AUTO WORKERS (UAW)
Wisconsin Boss Gets 5 Months for $28,000 Theft
U.S. Dist. Judge Rudolph T. Randa sentenced Pamela
L. Schultz, ex-financial secretary of the Racine, Wis.-based United
Auto Workers Local 553, Mar. 5 to five months in a halfway house for embezzling
$28,088 from the local. Randa also ordered her to serve five months on
home detention after her release and three years of supervised release.
He also fined her $3,000. Schultz previously pled guilty and has paid Local
553 $36,000 in restitution. She allegedly wrote union checks to herself
and others for her own benefit from 1996-99. [Milwaukee J.-Sent. 3/6/01]
Michigan Members' Suit Advances to Discovery
U.S. Dist. Paul V. Gadola ruled Mar. 7 that more than 140 UAW
members may proceed with their suit against UAW and Gen. Motors. The
$550 million suit claims UAW bosses demanded jobs for relatives and improper
overtime payments in return for ending a 1997 strike at GM's Pontiac truck
plants, thereby needlessly prolonging the 87-day strike. It also accuses
GM of going along with the alleged scheme, which the suit alleges cost
the average member $10,000-$20,000. Separately, federal investigators continue
their probe into the strike.
Gadola denied the requests of GM, UAW, and UAW Local 594 to dismiss the suit. Now, the members' attorney, Harold Dunne, can proceed with discovery. "It's a very important victory for us because we are now able to get to all of the documents to prove our case," Dunne told the Detroit Free Press. Dunne will also ask Gadola to give the suit class-action status for some 6,000 workers.
Gadola dropped individual defendants Gordon Campbell and Todd Fante from the suit, ruling that as individuals they were not liable. Allegedly, Campbell, son of Local 594's bargaining committee chairman, and Fante, the son of a close friend of a UAW rep., were not qualified and got jobs after the strike because of their connections.
The suit claims fraud, collusion and extortion. It alleges that UAW and GM breached their contract and duty to members and that Local 594 did not fairly represent its members. [A.P. 3/8/01]
TEAMSTERS (IBT)
HQ Staffer Resigns over $3,400 Discrepancy
Richard Lyter, an Int'l Bhd. of Teamsters staffer resigned after $3,414
unauthorized meal expenses were discovered, IBT said Mar. 14. He had been
the assistant to secretary-treasurer C. Thomas Keegel
since 1999. Lyter was asked to resign after an internal audit at IBT headquarters
in Washington. It reportedly found discrepancies in an expense account.
Lyter allegedly submitted personal expenses that were reported as union
expenses over a ten-month period. In his resignation letter, Lyter acknowledged
reporting errors and has reportedly reimbursed IBT. IBT said law enforcement
has been notified. [A.P. 3/14/01]
STEELWORKERS (USWA)
South Carolina Local Accused of Misusing Tax Money
The S.C. Atty. Gen. Office has given the green light to a taxpayer's
suit against United Steelworkers of Am. Local 7898 in Georgetown, S.C.,
to recover allegedly misused public funds. In a Jan. 19 letter to Georgetown
County Council Member Tom L. Swatzel, Asst. Dep Atty. Gen. Robert D. Cook
wrote that if Swatzel sues, the Office would join the suit as a friend
of the court. Cook's letter follows S.C. Atty. Gen. Charlie Condon's Dec.
18 legal opinion to Swatzel stating: "To subsidize a labor union under
the guise of a charitable purpose serves no public purpose. Taxpayers have
a right to know that their tax dollars are not being spent for private
purposes in support of special interests. Accordingly, if the facts
are as you have presented them, those expenditures are unconstitutional."
The object of this analysis is a $3,000 "contribution" from Georgetown County for a Labor Day parade and rally last year. Local 7898 boss James Sanderson filed an application seeking $50,000 in public funds on May 19, 2000. (Ultimately, Sanderson admits to spending only $15,000.) On the application, he stated the "group" was a non-profit organization registered with the S.C. Sec. of State's Office. However, the Sec. of State's Office later found that it was not so registered. On the application, Sanderson listed a federal employer identification number that belonged to USWA. In addition to the County Council, business and individuals were solicited in early June to support the rally of the "Georgetown County Labor Council" but were told to make their checks out to Local 7898. These checks were deposited in a bank account opened on July 20 -- nearly two months after the solicitations were made. The name on the account was "USWA Labor Day Fund."
Aside: donations from an employer to a union raise federal labor law concerns. Under the Nat'l Labor Rel. Act it is "an unfair labor practice for an employer" to "interfere with the . . . administration of any labor organization or contribute financial or other support to it."
On Aug. 21, the $3,000 check was deposited in this same account. Condon's analysis: allegedly the "purported nonprofit corporation involved is, in reality, a sham and . . . the public funds ended up in the account of a labor union . . . if these facts are indeed true, such would surely be an expenditure for a private, not a public purpose. If a labor union represented itself as a nonprofit association for the purpose of obtaining public funds, such would clearly be an improper use of public funds."
The parade and rally were held, but according to Swatzel, it was more like a political event than a salute to workers. Reportedly, only a few Republicans were invited and the only one allowed to speak was St. Sen. Arthur Ravenel who was booed as he made his way to the podium. "The most important issue is whether [USWA] received public funds. There is not doubt that that occurred," said Swatzel. "Whether they gained the money through misrepresentation or not, it doesn't matter. The union received public funds and that is unconstitutional." Swatzel is considering the recommended taxpayer suit. [Georgetown Times 2/5/01]
FIREFIGHTERS
Illinois Boss puts $59,000 in Escrow
Patrick Stiles, the ex-boss of Aurora (Ill.)
Firefighters Local 99 accused of embezzling up to $311,000, agreed Mar.
8 to place $59,000 in an escrow account pending the resolution of a civil
suit. The account will hold his pension fund and deferred compensation
account assets until Local 99 and Aurora Firefighters Relief Ass'n's suit
is decided.
The suit alleges Stiles stole up to $240,000 from the union and up to $71,000 from the ass'n. Allegedly, the funds were used for personal purposes such as paying off credit card debt, paying phone bills, buying computer equipment and paying other unwitting firefighters who worked on his house. Additionally, the union and the ass'n filed criminal complaints that launched an investigation by Aurora police and the Kane County state's atty.'s office.
The account agreement averted a hearing before Kane County Cir. Judge Michael Colwell on whether Stiles should be held in contempt for allegedly not adhering to an earlier order. Stiles has until Mar. 22 to provide an accounting of all union and ass'n funds while he was secretary-treasurer of each: 1992-2001 and 1995-99, respectively. He must include financial records, computer files and meeting minutes. Stiles has already provided a listing of his personal assets, which were frozen in Feb. under the initial court order. [Chi. Trib. 3/9/01]
LABORERS (LIUNA)
Oregon Fund Manger in Plea Talks
Ex-union fund manager Barclay Grayson is negotiating a deal with federal
prosecutors investigating his firm's loss of more than $200 million, said
U.S. Bankruptcy Judge Randall Dunn Mar. 7. Dunn revealed the plea
bargaining at a hearing on a personal bankruptcy petition that Grayson
filed in Feb. He and his father, Jeffrey L. Grayson, the founder and chairman
of Capital Consultants, surrendered the firm to a federal receiver in Sept.
2000 after the Sec. & Exch. Comm'n and the Dep't of Labor filed suits
accusing them of defrauding clients. The hardest-hit clients were union
pension funds, including the Laborer's Int'l Union of N. Am. SEC called
the scam the biggest fraud involving a money manager in U.S. history.
The Graysons and others are targets of a federal criminal investigation. Lance Caldwell, Asst. U.S. Atty. in charge of the probe, declined to comment on Barclay Grayson's dealings with his office. But, Steven Ungar, Barclay Grayson's criminal defense attorney confirmed the bargaining.
In Feb., John D. Abbott, ex-LIUNA boss in Oregon pled guilty to taking $195,000 in payoffs from Jeffrey Grayson. Abbott's deal may allow him to serve only 15 months in prison in return for testifying against other union bosses and Jeffrey Grayson.
Because of the bargaining, Dunn noted, Barclay Grayson could assert Fifth Amendment rights in his bankruptcy proceedings, and the lack of his testimony would hamstring the process. Dunn postponed the bankruptcy process for 90 days in hopes the negotiations would be completed. [Oregonian 3/8/01]
NURSES / TECHNICAL EMPLOYEES
Minnesota Consultant Guilty of Fraud
Union consultant, Elliot M. Cohn of Coral Springs, Fla., admitted Feb.
8 to bilking two Minn. unions out of almost $25,000 in fraudulent expenses.
The president of a labor negotiating firm pled guilty to mail fraud during
a hearing in Minneapolis before U.S. Dis. Judge Michael Davis. Cohn said
that from 1996-98, he billed $22,000 in phony airfare expenses to the Minn.
Licensed Practical Nurses Ass'n and also manipulated the compensation he
drew from the Tech. Employees Ass'n of Minn. He paid $106,476 in restitution
to the two unions during the hearing. [Star Trib. (Minneapolis) 3/9/01]
QUOTABLE QUOTE / LABOR LAW REFORM / UNION DUES
"Good unions don't need forced dues and bad unions don't deserve them."
- Kirk Shelley, Okla. City Freedom to Work Committee, Letter to the Editor, Tulsa World, Mar. 9, 2001. Addressing the need for Okla. to enact a right-to-work law.
- - - - - -
ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
- - - - - -
LABOR LAW REFORM / UNION DUES
Oklahoma Right-to-Work Law Closer to Reality
The Okla. Senate passed a right-to-work
joint resolution Mar. 14 that would require a constitutional amendment
be placed on a state ballot for voters to decide whether employees should
be required to be members of a union or pay dues to a union as a condition
of employment. The initiative passed 31-17. Both Houses of the Legislature
are controlled by Democrats.
A portion of the resolution that would have required a special election to be called Aug. 28, 2001, did not receive the required two-thirds vote to pass. Therefore, under the version passed by the Senate, the referendum would not take place until November 2002 -- during the next regularly scheduled election.
The initiative now will go to the House, where union bosses hope it will die in committee. Jim Curry, Okla. AFL-CIO boss, told BNA that "the fight isn't over yet." He said that organized labor is hopeful that the resolution will be assigned to the House Business & Labor Committee, in which legislators are supportive of labor. If it is assigned to that committee Curry believes "it will be killed there."
Richard Rush, president of the Okla. State Chamber, called the Senate vote "historic," noting that in previous years similar measures have died in committee without making it to the floor for a vote. The last time that Oklahomans voted on the issue was in 1964, he said. [BNA 3/15/01]
STEELWORKERS (USWA)
Federal Judges Apologies to California Retirees
U.S. Dist. Judge Marilyn Hall Patel apologized Mar. 7 to a trio of
retired steel workers, saying she shouldn't have trusted a Palo Alto attorney
who was supposed to redevelop their plant and use the money to benefit
them. During Bruce Train's nine-year tenure, he and his associates earned
$5 million while the pensioners didn't receive a penny. It was Patel
who in 1990 appointed Train to act as "special master" for the Pacific
States Steel Corp. property in Union City, Cal. She is now sorry she did.
"I want to apologize to you -- this weighs heavily on my conscience," said
Patel, who has handled a number of high-profile federal cases, including
the Napster lawsuit. Turning sideways from the bench, Patel told three
pensioners and their wives that Train misled her just as he misled them.
"I should have become aware much earlier that things weren't what they should be. I feel very, very badly that you have not been paid," she said. "I know that doesn't go very far -- it's not money you can take to the bank, but I'm going to try to make up for that now. I have to take responsibility."
Patel has not yet ruled on Train's request for an additional $20 million to compensate his work from 1990-99, when she replaced him. But her statements indicate where her sympathies lie. Union City officials have filed a counter-request in that Train return $2 million in public funds he's already received. Turning to the grim-faced Train, who sat flanked by his two business partners, Ted Sorensen and Hans Lemcke, Patel said: "In all honesty, I'm very, very sorry I relied on you Mr. Train."
Questions about Train's performance -- including over-billing for his office workers and pocketing the excess, and making campaign contributions to Union City Mayor Mark Green -- were first reported in the San Jose Mercury News in 1995.
Patel's public acknowledgment of such excess astounded the parties involved, many of whom have haggled over this complex real estate deal for decades. A handful of the 164 surviving mill workers -- more than 200 have died over the years -- who have watched the courtroom proceedings unfold this month and last, reacted with a sense of satisfaction. They've waited since the mill closed in 1978 for their benefits and were repeatedly told by Train there was no money.
Train's attorney Robert Goodin said he wasn't sure how Patel would rule. Train plans to appeal if he loses. Goodin argues that Train paved the way for homes now being built on the formerly blighted mill site with his years of work, even deferring his pay. But at the same time, Goodin conceded that his client's conduct "warrants criticism," particularly when he failed to disclose financial information to firms owed money for the steel mill cleanup. In 1996, Union City gave Train $350,000 to pay RUST Remedial Services. He used the money to pay himself instead.
Train's job arose from claims the workers filed after the mill closed in 1978. At the time, Patel devised a novel plan to avoid drawn-out bankruptcy proceedings and get the workers paid. She seized the assets of the company and appointed a "special master" to develop the approximately 100-acre mill site. Proceeds would go to pay the workers' benefits. But Train's insistence on compensation Union City officials call "obscene," dragged him back into Patel's courtroom. Observers said in previous years, Patel took little interest in the project's progress. But the growing clamor about Train -- his conflict of interest as both developer and land overseer; his failure to pay the pensioners, and his stretching of the concept of "essential operating costs" to include private tax sheltering advice -- prompted Patel to strip him of his duties in 1999.
Train's successors -- San Francisco real estate consultants Nina & Claude Gruen -- have paid workers in their first year on the job. Claude Gruen said payments would have been quicker, if Train had done a better job keeping track of workers and their surviving families. Charts presented in court by Union City redevelopment attorney Charles Reese indicated that between 1996 and 1999, Train and his partners configured several different plans that all amounted to a $37 million profit for themselves. And in April 2000, after being stripped of his court duties and ordered not to interfere, Train met secretly with at least three developers, in order to secure a claim in future building. Those deals carved out a profit margin of between $59 million and $101 million. Correspondence from developers indicates that Train continues wooing developers, to Patel's dismay.
Reese says Train's interference with the court's orders constitute criminal wrongdoing. He is asking Patel to consider embezzlement charges and a referral to the U.S. Attorney. [S.J. Mercury News 3/8/01]
LABOR LAW REFORM / DEPARTMENT OF LABOR
Bush, Chao Focus on Fraud and Abuse in DOL Programs
According to BNA, the FY 2002 budget "blueprint" suggests that attention
is being paid early in the Bush administration to longstanding concerns
regarding a variety of Dep't of Labor programs that may be subject to fraud
and abuse. Issued Feb. 28, the preliminary budget referred to three
areas identified in the past by the DOL's inspector general as in need
of attention. These include programs that provide benefits to workers,
such as the unemployment insurance (UI) program; administration of grant
funds; and foreign labor certification programs. DOL IG Gordon Heddell's
spokesman said he "looks forward to working with" Labor Secretary Elaine
L. Chao "and her management team to address these longstanding issues."
Heddell, a 28-year veteran of the federal law enforcement system was confirmed
IG by the Senate on Dec. 15.
DOL's portion of the Bush administration's budget proposal stated that the inspector general "continues to be concerned about the ease with which" worker benefit funds "can be defrauded by claimants and medical providers, as well as other weaknesses that can lead to waste of program funds." In addition to the UI program, the budget singled out the black lung benefit program and the Fed. Employee Comp. Act program. Other worker benefit programs administered by DOL include employee pension plans and the Longshore & Harbor Workers' Compensation program.
In its latest semiannual report, released in
Dec. 2000, the office of inspector general said it continues "to see
a multiplicity of schemes used to defraud the UI program, including fraudulent
employer schemes, internal embezzlement schemes, and the fraudulent collection
of UI benefits by illegal aliens and other ineligible claimants." The report,
which covered the second half of fiscal year 2000, also cited a number
of systemic weaknesses posing problems for the UI system.
These include the "loss of contributions due to the inability
of states to search for hidden wages by employers who misclassify workers
as independent contractors," and problems with a relatively new system
allowing those seeking to file claims for UI benefits to do so by telephone
rather than in person. The concerns regarding the UI program are not new.
The IG in 1999 highlighted DOL's estimates that overpayments of UI benefits
result in losses of approximately $500 million a year, only half of which
is eventually recovered.
The IG's latest report also said there continues to be "a significant amount of healthcare fraud in both DOL-related health plans and union-related health plans, resulting in millions of dollars in losses to the Federal government and private insurance companies." The report said the IG also has documented "that vast sums of money in union-sponsored employee benefit plans remain vulnerable to corrupt plan officials, service providers, and organized crime elements."
The Bush budget plan also pointed out that DOL's "administration of roughly $ 9 billion in grant funds" annually is another area of longstanding concern to the IG. DOL needs to ensure that all grantee cost reports are entered into its financial system in a timely manner "to ensure accountability over the billions of dollars involved," the budget said. It also called for "more attention to grant management" in such areas as the youth opportunity and welfare-to-work grants programs.
"With billions of dollars invested in various grants programs, it is vital for the Department to ensure that grant programs have the necessary financial systems, policies, and monitoring to ensure results-oriented accountability and performance," the latest IG report said. For more than three years, DOL has been emphasizing the need for better grant management to ensure that employment and training funds, which make up the bulk of DOL grants, are spent properly and that misspent funds are recovered and used to serve those for whom they were intended. [BNA 3/5/01]
TEAMSTERS (IBT)
Overnite's RICO Suit Rolls On
The U.S. Dist. Court for the W. Dist. of Tenn. has given a green light
to Overnite Trans. Co. to proceed with a federal
racketeering suit naming Int'l Bhd. of Teamsters boss James P. Hoffa
and other bosses as defendants. In the suit filed last year by the Richmond,
Va.-based company, Hoffa, Nat'l Freight Director Philip E. Young and other
members of the IBT Exec. Bd. were named as defendants alleging a host of
illegal activities, including attempted murder.
Overnite, one the nation's largest predominantly non-union carriers has been the target of an IBT job action since Oct. 1999. Less than 5% of the firm's 13,000 employees have followed IBT's call to strike the firm. The job action, which has been marked by violence, has seen judges in 14 states issue retraining orders to curb union activity.
The 225-page suit, filed in Jan. 2000 under the Racketeer Influenced & Corrupt Organizations (RICO) Act, alleges a pattern of racketeering activities that includes over 50 "predicate acts" of attempted murder, destroying and vandalizing company and personal property and beating and threatening non-striking Overnite employees. Under RICO, Overnite can recover treble damages and costs for injuries.
The dependents argued they should not be held responsible for the criminal activities because Overnite had failed to link them to the specific predicate acts. On Feb., 2001, the court rejected the argument noting that "RICO defendants are typically complex, hierarchical enterprises, where the offenses are perpetrated by 'underlings' at the direction of distant and removed 'bosses'."
As to Overnite's specific allegations regarding attempted murder, the court found "Firing a gun at a truck driver on the highway may support the conclusion that the person doing the firing acted with an intent to kill. Similarly, dropping a cinder block from an overpass while a truck is passing beneath at highway speed or throwing a brick or rock at a truck's windshield when it is traveling at highway speed may be found to constitute attempted murder ... "
"We will vigorously litigate the 55 attempted murder claims the court has authorized Overnite to pursue," said Overnite spokesman Ira Rosenfeld. In a section of the suit, the court departed from existing precedent under RICO in holding that the alleged criminal activities, short of attempted murder were not, in the strike context, among the racketeering activities prohibited by RICO. "The company remains confident that this limited portion of the court's ruling will be overturned on appeal," said Rosenfeld. [Overnite Trans. Co., Media Release 3/12/01]
Attorney Predicts Action on Money-Laundering Scandal
The Teamsters money-laundering scandal
that led to the recent indictment of ex-boss Ron
Carey, is consider to be one of the top emerging issues in labor law
according a speaker at a continuing legal education course presented by
the American Law Institute - American Bar Association Mar. 2, in Scottsdale,
Ariz. Charles P. O'Connor, a partner with Morgan, Lewis & Bockius in
Washington, D.C., said an issue to watch is the ongoing investigation by
a New York grand jury into an alleged Teamsters scheme to contribute to
state Democratic parties in return for assistance from party officials
in finding donors for Carey's 1996 re-election campaign. That investigation
"has sat on the back burner during the waning days of the Clinton administration,"
he said, predicting that it will receive more attention in the future.
[BNA 3/6/01]
LABORERS (LIUNA)
Pittsburgh Local Put in "Supervision" Not Trusteeship
The Laborers' Int'l Union of N. Am.'s "in-house judge" Peter F. Vaira
ordered supervision -- not trusteeship -- for LIUNA
Local 1058 in Pittsburgh Mar. 9 after finding that its officers have
had associations with members of organized crime that "were more than fleeting
or casual." Vaira concluded that "in-house prosecutor" Robert D.
Luskin, provided sufficient evidence to show that Local 1058's bosses "knew
or should have known" that they were associating with members of the La
Cosa Nostra crime family and that the association had direct or indirect
effects on the local. "The possibility remains that Local 1058 officers'
associations with the Pittsburgh LCN continues; uncontested elections may
reflect a continued relationship with organized crime; and, the perception
of organized crime association may remain with the membership," wrote Vaira.
Despite a lack of recent evidence of recent LCN association, Vaira held that the officers' past associations and over 30 years of uncontested elections of local officers "give LIUNA a bona fide reason to ferret out evidence of organized crime" under the union's sham "agreement" with the Dep't of Justice.
However, Vaira stopped short of granting Luskin's request for trusteeship over Local 1058, finding that trusteeship would be "too intrusive a procedure for oversight of Local 1058" based on the record. Factors included in this decision were Local 1058's "current business performance and reputation as well as a lack of evidence suggesting improper activities traditionally found in a LCN dominated union."
Among those named in the decision were: Joseph LaQuatra, president of Local 1058 from 1968-84 and business manager from 1985 until he retired in May 2000; Tom Percora, business manager of the local from 1968-84; Louis Dennis Martire, president of the local from May 1985 to May 2000; and Gerald Percora Jr., the current local president.
FBI surveillance and confidential informant information substantiated allegations that, beginning in 1974, these individuals regularly met with John LaRocca Sr., alleged leader of the Pittsburgh LCN, at a car wash owned by LaRocca, according to Vaira. Vaira found that these individuals had no union business reason for these meetings and did not get their cars washed or filled with gasoline. The report detailed similar meetings held at a local car dealership and several local restaurants between officials of Local 1058 and LaRocca and other organized crime members.
Vaira also said the concentrated period of Local 1058's ties to organized crime members was during the 1970s until 1987. After 1987, Vaira said there was "little reported evidence of any association." There were three "isolated incidents" in the 1990s, he said, which add "little weight to the allegation that the associations of 14 or more years ago continue."
Vaira recommended that LIUNA President Terry O'Sullivan appoint a LIUNA representative to serve, aided by legal counsel, as supervisor of Local 1058. Among other things, the supervisor should determine whether past organized crime association continues or affects the local and should ascertain why the local's elections were uncontested for so many years. The supervisor should be given authority to override decisions by local bosses and remove officers if necessary but only with O'Sullivan's approval. Authority should be given the supervisor to negotiate retirement of any local union officer and to call for a general election outside the normal election cycle.
Vaira's "probe" of Local 1058 was undertaken as part of an extension of an controversial consent decree negotiated in 1995 by LIUNA and DOJ that allowed the union to root out corrupt practices through an "internal reform effort." DOJ has threatened to file an already prepared 212-page civil complaint under the federal racketeering statute and take over the union if the union fails to achieve significant reform on its own. LIUNA was released from formal DOJ oversight in 2000, but is obligated under the terms of the agreement to continue internal reform programs until 2006.
Unlike previous agreements with DOJ, the 2000 agreement removes the threat of the department imposing the terms of a Racketeer Influenced & Corrupt Organizations Act consent decree that previously allowed DOJ to place LIUNA under federal court receivership if the pace and extent of reform did not meet department expectations. In exchange, LIUNA agreed to more than double the length of the previously negotiated reform program. Under the new agreement, the DOJ retained the right to veto any major change in the existing reform program. [BNA 3/14/01] In short, DOJ gave up a lot for a little.
HOTEL EMPLOYEES (HERE)
Boss Wilhelm Defends Chicago Trusteeship
Just before a hearing focusing on the trusteeship
imposed on Hotel Employees & Restaurant Employees Int'l Union Local
1 in Chicago, HERE boss John Wilhelm
justified his actions. In a Mar. 13 statement, Wilhelm alleged financial
and managerial deficiencies with Local 1, which for decades had been HERE's
flagship. Wilhelm pointed to a sharp decline in union representation in
Chicago and substandard wages and contractual protections for Local 1 members.
In large part, however, Wilhelm's statement focused on reckless spending
and financial mismanagement by local bosses.
Wilhelm's press release come one day before HERE conducts a hearing on the trusteeship. The hearing, scheduled for Mar. 14-16, was ordered by the Dep't of Labor's Office of Labor Mgmt. Standards. After probing the legality of the trusteeship, OLMS concluded that HERE, "had an allowable purpose for imposing the trusteeship," but had failed to hold a hearing to justify its actions with members of the local.
The trusteeship was imposed on Local 1 Nov. 29, 1999. Henry Tamarin, an int'l vice president and president of HERE Local 100 in N.Y.C., serves as trustee. No date for the dissolution of the trusteeship or the election of new officers has been scheduled.
In his statement, Wilhelm said Local 1's problems had been apparent long before a trusteeship was imposed. In 1998, Kurt Muellenberg, a former federal prosecutor who was appointed by a federal judge to investigate corruption within HERE and alleged ties to organized crime, suggested that Local 1 should have been placed in trusteeship years before because of its financial condition, lax management, and suspicious business dealings. Local 1 was home to ex-HERE boss Edward Hanley. Hanley's ouster from the union in 1998 and the suspension of his son Thomas Hanley, the former president of Local 1, stemmed in part from corruption pertaining to Local 1.
Wilhelm said while Local 1 carried significant debt before the trusteeship, the local's poor financial condition did not persuade the local bosses to curb spending. He pointed to a $17,000 party thrown following the 1999 election of officers and a $13,000 outing for a few select union officers and members to attend a Chicago Fire soccer match. Wilhelm also pointed to catered membership meetings featuring expensive door prizes and the leasing of expensive vehicles for union bosses. Wilhelm suggested that the trusteeship is finally imposing some accountability and fiscal responsibility on Local 1. [BNA 3/14/01]
POLICE UNION (FOP)
Guilty Rhode Island Boss Keeps Pension
Alan R. Gouveia, serving a prison sentence
for embezzling from the E. Providence (R.I.) Fraternal Order of Police,
will not lose his $27,122-a-year city pension. Acting on advice from the
city solicitor William F. Conley, Jr., members of the local police and
firefighter pension board decided Mar. 14 not to take action to revoke
or reduce Gouveia's pension. Conley said he reviewed the criminal
complaint against Gouveia, as well as relevant legal precedents and the
city's honorable-service ordinance, and concluded that there was no basis
for the city to act. When Gouveia committed the embezzlement, Conley explained,
he was "acting as an agent for the FOP lodge and not as an employee of
the city."
After pleading guilty to embezzling stealing $26,190 while serving as
FOP treasurer to support his drinking and gambling habits, Gouveia was
sentenced in Jan. by Superior Ct. Magistrate Joseph Keough to 10 years'
imprisonment, with nine months to serve and the remainder suspended. Gouveia
also was required to make restitution for $26,190, or face more stringent
punishment. According to Mark Norton, who took over the treasurer's post
from Gouveia in 1997, about $ 100,000 had not been accounted for. Norton
said the FOP intends to go to court to recover the $ 65,000 that it
believes Gouveia stole.
The embezzlement case prompted Councilman Rolland R. Grant, a retired
police officer, and Councilman Peter F. Midgley to sponsor an honorable-service
ordinance, which allows the city to reduce or revoke the pension of a police
officer or firefighter convicted of a crime related to their employment
by the city. [Providence J.-Bull. 3/15/01]
SERVICE EMPLOYEES (SEIU) / TEAMSTERS (IBT)
SEIU Guilty of Illegal Secondary Activity
The First Circuit Court of Appeals held Mar. 2 that trial is required
on an employer's claim that the Service Employees Int'l Union violated
the Labor-Management Relations Act's ban on secondary activity by threatening
to picket a customer. Judge Frank M. Coffin wrote the opinion reversing
the district court's grant of judgment as a matter of law for SEIU, stating
that a jury reasonably could have drawn inferences that SEIU's picketing
threat caused Intercity Maintenance Co. to lose a contract five weeks later
with Blue Cross/Blue Shield in Providence, R.I.
Intercity had provided janitorial services to Blue Cross since 1990. SEIU began attempts to organize Intercity in late 1994. Intercity's president refused to sign SEIU's proposed collective bargaining agreement, saying it was up to the workers to decide whether to unionize. SEIU's assistant director of organizing repeatedly warned Intercity's president, and later its attorney, to sign the agreement or SEIU would attempt to drive the company out of business by picketing its major customers.
On Mar. 20, 1995, the organizing director sent two letters to Blue Cross accusing Intercity of violating laws on the handling of hazardous substances. The union boss on Mar. 28 threatened to picket Blue Cross. Five weeks later, on May 5, Blue Cross solicited bids for performing cleaning services and awarded the contract to a unionized company. A Blue Cross official allegedly told Intercity's president that the company would not get the contract back unless it came to terms with SEIU.
The U.S. Dist. Court for the Dist. of Rhode Island granted summary judgment to SEIU on a number of tort claims by Intercity but conducted a trial on the LMRA and defamation claims against the union. Midway through the trial, the court granted judgment as a matter of law to SEIU. Even assuming that SEIU's actions were illegal secondary activity, the district court found that Intercity failed to show the activity caused the loss of the service contracts with Blue Cross. Although the district court found "overwhelming" evidence that SEIU knowingly or recklessly made false statements, the court decided that there was no evidence that the company lost the two service contracts because of the defamatory statements.
LMRA makes it an unfair labor practice for a union to threaten, coerce, or restrain a company for the purpose of forcing it to stop doing business with another company or forcing an employer to recognize an uncertified union. "Direct efforts to pressure an employer with whom a union has a dispute are acceptable, but indirect efforts to pressure a secondary employer are unfair labor practices," Coffin explained. In finding insufficient evidence that SEIU's conduct caused Intercity to lose the service contract, the district court noted that the company did not call anyone from Blue Cross to testify and drew an inference that Intercity probably was not the lowest bidder. Coffin decided that the lower court impermissibly drew an inference against Intercity and that a jury reasonably could have rejected the negative inference. He found that the company presented sufficient evidence to require submitting the case to the jury for decision.
Blue Cross' attorney corroborated the Intercity president's testimony that the union had threatened to picket customers, Coffin found. Even though no Blue Cross official testified that the union's conduct caused the loss of Intercity's contract, the judge said the jury was entitled to believe the president's testimony on this point. The timing of events -- just five weeks between the last union action and Blue Cross's solicitation of bids -- also gives rise to an inference that SEIU's actions caused the loss of the Blue Cross contract, Coffin found.
Vincent F. Ragosta of Providence, R.I., represented Intercity. John B. Lawlor of East Providence, R.I., represented two union officials. Steven K. Hoffman of James & Hoffman in Washington, D.C., was the attorney for SEIU. [BNA 3/7/01 citing Intercity Maintenance Co. v. Local 254, SEIU] James & Hoffman is the firm of Edgar N. James and Judith A. Scott both of whom played important roles in the Teamsters money-laundering scandal that lead to the recent indictment of ex-Teamsters boss Ron Carey.
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