GOVT WORKERS (AFSCME)
Problems Continue at DC 37: $15 Million Stolen from Credit Union
ATMs
Some 4,000 govt and health workers took advantage of electronic breakdowns
after Sept. 11 to loot ATMs operated by the credit union used by members
of District Council 37 of the Amer. Fed. of State, Cnty. & Municipal
Employees Union (AFSCME), acc. to an indictment announced on Aug. 6 by
NYC Dist. Attny. Robert Morgenthau.
The indictments come as AFSCME officials struggle to restore DC 37's reputation after dozens of union officials "convert[ed] DC37's assets into their own personal ATM," acc. to dissident member and now Secy.-Treasurer Mark Rosenthal. A string of rigged votes on contracts and officers, and nearly $6 million in kickbacks and financial thefts, led to the conviction of more than 30 union officials in the late 90s. According to Morgenthau, 62 people were arrested on the 6th, while 39 were still being sought. Those defendants stole more than $7,500 each from the Municipal Credit Union (MCU), and have made little or no effort to repay the money. Additionally, 439 others exceeded their acct. balances by at least $5,000; more than 1,700 overdrew their accts. by at least $3,000; and more than 4,000 people overdrew at least $1,500. The employees involved are fed., state, city and heath care workers in NYC, many of whom are members of DC 37.
The opening for the ATM thefts was created on Sept. 11, when the terrorist attack on the World Trade Center damaged a nearby bldg. that housed the credit union's computers. As a result, the MCU's computer link to the New York Cash Exchange, which ensured that there were sufficient funds to cover ATM withdrawls, was lost. Credit union officials allowed ATM withdraws without the normal electronic safeguards out of deference to those affected by the tragedy. "This is a prime example of no good deed goes unpunished," said Morgenthau. Among the most egregious overdrafts: a nurse overdrew her acct by $18,111 from Sept. 18 to the end of Oct., and has never repaid any of the money: a Housing Authority worker used his credit union card for purchases at Foot Locker, Bronx BBQ, Hot Booz Liquor and the 126th St. Motel.
According to Morgenthau, the workers stole some $15 million from the credit union until the computer safeguards were restored in Nov., and credit union officials were able to trace the illicit withdraws. Reportedly, a mere "handful" of the people confronted with the evidence agreed to take out loans to repay the overdrafts. Acc. to Morgenthau, the investigation is continuing because many of the workers who overdrew their accts by less than those sought in the original indictment have also made little or no repayments. [NY County DA, 8/5/02: New York Post, 8/5/02]
POLICE UNIONS
Ex-Calif. Bay Area Chief Indicted for "Sham Charities"
A former Santa Clara County Sheriffs Lieutenant and ex-union president
was indicted August 2 for trading on the union's name to raise funds for
sham charities.
According to the indictment by a Santa Clara grand jury, Armand Tiano and 12 alleged co-conspirators engaged in grand theft, tax evasion and money laundering that involved at least $1.4 million. Among the false charities were two created after the 1998 slaying of Millbrae police officer David Chetcuti. Allegedly, Tiano and the others persuaded many people to write checks for the "Officer Chetcuti Fund" and the "Millbrae Officer Family Trust Fund." The widow, Gail Chetcuti, never received any of those funds.
In his heyday, Tiano oversaw the county jails, presided over the Santa Clara Deputy Sheriffs Assn; and twice campaigned for Sheriff. In 1993, Tiano incorporated his own fund-raising group, the Deputy Sheriiffs' Sports Assn, and contracted with two brothers, George and Matthew Kellner, who already owed the union $100,000 in charity fund-raising. The brothers then began paying off Tiano from the ostensible charity to take advantage of "his official position and contacts" acc. to the indictment.
For the next five years, Tiano and the Kellners raised funds by phone for various groups claiming police affiliation, even though Tiano, who retired in 1996, was the only police officer in these groups. California law requires any non-govt. organization with "police" in its name to have current or retired police comprising at least 80 percent of its membership.
In 1998, a local attorney contacted county prosecutors after his client agreed to make a $100 credit card donation to the "Santa Clara County Deputy Sheriff's Office," then later found eight charges totaling $800 to a similarly named group using Tiano's home address. Tiano denied any wrong-doing and offered a list of food banks, shelters, churches and athletic teams that had benefited from his operations. But when the Santa Clara D.A. contacted 13 of the charities, only one said it had ever received any funds from Tiano's groups -- $1,000.
Tiano agreed to register his group with the state Attny General's Office of Charitable Trusts. After he failed to do so, prosecutors ordered him to cease his telemarketing operations in Feb. 2000. But three days later, Tiano formed the "Police and Sherriff's Athletic League and Community Fund" and persisted in raising money, acc. to the indictment.
In 2001, Tiano was convicted of molesting two teenage girls. After serving his sentence, Tiano failed to register as a sex offender and was sentenced to 16 months in San Quentin Prison, where he awaits trial for his charity scams. [San Francisco Chronicle, 8/2/02]
LABORERS (LIUNA)
Duo of Des Moines Officers Confess to $100K plus Theft
Two frmr. officers of Local 177 of the Laborers Intl. Union of N. America
confessed in the U.S. Dist. Ct. for Sou. Iowa on July 25 to stealing more
than $120,000 from the union's local and job-training funds.
Frmr. Bus. Mgr. Fred T. Risius and ex-vice-pres. Henry A. Jannnenga began their mutual crime spree in Nov. 1999, acc. to the Stipulation of Facts in the Plea Agreement. At month's end, Risius paid a union member $16,500, supposedly for materials he had sold to the Local's apprenticeship program. The member split the cash between himself, Risius and Jannenga.
At the same time, Jannenga ordered $660 worth of pens for his high school reunion. Jannenga asked the owner of Awards & T-Shirts Specialists to "hide the charges," and the owner billed the Iowa State Laborer's Training Fund. About two years later, on Sept. 11, 2001, Risius ordered four personalized watches costing $865 from the same company and asked the salesperson to bill them as "art and screen charges" to the Local. When Risius learned of an investigation by the U.S. Dept of Labor's Office of Labor-Mgmt. Standards in St. Louis two months later, he asked the owner to "get rid" of any invoices relating to the watches.
Between December 1999 and January 2000, Risius paid $28,405 to a Des Moines construction company from the Union's Bldg. Maintenanace Fund, though the company never provided any services for the Union. The owner kept 40% of the funds, and kicked back 60% to Risius. On July 5, 2001, Risius paid $500 to the same contractor from the strike fund. By then, he had already diverted $48,185 worth of strike benefits to himself, with checks written to fictitious individuals and "cash," for two years.
In February and July of 2000, Risius used the Bldg. Maintenance Fund to buy $2,605 for a laptop computer and digital camera for the personal use of the Local's office secy. Meanwhile, back at the Job Training Fund, Jannenga used the Fund's credit card to pay his personal repair bills, clothing purchases, and personal purchases while traveling on behalf of the Training Fund and the Labor Institute for Workforce Development. In February 2000, Risius and Jannenga teamed up again to negotiate a $1,000 "credit refund" from a company laying carpet in the Local Union's apprenticeship bldg., which the two split 50-50.
By the time the Labor Dept. began its investigation in late 2001, Risius had embezzled a total of $100,060 from the Local Union, while Jannenga had stolen $20,460 from both the Local and the Training Fund. U.S. Dist. Ct. Judge Robert W. Pratt (Clinton) scheduled their sentencing for Oct. 18. Under the plea agreement, both men agreed to fully repay the funds they embezzled. They each face a maximum penalty of five years in prison and a $250,000 fine for their violations of U.S.C. 29, Sec. 501(c). [U.S.A.O., S.D. IA, 7/25/02: DOL]
OPERATING ENGINEERS (IUOE)
Ex-Bus. Agent Indicted in Pittsburgh for Embezzling Strike Funds
A federal grand jury indicted a Butler man on August 7 for stealing
more than $150,000 from his union from 1993 through 1998. John L. Dorrier
Jr., former business agent for Operating Engineers Local Union 66, in Monroeville,
is also accused of hiding his thefts from the IRS.
Beginning in January 1993, acc. to the indictment, Dorrier used his responsibility of reimbursing picketers by preparing expense vouchers for individuals who had done no picketing, then insisted on collecting the checks personally rather than having them mailed. Dorrier then allegedly forged the payees' signatures on the endorsement lines, and either cashed or deposited them into his account. To hide these payments from the IRS, Dorrier allegedly kept records of his fictitious picketers, and limited the amount "paid" to under $600 to avoid triggering the filing of 1099 tax forms. He also paid cash to relatives and friends that went unreported to the IRS. When some of the "picketers" began receiving 1099 tax forms, Dorrier paid them not to report the problem to the IRS.
According to the indictment, Dorrier obtained $137,645 in false payments
for picketing, of which he kept $41,795 for his own use. And from Aug.
‘97 to Nov. ‘98, Dorrier embezzled an additional $14,400 from the local
union's treasury. Dorrier is accused of bank fraud in violation of U.S.C.
18, Sec. 1344; embezzlement of union funds [U.S.C. 29, Sec. 501(c)]; forgery
[U.S.C. 18, Sec. 513(a)] and obstruction of tax law [U.S.C. 26, Sec. 7212(a)].
Asst. U.S. Attny Paul Hull said that Dorrier faces a maximum sentence of
208 years in prison, nearly $7 million in fines, or both. [U.S.A.O. W.D.
PA, 8/7/02]
IRON WORKERS (IAIW)
Two Intl. Union Bosses Settled Power Dispute w/ Embezzled Payoffs
A fed. grand jury in Wash. D.C. issued yet another
indictment against ex-Iron Worker officials Jake West and LeRoy Worley
on August 7. The indictment adds more than $200,000 to the amount allegedly
embezzled from the IAIW, and provides new details on the deal between West
and Worley.
West and Worley had both held offices in the Intl. Assn. of Bridge, Structural, Ornamental and Reinforcing Iron Workers since 1989 -- West as General Pres., Worley as General Secy. By 1998, acc. to the indictment, West saw Worley as a challenge to his position in the union and wanted him out of the way. In Nov. of that year, they allegedly made a deal. On the 18th, Worley resigned his position in the IAIW. At the same time, West allegedly arranged for Worley to receive more than $37,000 from the union's pension fund that Worley had not worked for the union long enough to be entitled to. Those facts were previously laid out in a May 17 indictment.
Acc. to the new indictment, West arranged in Dec. ‘98 for IAIW staff to issue $14,606 in weekly salary checks to the already retired Worley, as well as $2,450 in "per diem" business expense checks. In January 1999, acc. to the indictment, Worley demanded his 1999 "salary" and "per diem" payment in one lump sum, which West then arranged in the amount of $200,142.
West and Worley were indicted on one count of Conspiracy in violation of U.S.C. 18, Sec. 371, one count of union embezzlement in violation of Title 29, Sec. 501(c) and Title 28, Sec. 2, and one count of pension embezzlement in violation of Title 16, Sec 664 and 2. West and Worley are the 8th and 9th individuals to be snared in the fed. investigation in which other ex-Intl. officials, a bookkeeper, and an accountant have pled guilty to embezzlement and efforts to cover up the thefts. [U.S.A.O. D.C., 8/7/02, DOL, 8/14/02]
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AUTO WORKERS
Ex Secy.-Treas. Indicted for Embezzling 3/4th of OH Local's Funds
Martin Mone, ex-Secy.-Treasurer of United Auto Wrkrs. (UAW) Local 1052
in Bedford, Ohio, was indicted July 24 on one count of union embezzlement
and one count of falsifying union records. U.S. Attny. Emily Sweeney announced
the indictment, which came in the U.S. Dist. Ct. in Cleveland.
According to the indictment, Mone embezzled $6,264 from the union in 2000 by issuing checks to himself, and falsifying the purpose of the checks on their memo lines. According to the union's LM-4 financial disclosure form filed with the U.S. Dept. of Labor, Mone also destroyed the Local's financial records. That form lists the union's total receipts in 2000 as $8,429. Mone's alleged embezzlement amounted to nearly 75% of 1052's funds that year. In 2001, Local 1052 was merged into UAW Local 70, also in Bedford. The embezzlement charge carries a maximum penalty of five years in prison and a $250,000 fine, while the falsification charge carries a amaximum of on year in jail and a $100,000 fine. [U.S.A.O. N.Dist. OH, 7/24/02: DOL 8/8/02]
TEACHERS (NEA)/UNION DUES
9th Circ. Ct. of Appeals Blocks Unions Fee Demands for Undisclosed
Politicking
The Natl. Right to Work Fdtn. announced on Aug. 2 that the United States
Court of Appeals for the Ninth Circuit ruled that local affiliates of the
California Teacher Association (CTA) must provide teachers with an independent
verification of how they spend employees' forced union dues.
With the help of attorneys with the National Right to Work Legal Defense Foundation, the case was brought by San Jose teacher Kim Sheffield, and seven other California teachers, against the CTA and eight of its locals in March 2000. The Court of Appeals yesterday affirmed the U.S. District Court ruling that the locals cannot collect agency fees until they provide an independent verification of how their agency fees were calculated. Without an outside accountant's verification, non-members cannot determine whether they are being forced to pay for union activities unrelated to collective bargaining, such as the union's political agenda.
"The court's decision is a small step toward preventing teachers from getting ripped off by union officials," said Stefan Gleason, Vice President of the National Right to Work Foundation. "For too long, union bosses have gotten away with hiding their use of employees' forced union dues to support their radical political agenda."
Under the First Amendment to the U.S. Constitution as articulated in the Foundation-won Supreme Court decision in Chicago Teachers Union v. Hudson, union officials must provide independently audited disclosure of their books and justify expenditures made from forced union dues seized from teachers who have chosen to refrain from union membership.
According to the constitutional protections construed by the U.S. Supreme Court in the Foundation-won decisions of Abood v. Detroit Board of Education and Lehnert v. Ferris Faculty Association, the union may only collect compulsory dues that are proven to be spent on collective bargaining activity. Politics, lobbying, organizing, public relations, and other non-bargaining activities are explicitly non-chargeable to employees who have exercised their right to refrain from union membership.
The CTA and its national affiliate the National Education Association (NEA), are two of the most politically active unions in the country. Every year, both organizations seize millions of dollars in compulsory dues to support candidates and causes that many of their members find objectionable. Polls have consistently shown that a majority of rank-and-file union members object to having their dues spent for political activities. [NRTWLDF, 8/2/02]
TEXTILE EMPLOYEES (UNITE)
Ex-Garment Union Bookkeeper in NE Penn. Confesses to Embezzlement
Seven years after the Intl. Ladies Garment Wrkrs. Union was merged
into the Union of Needletrades, Industrial & Textile Employees, federal
courts are still dealing with the leftover corruption. On July 23, a frmr
bookkeeper for the garment union pled guilty in the U.S. Dist. Ct.
in Scranton to embezzling more than $28,000 from the union's now-defunct
district council.
Diane Lewis used her position to steal funds from the N.E. Penn. Dist. Cncl. of the Ladies Garment Union from July 1995 to August 1997. During that time, that union and the Amalgamated Clothing & Textile Workers Union (ACTWU) were merging to form UNITE. Lewis faces a maximum penalty of five years in prison, and a $250,000 fine. [U.S.A.O. M.D. Pa, 7/23/02]
CARPENTERS
Ex-Organizer Pleads Guilty to Embezzlement in Jacksonville
On July 3, in the U.S. Dist. Court in Jacksonville, Fla., Dwight West
III, a former organizer for Carpenters District Council 78, pled guilty
to a one-count information charging him with embezzling $30,343.86
from Carpenters Local 164 while serving as the appointed treasurer of the
local. He had been charged on July 12, 2002, following an investigation
by the OLMS Atlanta District Office. [U.S.A.O. M.D. Fla., DOL]
ALLIED-INDUSTRIAL WORKERS (PACE)
Illinois Boss Pleads Guilty to Embezzling $13,000
Wesley J. Sharp, ex-financial secretary-treasurer of Paper, Allied-Indus.,
Chem. & Energy Workers Int'l Union Local 647 in Des Plaines, Ill.,
was sentenced on July 29 to 36 months probation and ordered to make restitution
of $9,362 to the union that he embezzled from. Sharp had already agreed
to repay $5,000 to Local 647's corruption insurance company, Fidelity &
Deposit Co. of Md, and $4,362.86 to the union. He must also complete 100
hours of community service.
Sharp pled guilty May 6 to one count of embezzlment. According to the
plea agreement, Sharp wrote 53 unauthorized checks on the local's checking
account between Mar. 1, 1996 and Dec. 29, 1997 totaling $13,062.86. Each
check required two signatures of union officers. On 49 checks, Sharp
forged the signature of a second union officer before negotiating
the check. On the other four checks, he simply left off the second signature
but was still able to cash the check. He made all the checks payable to
himself and converted the union's funds to his personal use. [USAO N.D.
Ill.
5/9/02; DOL 8/8/02]
MACHINISTS
Ex-Secy-Treas. in NY Admits to Writing Union Checks to Self
Thomas A. Lannon pled guilty in the U.S. Dist. Ct. in Albany to one
count of union embezzlement on Aug. 8. Lannon admitted that from July 1997
to June 2001, he used his position as Secy.-Treasurer of Local Lodge 1562
of the Intl. Assn of Machinists to write checks to himself from the union's
bank accounts, and pocketing cash from union promotions such as raffles
and tee-shirts. As part of his plea, Lannon agreed to repay the $13,175
he stole from the union. He is scheduled to be sentenced in Binghamton
on Dec. 5. The charges were brought following an investigation by the Buffalo
Ofc. of the U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards[U.S.A.O.
N.D. NY 8/8/02, DOL]
MACHINISTS
Ex-Pres. Indicted for Embezzlement in Wisc.
An ex-union President in Sheboygan Falls was indicted Aug. 6 by a fed.
grand jury on four counts of embezzlement and falsification of records.
From 1995 to 1999, Steven Pautz was President of Lodge 251 of the Intl.
Assn. of Machinists. According to the indictment, Pautz stole $12,257 by
writing unauthorized checks to himself, and by making unauthorized withdrawls
from the Lodge's savings accounts. In some cases, Pautz allegedly forged
the signature of the financial secy. on the checks. The charges were brought
following an investigation by the Milwaukee Ofc. of the U.S. Dept. of labor's
Ofc. of Labor-Mgmt. Standards [U.S.A.O. E.D. WI 8/6/02, DOL]
POSTAL WORKERS
Ex-Ga. Secy.-Treas. Confesses to Embezzlement
The frmr Secy.-Treasurer of American Postal Workers Local 2695 pled
guilty on July 25 to embezzling nearly $5,000 from the union, and misusing
the union's credit card. Dee Dee Gregory Lacy entered her plea in the U.S.
Dist. Ct. in Rome, Georgia.
On one count, Lacy admitted to using her position to steal directly from the union's funds between Jan. and Oct. 2000. Then, between May 25 and June 11, 2001, Lacy made more than $1,000 of personal purchases using the union's credit card. Apart from the union thefts, Lacy also admitted to stealing from the U.S. Postal Service. In addition to the $8,772 Lacy has already repaid, she agreed on the 25th to repay another $1,300 to the U.S.P.S. and $900 to Capital One, which issued the union credit card. Lacy will be sentenced by U.S. Dist. Judge Harold L. Murphy (Carter) in Rome on Oct. 4. [U.S.A.O. N.D. GA, 7/25/02: DOL, 8/8/02]
ELECTION/POLITICS
Cuomo Caught with Contributions from Mob Associate
After criticizing his rivals for taking contributions from companies
caught in Wall St. scandals, NY gubernatorial candidate Andrew Cuomo promised
on Aug. 13 to return contributions from a mob associate of the Intl. Longshoremen
Assn.
Julius and Steven Nasso were indicted, along with 17 members of the Gambino crime family for racketeering and extortion within the ILA on June 3. Vincent allegedly joined with other monsters to intimidate trustees of the ILA's health plan into awarding a prescription service contract to a company partly owned by Vincent. Both Nassos also allegedly attempted to extort a well-known movie star and director into including Julius in his next project, and paying $150,000 to a Gambino associate for every film he made.
The two brothers also contributed $44,500 to Cuomo's campaign last year, acc. to the New York Daily News,whose questioning prompted Cuomo spokesman Peter Ragone's promise to return the contributions. [8/14/02]
TEAMSTERS
St. Louis Local Put in Trusteeship
The Intl. Bhd. of Teamsters put Local 682 in St. Louis under truteeship
Aug. 13, thus suspending all local officials from their positions, incl.
the President, R.J. "Duck" Wurst. The action came on the heels of allegations
of financial mismanagement. Under the Teamsters' constitution, a hearing
will be held within 30 days by a three-member panel chosen by Intl. President
James P. Hoffa. [St. Louis Post-Dispatch 8/14/02]
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.
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