Unions, Busted: But there is much more 'busting' to do.

The tart and tony Prime Rib steakhouse in downtown Washington has long been a favorite of officials of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers. In fact, Jake West, the former president of the union, was there almost every day. So when federal agents wanted to serve West with an arrest warrant for conspiracy, fraud, and embezzlement in August 2001, they knew where to go.

Sure enough, West was there -- at his usual table, surrounded by cronies and lady friends. And the old union boss wasn't terribly pleased to be bothered by the feds. "Young man," agents say he lectured one of them, "you have just ruined a perfectly good martini."

West would know; he'd become somewhat of a connoisseur of Prime Rib's martinis. According to the 49-count indictment, he and his top two officers illegally charged nearly $500,000 in food and booze to the union's house account at the restaurant over a seven-year period. And that wasn't all. There were other restaurants, and private wine stocks, and over $200,000 in fees at yacht and country clubs stretching from suburban D.C. to Palm Springs, Calif. All told, the three Iron Workers officials embezzled $1.5 million in union dues to maintain their lavish lifestyles. How? By cooking the books, of course.

Upon his re-election as union president in 1992, West turned over the Iron Workers' lucrative accounting contract to Thomas Havey LLP. (The firm had long been wooing the union by, among other things, preparing the tax forms of union officials free of charge.) In addition to the obvious need for business accounting, unions are required to submit to the Labor Department forms detailing how dues are spent. But it soon became clear to Havey accountants that Iron Workers officials didn't want to do things by the book. Because "direct and indirect disbursements to officers" are supposed to be itemized separately, the union leadership feared their fat-cat lifestyle might be used against them by challengers in internal elections. Come up with a way to hide the charges, Havey was told, or you're fired. Which is how $47,000 worth of Prime Rib bonhomie in 1992 was hidden under "Office and Administrative Expenses."

The next year, Havey accountants took a different tack, suggesting that the entertainment charges be placed under the less egregious "Other Disbursements" category. But that, too, would require an itemization, and in an internal memorandum the union's chief in-house accountant expressed concern about the "political ramifications." The growing food-and-fun bills were again listed under "Office and Administrative Expenses."

In 1995, things changed. A new Labor Department rule required that office and administrative expenses be itemized. "Is there anywhere else to bury?" read the shorthand notes of the union's lead accountant from a series of meetings and discussions. The Havey folks scratched their heads and saw that the accounting rules for "Educational and Publicity Expenses" remained opaque, and the charges were buried there.

And so it continued until late 1998, when federal investigators stumbled upon the scam during a separate Iron Workers probe. So far six union officials and two Havey partners have copped pleas from federal prosecutors. In exchange for West's guilty plea in October in a different matter (an inflated pension plan and bogus salary West cooked up to stave off an election challenge by his general secretary), federal prosecutors agreed to drop the 49 charges of embezzlement, conspiracy, and fraud. He now faces at least four years in prison -- no small time considering his age (75) and ill health.