ALLIED-INDUSTRIAL WORKERS (PACE)
North Carolina Boss Indicted for $4,500 Embezzlement
A federal grand jury indicted Angela B. Smith of New Bern, N.C., Mar.
20 on two counts of union embezzlement. Smith was the secretary-treasurer
of the Paper, Allied-Indus., Chem. & Energy Workers Int'l Union Local
1325 (f.k.a., United Paperworkers Int'l Union Local 1325). From Jan. 1997
to Jan. 1999, Smith allegedly embezzled $4,374.95 from UPIU Local 1325
by issuing checks to herself and third parties for her personal expenses.
Further, she allegedly stole $150 from PACE Local 1325 in Dec. 1999 by
again issuing a check to a third party for her personal expenses. [USAO
E.D.N.C., Media Release 3/22/01; U.S. v. Smith, No. 4:01-CR-14-1H3 (E.D.N.C.
indictment 3/20/01)]
GOVERNMENT EMPLOYEES (UPW)
Hawaiian Boss, Daughter, Accused of Embezzlement
A federal grand jury returned a 43-count indictment Mar. 7 against
Gary W. Rodrigues and Robin H. Sabatini alleging fraud, embezzlement, and
money laundering in connection with two United Public Workers' funds. The
indictment charges that Rodrigues, Hawaii state director of the UPW and
Sabatini, his daughter, devised a scheme to defraud UPW and its members
of money paid out of UPW accounts for dental benefits and another scheme
to defraud a UPW health benefit program. Further, it alleges that Rodrigues
embezzled UPW funds by causing UPW to pay premiums not required to be paid
for dental benefits. Finally, it accuses Rodrigues and Sabatini of laundering
proceeds from the health benefit program fraud and embezzlement.
The amounts were not disclosed.
U.S. Atty. Steven S. Alm said that according to the indictment, the schemes sought to defraud UPW. Rodrigues allegedly failed to disclose that UPW premiums for dental benefits were in excess of those required and were inflated to include consulting fee negotiated by him, which he directed first to pay off a personal loan and then to a firm incorporated by Sabatini. Rodrigues also allegedly failed to disclose to the UPW bd. and membership that he negotiated a consulting fee to be paid to Sabatini's firm in connection with a UPW contract for medical benefits. [USAO D. Haw., Media Release 3/7/01]
LABORERS (LIUNA)
Indicted Illinois Boss Attends Governor's Fundraiser
Illinois Gov. George Ryan (R) will donate $40,000 in campaign contributions
to charity after learning that the money came from an adult bookstore owner
turned insurance executive linked to organized crime by the Chicago Crime
Comm'n. State records show Thomas P. Matassa
made donations to Ryan dating to 1996.
Matassa's money includes a $10,000 donation that earned him a spot among the 38 members of Ryan's finance committee, which had a fund-raising dinner Mar. 19. Matassa invited nine people to join him at Ryan's fundraiser, including John Serpico, ex-Laborers Int'l Union of N. Am. boss awaiting trial on federal charges of racketeering, fraud and money laundering for allegedly using union assets to obtain personal loans from banks. Serpico and Matassa have been repeatedly linked to the mob by law enforcement officials. They are listed as mob associates on the Chicago Outfit Organizational Chart published in 1997 by CCC. Matassa scoffed at CCC for listing him as a mob associate. [Chi. Sun-Times & Chi. Trib. 4/8/01]
GOVERNMENT EMPLOYEES (AFGE)
DOJ Report Says New York Boss Aided Mobsters
An internal Dep't of Justice report alleges that the boss of
the correction officers union at the Brooklyn federal lockup doled out
favors to jailed mobsters for eight years. The report cites detailed statements
from three fellow officers and 17 inmates, including members of the Colombo,
Gambino and Luchese crime families, who say union boss Raymond L. Cotton
smuggled in contraband like hero sandwiches, veal cutlets and radios, warned
of prison searches and broke visiting rules in exchange for bribes.
Allegations against Cotton, a correctional counselor and president of Am. Fed'n of Gov't Employees Local 2005, surfaced in 1997 after his arrest with 11 other guards in the "Operation Badfellas" probe by the DOJ's Office of Inspector Gen. Nine were convicted on criminal charges. Two others were fired. Federal prosecutors dismissed the case against Cotton in June 1998 after a key mob informant and inmate was accused of drug deals at the jail.
In Aug. 2000, the IG's Office completed its investigation of Cotton and referred the report to the Bureau of Prisons for administrative action. Newsday obtained a copy of the report through a Freedom of Information Act request. BOP declined to comment. He denied wrongdoing and said he faces no disciplinary charges. "All the charges were false. A lot of these inmates were just trying to make deals so they could get out of jail," said Cotton, now reassigned to a different unit. "They had no evidence, no tapes, no records of money."
The report details a broader series of allegations against Cotton than was disclosed in the criminal case, with some inmates coming forward as recently as July 1999. "According to these inmates, Cotton engaged in a continuing pattern of corruption," which span from 1990-98, the report alleged.
"We had everything as if we were on the street; it was not like being in jail," one inmate told investigators. "You could have everything you wanted on Cotton's floor." A member of the Colombo family now in the federal witness security program told investigators Cotton escorted mobsters between floors so they could meet with each other. He said there was so much food smuggled in, he gained 40 lbs.
A second inmate said Cotton let them use his phone to make long-distance calls at the Manhattan jail, hid contraband in his office from the mob and brought in sneakers for him in exchange for bribes. The inmate claimed another prisoner said of Cotton, "He's bleeding me dry." The inmate's mother told investigators she passed cash to her son for Cotton and sent money orders in Cotton's name. She also claimed she met with Cotton once outside the Manhattan jail and gave him a box to deliver to her son.
A third inmate cooperating with the government told investigators that after he was sent into isolation for fighting, Cotton brought chicken parmigiana sandwiches and cigarettes to his cell. He alleged Cotton helped smuggle in radios, headphones, jogging suits, sneakers and an Italian dinner cooked by another inmate's mom. A fourth inmate, who worked as a jail orderly, told investigators that Cotton hid contraband in his office and warned inmates about searches. A correction officer reported that Cotton played handball with inmates on days off. On one occasion, after the guard ordered a search that turned up garlic, tomatoes, and other contraband, an angry Cotton demanded to know why the guard was "shaking up his unit," the officer said. [Newsday (N.Y.) 4/10/01]
POLICE UNIONS
Illinois Union Endorsed Indicted Mayor
Stone Park (Ill.) Mayor Robert Natale has been accused by federal prosecutors
of shaking down drivers when he was a cop and taking mob payoffs as mayor.
But that hasn't stopped a local police union from endorsing Natale in his
re-election bid--because he has been tough on crime, the union says. Stone
Park residents received a letter last week from the Ill. Council of Police
& Sheriffs, which represents Stone Park officers, endorsing the mayor
and his slate of candidates for election Apr. 3.
Norm Frese, boss of the tiny union, said he had no problem endorsing the mayor, who awaits trial in federal court with alleged West Side and DuPage County mob boss Anthony Centracchio and two others. Natale, mayor since 1989, insists he is innocent.
The union letter says State Police data show crime was down in Stone Park in 2000 by 67% from 1999. The only problem: The number is wrong. The crime rate was down, but not as much as the union and Natale say, based on numbers the village provided. The crime rate for 2000 was down 22.3%, according to the measure commonly accepted by criminologists.
Natale lost Apr. 3 to Ben Mazzulla who won 56% of the vote to Natale's 44%. [Chi. Sun-Times 4/1, 4/4/01]
TEAMSTERS (IBT)
Overnite's Texas Tort Suit Proceeds
Overnite Transp. Co. may proceed with its
claim that the Int'l Bhd. of Teamsters unlawfully interfered with the firm's
business relationships by distributing an allegedly defamatory flier to
Overnite customers, the Texas Court of Appeals ruled Mar. 29. Reversing
summary judgment granted to IBT, the appeals court found that because IBT
admitted, solely for purposes of the motion, that it published a defamatory
flier for the purpose of injuring Overnite's business, IBT failed to show
its actions were legally justified.
IBT also failed to show the tort claim was preempted by the Nat'l Labor Relations Act, the appeals court decided, because the union did not show that handbilling based on defamatory statements is protected union activity. Justice Jan P. Patterson wrote the decision.
The case stems from IBT's long-running effort, marred by union violence, to unionize Overnite. In addition to the Texas suit, Overnite has cases pending in Georgia and Virginia involving defamation and libel claims against IBT.
In Sept. 1999, IBT issued a press release stating that NLRB had found the firm guilty of hundreds of labor law violations. In fact, the agency had only issued a complaint charging the company with violating the NLRA. IBT also distributed a flier to Overnite customers in Texas stating the firm was "on the brink of a national strike which could cause interrupted service to your business" and warning that union workers would be picketing customer locations where pickups and deliveries were made. Overnite sued IBT and Local 657 in Travis County Dist. Ct. in Oct. 1999, claiming defamation and tortious interference. [BNA 4/5/01]
QUOTABLE QUOTE
"As a Clinton appointee, Ms. White has reportedly submitted a letter
of resignation. It needs to be accepted forthwith."
-Washington Times, Editorial, Apr. 2, 2001, criticizing U.S.
Attorney Mary Jo White for her failing prosecution of the Teamsters
money-laundering scandal and noting that important statute of limitations
in the case will run this August.
- - - - - -
ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
- - - - - -
MACHINISTS (IAM)
Seattle Union Loses Sex Case, Jury Awards $638,000
A Washington state jury awarded $638,764 to a ex-union steward
Mar. 29 after finding that Int'l Ass'n of Machinists Dist. 160 in Seattle
discriminated against her because of her sex. The jury found Dist. 160
violated the Wash. Law Against Discrimination by not hiring Linda Blaney,
a senior chief shop steward, as business representative, and also by removing
her from the steward position. The order directing the union to pay Blaney
was signed April 9.
According to Blaney's attorney, the jury decided the union illegally failed to hire Blaney as business representative in 1998, 1999, and 2000. The jury awarded her $112,903 in lost wages and benefits, $450,861 in future lost wages and benefits. The jury award on the failure-to-hire charge included no damages for pain, suffering, and emotional distress. In connection with Blaney's removal from the shop steward job, the jury awarded her $75,000 in pain, suffering, and emotional distress, and no amounts for past or future wages and benefits.
According Blaney's amended complaint, filed by Stephen Connor and Christopher Ottele, attorneys with Short Cressman & Burgess in Seattle, said Blaney had been a shop steward for 10 years and has been president of IAM Lodge 289 (part of Dist. 160) for seven years. Blaney applied several times to be business representative for the district, but "less qualified males were selected in Blaney's stead," the complaint said. Blaney charged that a "substantial and motivating factor" in the union's actions was her sex. The original complaint was filed in Sept. 1999, a month after Blaney was removed from the union position.
IAM attorney, Lawrence Schwerin, of Schwerin Campbell Bernard in Seattle, said the union will appeal the verdict on the grounds that there was insufficient evidence to support the verdict and that the judge gave the jury improper instructions and improperly admitted certain evidence. [BNA 4/11/01 (citing Blaney v. IAM Dist. No. 160, Wash. Super. Ct., No. 99-2-22666-6SEA, 3/29/01)].
HOTEL & RESTAURANT EMPLOYEES (HERE)
Would-be Hawaiian Fund Manager Sentenced to 60 Months for Fraud
U.S. Dist. Chief Judge David A. Ezr sentenced Anthony G. DiPace to
a term of imprisonment of 60 months after federal jury convicted him Feb.
8 of all 11 counts of mail fraud charged against him. Specifically, an
indictment charged that DiPace executed a scheme to defraud the Hotel Union
& Hotel Industry of Hawaii Pension Plan & Trust. Essentially, the
indictment charged that DiPace lied about his credentials in an effort
to be hired by the Pension Plan as its investment monitor. If DiPace had
been successful in obtaining the position, it would have paid him in excess
of $300,000 per year. DiPace also received a term of supervised release
of three years and a special assessment of $850. Ezr also ordered
DiPace to make restitution in the amount of $32,063 to Hotel Employees
& Restaurant Employees Int'l Union Local 5.
U.S. Atty. Steven S. Alm and Billy Beaver, L.A. Reg. Director of the Pension & Welfare Benefits Admin. called the sentence appropriate for the type of misconduct engaged in by DiPace. They added that the Pension Fund had more than $200 million in assets and an expert witness called by the government testified that it would have been a disaster for the Pension Fund if it had hired DiPace. Alm and Beaver also stated that they hoped that this strong sentence would send a message to others who might hope to defraud pension funds protected by the federal government pursuant to the Employee Retirement Income Security Act. [USAO D. Haw., Media Release 2/23/01]
TEAMSTERS (IBT)
Obituary: Corrupt New York Boss Cody
John Cody, 79, who federal investigators said helped organized crime
figures extort the construction industry from Montauk to Manhattan in the
1970s and 1980s, died Apr. 3 of Alzheimer's disease at his home in Seaford,
N.Y. Cody was the longtime boss of Int'l Bhd. of Teamsters Local 282 in
Elmont, now in Lake Success. The local's members drive the trucks that
deliver concrete and building supplies to many construction sites in the
metropolitan area.
While reformers fought Cody for control of the union for decades, FBI agents and federal prosecutors sent him to prison, once in the 1980s for racketeering and once in the 1990s for plotting to murder a rival who had taken over the union during Cody's earlier imprisonment.
Cody grew up on the Lower East Side of Manhattan and began working as a trucker's helper at age 15. He was released from prison the first time in 1947, after serving 7 years in reform school and then state prison on burglary charges, according to court records. Michael Cody said his father was released from federal prison after several months in 1993 because of his Alzheimer's condition. Cody had faced up to 30 more months in prison for hiring someone to murder his successor at the Teamster's local. The murder plot was never carried out.
In 1995, a court-appointed officer and counsel were installed by a federal judge to oversee the union with the aim of eliminating organized crime influence. Federal prosecutors had charged that the Gambino crime family controlled the union, ignored labor agreements and extorted money from contractors in return for labor peace. [Newsday (N.Y.) 4/6/01]
Union Corruption Update is made possible by the generous contributions from readers like you. NLPC, P.O. Box 6273, McLean, VA 22106-6273. Thank you.
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.
All back issues of the Union Corruption Update can be viewed at NLPC's website (www.nlpc.org). Also available is a union-by-union and state-by-state index of all Union Corruption Update articles.
If you have story ideas or suggestions for future editions of Union Corruption Update, please email NLPC at nlpc@nlpc.org. Thank you.
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.
Union Corruption Update Article Index (by Union)
Union Corruption Update Article Index (by State)
Organized Labor Accountability Project