly parking of his personal car. He claimed $105.00 per month from April 1, 2016, through July 2016 to park his car at the Sacramento airport. Ross is to be assessed the mileage and monthly parking he claimed, and Ross is hereby Ordered to repay APFA for all of these inappropriate charges!”

Upon completion of the audit, the Independent Forensic Auditor prepared a report which was submitted to the Arbitrator. In that report, the Auditor determined, after review of all the available financial records, that former National President Ross owed an additional $20,336.19 to the Membership of the APFA, in addition to the monies the Arbitrator had already found to be owed in his March 18, 2022, decision. Based on the Auditor’s findings and report, the Arbitrator issued his August 24, 2022, Supplemental Decision and Remedy Modification, linked above, in which he concluded and ordered that Ross owed and shall repay the APFA membership the following total amounts:

Click chart to enlarge

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Independent Forensic Auditor Findings
for Former National Treasurer Eugenio Vargas

In his February 18, 2022, decision, as clarified by his March 10, 2022, supplemental decision, in connection with the charges against Eugenio Vargas, Arbitrator Armendariz, ordered as one aspect of the remedy that:

“1. Issue No. 1 is remanded to the BOD or EC to hire an Independent Auditor to audit Vargas credit card charges during his term as National Treasurer. Vargas is hereby Ordered to repay APFA for all meals he purchased on the APFA credit card for himself and for all other meals he has not properly documented. If he has failed to provide documentation to support the purchase of the meal expense, the Independent Auditor must determine if said expense was or was not for the sole purpose of conducting Union business. Moreover, the audit must comply with federal income tax guidelines which distinguish between personal and nonpersonal expenses.”

Upon completion of the audit, as was done in the Ross case, the Independent Forensic Auditor prepared a report which was submitted to the Arbitrator. In that report, the Auditor determined, after review of all the available financial records, that former National Treasurer Eugenio Vargas owed an additional $13,914.87 to the Membership of the APFA, in addition to the monies the Arbitrator had already found to be owed in his February 18, 2022, decision and March 10, 2022, supplemental decision. Based on the Auditor’s findings and report, the Arbitrator issued his August 24, 2022, Supplemental Decision and Remedy Modification, linked above, in which he concluded and ordered that Vargas owed and shall repay the APFA membership the following total amounts:

Click chart to enlarge

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In addition to the monetary amounts that Arbitrator Armendariz ordered Ross and Vargas to repay APFA, he further ordered that the APFA must take certain steps to reform the way we do business. Your APFA Leadership is in the process implementing financial reforms to ensure APFA complies with this ruling. Arbitrator Armendariz ordered:

• “The APFA if it hasn’t done so, must create a separate body of trained forensic accountants to oversee the annual audit and to create procedures and recommendations to preclude fraud for the BOD’s review and action to be included within the Policy Manual. 
• National Officers or Officers who have the authority to extend APFA to credit or use of an APFA credit card must be held economically responsible. The language created must be very clear and unambiguous. Training over the LMRDA must be a requirement for all National Officers or any person who can extend APFA to credit and whom is given an APFA credit card. These individuals must sign a document declaring and attesting that they have read and understand their responsibilities in using an APFA credit card or extending credit to the APFA for rental cars, apartments, etc., and that negligence will not be tolerated and will be dealt with severe penalties.” 

APFA is an independent union and does not have a parent body to scrutinize the actions of the National Officers. Therefore, changes to the Policy Manual are necessary to ensure financial transparency and integrity. Earlier this month, your APFA Board of Directors unanimously approved a resolution that updates and clarifies the APFA credit card policy. Once the minutes of the meeting are available, we will send a communication detailing the changes.

This administration since day one has taken steps to ensure member access to all of APFA’s financial records and reports, including audits, LM-2 filings, monthly financial reports, expense and mileage reports, officer credit card statements, signed contracts and agreements, and payroll registers. And we are in the process of taking the actions necessary to implement the financial reforms as ordered by the Arbitrator. All APFA Members in good standing may review these documents for the current and former administrations by contacting the APFA National Treasurer.

In Solidarity,