John Orecchio saw in the nearly $200 million in union pension benefits under his management a ticket to a high roller's life. It proved to be a ticket to prison. On June 17, the one-time Chicago investment banker and equity fund manager was sentenced in U.S. District Court for the Northern District of Illinois to nine years and four months in federal prison to be followed by three years probation for embezzling more than $24 million from various Michigan-based labor pension plans. He had pleaded guilty in February. Orecchio also will have to pay more than $26 million in restitution - on top of the $50 million he'll have to fork over in the wake of a civil judgment against him last August obtained by the U.S. Department of Labor and another $7.8 million toward a DOL-engineered global settlement announced this past June 22 against his company, AA Capital Partners, and other parties.
It's no secret that many union-sponsored pension plans lack the assets needed to cover liabilities. And a major reason for this lies with the gullibility, and on due occasion dishonesty, of their fiduciaries. Major case in point: the theft of tens of millions of dollars from six union pension plans entrusted to Chicago-based equity fund manager John Orecchio. On July 22, the U.S. Attorney's Office for the Northern District of Illinois filed an information count against Orecchio, charging him with embezzling approximately $24 million from his clients. The action, which follows a similar Securities & Exchange Commission complaint of nearly three years ago, provides a window into the overlapping worlds of high finance and organized labor. It also should serve as a reminder to the see-no-evil, hear-no-evil Obama Labor Department that union members have a right to maximum transparency as to how their dues and retirement contributions are being spent.