LONGSHOREMAN (ILA)
Five Convicted in $750,000 New Jersey Scandal
A federal jury in Trenton, N.J., convicted four union officials and
an employer's hiring agent Dec. 17 in an massive embezzlement scandal that
victimized Local 1588 of the Int'l Longshoreman
Ass'n in Bayonne, N.J. Joseph Lore, ex-hiring agent at Int'l Terminal
Operating Co., was found guilty of conspiring to receive in excess of $750,000
in union funds as a result of a multi-faceted scheme to skim union monies
between 1991-99.
Also convicted of conspiracy were Denise Bohn, Local 1588's office manager, Joseph Pelliccia, the local's vice president, William Hurley, a Local 1588 business agent, and Thomas Rackley, the local's environmental representative. Local 1588's president, John J. Angelone, and its ex-president, Eugene G'Sell, both previously pled guilty and testified for the government in a bid for leniency. Initial indictments in the case were brought in June 1999.
The main source of the embezzled funds was a salary diversion scheme where one-half of the salaries of all officers and select union employees were diverted weekly, in cash, to Lore over the nine-year period. Lore received as much as $2,000 per week. Allegedly, the conspiracy also involved Lore and Bohn receiving kickbacks from Local 1588's service providers, who were permitted by Lore and Bohn to improperly inflate costs. Lore was also convicted of three counts of embezzlement for receiving the diverted salaries of Pelliccia, Hurley, and Rackley. Bohn was also convicted of three counts of embezzlement for receiving kickbacks from a service provider during 1994. Bohn was also accused of misusing the union's credit cards.
The jury also found Lore guilty of filing a false disability claim with his employer for the purpose of obtaining payment under the Longshoremen & Harbor Workers Compensation Act. The jury found that Lore falsely stated he was injured at his place of employment and sustained head injuries so severe as to render him permanently disabled, entitling him to a weekly benefit for life.
Lore had eluded conviction in four previous federal trials. In 1990, the Dep't of Justice filed a civil racketeering suit against the local. Union officials agreed in 1992 to ban Lore from any having business relationship with the local or its officers. He was convicted of loan sharking in 1997, but U.S. Dist. Judge Joseph H. Rodriguez (D.N.J., Reagan) overturned that conviction due ineffective defense counsel. Lore was then acquitted at another trial on those charges after the government's main witness, who was in the federal witness protection program, died in an accident. Prosecutors charged him again in 1999 with loan sharking. The judge in that case dismissed it when the main government witness recanted her testimony on the witness stand.
This case first went to trial in Oct., but U.S. Dist. Judge Mary L. Cooper (D.N.J., H.W. Bush) declared a mistrial when she found that Lore had made threatening hand gestures, witnessed by jurors, to G'Sell during his testimony. The new trial began Nov. 3, and the jury began deliberations on Dec. 13. Cooper set sentencing for the five defendants for Mar. 22. Lore's attorney, Daniel Welsh, plans to appeal. [USAO D.N.J.; Bloomberg News 12/17/01]
EMPLOYEES WELFARE UNION (IEWU)
Northern Illinois Boss Charged with $353,000 Theft
Charles C. Isely, III, ex-president and treasurer of the Int'l Employees
Welfare Union was indicted Dec. 19 on one count of embezzlement and three
counts of mail fraud. He allegedly embezzled $353,000 from the Waukegan,
Ill.-based union, which he founded and ran from 1974 to 1998. He allegedly
wrote 30 fraudulent checks totaling $225,000 from IEWU's death trust fund.
He also allegedly wrote another 40 checks for $108,000 on IEWU's bank accounts.
The checks were allegedly routed to Isely's bank accounts and used for
personal expenses. Further, Isely allegedly obtained a $20,000 bank loan
under the union's name and reportedly deposited it in his personal bank
account. The alleged crimes occurred in 1994-98.
Uniquely, Isley was also the president of the Lake County (Ill.) Chamber of Commerce. He held that post since 1974 but resigned in 1998 after the Dep't of Labor's probe of his union activities became public. His wife, Patricia, IEWU's ex-vice president and secretary, was not charged. Both resigned in Mar. 1998. In Nov. 1998, Isley and his wife filed for bankruptcy and claimed outstanding debts to IEWU. [Chi. Daily Herald 12/22/01; Chi. Trib. 12/20/01]
ELEVATOR CONSTRUCTORS (IUEC)
New York Probe May Bring Charges to Stop Union Corruption
at Site of September 11 Massacre
According to the N.Y. Post, the U.S. Attorney's Office in Brooklyn
is on the verge of charging up to 75 individuals linked to Int'l
Union of Elevator Constructors Local 1 in order to stop the allegedly
mob-tainted local from illegally lining their pockets or inflating construction
costs in the devastated World Trade Ctr. site. Local 1 operates temporary
construction elevators, which will be required on the rebuilding of damaged
buildings around Ground Zero. Members of the local have allegedly doled
out no-show jobs to union cronies and members of two Mafia crime families.
Additionally, the prosecutors will reportedly seek a court monitor to oversee
the local, whose membership list reportedly includes Joseph Gotti, nephew
of imprisoned Gambino crime family boss John Gotti.
Four Local 1 members were charged in Sept. 1999 on mail-fraud charges for allegedly taking no-show checks, but in a rare move, prosecutors dismissed charges while retaining the right to reinstate them later. Among those charged was Terence Carr, the son-in-law of Local 1 president John Green. In 1997-98, Carr allegedly clocked 32-hour days at different locations around NYC and took no-show paychecks in his own name. Carr is now in Fla., working as an IUEC organizer Also charged were Leonard Capozzoli, Frank Walker and Thomas McCarthy, who were allegedly paid for numerous 25-hour days. The four allegedly ripped off several big-name construction firms. At least one of those companies is helping to clean up the WTC site. [N.Y. Post 12/30/01]
Charges are already pending against one Local 1 official. Matthew Downey was indicted in Oct. on witness tampering and obstruction of justice charges related to an alleged $2 million falsified hours scam. [USAO E.D.N.Y. 11/14/01]
GOVERNMENT EMPLOYEES (UPW)
New Charges for Hawaiian Boss
A federal grand jury in Honolulu returned a new indictment Dec. 19
against United Public Workers boss Gary
Rodrigues and his daughter Robin H. Sabatini adding to an existing
union corruption indictment that was brought in Mar. 2001. The new indictment
alleges that Rodrigues accepted more than $100,000 in kickbacks from a
life insurance agent in connection with an employee benefit plan. In Mar.,
he was indicted for allegedly embezzling from the union's medical and dental
plans through overcharging.
Currently, both are charged with 50 counts of mail fraud, one count of conspiracy to defraud a health care benefit program, two counts of conspiracy to commit money laundering, and 42 counts of money laundering. Also, Rodrigues is charged with five counts of embezzling union assets and one count of accepting kickbacks in connection with an employee benefit plan. Their trial was set to begin in Jan., but the new charges are expected to cause a several month delay.
Rodrigues allegedly negotiated agreements with Hawaiian Dental Serv. and Pacific Group Med. Ass'n, under which some of the money paid by union members for monthly premiums was later used to pay consultants reviewing the health plans. He allegedly instructed the health care firms to issue checks for consultant services to firms owned by Sabatini. Also, he allegedly never told UPW that he had included consulting fees as part of the contract and set up his daughter and her firms to primarily receive those fees. [Honolulu Advertiser 12/20/01]
IRON WORKERS (BSORIW)
Boss West Hit with More Charges
A superceding indictment was returned Dec. 12 in U.S. Dist. Court for
the Dist. of Columbia against Jake West,
ex-president and now president emeritus of the Int'l Ass'n of Bridge, Structural,
Ornamental & Reinforcing Iron Workers. The new indictment contained
the same 49 counts that were in the Aug. 29 indictment that accused him
of embezzling some $50,000. It adds one count of conspiracy to embezzle,
defraud, and file false reports and one count of obstruction of justice.
West is one of six BSORIW officials charged
with corruption; the other five have pled guilty. [DOL 12/12/01]
TEAMSTERS (IBT) / MACHINISTS (IAM)
Union Fund Manager Charged
Federal prosecutors in Boston and Chicago announced today that George
Philipps, president of a N.Y. investment consulting firm, Pension Fund
Evaluations, Inc., was charged Dec. 18 in a one count information with
paying illegal kickbacks to William Close, ex- trustee of the pension funds
of Int'l Bhd. of Teamsters Local 710 and
Int'l Ass'n of Machinists Local 701 (a.k.a., the Auto. Mechanics Union),
both of Chicago. Allegedly, from about Mar.-Nov. 1997, Philipps paid kickbacks
to Close in exchange for Close directing that trades of assets of the two
pension funds be executed through PFE's clearing brokers. PFE in turn had
agreements with the brokers that PFE would receive 70% of commissions earned
on the trades. Close previously pled guilty to racketeering charges arising
out of his receipt of illegal kickbacks, and is awaiting sentencing. [USAO
D. Mass. 12/18/01]
STAGE EMPLOYEES (IATSE)
Illinois Bosses Charged with Theft
On Dec. 12 in Winnebago County (Ill.) Court, Todd Mosley and Laura
Reilly, ex-business agent and recording secretary, respectively, of Int'l
Alliance of Theatrical Stage Emp. & Picture Operators Local 217 in
Rockford were indicted for felony theft. Mosley allegedly stole some $3,126
from the local and Reilly $1,522. [DOL 12/12/01]
LABOR LAW REFORM
Clinton-Appointee Strikes Down Bush's Beck Executive Order
On Jan. 2, U.S. Dist. Judge Henry H. Kennedy, Jr. (D.D.C., Clinton)
struck down President Bush's Executive Order
13201 requiring fed. contractors to post
notices informing employees of their rights not to join a union or
to pay fees for nonrepresentational purpose, under the Supreme Court's
1988 decision, CWA v. Beck. He ruled
that the order, which took effect Apr. 18, is preempted by the Nat'l Labor
Relations Act. He granted summary judgment for several
union entities, including UAW, and issued a permanent injunction barring
implementation and enforcement of the order. "We're disappointed, but we
will appeal the ruling on behalf of workers who deserve to be informed
of their rights," said Dep't of Labor spokeswoman Sue Hensley. [BNA 1/7/01]
Road Map to the Oklahoma Victory
Would you like to emulate the Sept.
25 victory in Okla. and enact a Right-to-Work law in your state?
Well, one of your first steps should be to read a recent account by the
Free Congress Fdn.'s Connie Marshner which details how Mark Nuttle, the
pro-Right-to-Work coalition's campaign manager in Okla., and others organized
a highly successful grassroots effort. This effort won the much needed
right-to-work referendum making Okla. the twenty-second Right-to-Work State.
The article is at http://www.freecongress.org/press/offpress/2001/011214CMfcc.htm.
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ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
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LABOR LAW REFORM
Oklahoma Battles to Save Right-to-Work Law on Sovereign Immunity
Grounds
Attorneys for the State of Okla. and Gov. Frank Keating (R) have filed
a motion to dismiss a union-led lawsuit
that seeks to overturn the State's recently ratified Right-to-Work law.
Under the Eleventh Amendment and the Sovereign Immunity grounds, the State
argues that the federal district court does not have jurisdiction.
The suit is before U.S. Dist. Judge Frank H. Seay (E.D. Okla.). The civil
rights suit claims that Okla.'s Right-to-Work law violates the plaintiffs'
federal rights under the U.S. Constitution and an array of federal statutes.
The State maintains, however, that the law is clear and a state cannot
be held liable for an alleged civil rights violation. "As the state is
not a 'person' subject to suit, there is no material fact at issue
which would entitle plaintiffs to any relief against the state,"
the motion says. The motion to dismiss is limited to only immunity claims,
with defendants not waiving other potential grounds for dismissal. The
court had scheduled a status conference in the case for Jan. 4. [Daily
Oklahoman 12/19/01]
TEAMSTERS (IBT)
Honolulu Local Liable for Additional $544,000
On Dec. 13, U.S. Dist. Judge Helen W. Gillmor (D. Haw., Clinton) ordered
Int'l Bhd. of Teamsters Local 996 in
Honolulu to pay Steam Press Holdings Inc. an additional $544,130 for interest
and penalties the cleaning firm was required to pay as the result of wrongful
actions of the union. In Sept., Gillmor awarded the firm nearly $1 million
after finding union officers had shown "reckless disregard" as to the truth
of statements they made concerning the company's financial health during
contract negotiations and in advance of a strike vote. Gillmor had said
that the firm could receive an additional award based on a showing of emergency
loan interest and interest on existing debt that the company incurred as
the result of the union's action. The supplemental award also includes
future additional unemployment insurance taxes and interest and penalties
on those taxes paid by the firm, according to Steam Press' attorney
Lynne T. Toyofuku of Dwyer Schraff Meyer Jossem & Bushnell in Honolulu.
[BNA 12/24/01]
OPERATING ENGINEERS (IUOE)
Kickbacks Charges Brought Against New York City School Custodians
Eleven N.Y. City public school custodians, all members of Int'l Union
of Operating Engineers Local 891, were arrested and charged Dec. 11 with
receiving bribes and kickbacks and rigging bids for window cleaning services.
According to N.Y. State Atty. Gen. Eliot Spitzer, from June 2000 to Nov.
2001 the suspects received kickbacks of $300 to $2,000 in cash, or 10%
of the contract price, from the cleaning services in exchange for selecting
them for their schools. The suspects allegedly asked contractors to supply
false bids as a way to circumvent NYC Board of Educ. requirements for at
least three bids for services costing more than $250.
"These . . . employees put personal gain before the well-being of our school children," Spitzer said. Edward F. Stancik, special commissioner of investigation for NYC schools said the latest allegations result "from a fundamentally flawed system that distorts supply and demand in favor of corrupt custodians and vendors, to the detriment of school children and their parents." Stancik and Spitzer said custodians have too much latitude in spending money for school maintenance. They criticized the lack of oversight in bidding procedures.
The arrests, the culmination of an 18-month investigation drew further scrutiny to a union that has been the subject of several corruption scandals, allegations of union featherbedding and nepotism dating back two decades. In 1996, for example, five custodians were indicted for stealing school money by manipulating time clocks and other abuses. John C. Fager, who has investigated the custodial system for the City Council and others over the past two decades, said, "It's a permanent scandal, and the system never changes."
The suspects work at schools in Manhattan, the Bronx, Brooklyn, Queens, and Staten Island. If convicted, each suspect faces as much as seven years in prison and/or $100,000 in fines. Although these arrests involved only window washing, Spitzer said "it would defy logic" to suggest that other parts of the city's $40 million custodians' budget were not also affected by corruption. "This really is a window into a corrupt system," he said. Prosecutors did not identify the firms involved in the kickbacks, saying that the investigation is continuing and that they did not want to jeopardize a confidential informant at one of the companies who was an important source.[Bloomberg News 12/11/01; N.Y. Times 12/12/01]
ELECTRICAL WORKERS (IBEW)
D.C. Circuit Overturns NLRB's Approval of "Staggering" Fine by Milwaukee
Union
The U.S. Court of Appeals for the Dist. of Columbia Circuit ruled Dec.
28 that the National Labor Relations Board erred in exculpating Int'l Bhd.
of Elec. Workers Local 494 in Milwaukee for fining a member $100,000 after
he took a supervisor's job at a nonunion shop. The appeals court said NLRB
was "flatly unreasonable" for finding that the union did not commit an
unfair labor practice by fining the member. NLRB's conclusion, that no
violation of the act occurred because the local union was not seeking a
collective bargaining relationship with the nonunion employer, was not
supported by substantial evidence, the court held. Comments from the union
business agent, as well as the "staggering" size of the fine, which was
later reduced to $10,000 by the int'l union, "conclusively establish[ed]
that the local sought a collective bargaining relationship with [the nonunion
company] and retaliated against [Joseph] Podewils for not providing it,"
wrote U.S. Circuit Judge Laurence H. Silberman (D.C. Cir., Reagan).
Podewils had been a rank-and-file member of Local 494 for 21 years when he went to work as a manager at Gerald Nell Inc., a nonunion shop. However, before starting work there in Oct. 1997, he went to the local's office and filled out an honorary withdrawal card, informing a business agent that he was withdrawing from the union for personal reasons. Three months later, the business agent confronted Podewils at the shop and asked, "Is there any possibility you being here means that the electricians here might become union?" Podewils replied that "that wouldn't happen here."
The business agent then filed charges against Podewils for violating the IBEW constitution by working for a nonunion employer while still a member. After a hearing, to which Podewils was invited but did not attend, the local found him guilty and fined him $100,000. The agent testified that the fine was proper because Podewils already was responsible for more than $250,000 of work that should have been "done union." After the fine was assessed, Podewils retained an attorney and appealed to the int'l. IBEW reduced the fine to $10,000, based on Podewils' salary, as opposed to the amount of union work allegedly lost.
Podewils and his employer then filed unfair labor practice charges against IBEW with NLRB. NLRB found no evidence that the union was seeking a contractual relationship with Gerald Nell. The board, over the dissent of Member Peter Hurtgen, found that the business agent's inquiry regarding whether the shop would go union, "standing alone falls short of the kind of concrete evidence necessary to show a union is currently and actually seeking ... a collective bargaining relationship."
Podewils and his employer appealed to the D.C. Circuit, renewing their allegation that the local and international violated the Nat'l Labor Relations Act act which makes it unlawful "to restrain or coerce ... an employer in the selection of his representatives for the purpose of collective bargaining or the adjustment of grievances." Silberman found that a union violates that provision "by disciplining a supervisor who has either collective bargaining or grievance adjusting duties and thereby coercing an employer only if it has, or is seeking a collective bargaining relationship with the employer." Here, he concluded, NLRB ignored evidence that IBEW was seeking such a relationship with Podewils' new employer.
U.S. Circuit Judges Harry T. Edwards (D.C. Cir., Carter) and David S. Tatel (D.C. Cir., Clinton) joined in the opinion. Kevin J. Kinney of Krukowski & Costello, S.C. in Milwaukee, represented Podewils and Gerald Nell, Steven Goldstein represented NLRB, and Matthew Robbins represented the union. [BNA 1/4/01]
AFL-CIO / ELECTIONS & POLITICS
Judge Keeps AFL-CIO Documents Secret
U.S. Dist. Judge Gladys Kessler
(D.D.C., Clinton) ruled Dec. 19 that documents collected by the Fed. Election
Comm'n in investigating alleged campaign finance violations must be kept
secret even after the investigation has ended. Kessler acknowledged her
ruling "ends a 25-year practice by the FEC to make available to the public
the full investigatory record pertaining to any complaint filed once the
complaint is resolved."
The case involved an FEC investigation of links between the AFL-CIO and the Democratic Party during the 1996 campaign. Kessler said she recognized the "serious policy arguments raised" in the case but added that her decision was "compelled by the plain wording" of a provision of the Fed. Election Campaign Act, which requires that FEC investigations be kept secret and sets no time when the investigations can be disclosed. Previously, the FEC has read this confidentiality provision to expire once an investigation was closed.
A separate FECA provision requires the FEC to make public its "determination" of whether campaign finance laws have been violated in each case it investigates. But, this provision can be satisfied, Kessler said, by disclosing only summary documents, such as the FEC general counsel's report and commissioners' statements about their votes, not the entire record of a case.
Kessler also addressed constitutional arguments noting that FEC investigations involve political activities that are protected by the First Amendment. She said FEC's practice of disclosing information from its investigations carries a potential to chill the free exercise of political speech. [BNA 12/21/01]
TEACHERS (NEA) / ELECTIONS & POLITICS
Southern California Boss Indicted for Election Law Violations
Raymond Busch, an Orange County, Cal., teachers union boss, was charged
Dec. 12 with nine criminal counts of participating in the illegal gathering
of petition signatures to recall school board trustees. The case is the
newest chapter in the continuing saga of the Orange Unified Sch. Dist.,
for which control of the board has been an ongoing battle, beginning with
the June 2001 recall of three board members and culminating with a Nov.
election, which brought in a new slate of trustees.
According to the charges brought by the Orange County District Attorney's Office, Busch attested that he had gathered signatures for the recall, though others had actually done the signature-gathering, a possible violation of state election laws. Busch, a teacher and member of the board of directors of the Orange Unified Educ. Ass'n, could be sentenced to up to nine years in jail if convicted on all counts. He is not under arrest, prosecutors said, because he is not a flight risk. He is scheduled to be arraigned Jan. 7.
OUEA backed the recall, but its president, Paul Pruss, claimed there was no concerted attempt by his members to mislead voters. Unionists gathered almost 20,000 signatures in the recall effort. "These were volunteers," Pruss said. "These were not professional signature-gatherers. If there were mistakes made, they were not intentional--or at least I'd hope they weren't."
By law, signatures for recall petitions must be gathered by registered voters who live in the district. The law is meant to prevent outsiders from recalling local officeholders. Busch is a registered voter and an Orange resident,but he was not the one who gathered signatures on nine petitions late last year that bear his name as the petition circulator, prosecutors said. Petition circulators must sign an affidavit under each set of signatures attesting that they gathered the signatures before filing them with the registrar of voters. The nine petitions with Busch's name, each with ten to twenty signatures, were distributed among adult vocational students in the district, said senior Deputy Dist. Atty. Pete Pierce, who is prosecuting the case. He said his office began investigating in May after citizen complaints.
Martin Jacobson, one of the recalled trustees who unsuccessfully sought to regain his seat in November, said the charges against Busch support his allegations that recall supporters were using underhanded tactics. "It was evident the other side was doing everything they could possibly do to win," he said. "It is the idea that the end justifies the means." Jacobson and the other two recalled trustees, Linda Davis and Maureen Aschoff, said they had no immediate plans to contest the recall election results, but Davis said the district is now governed by an "illegal board." "I'd like to talk to an attorney about it," Davis said. The 30,000-student district has been plagued for a decade by unionist unrest over salaries and benefits. [L.A. Times 12/13/01]
FOOD & COMMERCIAL WORKERS (UFCW) / ELECTIONS &
POLITICS
Traficant Allegedly Sought Labor Peace in Exchange for Personal
Construction Work
U.S. Rep. James A. Traficant (D-Ohio) asked a grocer to build him a
barn and buy him a truck in exchange for helping settle a union dispute,
according to documents filed Dec. 21 in U.S. Dist. Court in Cleveland.
Federal prosecutors said businessman Henry Nemenz gave Traficant more than
$115,000 in work and gifts. They say it illustrates how Youngstown Democrat
routinely shook down businessmen. Traficant is scheduled to go on trial
in Feb. on a 10-count indictment that alleges he took free work and meals
from contractors in exchange for helping them with business needs. Nemenz
is the seventh businessman who prosecutors said did work for Traficant
in exchange for favors. Traficant denies wrongdoing. Nemenz has never been
charged and will testify in Traficant's trial about the work and gifts.
When Nemenz tired of Traficant's requests for additional work, the contractor demanded payment. Traficant allegedly said he couldn't afford to pay him. Traficant later reimbursed him for about a third of what Nemenz paid out of his pocket, leaving Nemenz unpaid for more than $50,000 of work, according to the documents. The barn and materials cost more than $89,000.
Nemenz became friends with Traficant in 1994, when the congressman began serving as host of a show at Nemenz's radio station, WRRO, in Warren, Ohio. As they talked, Nemenz told Traficant that he owned several grocery stores and that he was having trouble with informational pickets by the United Food & Commercial Workers Int'l Union. Traficant allegedly said he would work to eliminate or drastically reduce the pickets.
Traficant allegedly told Nemenz that he needed repairs at his home and horse farm but couldn't afford to pay for them. He also allegedly told Nemenz that he had financial trouble because the IRS garnished his wages over a 1980s tax case.Traficant asked whether Nemenz's construction company, could build a pole barn for his horses.
Prosecutors said that in exchange for his work, Traficant did a radio broadcast at one of Nemenz's grocery stores, urging residents to cross the pickets and shop. Traficant's staff also set up meetings with union bosses, though the union continued to picket.
Prosecutors also contended that Nemenz bought a truck for Traficant, made about $17,000 in payments on it and paid to insure it. He also lent Traficant a Chevrolet Corvette for several months.
Throughout their relationship, Traficant often stalled on payments, saying his work on behalf of the grocer "caused him great political problems with organized labor," the documents said. Traficant agreed to pay Nemenz only after the businessman threatened to sue him. To resolve the situation, Traficant paid Nemenz about $25,000, and Nemenz transferred the truck title to him, prosecutors said. Traficant allegedly did not mention the vehicles or the work on his financial disclosure forms or on his federal tax returns. [Cleveland Plain Dealer 12/22/01]
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