Oakland union official pleads not guilty to charges of taking illegal payments

Daniel J. Rush, a union official who has been at the center of a four-year FBI investigation, sat on the front bench in a federal courthouse in Oakland Wednesday morning waiting to enter his plea in a lawsuit filed by the US Attorney’s Office that alleges he was involved in attempted extortion, money laundering and receiving illegal payments. His wife handed him a folded-up handkerchief, which he used to wipe the sweat from his brow as he waited to be called before Judge Kandis Westmore.

Rush, a resident of Oakland, is a union executive at the International United Food and Commercial Workers (UFCW). Rush was also previously the treasurer of the Instituto Laboral de la Raza, a non-profit organization that advocates for the working poor.

On September 17, a federal grand jury indicted Rush on charges of accepting illegal payments as a union employee, attempted extortion, money laundering, and honest services fraud, which means accepting arrangements that benefitted himself while conducting union business.

Rush was arrested on August 11 after the FBI filed a criminal complaint against him, supported by an affidavit for his arrest filed in US District Court, Northern District of California. The affidavit alleged that Rush had violated the Taft-Hartley Act, which restricts union workers from accepting or receiving payments of value.

If convicted, Rush would face a maximum of 20 years imprisonment with a fine of as much as $500,000, in addition to restitution if appropriate, according to a press release put out by the US Attorney’s Office.

In court on Wednesday, Rush said “Not guilty” to the judge when asked how he pled to the charges against him.

According to the FBI’s affidavit, in 2011, the UFCW appointed Rush as the executive director of its cannabis division, which involves expanding the union’s presence in the marijuana dispensary industry and includes efforts to unionize dispensary workers. Prior to this position, Rush worked for UFCW Local 5, which represents employees in Northern California.

The indictment alleges that Rush accepted a $600,000 loan, followed by $550,000 in debt forgiveness, from a medical marijuana dispensary operator. The press release from the US Attorney’s Office states that the indictment further alleges, “Rush and the attorney engaged in a series of structuring transactions designed to obscure the origin of the money.” Rush allegedly “required the attorney to fund interest payments on the loan and, when Rush ultimately was not able to repay the loan, he offered favorable union benefits in exchange for forgiveness of the loan.” The benefits included using Rush’s position in the UFCW to favor the medical marijuana dispensary’s operator, according to the affidavit.

According to the indictment, Rush used his position at the institute to direct worker’s compensation clients to the attorney, who in return gave Rush a credit card that he used to charge thousands of dollars of expenses.

Rush also faces an attempted extortion charge for allegedly misusing his influence as a member of the Berkeley Medical Cannabis Commission, which is a city agency that regulates the licensing of medical marijuana dispensaries in Berkeley. According to the US Attorney’s press release, “Rush demanded a well-compensated job from a prospective medical marijuana dispensary in exchange for his influence as a member of the commission.”

Requests for comments from representatives of the UFCW International and UFCW Local 5 were not returned by press time.

Michael Inman, attorney of the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office in San Francisco, who represents the federal government, declined to offer comments on the case after the court appearance.

Attorney William L. Osterhoudt, representing Rush, said “I have no comment at this time. We will leave this up to the courts and the judge to sort out.”

Rush is next expected to appear in court on Monday September 28 in front of Judge Haywood Gilliam Jr., where Rush will seek to establish private counsel, replacing Osterhoudt, a public defender.