LABOR LAW REFORM
NLPC Chair Testifies on Pension Corruption in U.S. House
NLPC Chairman Kenneth Boehm testified on how to better protect union
pensions from corruption before the Subcommittee on Employer-Employee Relations
of the Committee on Education and the Workforce on Sept. 10.
Boehm cited a March 2002 report by the U.S. Dept. of Labor's Inspector General on 357 cases of union racketeering, of which 44% involved pension and welfare plans. He then pointed to a number of particularly outrageous examples reported in UCU:
-- In Oregon, officials with Capital Consultants dispensed favors to union pension trustees, who then steered their members' retirement savings to risky investments, which were then covered with even riskier "Ponzi-like schemes." More than $100 million was lost.
-- In 1997, the Plumbers & Pipefitters Natl. Pension Fund bought the aging Diplomat Hotel in Hollywood, Fla. for $40 million. A plan to spend $100 million on restoration with investment partners eventually mushroomed to $800 million, despite an appraisal that valued the hotel's worth at only $587 million. Labor Dept. investigators found that Plumbers Union President Marty Maddaloni accepted a $12,000 trip to Italy from a contractor on the project, a clear violation of the Employee Retirement Income Security Act (ERISA).
--Several natl. union officials took advantage of their positions on the board of the union-owned insurance group, Ullico, to buy its stock before its price was set to increase. Then as that stock, highly leveraged to Global Crossing, was scheduled to decrease in value, Ullico directors sold their stock before the decrease took effect, at a personal profit. But because most union pension funds held far more shares of Ullico stock than the individual directors, they could not participate in the buyback and were forced to watch their stock plummet along with Global Crossing's.
Boehm recommended that the Congress amend ERISA to require union officials to disclose all income outside their positions as trustees. And incredibly, independent public accountants are not required to report violations of ERISA to the Labor Dept. "There is no rational justification for such a loophole if we are serious about protecting pension funds relied upon by American workers.
Boehm's complete testimony can be read on the NLPC web site at http://nlpc.org/olap/congress/020910.htm.
ALLIED INDUSTRIAL WORKERS (PACE)
Frmr. Secy.-Treas. in OH Indicted for $100K+ Theft
Barbara Ryan was indicted Aug. 5 in Toledo on charges that in her eight
years as a local Secy.-Treasurer, she embezzled $117,734 from the union.
From 1992 through 2000, Ryan was an officer with Local 626 of the Paper, Allied Industrial, Chemical & Energy Workers union (PACE), which covered employees at the BP Chemicals plant in Lima. During that time, according to Asst. U.S. Attny. Thomas Karol, she disguised financial transfers to her personal accounts as transfers between various union saving and checking accounts, and cashed checks for herself that had been intended for the union.
In addition to the union embezzlement charge, Ryan is also charged with using her position in the BP payroll dept. to make false time entries for work that she had not, in fact, performed, in violation of U.S.C. 18, Sec. 1341. Both counts of embezzlement carry the potential of $250,000 in fines and/or five years in prison. The charges, brought in the U.S. Dist. Ct. for the N. Dist. of Ohio, are the result of an investigation by the FBI and the Cleveland branch of the U.S. Ofc. of Labor-Mgmt. Standards. [U.S.A.O. N.D. OH 8/5/02, DOL OLMS]
GOVT. EMPLOYEES (NAGE) / SERVICE EMPLOYEES (SEIU)
Fed. Judge Upholds SEIU Takeover of Mass. Govt. Union
U.S. Dist. Judge Morris E. Lasker (Johnson) upheld the ouster of Mass.
govt. union boss Kenneth Lyons by its international affiliate on Aug. 29.
The Service Employees Intl. Union (SEIU) placed the Natl. Assn. of Govt. Employees (NAGE) under trusteeship in Nov. 2001, after Lyons was accused of altering and destroying records relating to meals he paid for with James Hartnett, undersecy. of the Mass. Div. of Admin. and Finance, and the state's chief labor negotiator. Under Mass. ethics laws, public employees are barred from accepting or soliciting gifts and/or meals valued at $50 or more from business associates.
Judge Lasker found that the SEIU did not intimidate other NAGE officials into agreeing with the trusteeship. An election for NAGE president is scheduled for mid-September. [Boston Herald 8/30/02]
AIR LINE PILOTS / UNION DUES
Pilot Union Forced to Return nearly $700K in Illegal Dues
In response to legal action brought by attorneys with the National
Right to Work Legal Defense Foundation, the Airline Pilots Association
(ALPA) union is returning $672,000.00 in dues and interest to 330 non-union
airline employees.
The settlement brings to close a long-running case that reached the United States Supreme Court. In addition to returning the dues money, the ALPA officials are required to change the accounting procedures they use to determine how much non-union employees pay in agency fees. These changes may reduce the difficulties faced by airline employees in reclaiming forced dues used to pay for union politics and other activities unrelated to collective bargaining.
Although many of the airline workers represented by Foundation attorneys live in states with Right to Work laws, they are not protected from compulsory unionism. The airline industry is regulated by the Railway Labor Act (RLA), which imposes compulsory unionism despite state Right to Work laws.
The illegally confiscated dues are being returned pursuant to the settlement of two related suits brought by Foundation attorneys, Miller v. ALPA and Shackelford v. ALPA. Foundation attorneys won the Miller case at the U.S. Supreme Court with a 7-2 ruling that non-union workers cannot be forced into internal union kangaroo courts before taking their constitutional claims into federal court.
Among other things, the suit alleged that ALPA officials violated First Amendment protections as articulated in the Foundation-won Supreme Court decision in Chicago Teachers Union v. Hudson.Under Hudson, union officials must provide independently audited disclosure of their books and justify expenditures before seizing any forced union dues from employees who choose chosen to refrain from union membership. [NRTWLDF 9/4/02]
BOILERMAKERS
Ex-WI Secy.-Treas. Sentenced for $60K Theft
On September 6, 2002, in the U.S. Dist. Ct. for the East. Dist. of
Wisc., David Dobry, former Secy.-Treas. of Boilermakers Lodge 177, was
sentenced to five months imprisonment followed by five months of home detention
followed by three years of supervision. He was also ordered to pay restitution
in the amount of $61,510. He pled guilty to embezzling
$61,510 in union funds on July 2, 2002, following an investigation
by the Milwaukee branch of the U.S. Dept. of Labor's Ofc. of Labor-Mgmt.
Standards. [DOL OLMS 9/12/02]
PLUMBERS AND PIPEFITTERS (UA)
Ex-Bookkeepper Ordered to Return $57K in Embezzled Funds
On Aug. 12, 2002, in the U.S. Dist. Ct. for the East. Dist. of Arkansas,
Laverdia Ann Brockman, the former bookkeeper for
United Assn. of Plumbers and Pipefitters Local 155, pled guilty to
one count of embezzlement, and was sentenced to five years probation, including
six months in home detention with electronic monitoring, assessed $100,
and ordered to make full restitution of $57,938.46 ($9,400 had already
been paid to the bonding company). The charges were brought following an
investigation by the Dallas branch of the U.S. Dept. of Labor's Ofc. of
Labor-Mgmt. Standards. [DOL OLMS 9/12/02]
MUSICIANS (AFM)
W. Va. Husband and Wife Convicted of Embezzlement, Falsification
Former musicians union president Tom Bailey was convicted Sept. 11
of embezzlement and falsification of union records, five days after his
wife, the union's ex-ofc. mgr., unexpectedly pled guilty. Deborah Bailey's
confession before U.S. Dist Ct. Judge Charles H. Hadden II (Ford) was not
part of an arranged plea agreement with fed. prosecutors, and came as a
surprise to court officials.
Deborah and Tom Bailey had been officers of Local 136 of the Amer. Fed. of Musicians since 1985, when they were indicted in Dec. 2001 for embezzling $15,061 from the union. That same month, at a union hearing, union member Liz Nichols charged Mr. Bailey with using the union booking ofc. to promote his favorite bands, ignoring union rules and refusing to share with Nichols her own performance contracts. As a result of the indictment and hearing, the Baileys resigned their positions in the Local.
Mrs. Bailey's guilty plea might be explained by her husband's defense during the trial. His attorneys claimed that as President, he wrote only a handful of the deposit slips in question, had no time to audit his wife's work, and had no knowledge of the missing funds. But Asst. U.S. Attny. Karen George pointed out that while Mr. Bailey may have written only a few deposit slips from the union accounts, he personally made all of the deposits at the bank, and assumed several responsibilities previously handled by the union's treasurer. Under questioning, Mr. Bailey also admitted that it was his duty as union president to handle the union's bookkeeping. In the end, a jury in the U.S. Dist. Ct. for the Sou. Dist. of W. Va. found Mr. Bailey guilty of embezzlement and of filing a false financial disclosure form with the U.S. Dept. of Labor.
Mr. and Mrs. Bailey are scheduled to be sentenced on Dec. 9. [Charleston Gazette 9/10/02, 9/13/02]
ELECTRICAL AND RADIO WORKERS (UE)
Ex-Fin. Secy. Pleads Guilty to Embezzlement in IL
Michele Hearn pled guilty on August 23 in a Rock Island Fed. court
to embezzling $29,561 from her local union. According to her plea agreement,
Hearn was Financial Secy. of Local 1174 of the United Electrical, Radio
and Machine Workers union (UE) in Moline from Aug. 1995 until Feb. 2000.
Starting in March 1997, Hearn began issuing checks to herself and three
of her friends, and continued to do so after she lost her union office,
until October 2000.
Hearn pled guilty to one count of violating U.S.C. 29, Sec. 501(c). At her Dec. 20 sentencing in the U.S. Dist. Ct. for the Cent. Dist. of Ill., she faces a maximum penalty of five years in prison, a $250,000 fine and any restitution ordered by the court. [U.S.A.O. C.D. IL 9/23/02]
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POSTAL WORKERS
Ex-NC Pres. Pleads Guilty to Embezzlement, Falsification
On August 19, 2002, in the U.S. Dist. Ct. for the East. Dist. of North
Carolina, Hugh C. Credle, former president of United Postal Workers Local
1616 in Roanoke Rapids, pled guilty to making false entries in required
union records in violation of U.S.C. 29, Sec. 439(c). He admitted making
the false entries in order to conceal his embezzlement of union funds totaling
$8,163.09.
Credle had been charged in a two-count indictment on April 17, 2002, following an investigation by the Nashville branch of the U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards. As part of the plea agreement, Credle agreed to make restitution of $6,734 to the union, pay a fine of $5,000, and resign from the Halifax County School Board. [DOL OLMS 9/12/02]
GOVERNMENT EMPLOYEES
Ex Puerto Rican Adminr. Confesses to Embezzlement
On August 29, 2002, in the U.S. Dist. Ct. for the Judicial Dist. of
Puerto Rico, Abdiel Navarro, former office administrator of the Union General
de Trabajadores, pled guilty to three counts of embezzling a total of $15,005.63
in union funds, three counts of embezzling a total of $20,556.31 from a
welfare benefit plan, and two counts of falsifying welfare benefit plan
records. He had pled not guilty on July 1, 2002,
following an investigation by the Atlanta branch of the U.S. Dept. of Labor's
Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/12/02]
LABORERS (LIUNA)
Frmr. Ofc. Secy. in Tex. Sentenced for Embezzlement
On August 23, 2002, in the U.S. Dist. Ct. for the East. Dist. of Texas,
Linda G. Chargois, former office secretary of Laborers Local 80, was sentenced
to three months imprisonment followed by three years probation and was
ordered to pay restitution in the amount of $35,171.10. She
had pled guilty on April 1, 2002, and had been
indicted on January 9, 2002, following an investigation by the New
Orleans branch of the U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards
and the DOL Inspector General. [DOL OLMS 9/12/02]
PAINTERS (IBPAT)
Ex-IN Bus. Manager Pleads Guilty to Thefts from General, Training
Funds
James Clem pled guilty on Aug. 21 two counts of embezzlement of membership
dues and training funds from Local 80 of the Intl. Bhd. of Painters and
Allied Trades in Lafayette, Indiana. The former business manager and financial
secy. entered his plea in the U.S. Dist. Ct. in Hammond, Ind.
According to the indictment, Clem collected $4,053 in members' dues payments and kept them rather than deposit the cash in the union's bank account. He also issued and endorsed a check to himself for $980 from the union's general fund. Most of his thefts came from Local 80's Apprenticeship and Training Fund, where from October 16, 1997 to January 10, 1998, he issued 14 checks totaling $10,944 to himself.
Each individual theft was treated as a separate count, totaling 16, in the indictment. By pleading to one count of embezzlement from the general fund -- in violation of U.S.C. 29, Sec. 501(c), and one count of theft from the training fund -- in violation of U.S.C. 18, Sec. 664, Clem faces a maximum term of 10 years in prison and $500,000 in fines, The U.S. Attny will recommend a reduction in the "offense level" to be used in consideration of his sentencing. [U.S.A.O. N.D. IN]
POSTAL WORKERS
WA Secy.-Treas. Sentenced for Falsification of Financial Disclosure
Form
On August 29, 2002, in the U.S. Dist. Ct. for the West. Dist. of Washington,
Lenette Kendrick, former secretary-treasurer of the Rural Letter Carriers
in Clallam and Jefferson Counties, was sentenced to two years probation,
fined $500, and ordered to pay the balance of $212 in restitution for the
falsification of the union's annual financial report. Kendrick pled guilty
on June 20, 2002, following an investigation by the Seattle branch of the
U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/12/02]
STEELWORKERS
Ex-Local Pres. in MI Pleads Guilty to Embezzlement
On August 22, 2002, in the U.S. Dist. Ct. for the East. Dist. of Mich.,
Delbert Steward, former president of Steelworkers Local 1279, pled guilty
to embezzling $9,578 in union funds. He had been charged in a criminal
complaint following an investigation by the Detroit branch of the U.S.
Dept. of Labor's Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/12/02]
QUOTABLE QUOTE / TEAMSTERS
Does Indicted Bos. Teamster Boss Represent Janitors? Excerpt
from Boston Globe column by Joan Vennochi
Jimmy Hoffa is still missing. But never fear: George Cashman, the indicted
president of Teamsters Local 25, is ready to march in solidarity with Greater
Boston's janitors.
...It was visible at Monday's AFL-CIO Labor Day breakfast. Rows of tables in the ballroom at the Park Plaza Hotel were dominated by thick-waisted older men. One table, situated toward the back of the room, was home base for the younger, darker-skinned men and women, some accompanied by small children, who belong to Service Employees International Union Local 254...
And into that mix strides the ever-cocky Cashman. "This is all about helping protect the American worker and the American dream. This is where it all started -- with the immigrants," Cashman declared in response to the janitors' negotiation efforts while pledging Teamster support for any job action.
He is right in his assessment. But his message is tainted by allegations about his past methods of doing business.
Cashman's fans paint him as a passionate advocate who is never afraid to jump into the fray on labor's behalf. His critics see in him something that is closer to a stereotypical labor thug.
The Teamsters chief was indicted last January and awaits trial on charges of embezzling from his union by fabricating work hours that allowed truck drivers to collect health care benefits illegally. Those charges forced the politically wired Cashman to resign his trophy seat on the Massachusetts Port Authority board of directors...
...That is where old-fashioned union thinking gets in the way of building bridges beyond traditional union organizing. The us-against-them mentality doesn't work when "us" nods and winks at the bullying antics of Cashman...
Labor unions have been powerful forces of change for working men and women. A person can support their empowerment of Local 254's janitors and dislike their empowerment of Local 25's George Cashman. Labor's future political clout lies in its ability to understand the difference.
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.
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Union Corruption Update Article Index (by Union)
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