LABOR LAW REFORM
Sen. McConnell Cites NLPC in Demanding Corporate and Union Accountability
Pointing, on the floor of the U.S. Senate, to a stack of union corruption
reports compiled by NLPC, Sen. Mitch McConnell (R-Ky) argued on July 10
that legislation on corporate accountability should also include unions.
McConnell spoke in support of his amendment to the Public Company Accounting Reform and Investor Protection Act, which would require unions with an annual income over $200,000 to use the same strict standards for their annual financial reports filed with the U.S. Dept. of Labor (DOL) as public corporations, and that they submit their reports to audits by a certified public accountants.
Pointing to the "stack" of NLPC's union corruption reports just for 2002, McConnell recounted 17 of those crimes, then revealed that the DOL's Office of Labor-Management Standards reported an average of 12 indictments and 11 convictions of union fraud per month over the last four years. "We have a choice," McConnell concluded: "We can extend to American workers the same financial protection afforded corporate shareholders [since 1933], or we can extend to unions the ability to continue to pilfer and profit off the workers' money. That is the choice."
he Senate voted, 55-43, to table McConnell's amendment without voting on it.. The complete text of Sen. McConnell's speech can be read on NLPC's web site at http://www.nlpc.org/olap/020710mc.htm
BOILERMAKERS (IBB)
Ex-Green Bay Boilermaker Boss Confesses to $61K Embezzlement
Frmr Secy.-Treas. David Dobry pled guilty on July 2 to embezzling $61,510
from Lodge 177 of the Intl. Bhd. of Boilermakers in Green Bay, Wisc. Dobry's
plea came in the U.S. Dist. Ct., E.D. Wisc., before Chief Dist. Judge J.P.
Stadtmueller (Reagan). The Secy.-Treasurer of Lodge 177 from 1987-99
was indicted on Feb. 2 for the embezzlement, and for falsifying the union's
LM-3 financial disclosure form filed with the U.S. Dept. of Labor.
According to the prosecutor, Asst. U.S. Attny Erica O'Neil, that charge
will be dropped at Dobry's sentencing.
Dobry began his embezzlement in 1994 to pay for his heavy alcohol and cocaine usage. He wrote checks from the union's account to himself, sometimes without a second signature as required, other times using the signature stamp of the frmr Lodge President, Delbert Watzka. [U.S.A.O. E.D. WI, DOL]
HOTEL EMPLOYEES & RESTAURANT EMPLOYEES (HERE)
Hawaii Businesswoman Pleads Guilty to Embezzling Union Member Benefits
On June 17, Roberta Cabral pled guilty in a Honolulu federal court
to defrauding a non-profit organization established to benefit members
of HERE Local 5 and the Intl Bhd. of Teamsters.
First, Cabral admitted to not filing tax returns for $50,000 in commissions she received in 1994 for her role in a $10 million investment made by the union non-profit, Unity House, Inc. She laundered the commissions through a British Virgin Islands corporation she controlled and used for the concealment of her income.
Second, she admitted to participating in a scheme to defraud Unity House with her now deceased co-defendant Roderick Rodriquez. According to the plea agreement, Cabral and Rodriquez a conspired to "pad" the budget of a one-hour television project funded by Unity House entitled "Heavenly Road", later known as "Blue Hawaii", for which she was to receive a kickback of $150,000. Cabral also pled guilty to two more counts of tax evasion for 1992-93. She was indicted on April 25, 2001, after a joint investigation by the Honolulu office of the U.S. Dept. of Labor's Office of Labor-Mgmt. Standards, the IRS and FBI.
Cabral is scheduled to be sentenced by visiting Sr. U.S. Dist. Judge Manuel L. Real (U.S.D.C. Cent. Dist. CA, Johnson) on November 1. At that time, Cabral faces a maximum penalty of up to five years imprisonment on each of the two counts of income tax evasion (26 U.S.C. § 7201) and one count of wire fraud (18 U.S.C. § 1343). Each of these charges carries a potential fine of up to $250,000 and, except for the wire fraud charge, the costs of prosecution. For her willful failure to file a federal tax return, Cabral faces a maximum term of one year of imprisonment and a $100,000 fine. [U.S.A.O. D.HI, DOL]
GOVERNMENT EMPLOYEES
Ex Puerto Rican Adminr. Arraigned for Embezzling Funds from Govt
Union
Abdiel Navarro, frmr administrator of the Union General de Trabajadores
(UGT), was arrested, arraigned and pled not guilty on July 1 to eight counts
of embezzlement and falsifying records. His bond was set at $50,000 in
the U.S. Dist. Ct. for Puerto Rico. He was indicted on June 26 after an
investigation by the Atlanta office of the U.S. Dept. of Labor's Office
of Labor-Mgmt. Standards.
Navarro worked for UGT from April 1994 to December 1999, first as Ofc. Administrator, then as Union Administrator. During that time, according to the indictment, Navarro stole $35,700 from the UGT's Benefit Plan, General Fund and credit cards. His alleged embezzlement took the following forms: $2,520 in unentitled vacation days from the Benefit Plan, $6,815 from the Benefit Plan in claimed withholdings from his paychecks that were not actually deducted, $11,221 in cashed checks from the Benefit Plan, $7,207 in fraudulent reimbursements from the General Fund, $3,046 in personal purchases from the UGT's Visa credit card, and $4,942 in personal purchases from the UGT's Office Max credit card. Allegedly, Navarro also created false documents to justify his fraudulent vacation benefits, checks and reimbursements. [U.S.A.O. P.R., DOL]
STEELWORKERS (USW)
Va. Union Officials Confess to Stealing from Disaster Relief Fund
Four frmr officials of Steelworkers Local 9336 pled guilty on July
12 to stealing more than $17,000 from the union and a disaster relief fund
for workers affected by an explosion at a metal foundry that killed three
people and left the rest jobless. A fifth defendant did not appear in the
U.S. Dist. Court in Roanoke, Va., and was at large.
Of the $22,500 raised after the explosion at Intermet Corp.'s New River Foundry in Radford, the ex-local president, William Fricker, ex-president and vice president Edward Ramsey, ex-financial secy. Joseph Burress, and ex-grievance cmte. chair Rhoda Creed, and Elizabeth George stole more than $10,000. George, also charged with approving $900 in unauthorized payments to her companion, Robert Martin, is still at large.
In addition to the relief fund, all but George also pled guilty to claiming some $10,800 as time spent on union business while collecting paychecks from Intermet for the same time. The frmr officials face up to five years in prison and fines as high as $250,000 for each of the three counts of conspiracy and embezzlement. [Wash. Post 7/14/02]
UNION DEMOCRACY
NJ Fed. Ct. Orders New Election for Postal Wrkrs Local
On June 27, 2002, the United States District Court for the District
of New Jersey granted the Department's motion for summary judgment concerning
the April 2000 election of officers in the North Jersey Area Local of the
American Postal Workers Union. The court found that the local violated
Section 401(g) of the LMRDA by making two mailings to the membership at
union expense and on union letterhead. One mailing was laudatory of the
incumbents and critical of an opposing candidate and the other "provided
gratuitous and damaging material" about the opposition candidate.
The court held that all members of the opposing candidate's slate are entitled
to a new election under the supervision of the Secretary of Labor. The
court case resulted from an investigation by the OLMS New York District
Office. [DOL]
HOTEL & RESTAURANT EMPLOYEES (HERE)
Buffalo Boss Makes Restitution to Pension Fund She Helped Clean
Out
On June 21, Mrs. Ervolino was sentenced to a $5,000 fine on top of
the $144,470 she had already paid back to the Hospital & Nursing
Home Council (HNHC) in Buffalo, NY. She was also sentenced to one
year probation and 150 hours of community service [U.S.D.C., W.D.N.Y.],
and she agreed to a 13-year bar on employment by a union or union pension
fund. In exchange for her March 22 guilty
plea and restitution, the U.S. Attny agreed to drop all remaining charges.
She specifically pled guilty to embezzling $1,513 from the HNHC to pay
her husband's life insurance premium.
The HNHC, now defunct thanks to the Ervolinos, was chartered by Local 4 of the Hotel Employees & Restaurant Employees union (HERE), Local 168-39 of the Laundry & Dry Cleaning Union, and the Service Employees Intl. Union (SEIU). Using the executive positions they held in HERE, the Laundry Union and the HNHC pension fund, the Ervolinos began embezzling from HNHC in 1990, ordering the issuance of checks into their personal accounts, sometimes labeling these checks as "severance pay," or "loans" to the Laundry Union, and often forging the signature of another HNHC officer on the checks. By 1996, the Ervolinos had dragged the HNHC's assets from $196,512 in the black to $178,648 in the red.
In 1999, the court-appointed monitor of HERE concluded that Frank, Anna and their daughter embezzled hundreds of thousands of dollars from HERE Local 4 and the HNHC from 1990-95. The Ervolinos "knew they were receiving full-time pay for less than full-time work and acted with fraudulent intent," the report said. "Ervolino's work habits consisted of arriving at his office at approximately 10 a.m., taking a 45-minute to an hour lunch period and leaving the office at approximately 2 p.m. or 3 p.m." Reportedly, he also took month-long vacations to Fla., in which he worked on union matters an hour a day.
Both Ervolinos were indicted by a fed. grand jury in Buffalo in May 2000. But Frank died in Nov. 2001 without ever being tried. [U.S.A.O., W.D..NY]
QUOTABLE QUOTE / HOTEL EMPLOYEES & RESTAURANT EMPLOYEES
(HERE)
Union Embezzler Complains About Losing "Accustomed Lifestyle"
"At some time during the conspiracy, the defendant, Anna May Ervolino,
stated to a person known to the Grand Jury that she hoped certain persons
‘did not expect them [the defendants] to give up the lifestyle to which
they were accustomed.'"
--Denise E. O'Donnell, U.S. Attny, W.D.N.Y., May 16, 2000
Ervolino's statement came as investigators zeroed in on her and her
late husband, Frank, for bankrupting the Hospital & Nursing Home Council's
pension fund by using their executive positions on the HNHC to embezzle
hundreds of thousands of dollars.
- - - - - -
ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
- - - - - -
EMPLOYEES WELFARE UNION (IEWU)
No. Ill. Boss Confesses to Stealing $362K from Union He Founded
Charles C. Isely, III, ex-president and treasurer of the Int'l Employees
Welfare Union (IEWU) pled guilty on July 10 to embezzlement and mail fraud.
He embezzled $362,000 from the Waukegan, Ill.-based union, which he founded
and ran from 1974 to 1998. He wrote 30 fraudulent checks totaling $225,000
from IEWU's death trust fund, and 40 checks for $108,000 on IEWU's bank
accounts. Isely used the union's funds 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. Isely
committed the crimes between 1994 and 1997.
Isely could be sentenced to more than two years in prison on October 2, according to Asst. U.S. Attny Carolyn McNiven. [Chi. Trib. 7/11/02]
SERVICE EMPLOYEES (SEIU)
NY Officials Forced to Refund Illegal Dues after Violating Federal
Settlement
Responding to charges filed by attorneys with the National Right to
Work Legal Defense Foundation, the National Labor Relations Board (NLRB)
has forced Local 200 of the Service Employees Intl Union to refund illegally
seized union dues from employees of the Marsellus Casket Company.
This is the second time the NLRB has issued a formal complaint against SEIU Local 200 in the past year. Under the NLRB's original settlement, issued in November, SEIU officials were ordered to refund the employees' dues and fees that were used for non-representational purposes. Union officials disregarded the agreement and continued illegally seizing workers' dues to pay for union politics. As part of the second settlement, the NLRB has also mandated the union must post a notice alerting workers and employees of the Marsellus Casket Company of their right to refrain from formal union membership and the payment of full union dues.
The settlement also requires SEIU union officials to notify objecting workers what percentage of their dues is being used to fund non-representational activities, including political activities. Under law, an employee may resign from formal union membership, pay a reduced fee, and further challenge the veracity of the union's figures.
The case was originally filed in July 2001 by Foundation attorneys for three company employees, Mark L. Miller, Scott Bayer, and David Sprague. SEIU officials violated the workersÆ rights established by the U.S. Supreme Court Communications Workers v. Beck decision. Under Beck, a case that Foundation attorneys argued and won, workers may halt and reclaim forced union dues spent on politics and other activities unrelated to collective bargaining. [NRTWLDF]
GOVERNMENT WORKERS (AFGE)
Ex-Treasurer Must Pay Back $28K to AZ Govt. Union
On July 3, 2002, in the Superior Court of the State of Arizona, Maricopa
County, Mary Katherine Johnson, former treasurer of American Federation
of Government Employees Local 2552, was sentenced to incarceration for
four months followed by five years probation and was ordered to make full
restitution to the union of $28,853.69. She had pled guilty on June 3,
2002, to attempted theft following an investigation by the OLMS Los Angeles
District Office. [DOL]
GOVERNMENT WORKERS (AFGE)
Indiana Official Admits to Forgery
On June 25, 2002, in Marion County (Indiana) court, Mack Dykes, former
president of American Federation of Government Employees Local 1411, pled
guilty to two counts of forgery in the amount of $7,100. He had been indicted
on March 21, 2002, following an investigation by the OLMS Cincinnati District
Office. [DOL]
GOVERNMENT WORKERS (AFGE)
NJ AFGE Boss Indicted for Embezzlement
On June 20, 2002, in the United States District Court for the District
of New Jersey, Toy Jones, secretary-treasurer of American Federation of
Government Employees Local 1012, was indicted under 18 U.S.C. 661 on charges
of embezzling in excess of $41,000 in union funds. The charges were brought
following an investigation by the OLMS New York District Office. [DOL]
STEELWORKERS (USW)
Mich. Steelworkers Official Charged with Embezzlement
On June 20, 2002, in the United States District Court for the Eastern
District of Michigan, Delbert Steward, former president of Steelworkers
Local 1279, was charged in a criminal complaint with one count of embezzling
$9,578.87 in union funds. The charges were brought following an investigation
by the OLMS Detroit District Office. [DOL]
COMMUNICATIONS WORKERS (CWA)
Md CWA official charged with Embezzlement
On June 26, 2002, in the United States District Court for the District
of Maryland, Efrain Tulier, former secretary-treasurer of Communications
Workers Local 2185, was indicted on one count of embezzling $13,467 in
union funds. The charges were brought following an investigation by the
OLMS Washington District Office. [DOL]
ELECTRICAL WORKERS (IBEW)
Dem. Chief's Shady Business Past with the IBEW
[Excerpted from Btron York's article on National Review Online: http://www.nationalreview.com/york/york071602.asp
Democratic National Committee chairman Terry McAuliffe has been a leading critic of President Bush's business dealings with the Harken Energy Corporation, as well as the president's corporate-reform efforts. "It's time this CEO, President Bush, took responsibility for his actions as a private businessman," McAuliffe said shortly after the Harken matter appeared in the press.
But even as he questions the president's credibility on the issue of corporate responsibility, there are questions about McAuliffe's own past as a private businessman ... In the late 1990s, some of McAuliffe's business ventures came under investigation by the U.S. Department of Labor, which filed suit against two labor-union officials, both of them with the International Brotherhood of Electrical Workers pension fund, for entering into questionable business arrangements with McAuliffe. Both officials later agreed to pay hundreds of thousands of dollars in penalties for their actions, and the union itself had to reimburse its pension fund by nearly $5 million.
The lawsuit that details McAuliffe's dealings with the electrical workers' pension fund is Herman v. Moore, filed in May 1999. The title refers to Jack Moore, a friend of McAuliffe's who ran the pension fund (Herman was Alexis Herman, the Secretary of Labor when the suit was filed). At the time, Moore was a long-time electrical workers' union official who had virtually unchallenged authority to choose where to invest the pension fund's $6 billion store of capital.
According to Herman v. Moore, on November 19, 1990, the [pension] fund entered into a partnership with a firm called American Capitol Management Company, which was owned by McAuliffe. The purpose of the partnership, according to the suit, was "to acquire, hold, improve, lease, operate, and sell a shopping center and various apartment complexes located in central Florida."
The suit continues:"In 1991, the limited partnership acquired the Woodlands Square Shopping center and five apartment complexes through $39 million in capital contributions from the fund. American Capitol Management Company made one capital contribution of $100....At the outset, each partner held a 50-percent interest in the limited partnership. If the limited partnership's properties sold at a profit, American Capitol Management Company and the fund would share in the gains according to their percentage partnership interests."
The next year, according to the suit, McAuliffe proposed another venture for the partnership: the purchase of a parcel of land near the apartment complexes which could be divided up into more than 500 single-family lots. Instead of another lopsided buying arrangement, the fund came up with the idea of lending McAuliffe up to $10 million to buy the property, which was known as Country Run. As collateral, McAuliffe put up the Country Run land itself, plus his 50-percent interest in the apartment/shopping center venture.
But not long after the Country Run loan was finalized, McAuliffe got out of the apartment/shopping-center deal. According to the lawsuit, in June 1992 the pension fund paid McAuliffe $450,000 for a portion of his 50-percent share. Then, in August 1993, the fund paid McAuliffe $2,000,000 for most of the rest of his share — for a total return of $2.45 million on that original $100 stake.
In the years that followed, the Country Run project went nowhere; according to the lawsuit, by the end of 1996, lot sales to homebuilders were less than half the number that had been predicted. The pension fund's loan to McAuliffe, according to the suit, "was in default continuously from December 1992 until October 1997." In 1997, McAuliffe found another partner and bought out the loan. In the end, Labor Department investigators found, the pension fund got a relatively meager return on its money — significantly less than it would have earned in a more conservative investment.
On October 16, 2001, Jack Moore and another official named in the suit agreed to pay six-figure penalties for their role in the McAuliffe ventures, and the electrical workers union was forced to reimburse the pension fund for its officers' failure to act "with the care, skill, prudence, and diligence...that a prudent person acting in a like capacity and familiar with such matters would use." McAuliffe was not charged with any wrongdoing; his $2.45 million payday, while a violation of common-sense norms of business propriety, did not break any laws.
A Democratic-party spokeswoman dismisses suggestions that McAuliffe's record might damage his credibility. "First of all, Terry McAuliffe isn't president of the United States," says the DNC's Jennifer Palmieiri. "He doesn't have the responsibility or the ability to restore confidence in the markets."
Nevertheless, McAuliffe's business career might attract increased scrutiny should he continue his high-profile criticism of the president's business history. Already there have been mentions of McAuliffe's extraordinarily well-timed investment in the now-bankrupt Global Crossing, in which McAuliffe invested $100,000 and made $18 million.
LONGSHOREMEN (ILA)
NYC Mob "Enforcer" in ILA Denied Bail
Federal Judge Fredric Block (E.D.N.Y. Clinton) denied bail on July
16 to a Gambino family"captain" indicted for infiltrating two ILA locals
in NYC and intimidating dissidents.
Anthony "Sonny" Ciccone was charged last month with intimidating ILA bosses into placing a Genovese associate on the ILA's Executive Council, as a stepping stone to the ILA presidency. Ciccone and others were also charged with intimidating trustees of the ILA's national health plan into awarding a prescription contract to a firm from which the Gambino and Genovese families then split a kick-back of approximately $400,000. Further, between June 2000 and Aug. 2001, Ciccone and others, allegedly coerced ILA Local 1 officials into following Ciccone's directives regarding the management of the local, including the placement of members in particular jobs.
At the July 16 hearing in Brooklyn, federal prosecutors cited enough wiretaps and other evidence of Ciccone's threats, that Judge Block ruled that they had shown in its "proffer" of pre-trial evidence that Ciccone was too dangerous to be released, and Block ordered that he be held without bail. [NYT, 7/17/02]
Union Corruption Update is made possible by the generous contributions from readers like you. NLPC, PO Box 6821, Falls Church, VA 22040. Thank you. Union Corruption Update is part of NLPC's Organized Labor Accountability Project which is investigating and exposing corruption 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.
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 (http://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.
Looking for a LM-2, LM-3, or LM-4 Annual Financial Report from the
Department of Labor? Visit http://www.dol-union-reports.gov.
Union Corruption Update Article Index (by Union)
Union Corruption Update Article Index (by State)
Organized Labor Accountability Project