Where in the world is Diana Frey? For some time, people had been asking that question, especially members of the independent public employees union she headed, Cincinnati Organized and Dedicated Employees (CODE). Frey was charged in Cincinnati federal court on Wednesday, July 20 with embezzling more than $750,000 from the organization over more than six years. The alleged thefts might have gone on longer were it not for anonymous information triggering an investigation by the U.S. Department of Labor. At the time of her indictment, her whereabouts had been unknown for weeks. But she came out of the woodwork to appear at her arraignment yesterday, July 28, to plead not guilty. She faces a maximum of 20 years in prison and a $1.5 million fine.
CODE represents about 800 middle managers, professionals, technicians and nurses employed by the City of Cincinnati. Diana Frey, 51, was an administrative specialist with the Metropolitan Sewer District. Regrettably, she also headed the union since its founding eight years ago. Federal prosecutors say she used her latter position, illegally, to expand her disposable income at the expense of dues-paying members. The union withheld $9 from biweekly paychecks. That worked out to about $187,000 a year, or around $1.2 million during the six-and-a-half-year period covered by the indictment. Frey allegedly diverted $757,009, or about 62 percent of these revenues, to her personal use. The indictment states that Frey “knowingly and willfully devised…a scheme” by which she moved CODE funds to her own accounts and then “misrepresented the CODE finances to the other CODE officers and members.”
The indictment cites only two instances of theft: a pair of unauthorized wire transfers in September 2008 in the respective amounts of $4,000 and $5,000 from the union’s CINCO Credit Union account to a separate account Frey controlled. But prosecutors believe this represented a tiny portion of the true take. “She was the president throughout that period of time,” said Tim Mangan, an assistant U.S. attorney in Cincinnati. “She had control, at least influence over, the finances of the union…That’s basically how she was able to take care of this.” She’s accused of writing checks, and making wire transfers, ATM withdrawals and credit card purchases to make unauthorized transfers of member dues to her own benefit. Mangan stated: “Suffice it to say it was all spent over these six years for her personal benefit one way or another. But in terms of getting into what we can recover, that’s still something that’s ongoing.”
Frey’s pattern of theft began to unravel when the U.S. Department of Labor received a recent tip about a substantial shortfall of CODE funds. The most likely source was Don Stiens, a CODE member and senior engineer in the Cincinnati Transportation and Engineering Department. Stiens had sent a complaint in June to the State of Ohio’s Employment Relations Board in which he alleged, among other things, that the union had failed to properly maintain financial records or allow members to view them, as required by federal law. DOL investigators would not confirm whether this inquiry was the catalyst for their probe. But assertiveness paid for Stiens. The union board dismissed Frey from its ranks this past Tuesday and then, in an executive session, elected Stiens president. As for Frey’s City position, as of last week she reportedly was “in the process of formally severing her employment.” She insists she is not guilty. The claim will be a tough sell to a jury.