POLICE UNIONS (PBA)
New Jersey Bosses Allegedly Diverted $1 Million from Union
Two ex-bosses of the N.J. State Policemen's
Benevolent Ass'n, Frank Ginesi and William Saksinsky, were arrested
Nov. 16 and charged with defrauding the union of as much as $1 million.
Reportedly, the two regularly diverted union dues checks, death benefit
insurance premium checks, travel agency checks and checks from a PBA fundraising
company into secret accounts. Some of this money was reportedly earmarked
to help disabled children. They allegedly spent the money on cars, jewelry,
real estate projects, personal investments and gifts for girlfriends.
"This was an audacious, pervasive, long-running fraud," said Acting U.S. Atty. Robert J. Cleary. "It is perverse that the fraud was committed by longtime former law officers against...the very people they were trusted to represent."
Saksinsky was also charged with witness tampering. Allegedly, he tried to persuade a cooperating witness who was wearing a recording device to lie when called to testify about checks to the secret accounts. According to FBI affidavit, Saksinsky bemoaned his plight and asked in a flurry of expletives why investigators were treating him as if he were "Gotti," apparently referring to ex-Gambino crime boss and convicted racketeer John J. Gotti. He threatened to "blow my brains out... That'd be the end, end it all."
Citing that threat to do violence to himself and citing Saksinsky's "huge liquid assets," estimated at $2.54 million, an Asst. U.S. Atty., Ralph J. Marra, Jr., asked Magistrate Judge Joel A. Pisano to set a $500,000 bond for Saksinsky as a guarantee for future court appearances. Pisano, set a $300,000 cash bond for Saksinsky and ordered him to undergo psychiatric tests and to turn over to all his weapons. Pisano released Ginesi on $300,000 bail.
Jerry Dowling, editor of Police Labor News, a monthly newsletter for police labor groups that is based in Huntsville, Tex., told the N.Y. Times that fraud in police unions is relatively rare. He recalled the 1998 conviction of ex-president of N.Y. Transit PBA, Ronald Reale, on charges of taking kickbacks from a law firm retained to represent the union, and the conviction of a San Antonio police union boss, Harold Flammia, earlier this year on similar charges. "I would say that it is my sense that such things happen more in other branches of organized labor," Mr. Dowling said. "But I would be in denial to say that it never occurs with police unions." [USAO D.N.J., Media Release 11/16/99, N.Y. Times & APBNews 11/17/99]
Is police union corruption really that rare? Dowling failed to mention
many other recent cases of police union corruption that have been detailed
in Union Corruption Update. Visit www.nlpc.com/olap/ucu/artindx.htm for
police union corruption stories from Cal., Col.,
Fla., Ill., N.J.,
Pa., Ohio and R.I.
TEAMSTERS (IBT)
Jury Gets Hamilton Case; Sullivan Testifies against McAuliffe
At the corruption trial of ex-Int'l Bhd. of
Teamsters political director William W. Hamilton, Richard Sullivan,
ex-DNC finance director, testified that Terence
A. McAuliffe, Bill Clinton's friend and chief fundraiser, played a
major role in promoting an illegal money-laundering scheme in which Democratic
donors were to contribute to ex-IBT boss Ron Carey's 1996 reelection campaign
in exchange for IBT's large donations to Democrats. Describing a Oct. 1996
meeting with the Democrats' fundraising staff, Sullivan testified, "[McAuliffe]
said that if we could get a $50,000 contribution for the Carey campaign,
he knew we could get $500,000 for Unity from the Teamsters." Unity was
a joint fund-raising effort by Clinton-Gore 96 and other Democratic campaign
committees.
The U.S. Atty.'s Office in Manhattan has focused on two conspiracies, one involving this swap scheme with the DNC and one in which they say Hamilton steered over $700,000 in IBT money to liberal groups, and in exchange donors to those groups gave $200,000 to Carey's campaign. The prosecution described the schemes as desperate attempts by Carey aides to prop up Carey's faltering campaign by using IBT funds to get donors from outside the union to donate heavily to Carey. Hamilton is charged with fraud and conspiracy, accused of illegally diverting union funds. After three weeks in the courtroom, the jury began deliberations Nov. 17. Reportedly, McAuliffe was cooperating with prosecutors. [N.Y. Times 11/18/99]
Also, ex-Carey campaign aide Martin Davis, who had pled guilty and was cooperating with prosecutors, may have had a change of heart. Reportedly, he did not appear as a witness and the government is reviewing his plea bargain. [Wall St. J. 11/15/99] For chart and full report on the Teamsters money-laundering scandal, please visit www.nlpc.org.
Philly Boss Removed, Local in Trusteeship
IBT Local 115 in Philadelphia, which is run by the "powerful"
boss of the Pa. Conference of Teamsters -- John P. Morris, was put into
trusteeship Nov. 15 by IBT. IBT boss James P. Hoffa cited allegations of
abuse of members' rights and failure to protect union finances as reasons
for the takeover. Morris -- who was involved in
the beating of Clinton-protester Don Adams last year -- was removed
from his position as Local 115's secretary-treasurer. The trusteeship notice
cited numerous examples of abuse including: intimidation and assault of
members; weapons purchases; member surveillance; failure to enforce collective
bargaining agreements; and operation of the local for the personal benefit
of Morris and his family.
The notice stated that Local 115 bosses used union resources to create a climate of fear and intimidation among members, including the assault of at least three members. Union funds were allegedly used for the purchase of two shotguns, 20 stun guns, a supply of pepper spray, and paramilitary gear. Morris also allegedly colluded with employers to terminate and suspend members from employment and maintained various companies that only hired individuals who demonstrated their loyalty to Morris. IBT also alleged that Morris -- who collected union salaries for several different positions of $184,423 last year -- used local members to do home and car repairs at the expense of their employers. [BNA 11/16/99]
GOVERNMENT EMPLOYEES (AFSCME)
New York Boss Sentenced to 4.5 Years
Am. Fed'n of State, County & Mun. Local 1597 ex-boss Lola
McBryde was sentenced Nov. 8 to 4.5 years in prison for union corruption.
Local 1597 is part of the AFSCME Dist. Council 37
in N.Y. City that has had 24 bosses indicted for corruption with 12 pleading
guilty.
McBryde, who ran Local 1597 since in 1992, was indicted Apr. 14 on charges of embezzling over $110,000 from the local by billing personal food and travel costs to the union and through kickback schemes. She also was charged with submitting phony expense accounts to pay for a cruise that she and a companion took to Alaska. She pled guilty Sep. 27 to one scheme that involved food for members who took part in a union march on Washington in 1993. She admitted stealing $6,500 by billing Local 1597 for food that was never provided.
The start of McBryde's sentence was delayed on the condition she repay Local 1597 of DC37 at least $20,000 by Dec. 13. If she pays, she can spend Christmas at home and surrender on Jan. 5. If she fails to pay, she will go to prison on Dec. 13. She must serve 1.5 years before she is eligible for parole. [AP 11/8/99; Daily News 11/9/99]
DC37 Fund Sued for Racketeering
Two ex-staffers of AFSCME DC37 have accused
its benefits fund of illegally diverting money toward the union's political
activities and fraudulently obtaining overpayments in contributions from
the city. Harold Hofmann, the fund's ex-director of computer systems, and
a staffer, Anthony Lawson, have filed a civil racketeering suit charging
DC37, its benefits fund and several union bosses with using fund money
for politics, no-show jobs, a girlfriend and other improper expenses.
The federal suit raises serious questions about DC37's benefits fund, which had not been previously connected, publicly, to the widespread criminal corruption investigation of DC37 over the past year. The fund takes in over $100 million in annual contributions from the city. But, union sources said that the Manhattan Dist. Atty., Robert M. Morgenthau, had subpoenaed many documents from the union and from the benefits fund.
The suit seeks over $26 million in damages and accused fund managers of cheating the city by submitting inflated counts of the number of unionized workers for whom the city had agreed to pay the fund $925 annually each. The suit made no estimate of the size of the overpayments, although it said Hofmann told senior fund managers about the overpayments and was ordered not to do anything about them. The suit claimed that schemes ran approximately from 1988 to 1998.
Regarding no-show employees, the plaintiffs asserted that there were at least two dozen people on the payroll of the fund's computer dep't who, as far as they could tell, did no work for the fund. The suit also said the fund paid for the mistress of indicted ex-boss Charles Hughes, to work on a project not related to the fund. It also accused Hughes, a defendant, of having the benefits fund pay for him to take friends to Honolulu, Las Vegas and elsewhere.
The suit further alleges that the fund's employees and equipment were often used for political activities at the request of Stanley Hill, DC37's ex-executive director. Allegedly, Hofmann was told by bosses that his dep't had to do whatever was required of it for a union political action committee that was run by Hill. Federal law bars benefit funds from using their money for political campaigns. [N.Y. Times & N.Y. Post 11/6/99]
FOOD WORKERS, PLANT GUARDS, UTILITY WORKERS, &
PAPERS WORKERS
Bosses of Four Different California Unions Accused of Embezzlement
U.S. Atty's Office in L.A. brought embezzlement charges against ex-bosses
of four different unions on Oct. 29. The cases appear to be unrelated,
but no reason was given why all four cases were brought together.
1) David Arnold Coupe, ex-financial secretary of United Food & Commercial Workers Local 47C in Inglewood, was accused of embezzling over $14,000 from the local. 2) Kenny Lambey, ex-secretary-treasurer of the United Plant Guard Workers Union Local 155 in Corona, was accused of embezzling $9,189. Lambey failed to show up for his initial court appearance and a warrant was issued for his arrest. 3) Herminio L. Garcia, Sr., ex-president of the Utility Workers Union Local 522 in Moreno Valley, was accused of embezzling $7,768. 4) Brian V. Carter, ex-secretary-treasurer of the Paper, Allied-Industrial, Chemical & Energy Workers Union Local 307 in Bell, was accused of embezzling $5,968. All four face up to six years in federal prison if convicted.
Jeffrey Gitomer, district director of the U.S. Office of Labor Management Standards, said embezzlement usually occurs at smaller unions with disinterested members. "An apathetic membership leads to this kind of thing." [City News Service 10/29/99; L.A. Daily News 10/30/99]
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LABORERS (LIUNA) & CARPENTERS (UBC)
New York Boss Funds Settle Suit for $3.6 Million
The Dep't of Labor agreed to a $3.6 million settlement of three related
lawsuits with trustees of three New York pension funds. Trustees Sam Marchio,
Gerald Spiridilozzi, Carmen Nicotera, Richard Alexander, Jack Endryck and
Tony Korrie agreed to repay a total of $930,000 to Laborers'
Int'l Union of No. Am. Local 35 pension fund in Utica, N.Y. Additionally,
trustees John Agati, Sam Agati, Robert Ashley, Lanny Miller, Fred Rexford
and Hugh Schickel agreed to repay a total of $1.1 million to LIUNA Local
322 pension fund in Massena, N.Y. Finally, trustees Carl Spatol, Edward
Morgan, Richard Buck and Harold McElwain agreed to repay $960,000 to the
United Bhd. of Carpenters Local 120 pension fund in Utica, N.Y.
Further, the trustees of the three pension funds also agreed to pay $600,000 in fines to DOL for violating federal pension law, and to give full discretion to the funds' investment managers to manage all of the assets. DOL's suits alleged the trustees violated their fiduciary duties when they made their pension plans buy a class of collateralized mortgage obligations and real estate mortgage investment conduit bonds, generally known as Z-bonds. Trustees of all three plans used the same broker-dealer to make the purchases. In 1994, each plan held a large amount of these securities, which the plans eventually sold at a significant loss. The suits alleged the purchases were imprudent because the trustees did not understand the investments and the risks of purchasing them, and did not monitor these investments. The lawsuits also claimed the trustees did not properly investigate the bonds, or consider how the bonds would fit with the plans' funding objectives. [Pensions & Investments 10/4/99]
PROFESSIONAL SPORTS
Boxing Bosses Charged with Racketeering,Taking Bribes to Manipulate
Fighter Rankings
Four top officials of the Int'l Boxing Federation, including its president,
Robert W. Lee Sr., have been charged in a federal Indictment with running
the East Orange, N.J.-based IBF as a racketeering enterprise, in which
fighters' rankings were routinely altered in exchange for bribes from boxing
promoters, managers and others, Acting U.S. Attorney Robert J. Cleary said
Nov. 4.
Following the payment of bribes to IBF officials, fighters advanced in the IBF ratings, where previously they may have had no rating at all or had been ranked lower, according to the indictment. "Professional boxing is built on the ranking system," Cleary said. "Favorable rankings can mean the difference between obscurity for a boxer and a shot at a title bout and a potentially big payday."
The Indictment alleges that payments from promoters, managers and others to the defendants ranged from $1,000 to $25,000 to change fighters' ratings. In one instance, a promoter paid $100,000 in 1995 to influence the IBF to grant a special exception for the heavyweight champion to defend his title against a specific opponent who was previously unranked in the IBF. In May 1995, defendants Lee, Sr., Robert W. Lee, Jr., Donald W. Brennan and others solicited and accepted another $100,000 to mandate a rematch between those same fighters. Lee, Sr., Brennan and others also laundered in excess of $150,000 in bribe proceeds to avoid detection by law enforcement and further their criminal activity.
In all, the Indictment describes 32 instances of payments being made by boxing promoters, managers and others to the defendants to influence IBF boxer ratings and executive decisions between 1985 and 1998. The Indictment also seeks forfeiture of $338,000 from the defendants allegedly taken through their association with the IBF as a criminal enterprise.
Defendants Lee, Sr., Brennan and Francisco (aka "Pancho," aka "Pacho") Fernandez, a Colombian, each violated federal money laundering law by conspiring to conduct financial transactions to conceal the proceeds of unlawful activity, according to the Indictment. They did this by funneling checks mostly through business accounts to make the payoffs appear legitimate. Lee, Sr., Brennan and Fernandez each violated federal fraud statutes, allegedly by using the U.S. mail, telephone and facsimile communications as part of a scheme to obtain money from the IBF membership and registration and sanction fees from boxers and promoters, while representing that the IBF maintained fair and unbiased systems of rankings.
Each of the defendants is charged in Counts One and Two with racketeering and racketeering conspiracy. Both counts carry a maximum penalty of 20 years in federal prison and a $250,000 fine. Lee, Sr., is also charged with 11 counts of mail fraud, four counts of wire fraud, 12 counts of interstate travel in aid of racketeering, two counts of use of an interstate facility in aid of racketeering and one count of money laundering conspiracy. Lee, Jr., is also charged with two counts of wire fraud and five counts of interstate travel in aid of racketeering. Brennan is also charged with seven counts of mail fraud, two counts of wire fraud, nine counts of interstate travel in aid of racketeering and one count of money-laundering conspiracy. Fernandez is also charged with five counts of mail fraud, three counts of interstate travel in aid of racketeering, one count of use of an interstate facility in aid of racketeering and one count of money laundering conspiracy. Fernandez was not arrested and is believed to be in Colombia. A warrant is outstanding for his arrest.
Mail fraud and wire fraud carries a maximum penalty of five years in prison and a $250,000 fine on each count, as do the counts charging use of an interstate facility in aid of racketeering and travel in aid of racketeering. [USAO D.N.J., Media Release 11/4/99]
TEACHERS (NEA)
Alabama Union Tries to Wiggle Out of Paying Member's Attorney Fees
The Ala. Educ. Ass'n which had refused to represent a union member
in her claim against her employer must honor its offer to pay her reasonable
attorneys' fees, the full Ala. Ct. of Civ. Appeals held Nov. 12.
The court remanded plaintiff Carmen Black's breach of contract claim against
AEA to the trial court for a determination of "reasonable" fees, finding
that the trial court erred in ruling that AEA was liable for Black's attorneys'
fees whether or not they were reasonable. However, the court rejected AEA's
argument that Black's suit was barred by a settlement agreement between
her and the Birmingham Bd. of Educ.
Reportedly, Black was a non-tenured teacher represented by AEA. In Jun. 1991, the school board notified her that it was not going to renew her contract. Black contacted AEA and asked it to provide her with an attorney to represent her in a lawsuit against the board. On Jun. 11, 1991, Dr. Joe Reed, AEA's associate executive secretary, wrote Black a letter denying her request. Because she was a probationary employee, the letter stated, the school board could "nonrenew" her contract without giving her a reason, and unless she could show some constitutionally impermissible reason for the board's action, there was no legal recourse. The letter also stated that "[I]f you decide to pursue your case and employ private counsel and are successful in being reinstated in a court of law, AEA will reimburse you for legal fees, not to exceed $60 an hour, plus court costs." Black contacted Reed after receiving the letter, asking him to reconsider, but he again refused, stating that her case "cannot be won in a court of law."
Black then hired attorney David Sullivan and sued the board. In February 1996, Black settled her claim against the board, receiving tenure, credit for sick days for four years, retirement credit, and $100,000 for mental anguish. The board also agreed to reimburse her $2,336 for litigation expenses and up to $500 in court costs. On Mar. 20, 1996, Sullivan submitted an itemized statement of his hourly charges and expenses to AEA, indicating that he had spent 224.2 hours in litigating Black's case, and requesting that AEA pay Black $15,981. Reed told Black that some of the hours submitted by Sullivan were excessive and that she would be paid "reasonable and customary" attorneys' fees after AEA performed an audit. On Aug. 22, 1996, Reed sent Black $11,985, stating that anything more would be excessive, the court said.
Black sued the union for breach of contract. The trial court granted Black's motion for a judgment as a matter of law, and awarded Black $5,493, which included the unpaid balance of the charges submitted by Sullivan to AEA, plus interest. AEA appealed. The appeals court stated that an agreement to pay attorneys' fees does not speak specifically to the reasonableness of the fee, a "reasonable" fee is inferred.
However, the appeals court rejected AEA's argument that the settlement-and-release agreement between Black and the board barred Black's lawsuit against the union. The settlement agreement provided that Black release the board and "any other entities" from all claims arising from Black's employment, or efforts to gain employment, with the board. Under Ala. law, a party claiming to be an unnamed third party mentioned in such a release has the burden of proving that it was the party intended to be released by the named parties to the agreement. "The AEA failed to present substantial evidence indicating that the parties intended to release it. It is clear from the evidence that neither the AEA nor any claim against the AEA was within the contemplation of the parties at the time the release was executed between Black and the Board," the court held. [BNA 11/17/99]
AIR LINE PILOTS (APA)
Texas Judge Allows Class Action against Union to Continue
U.S. Magistrate Judge Jeff Kaplan in Dallas ruled Nov. 15 that passengers
who were impacted last Feb. when American Airlines'
union pilots defied a court order to end a sickout may proceed with their
claims in state court. "Plaintiffs have sufficiently alleged a claim against
the Allied Pilots Ass'n for tortious interference with contract and civil
conspiracy based on violations of the [temporary restraining order],"
wrote Kaplan.
Kaplan's ruling was on a pilots' motion to dismiss a class action suit filed by passengers after a pilots' sickout virtually shut down American. The suit seeks to recover economic damages for a class consisting of more than 300,000 ticketed passengers whose flights were delayed or cancelled as a result of the sickout. The sickout continued for some days after a U.S. District Judge ordered it stopped. The union is appealing a $ 45 million fine to compensate the company for losses
Passenger attorney John L. Malesovas, with Malesovas, Martin & Tekell in Waco, Texas, said he was pleased with the ruling. "The pilots essentially argued that they were immune from liability despite the admission of APA leaders that the sickout was staged for the sole purpose of gaining an economic advantage in their labor negotiations with American Airlines," Malesovas said. "They knew that their illegal sickout was severely disrupting the lives of thousands of innocent passengers, and they brazenly ignored the orders of a federal district judge. Judge Kaplan wisely rejected pilots' claims of immunity for their egregious conduct." [BNA 11/18/99]
ELECTIONS & POLITICS
Union Boss Pork Removed from Federal Tax Bill
A tax/pension law change that would mostly benefit union bosses was
among the goodies removed Nov. 17 from a federal tax bill. Union bosses
had wanted in an obscure pension law known as ``Section 415" that
critics said could enable highly paid union bosses to sharply increase
their pensions. The measure, originally part of the $792 billion tax bill
vetoed by Bill Clinton, would have benefited union pensioners by eliminating
a requirement that benefits be based the three highest consecutive years
of earnings. That could help union members, but another part of the proposal
would eliminate an annual pension cap of about $60,000 for those who retire
before age 65, enabling them to get yearly pensions of well over $100,000.
Most members in that income category are senior union officials.
"There are not a lot of people earning that much money," said Peter Orszag, an economics professor at the Univ. of Cal. at Berkeley. "It could easily be interpreted as mainly helping them, [the union bosses]." [AP 11/18/99]
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Union Corruption Update is part of NLPC's Organized Labor Accountability Project which is investigating and exposing corruption and extremism in the Teamsters, LIUNA, AFL-CIO and many other union organizations. NLPC is a nonpartisan, nonprofit foundation promoting ethics and accountability in government through research, education and legal action.
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