OKLAHOMA CITY – A former federal employee in Oklahoma indicted on a felony charge of submitting a falsified report to the U.S. Department of Labor in an attempt to conceal embezzlement of union funds was exonerated at the conclusion of a jury trial in federal district court here.
Tracy Jean Vargas, of Choctaw, was an employee of the U.S. Department of Housing and Urban Development (HUD) when a whistleblower told a United States senator from Iowa that Vargas apparently collected a government paycheck while she was sitting in jail in Oklahoma on a drunken- driving charge.
Vargas, 52, 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, 2024, and was indicted by a federal grand jury on Dec. 17, 2024.
She was accused of submitting a falsified federal form on March 31, 2023. The indictment arose from an investigation conducted by the Office of Labor-Management Standards’ Dallas- New Orleans District Office.
Sen. Joni K. Ernst (R-Iowa) sent a letter dated Aug. 14, 2024, to Adrienne Todman, Acting Secretary of HUD, informing her that the “most egregious independently verifiable allegation” that the unidentified whistleblower made was against Vargas, who was then employed by HUD.
Ernst asserted that when Vargas was arrested in 2020 for driving under the influence of alcohol, she supposedly “drank and drove on the taxpayer dime.” Ernst alleged that Vargas nevertheless “claimed and received payment, asserting she was engaged in union activities pursuant to taxpayer- funded union time.”
The senator claimed Vargas was “paid on taxpayer-funded union time while sitting in a jail cell.”
The informant, who was not identified in the senator’s letter, said Vargas’ first arrest on a misdemeanor DUI charge “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 an Oklahoma jail.
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 for embezzling” union funds.
The unnamed informant claimed 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, 2024, with three questions:
• Why did the whistleblower contact her office rather than either of Oklahoma’s two U.S. senators, since the Vargas case occurred 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 during the Christmas holiday, and he said a reply to the Ledger inquiry probably would be received sometime in January. Neither the senator nor anyone from her office ever called back.
Tracy Jean Vargas admitted guilt, made restitution Tracy Jean Vargas, a single mother with three children, “went through a rough patch and fell into an addiction to alcohol,” her court-appointed attorney, Robert Gifford of Oklahoma
City, told the Ledger. “She got a couple of DUIs, embezzled $3,000 from the union in 2021 and $17,000 from the union in 2022.”
Yet hers is ultimately a story of redemption.
Vargas sobered up, “went to union officials and turned herself in,” Gifford said. An audit of the union books confirmed her story. She “volunteered to pay it all back.”
She also reported her crime on Form LM-4 Labor Organization Annual Report to the DOL. That document is a mandatory report for labor organizations with less than $10,000 in total annual receipts. It is used to state the organization’s annual activities and is required under Public Law 86-257. Vargas inadvertently put the information “in the wrong blanks on the form,” Gifford said.
Vargas was charged on June 26, 2024, with falsely reporting “no payments of labor union funds to officers and employees, for the purpose of concealing the conversion of labor union funds … for her own personal use.” Approximately one week later “Senator Ernst’s story came out,” Gifford said.
Vargas was suspended from her job, and she resigned from HUD and the union in September 2024 after 23 years of federal service. By then she was sober and had repaid the $20,000. “I worked three jobs to pay back the money,” Vargas told the Ledger.
At the time she was still owed approximately $2,000 from her travel on the union’s behalf – Vargas paid her travel expenses up-front and was reimbursed afterward – but during the audit she told the federal government “to just keep the money,” Gifford said.
Jail and government records prove that Vargas “took leave time and never got paid while sitting in jail,” Gifford said. “And she insisted she was never drunk at work.”
On June 26, 2024, the day she was charged by information in Oklahoma City’s federal district court, Vargas was notified by HUD that from among more than 400 nominees, she was one of seven employees chosen to receive the 2024 Secretary’s Award that honors “the work, sacrifice and professional excellence of employees within the agency… This email is to notify you that you have been selected as a winner” in the housing category.
Less than three weeks later, on July 14, 2024, Vargas received another email informing her that “we are rescinding the winner notification…” On Feb. 12, 2025, at the conclusion of a twoday trial that spanned four and a half hours in Oklahoma City’s federal district court, a jury – after deliberating 40 minutes – returned a unanimous verdict of “not guilty” of falsifying a federal document.
After the verdict was read, Gifford said he “stepped out of the courtroom and I called the senator’s office in Des Moines, Iowa, and left a message notifying her. She never called me back.”
Vargas is now working for the Oklahoma City Thunder as a guest services manager, and has twice been recognized by the basketball team as “an outstanding employee.”
Attorney scores rare win in federal court Gifford, a University of Oklahoma Law School graduate, said he’s been an attorney for 28 years and does “a lot of federal work.” He told the Ledger, “I get calls from the Muskogee and Tulsa federal district courts” as well as Oklahoma City’s Western District federal court.
After law school Gifford joined the Army’s Judge Advocate General (JAG) staff. He served some time at Fort Sill and after active duty he joined the Reserve, retiring from military service in 2019 as a colonel.
Only 290 of 71,954 defendants in federal criminal cases – fourtenths of 1 percent – went to trial and were acquitted in Fiscal Year 2022, according to a Pew Research Center analysis of statistics from the federal judiciary.
Vargas’ case was Gifford’s second victory in federal court in five months, he told the Ledger.
“That man gave me my dignity back,” Vargas said.