GOVERNMENT EMPLOYEES (AFSCME)
New York Boss Pleads Guilty to Stealing $2 Million
Charles Hughes, once one of N.Y.C's
most powerful union bosses, pled guilty Apr. 19 to stealing over $2 million
from Am. Fed'n of State, Country & Mun. Employees Local 372. Hughes
is the most senior figure to plead guilty in the AFSCME Dist. Council 37
probe which has now resulted in 19 guilty pleas. Hughes will be sentenced
to no more than nine years in prison. He had denied any wrongdoing but
was scheduled to go on trial on Apr. 24.
Hughes admitted to: 1) stealing $1.29 million in unearned, unauthorized pay; 2) spending $340,000 of union funds on his personal credit card bills; 3) spending over $100,000 of union money on a trip he and 14 relatives and friends took to Egypt, Israel, Prague, Paris and London; 4) spending $97,000 in union funds on no-show jobs for friends in Millen, Ga.
Reportedly, Hughes' actions forced the Local 372 into a $10 million debt, even though it collected $19 million a year in dues. Union members paid about $910 a year in dues, a reportedly relatively high figure for workers at their sub-$20,000 wage level. [N.Y. Times 4/20/00]
TEAMSTERS (IBT)
Chicago Pension Funds' Scandal Uncovered
U.S. Atty. Donald K. Stern in Boston announced Apr. 17 the indictment
by a federal grand jury in Chicago charging Christopher P. Roach of Detroit
and Richard S. Tringale of Sarasota, Fla., with conspiracy to violate the
Racketeer Influenced & Corrupt Orgs. Act, and with paying kickbacks
to union trustees. It charges William V. Close of Chicago, ex-trustee of
IBT Local 710 and Auto. Mechanics Union Local 701 pension funds,
with receiving kickbacks and with money laundering.
Allegedly, Roach and Tringale controlled a Detroit-based brokerage firm known as East/West Inst. Servs. through which they contracted with clearing brokers to pay East/West commissions generated by trades of union pension assets. From 1994 to 1997, Roach and Tringale made promises and threats to investment advisors that Local 710 and 701 pension fund business would be won or lost depending on whether the investment advisors agreed to funnel commissions through the clearing brokers to East/West.
Roach and Tringale also allegedly paid almost a million dollars in kickbacks to two union pension fund trustees, Close and Robert J. Baker. Baker died in 1997. Allegedly, both trustees influenced and voted on the selection of advisors to the Local 710 and 701 funds resulting in over $3 million in commissions being transferred to Cayman Islands accounts and then distributed to accounts in various names for the benefit of Baker, Close, Roach and Tringale. Close then transferred the funds to accounts in England and the Isle of Man.
The charges against Roach and Tringale also include allegations of money laundering, witness tampering, interstate and foreign travel in aid of racketeering, and extortion. The two allegedly threatened physical violence and assault with a firearm to investment manager Clarke Blizzard of Boston-based Shawmut Inv. Advisors, Inc., an advisor to the Chicago-based pension funds. Allegedly, Roach and Tringale claimed they had paid $25,000 to an unnamed union official in Providence, R.I., to get him to agree to funnel commissions to East/West, and when the union official failed to deliver, they demanded, at gunpoint, that Blizzard pay them back. They threatened to have Blizzard's legs and knees broken and to send someone to attack him with a baseball bat. Roach and Tringale are also charged with witness tampering, by threatening Blizzard if he co-operated in this investigation.
The indictment seeks $7 million from Roach and Tringale and $443,000 from Close. Roach and Tringale face a maximum sentence of 20 years in prison on the racketeering conspiracy charge, and three years imprisonment on each of the 26 kickback counts alleged against them. The maximum sentence on the seven money laundering charges Close faces is ten years on each count; he also faces a three-year prison term on each of 13 kickback counts. Each count in the indictment carries a maximum fine of $250,000.[USAO D. Mass., Media Release 4/17/00; Bos. Globe 4/18/00]
$100,000 Restitution for Hamilton, DOJ Admits Error
U.S. Dist. Judge Thomas P. Griesa ordered Apr. 7 ex-Teamsters political
director William W. Hamilton, Jr., to pay $100,000
in restitution for his role in a scheme to swap IBT political contributions
for donations to Ron Carey's 1996 reelection
campaign. Griesa already sentenced Hamilton to three years in prison. Hamilton
is free on bail pending the appeal of his six-count conviction on conspiracy,
embezzlement, fraud and perjury charges. In addition to prison, Hamilton
must serve two years of supervised release. The Manhattan judge gave Hamilton
until the end of his supervised release to pay the restitution.
IBT is still trying to collect some $3 million in restitution from Hamilton or from him and two co-conspirators, Martin Davis and Michael Ansara. Davis and Ansara, with Carey campaign manager Jere Nash, pled guilty in 1997 to participating in the scheme and agreed to cooperate with the Dep't of Justice. But, the Clinton-Reno DOJ admitted they erred by failing to apply Mandatory Victims Restitution Act standards in collecting restitution from Davis and Ansara. As part of their pleas, Davis paid $500,000 and Ansara $395,000 into escrow. The $3 million figure represents $885,000 in contributions plus $2.2 million IBT paid to help fund the resulting rerun election (no mention of the millions U.S. taxpayers paid for the two elections).
Under the MVRA, restitution of the full amount of a victim's loss is mandatory, based on the findings of a presentencing report prepared by a federal probation officer and required notice to identified victims, IBT argued in asking Griesa to modify the orders by other district judges that set the amounts paid by Davis and Ansara. DOJ erred in treating the amounts as discretionary. IBT argues that, although the Davis and Ansara escrow funds went toward the rerun election, none of it went to the IBT. DOJ admitted its error at the hearing before Griesa, but the judge said that under case law in the Second Circuit they remain "strictly bound" by the terms of the cooperation agreements. It smells like an appeal in there somewhere.
Despite making the costly error, DOJ urged Griesa not to convene a further hearing on IBT's claim for more restitution. Asst. U.S. Atty. Martine Beamon said such litigation "would handicap the government significantly" in its continuing investigation of the matter. She said DOJ had taken a "conservative approach" in light of the case's "complicating factors." In ordering the $100,000 restitution, Griesa called Hamilton "a man of quite modest means" who could face limited earning opportunities after prison. He called the DOJ's recommendation of $885,000 "totally unrealistic." He also scolded DOJ for failing to submit papers that could help guide him through the legal problems raised by the restitution issue.
"The restitution order should have gone further," IBT Gen. Counsel Patrick J. Szymanski said. "We certainly hope there is an ongoing investigation that goes beyond the individuals who have pled guilty so far. We wonder at this point why former President Carey hasn't been charged." [BNA 4/10/00]
RICO Suit Against Carey, Not Trumka
IBT and its boss James P. Hoffa filed a civil racketeering suit Apr.
17 seeking about $9 million in damages against ex-boss Ron
Carey and others, but not AFL-CIO
secretary-treasurer Richard L. Trumka, for allegedly defrauding IBT
of funds used to promote Carey's reelection in 1996. The suit, filed in
U.S. Dist. Ct. in Manhattan, charges the defendants with an illegal scheme
to defraud the IBT by making bogus IBT contributions to liberal groups,
which, in turn, made reciprocal contributions to Carey's campaign.
In addition to Carey, the current defendants are: 1) William W. Hamilton, ex-IBT political director (convicted), 2-4) Carey campaign consultants Martin Davis, Jere Nash, and Michael Ansara (all pled guilty); 5) Ansara's wife, Barbara Arnold; 6) liberal fundraiser Charles Blitz (pled guilty); 7) Cohen, Weiss and Simon law firm and 8) its ex-associate Nathaniel Charny (pled guilty); 9) liberal advocacy group Citizen Action and two of Citizen Action officers, 10) Ira Arlook and 11) Rochelle Davis.
Trumka's absence is troubling. He allegedly routed $150,000 from IBT through AFL-CIO to Citizen Action to the Carey campaign. Trumka has invoked the Fifth Amendment to avoid federal probes. IBT is hopeful that U.S. Atty. Mary Jo White will indict Trumka soon. But, IBT spokesman Bret Caldwell said the union had no comment on "why or why not Trumka was not named" adding "this is the right group to name based on the roles they played in the scheme." On Feb. 8, 2000, IBT received $500,000 from the AFL-CIO for a strike fund.
The suit, which has been anticipated since Jan. 1999, seeks to recover $885,000 lost as the result of the money-swap scheme plus $2.2 million the IBT spent for the rerun election. IBT seeks triple damages allowed under RICO: $9 million.
Ask about the RICO charges, Hamilton said "being called a racketeer by James Hoffa is like being called ugly by a frog." [BNA 4/19/00]
LABORERS (LIUNA)
California Boss Removed for Corruption
Ruben L. Gomez, business manager for the Laborers' Int'l Union of N.
Am. Local 652 in Santa Ana, Cal. was ousted Apr. 13 for using union funds
for personal trips to San Fran. and Las Vegas. He was banned from office
for five years and ordered to repay an undetermined amount for the cost
of two 1997 trips.
LIUNA's failed "internal reform effort" led by the ethically-challenged Robert D. Luskin took the action after allegations emerged in 1998. But, there was no criminal prosecution against Gomez, no fines, no jail time. This is another illustration of why the "internal reform effort" needs to be replaced by a full-scale Dep't of Justice takeover.
Gomez, who ran Local 652 for six years, appealed the ruling calling it "arbitrary and draconian." But LIUNA "internal appellate judge" W. Neil Eggleston upheld the punishment. Eggleston has represented both Bill Clinton and Dep't of Labor head Alexis Herman in scandal-related litigation.
According to LIUNA, Gomez contrived with other union officials to send bogus invitations to himself, requesting his attendance at fictitious union meetings. Gomez then used the invitations to receive reimbursement. Mario Hernandez, a Local 652 organizer, was also barred for five years for helping Gomez obtain official stationery belonging to another union and preparing one of the fake invitations. [L.A. Times 4/14/00]
GOVERNMENT EMPLOYEES (AFGE)
Florida Boss Embezzled $40,000
U.S. Dist. Judge Daniel T.K. Hurley sentenced Am. Fed'n of Gov't Employees
Local 507's ex-president Diana M. Morgan
Mar. 31 to a year and a day in prison for embezzling union funds. Morgan
must also pay $42,300 in restitution to the Riviera Beach, Fla.-based local
and serve three years supervised release. She pled guilty in Aug. 1999
to a mail-fraud charge; from 1996 to 1999, the boss used her position to
embezzle union funds to pay for rent, a personal loan, her car payments,
and $610 worth of tickets to Disney World. She also wrote checks from the
union accounts to herself for $28,400 and to her teenage daughter for $2,780.
U.S. Atty. Bruce Reinhart said he chose the mail fraud charge because a
suitable federal embezzlement charge didn't exist. [USAO S.D. Fla., Media
Release 3/31/00]
LABOR LAW REFORM
NLPC's Boehm Testifies Before Senate
Sen. Mitch McConnell (R-Ky.), Chairman of the Senate Rules Comm., held
a hearing on compelled political speech on Apr. 12 focusing unions. He
said the hearing was on an "important civil rights issue...largely overlooked,
perhaps intentionally, by so-called campaign finance reform advocates,
their political allies and their admirers in the media."
McConnell stated, "the best way I can think of to protect workers from being forced to subsidize political speech with which they disagree is to ensure that they get an annual report of the ideological and political causes unions are supporting with their dues and fees. In that vein, I plan to introduce the Worker Information and Empowerment Act to make it easier for workers to determine if they want to...seek a refund."
Ken Boehm, Chairman of the National Legal and Policy Center, a union corruption watchdog, was one of six individuals before the committee. Boehm agree with McConnell that reforms are needed and pointed out the nexus of union corruption and union compelled speech reforms. Boehm's testimony is at <http://www.nlpc.org>.
Others on the panel included David S. Fortney, labor law attorney and former deputy and acting Solicitor of Labor; Leo Troy, Rutgers Univ. Professor of Econ.; Robert P. Hunter, of Mackinac Center for Public Policy and former NLRB board member; Laurence E. Gold, AFL-CIO Assoc. Gen. Counsel; and Joan Claybrook, President of Public Citizen. Prepared statements are at <http://www.senate.gov/~rules/hearings/41200hrg.htm>.
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TEAMSTERS (IBT)
Another Teamsters Scandal Figure Sentenced
U.S. Dist. Judge Thomas P. Griesa sentenced Nathaniel
Charny, a lawyer with labor law firm of Cohen, Weiss & Simon, who
vetted contributions for the Carey campaign,
was sentenced to "serve time" and a $500 fine for conspiring to make false
statements to a court-appointed election officer investigating the fund-raising
activity. He pled guilty in Oct. 1998. [BNA 4/10/00]
No DOJ Oversight of 2001 Election
For the first time since settling federal racketeering charges in 1989,
the Int'l Bhd. of Teamsters will conduct leadership elections free of government
supervision. Campaigns for union posts in the historically-corrupt union
begin this year with the selection of local delegates and conclude next
fall with the election of a general president. Each of the
past three Teamsters ballots -- including
the scandal-ridden vote in 1996 in which Ron Carey's campaign stole the
election with union funds -- have been conducted under the Dep't of
Justice's oversight.
IBT boss James P. Hoffa has been lobbying to end the oversight, and the DOJ's has agreed . The stage was set for the new elections when the U.S. Attorney's office in Manhattan agreed in principle to a set of election rules and procedures proposed by the union. Hoffa described the rules, which call for secret ballots and strict accounting of all campaign contributions and expenditures, as "tougher" than those imposed by the government in 1991, 1996 and 1998 when it supervised union elections.
Money may have played a key role in DOJ's decision to end its supervision of IBT elections. It cost the government more than $22 million to supervise the 1996 election and 1998 rerun. Congress only reluctantly agreed to pay for the 1998 rerun election, and coming up with taxpayer money to pay for another election may have been even more difficult. The union will pay the cost of the upcoming contest, estimated at more than $10 million.
The new rules provide for the election of delegates to the union's national convention in Las Vegas in June 2001. Delegates will nominate candidates for the union's top offices at the convention. Ballots will be mailed to the union's 1.4 million members in October of next year and the tallying of the votes will be in November. It further provides that William Wertheimer, a Southfield, Mich. labor lawyer, will serve as election administrator. Ex-U.S. Dist. Judge Kenneth Conboy will again serve as election appeals master as he has done in previous elections. It was Conboy who disqualified Carey in Nov. 1997.
Corrupt Long Island Local Gets Election Go-Ahead
The historically corrupt Long Island local has been deemed free enough
of organized-crime influence to its first member election in years. Int'l
Bhd. of Teamsters Local 813 agreed to be supervised by court-appointed
monitors in 1993 as part of a settlement of a civil racketeering case brought
by the Dep't of Justice prosecutors. The racketeering suit alleged the
local was controlled by organized-crime figures as part of a conspiracy
to prevent competition and extort kickbacks in the garbage collection industry.
On April 14, U.S. Atty. Loretta Lynch announced that an agreement had been reached between the DOJ and the Int'l Bhd. of Teamsters to allow union members to hold an election, and the agreement had been approved by U.S. Dist. Judge I. Leo Glasser overseeing the racketeering case.
"This is a significant step forward to returning union democracy to Local 813, which historically has been one of the locals dominated by organized crime," said Lynch. The election is expected to take place sometime this summer, according to Asst. U.S. Atty. Stephen Riegel. [Newsday 4/15/00]
POLICE UNIONS (PBA)
Ex-Police Chief Sues South Florida Union
Ex-Hollywood, Fla. Police Chief Rick Stone, who was forced out of his
job after a bitter union campaign against him, filed a lawsuit on Apr.
13 against the Broward County Police Benevolent Ass'n and two union bosses.
The suit accuses PBA president and ex-Sgt. Dick Brickman and Sgt. Jeff
Marano of racketeering, defamation, infliction of emotional distress, invasion
of privacy and interference with Stone's ability to do his job.
Stone seeks unspecified damages for loss of past and future earnings and
benefits, emotional distress and damage to his reputation.
The lawsuit was filed as Stone publishes his novel Behind the Gold Star with an online vanity publishing press. Union leaders laughed off the lawsuit on Friday and suggested it was part of a publicity stunt by Stone. A promotional leaflet distributed around City Hall said Stone's book details seven days in the life of a police chief "struggling against bureaucratic stupidity, personal conflicts and his department's collection of screw-ups, lunatics and peculiar happenings." Brickman said that any actions the union and its officers took were in the role of labor advocates for their membership. "Every time I called him an incompetent chief, I was talking for the rank and file I represent and what they said in our survey," Brickman said.
Stone was brought in to try to reform the troubled and scandal-plagued department in 1996. Two years later, on Oct. 21, 1998, Stone was forced to resign or be fired. At the time, City Manager Sam Finz said Stone did nothing wrong but it was impossible for Stone to do his job given the entire force's lack of support for him. City commissioners, tired of the ongoing crisis in the department, and Finz came under pressure to resolve it. As part of his severance deal, Stone agreed not to sue the city.
"The problem with the PBA is they don't concentrate on labor issues," Stone's attorney Scott Rothstein said. "If management doesn't bow to their whims -- as Rick Stone wouldn't -- they retaliate." Rothstein, who has been representing police officers for 10 years, said this is the first lawsuit he's filed on behalf of a police manager. He said he was appalled by the evidence Stone gave him about what happened in Hollywood. Rothstein said he also polled his police clients before agreeing to represent Stone, and they overwhelmingly supported the chief. More than the money, Stone wants an agreement from the union leadership that it will not use the same tactics on anyone else, Rothstein said.
Shortly after Stone took over, the lawsuit says Brickman, who retired from his Hollywood police job last year, and Marano visited him and told him it was "payback time" for members of the department's command staff who had offended them. When Stone refused, he said they turned their attention to harassing and intimidating him.
Stone's lawsuit states that the union and its top officers controlled lucrative off-duty security work that was worth about $2 million a year to Hollywood officers. The union used its power to assign the off-duty details to intimidate and influence its members, Stone alleged. Union officers also demanded personnel transfers, demotions of command staff and a reorganization of the department, Stone said.
Shortly before Stone's wife of 28 years, Rose Mary, died after a long battle with brain cancer, someone called Stone's former colleagues in Wichita and told them she had died. Stone and his teenage daughter received wreaths and sympathy cards, while Mrs. Stone was still alive, from friends who believed the hoax. Rothstein said on Friday that he now knows who was responsible for making the phone call to Wichita. He refused to name the individual.
Stone also accuses the union of: Telling its members not to perform certain public-safety duties. Hiring an airplane to fly over Hollywood and a Miami Dolphins game with a banner that called for Stone to be fired. Wearing T-shirts with a caricature of Stone that commemorated an incident where union members said he cursed at them during roll call. Printing false and defamatory fliers about Stone and distributing them around the community. [Sun-Sentinel (Fort Lauderdale) 4/15/00]
QUOTABLE QUOTE
NOVAK: Now, James Hoffa, who's the president of the Teamsters Union
-- and he is your brother, isn't he...
TRUMKA: He is indeed.
NOVAK: ... in the labor movement?
TRUMKA: He is indeed.
NOVAK: Even though you people tried to screw him, but that's another
story.
We won't get into that tonight.
- CNN's Robert Novak interviewing AFL-CIO secretary-treasurer Richard L. Trumka (who has pled the Fifth Amendment to avoid questions on the Teamsters money-laundering scandal) on "Crossfire," Apr. 12, 2000.
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In addition to the unions and organizations covered in this Union Corruption Update, readers can look forward to news and information on other corrupt and abusive unions in future editions.
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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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