OKLAHOMA CITY – An Oklahoma woman who was a federal employee and previously was a labor leader has been indicted on a felony charge of submitting a falsified report to the U.S. Department of Labor in an attempt to conceal her embezzlement of union funds.
Moreover, Tracy Jean Vargas, formerly an employee of the U.S. Department of Housing and Urban Development (HUD), was outed by a whistleblower who told a United States senator from Iowa that Vargas apparently collected a government paycheck while she was sitting in jail in Oklahoma on one of multiple drunken-driving charges.
Vargas, 52, of Choctaw, former president of Local 3138 of the American Federation of Government Employees in Oklahoma City, was charged by information presented by federal prosecutors in Oklahoma City’s Western District federal court on June 26, and was indicted by a federal grand jury on Dec. 17.
She is accused of submitting a Form LM-4 Labor Organization Annual Report to the DOL on March 31, 2023, that “falsely reported no losses and no payments of labor union funds to officers and employees,” because Vargas allegedly diverted labor union funds “for her own personal use.”
Form LM-4 is a mandatory report for labor organizations with less than $10,000 in total annual receipts. It is used to report the organization's annual activities and is required under Public Law 86-257.
The indictment arose from an investigation conducted by the Office of Labor-Management Standards’ Dallas-New Orleans District Office. Vargas was released from custody Dec. 20 on a $5,000 unsecured bond pending trial.
Iowa Senator says Vargas case ‘egregious’ Sen. Joni K. Ernst (R-Iowa) sent a letter dated Aug. 14 to Adrienne Todman, Acting Secretary of HUD, informing her that the “most egregious independently verifiable allegation the whistleblower made” was against Vargas, who was employed by HUD for 20 years.
“From 2020 through 2022, Ms. Vargas was arrested four times, including one arrest for driving under the influence of alcohol on May 1, 2020, at 3:28 p.m.,” the senator wrote.
As proof, Ernst included four arrest “booking” photos of Vargas dated:
• Jan. 5, 2020, Driving Under the Influence (DUI) misdemeanor.
• April 9, 2020, charge(s) unknown.
• May 1, 2020, DUI alcohol.
• Feb. 17, 2022, DUI second offense in 10 years.
On the day Vargas “drank and drove on the taxpayer dime,” she is alleged to have “successfully claimed and received payment, asserting she was engaged in union activities pursuant to taxpayer- funded union time,” the senator wrote.
“It is unacceptable for any employee to be paid on taxpayer-funded union time while sitting in a jail cell,” Senator Ernst asserted.
The informant, who was not identified in the senator’s letter, said Vargas’ first arrest “resulted in a four-day jail stay.” The individual also alleged that Vargas “submitted no leave request, suggesting she may have been paid for taxpayer-funded union time” while she was incarcerated in a jail in an unidentified county in Oklahoma.
Multiple DUIs “apparently weren’t sufficient grounds for suspension from her job at HUD,” Ernst continued. According to documents the informant provided to the senator’s office, Vargas “remained a HUD employee until she was fired” in August 2023 “for embezzling over $20,000 of union funds…” ‘Troubling’ allegations The whistleblower approached the senator’s office with “troubling allegations” against HUD and its employees, Ernst wrote.
The informant claims HUD employees “are abusing remote work flexibilities to engage in personal activities while also claiming 100% of their working time as taxpayer- funded union time.” HUD also “performs no meaningful verification of funds disbursed pursuant to taxpayer-funded union time before the money is sent out the door,” the whistleblower charged.
As a result, Senator Ernst demanded Todman provide answers to 13 questions about Vargas and HUD work rules.
Southwest Ledger emailed the senator’s office on Dec. 23 with three questions:
• Why did the whistleblower contact her office rather than either of Oklahoma’s two U.S. senators, since the Vargas case arose in this state?
• Did Senator Ernst receive a reply from Acting HUD Secretary Todman, and if so what did she say in her reply?
A spokesman said the senator’s office in Washington, D.C., was closed last week, and he said a reply to the Ledger inquiry probably would not be received until sometime in January.
Tracy Jean Vargas no stranger to Oklahoma courts Tracy Jean Vargas is no stranger to the state judicial system, records in the Oklahoma State Courts Network (OSCN) reflect.
The dates and locations where Vargas allegedly was arrested for drunken driving in May 2020 and in February 2022 are not reflected in the OSCN. However, Vargas was arrested by the Choctaw Police Department in April 2022 on a charge of driving under the influence of alcohol, and she pleaded guilty in Oklahoma County District Court five months later. She received a three-year deferred prison sentence but was ordered to pay $395 in fees and assessments, court costs of $166.50, plus $83.25 to the Choctaw Police Department and a $45 court fund assessment.
Her driver’s license was revoked in 1999 but was restored in 2000, Cleveland County court records indicate.
Yes Companies d/b/a Timberland Mobile Homes sued Vargas in Oklahoma County in 2016, claiming she was in default on $1,064 in rent on a residence in Choctaw. The case was settled nine days later.
The University of Oklahoma was awarded a default judgment against Vargas in May 2017. However, it was vacated three months later after Vargas agreed to have the remaining balance of the $2,855 debt “taken from the Oklahoma Tax Warrant Intercept Program,” Cleveland County records show.
Comenity Capital Bank sued Vargas in May 2019 in Oklahoma County for defaulting on a debt. On Valentine’s Day 2020 the district court approved a default judgment for $3,337 plus 6.75% annual interest until the debt was retired. Vargas’ HUD wages were garnished to retire the bill, which had climbed to $4,910 by November 2021; the debt was paid in full by Feb. 28, 2022, when the garnishment was vacated, court records reflect.
An Oklahoma County judge awarded an individual a default judgement against Vargas in October 2019 for failure to pay an unspecified debt of less than $5,000.
Midwest City Loan Service filed suit in Oklahoma County District Court in March 2021 against Vargas for failure to pay a debt of less than $5,000. The case was dismissed two months later after Vargas paid the amount “in full,” court records show.
And Capitol One NA sued Vargas in Oklahoma County in April 2023 for failure to pay a debt. A default judgment for $4,972 was issued against her in October 2024.