Financial scandal and betrayal are plaguing the Washington Teachers' Union in the nation's capital.

A 46-page audit released Thursday night at the request of parent group the American Federation of Teachers alleges that three former union officers looted more than $5 million over the last seven years and used the money to buy items such as flat-screen TVs, fur coats and silver.

"The massive misappropriation of union funds and the betrayal of the members that are outlined in our audit are reprehensible and sickening," said AFT president Sandra Feldman. "The individuals responsible must be held accountable, and the AFT will do everything in its power to see that these funds are returned to the WTU and its members."

With audit in hand, the AFT filed a lawsuit in Federal District Court in Washington under the Racketeer Influenced Corrupt Organizations Act and other federal and state statutes. The group is seeking restitution on behalf of the nearly 5,000 members of the WTU for the misuse, misappropriation and conversion of union funds.

The lawsuit alleges that eight individuals, including former WTU President Barbara Bullock, elected union president in 1994; James Baxter, the WTU's former treasurer; and Gwendolyn Hemphill, former assistant to Bullock, "in their positions as union officers, agents, representatives and employees, or through their relationships with union officers, agents, representatives and employees, aided and abetted, participated in, and used the union as part of their conspiracy to embezzle and convert funds of the union."

The lawsuit and audit detail a scheme to defraud the union and its members, embezzle WTU funds and convert those funds for personal use. The complaint charges that defendants defrauded the union by forging checks, illegally converting them or using checks without authorization and that some of the individuals made "substantial unauthorized purchases" with union credit cards.

"In summary, due in large part to the deliberate override of the system of internal controls at the WTU, Bullock, Hemphill and Baxter appear to have systematically diverted millions of dollars in WTU funds to themselves, family members, and others for personal benefit," the forensic examination states.

A WTU receptionist on Friday told Foxnews.com that he was not aware of any lawsuit and no one was available to discuss the charges.  An open letter from interim WTU President Esther S. Hankerson in December said she was "shocked and angered" by the allegations leveled against Bullock, Baxter and Hemphill.

"It is very upsetting to see the worst of our fears possibly coming true, and to realize that perhaps those in whom we placed our confidence have violated their trust, abandoned their personal and professional responsibilities and severely abused their position of authority," she wrote nearly a month before the charges were filed.

Auditors began scouring two years of the local union's books in July after the AFT was alerted by a WTU member to an overcharge of union dues. What they found was a long trail of forged signatures and altered checks, as well as $1.5 million in "inappropriate" personal charges on a WTU credit card. Another $948,000 is labeled "questionable." The audit also unearthed nearly $700,000 in "undocumented expense reimbursements."

While union rent and utility bills often went unpaid and union teachers allegedly weren't receiving promised services, the AFT investigation concludes that Bullock wrote $381,000 in checks to herself, Hemphill diverted at least $492,000 through unauthorized credit-card charges or unauthorized checks and Baxter diverted at least $537,000 to buy himself art, clothing and sports tickets.

The three also allegedly made $12,000 in political contributions — charged to the WTU's American Express credit card — to the Democratic National Committee and to the 2000 senatorial campaign of Hillary Clinton, D-N.Y. Other political donations charged to that account totaled $4,200, made to groups including the National Political Congress of Black Women and the (former D.C.) Mayor Marion Barry Constituent Services Fund.

Both the DNC and Clinton's campaign have since reimbursed AFT with the funds.

Then there's the $1.2 million allegedly paid to the Bullock's chauffer, Leroy Holmes. Auditors say he kept some of that cash and gave the rest to Bullock or Hemphill, who also co-chaired District of Columbia Mayor Anthony Williams' re-election campaign. Holmes said he thought his 2001 salary was $105,000, but $150,000 was noted on his tax forms. Holmes said the WTU also paid for expenses related to his three Cadillacs.

The Washington Post reports that Washington's Office of Campaign Finance this week began investigating whether Williams' re-election campaign failed to report in-kind contributions from the union. The mayor and his staff have denied any wrongdoing.

"This is a perfect example of why workers need to have the freedom to choose for themselves when it comes to union membership," said Dan Cronin, legal director for the National Right to Work Foundation.

Cronin's group argues that this kind of union corruption could be minimized if workers weren't forced to pay union dues in order to get jobs.

Included in the WTU's bylaws is a section saying the District of Columbia Board of Education recognizes the WTU as the "sole and exclusive bargaining representative" in negotiating for teachers' wages, rights and other job-related issues.

"If workers have the freedom to leave the union and stand on their own … then you would be forced to be more responsive to the workers," Cronin said. "Compulsory unionism breeds corruption — they go hand and hand."

The Post reports that the AFT is considering placing the 5,000-member WTU in an "administratorship," which would dissolve local leadership for as long as 18 months. A two-member, AFT-appointed panel held a hearing Thursday with the local union's executive board and AFT could vote on a takeover, the Post reported.