AFL-CIO / HOTEL EMPLOYEES (HERE)
Trumka in Trouble? Finally?
According to columnist Robert Novak, the Dep't of Justice's decision
to remove government oversight of the Hotel Employees & Restaurant
Employees Int'l Union, after a surprisingly short five years to monitor
any connections with organized crime, has raised speculation in labor circles
that its president, John Wilhelm, soon might replace Richard Trumka in
the AFL-CIO's No.2 job.
Wilhelm became a “rising star” in the union movement when he organized 22,000 new hotel employees in Las Vegas. Now he is incorrectly being credited with cleaning up a mob-infested union.
Trumka was permitted to stay on as AFL-CIO secretary-treasurer by president John Sweeney in violation of union rules after he invoked the 5th Amendment to avoid federal investigators' questions. Novak said, “If the Republicans take over [DOJ], Trumka could be a target of a new investigation.” [Chi. Sun-Times 12/10/00] Here, here. It's about time. Trumka needs to be brought to justice.
DEPARTMENT OF LABOR (DOL)
New Report: Union Pension Funds at Risk
The U.S. Dep't of Labor believes funds in union-sponsored employee
benefit plans are vulnerable to “corrupt plan officials, service providers,
and organized crime elements,” according to DOL's Office of Inspector Gen.'s
semiannual report to Congress for Apr. 1 to Sept. 30, 2000. The OIG report
said it was concerned about corrupt lawyers, accountants, and investment
advisors who provide services to union pension plans. OIG currently is
pursuing 28 cases involving service providers to pension plans with over
$1.5 billion in total assets.
“The OIG remains concerned that with such large amounts of money and limited oversight, union-affiliated benefit plans remain vulnerable to fraud and corruption,” the report said.
The report also stated worries about health care fraud in DOL and union-related health plans, “resulting in millions of dollars in losses to the federal government and private insurance companies.” OIG said several examples illustrate “the damage that can be done” by health providers who evade state insurance regulation by claiming ERISA preemption as a multiple-employer welfare arrangement and creating a bogus labor union to do so. The OIG report will be available at <http://www.oig.dol.gov>. [BNA 12/7/00]
LABORERS (LIUNA)
New York Union Fund Manager Indicted for $314,000 Theft
Anthony DiPace, a union investment manager, was indicted Dec. 18 on
embezzlement and wire fraud charges for allegedly stealing $314,000 from
a union's pension fund by concealing commissions he made on dozens of stock
and bond trades. From 1988 to 1996, DiPace managed the health and welfare
plan for the Laborers Int'l Union of N. Am. Local 190 in Glenmont, N.Y.
While managing the fund, DiPace allegedly executed a series of trades through his private brokerage practice, Direction Planning. DiPace allegedly collected commissions on the trades without the fund's trustees' knowledge, violating federal rules that bar investment managers from acting as brokers in order to avoid potential conflicts of interest. The trustees paid DiPace to manage the fund based on a formula they had established.
DiPace allegedly executed the trades as a registered representative of Linsco Private Ledger, a brokerage firm, even though the company does not allow brokers to have discretionary accounts. Between 1993 and 1996, he allegedly conducted 41 trades using Local 190 assets, earning him $314,000 in commissions through Linsco. In 1996, federal authorities monitored 10 phone calls DiPace made to a Linsco bond trader in San Diego. The transactions that took place over those phone conversations are included in the indictment.
In February, DiPace was convicted of 11 counts of wire fraud in Hawaii for misrepresenting himself to two Honolulu money managers. DiPace claimed he had more clients than he actually had and lied about how much money he had under his management, according to federal prosecutors. DiPace is awaiting sentencing. [Times Union (Albany) 12/19/00]
TEAMSTERS (IBT)
Union Pension Managers Guilty of Racketeering
Two men pled guilty on Dec. 18 in Chicago to federal racketeering conspiracy
and pension fund kickback charges arising out of hundreds of thousands
of dollars in commission kickbacks paid to two trustees of Chicago-based
labor union pension funds.
U.S. Atty. Donald K. Stern in Boston, announced that Christopher P. Roach and Richard S. Tringale pled guilty to a conspiracy that involved paying kickbacks to trustees of employee benefit plans. The racketeering conspiracy charges against Roach and Tringale also include allegations of international money laundering and interstate and foreign travel in aid of racketeering. William V. Close, a former trustee of Int'l Bhd. of Teamsters Local 710 and Auto. Mechanics Local 701's pension funds, earlier pled guilty to receiving kickbacks and to money laundering.
Prosecutor Jeanne M. Kempthorne told the court that Roach and Tringale controlled a Detroit-based brokerage firm known as East/West Institutional Servs. through which they contracted with clearing brokers to pay them commissions generated by investment trades of union pension plan assets. During the conspiracy period, Mar. 1994 to Aug. 1997, the two 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 paid hundreds of thousands of dollars in kickbacks to two union pension fund trustees, Close and Robert J. Baker, who died in 1997. Both trustees influenced and voted on the selection of investment advisors to the Local 710 and 701 pension funds. Millions of dollars of commissions were transferred from bank accounts in the U.S. to Cayman Nat'l Bank in the Cayman Islands 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. As fiduciaries, pension fund trustees are prohibited by federal law from accepting or soliciting gifts or kickbacks in connection with their actions or decisions with respect to the pension funds. They agreed to the forfeiture of over $7 million in commissions paid to the enterprise.
Roach also pled guilty to having caused his corporation, Christopher Roach, Inc., to under report commission income related to the scheme for tax years 1995 and 1996, in the total amount of over $740,000. [USAO D. Mass., Media Release 12/20/00]
AIR TRANSPORT WORKERS
Patient Broker Admits to Kickback
Douglas A. Miller, an executive involved in illegally brokering patients
into treatment centers in Largo and Tarpon Springs, Fla., pled guilty Dec.
15 to making a kickback to a union boss and agreed to pay $500,000 in restitution
and fines. Miller admitted to making a $3,000 payment through a firm called
Management III to Lindsey Huddleston. Huddleston was the “community services
director” for the Detroit Air Transport Workers Union Local 141, and responsible
for intervening with union members suffering from addiction or psychiatric
problems.
Huddleston originally was charged with bribery and racketeering, then pled guilty in Jan. 1999 to reduced charges of taking an illegal kickback. He was sentenced to five years' probation and ordered to pay a fine of $1,000 and restitution of $12,882. Reportedly, Huddleston also brokered a dozen patients into Colonial Hosp. in Va. in 1992 for $22,268. The facility was found guilty of violating Medicare laws and was stripped of its certification and went into bankruptcy. [St. Pete. Times 12/16/00]
FIRE FIGHTERS (IAFF)
Kansas City Boss Sentenced for $18,000 Theft
Roger L. Mathisen, ex-boss of Int'l Ass'n of Fire Fighters Local I-34
in Kansas City, was sentenced Dec. 8 to a mere four months in a halfway
house for embezzling more than $18,000 in union funds. He pled guilty to
one count of felony embezzlement in Aug. Mathisen must further spend three
years under supervision - the first four months under house arrest
- after his release from the halfway house. Additionally, he was ordered
to pay $15,295 in restitution to Local I-34.
Reportedly, during his two-year stint as union president, Mathisen made about $14,000 in unauthorized withdrawals using a union debit card. Overpayment for Mathisen's expenses and unauthorized stipends accounted for the rest of the $18,000. [K.C. Star 12/9/00]
QUOTABLE QUOTE
"The fact that U.S. Rep. Patrick Kennedy asked the [R.I.] Supreme Court
to allow disgraced labor leader Arthur Coia to remain a member of the bar
in good standing and continues to seek his advice raises tough questions
about the congressman, Coia, and our political system.
...[T]here is something distasteful about Kennedy's views....[I]nstead of seeking leniency for Coia in the disbarment matter, Kennedy could have told him to buzz off, that, while he has high regard for the Laborers, Coia's criminal activities proved to be an embarrassment both to the union and the party.
But even if you accept that the letter was a favor for past services, or written purely for humanitarian reasons, it is alarming that Kennedy continues to rely on Coia for advice on fundraising and other matters. Kennedy aide Tony Marcella said of Coia, 'He knows the way Washington works.'
I say: If you commit a felony, you shouldn't enjoy the luxury of being consulted by your congressman. Kennedy has 500,000 other constituents. Can't he find someone who knows his way around Washington but isn't a criminal?"
- M. Charles Bakst, Columnist, Providence J.-Bull., Dec. 5, 2000.
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ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
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TEACHERS (AFT)
Buffalo Local Fined $250,000 for Illegal Strike
The Buffalo Teachers Fed'n was fined $250,000 Dec, 5 for conducting
an illegal strike after the sentencing judge said he is convinced the union
would strike again if it felt a walkout would benefit its negotiating position.
"At no time has the union ever apologized for its conduct," said N.Y. State Supreme Court Justice Kevin M. Dillon. Dillon added that the BTF gave no indications that it would refrain from striking again if it felt a job action would work to its benefit. Instead, he said, he is convinced the BTF would walk out again under similar circumstances. After a lengthy explanation, Dillon said his decision to impose a stiff fine was heavily influenced by the lack of apology or pledge to shun strikes.
The Buffalo Bd. of Educ. earlier had asked for a fine of $400,000 or more. The union said that amount would be "unduly harsh and potentially ruinous," but did not suggest a figure of its own. [Buff. News 12/5/00]
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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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