PLUMBERS & PIPEFITTERS (UA)
DOL Sues Union Pension Bosses over Hotel Boondoggle in Fla.
Attnys with the U.S. Dept. of Labor asked a federal judge in Ft. Lauderdale
to remove five trustees of the Plumbers & Pipefitters national pension
fund on Sept. 12. The suit, filed in the U.S. Dist. Ct. for the Sou. Dist.
of Fla., alleges a pattern of poor planning,
financial favoritism, and hundreds of millions of dollars in cost overruns
surrounding the frmr. Diplomat Hotel in Hollywood, Fla.
A Ullico subsidiary bought the Diplomat in May 1991, then closed the hotel in July, and allowed the property to fall into disrepair. In 1997, the United Assn. of Plumbers & Pipefitters (UA) approached Ullico about buying the property. On Sept. 11 of that year, the Trustees of the UA's Natl. Pension Fund, incl. Maddaloni, met to consider the acquisition. According to the DOL complaint, the trustees failed to discuss the proposed renovation, its architectural designs or budget. Yet, the trustees voted unanimously to buy the Diplomat from Ullico for $40 million, and committed $100 million of the members' pension funds to cover acquisition costs and initial redevelopment.
Maddaloni and the other trustees retained Thomas Driscoll to oversee the project, who had first recommended the Diplomat to Maddaloni. In Dec., 1997, Driscoll presented a radical new plan to implode the old hotel, rather than renovate it, then build a much larger facility. When the new plan was approved in Feb. 1998, a construction project first estimated at $277.2 million had jumped to $400 million. On April 17, the old Diplomat was imploded.
At the same time, trustee Thomas Patchell directed Driscoll to retain STI as the construction manager. Soon after, Driscoll's company retained B&R Consultants to oversee the concrete contract. According to the complaint, STI's experience was limited to renovation, and their contract contained no limits on costs, disincentives for cost overruns, and no completion date. But acc. to DOL, three brothers -- Mickey, David and James Cahill -- were respectively, an officer of B&R, general counsel of STI, and an official with the UA. In addition to the personal connections between the contractors and the union, STI paid for a trip to Italy by Maddaloni, Patchell, and their wives in Sept. 1998 to inspect marble to be used for the hotel.
In Dec. 1998, accountants with Ernst & Young estimated a rate of return on the Pension Fund's investment in the Diplomat to be 2.6% -- far below Driscoll's prediction of 13.6% in 1997. The trustees responded by transferring another $50 million of UA members' pension funds into the Diplomat. By May 1999, the projected cost had ballooned to $644.3 million.
In Nov. 1999, the independent fiduciary imposed on the project by DOL terminated Driscoll's company from the project, after finding that Driscoll collected more than $1.2 million from the Pension Fund in office space, furniture, utilities and other expenses. In Oct. 2000, the fiduciary conducted an independent appraisal of the property and estimated the project's value at $587 million, 27% below the current cost estimate of $800 million, all from the UA's pension fund.
Because the Trustees "failed to discharge their duties...for the exclusive purpose of providing benefits to participants and their beneficiaries," DOL charged them with violating the Employee Retirement Income Security Act (ERISA), U.S.C. 29, Sec. 1104(a)(1)(A) and (B). In addition to the trustees' removal, DOL is also seeking an order forcing them to restore all pension funds lost in the boondoggle. [DOL 9/12/02]
AUTO WORKERS (UAW)
Three MI Union Bosses Indicted for Extortion, Nepotism, Mail Fraud
Three Pontiac, Mich., union officials were indicted Sept. 25 on charges
that they extorted jobs and overtime payments for family and friends, then
hid the payments from the members they had a duty to represent. The
indictment comes just two months before a civil trial of the same three
officials is scheduled to begin before U.S. Dist. Judge Paul V. Gadola
(E.D. Mich., Reagan) in a suit filed by a dissident group of more than
140 workers, known as "UAW Concerns."
Charged in the criminal case are three frmr. officials of United Auto Workers Local 594, which controls the labor at Gen. Motors' truck and bus factory in Pontiac. They are: ex-president Donny G. Douglas, frmr. Skilled Trades Cmte. Man William J. Coffey, and Chief Negotiator Jay D. Campbell.
In 1995, acc. to the indictment, the three threatened not to provide any workers to GM's "mockup" truck facility unless GM hired Jay Campbell's son, Gordon, and Todd Fante, son-in-law of frmr. 594 official Clarence Powell, neither of whom were qualified in skilled trades. In ‘96, Campbell, Douglas and Coffey made a similar threat to get the same two unqualified individuals into a "validation center" being transferred from Flint to Pontiac.
In 1997, acc.to the indictment, the three officials refused to settle an 87-day strike at the main Pontiac plant until GM agreed to hire the two there as well. Allegedly, the three officials then submitted the contract ending the strike to the members for a vote without the section that detailed the hiring of Campbell and Fante. Fed. prosecutors also charge that Coffey, Campbell and Douglas received payments "in excess of $1,000" from GM during the scheme. According to the civil suit, Coffey received about $60,000, and Campbell more than $40,000.
These acts, acc. to fed. prosecutors, amount to violations of the 1947 Taft-Hartley Act (U.S.C. 18, Sec. 371), and the Hobbs anti-extortion act (U.S.C. 18, Sec. 1951). Their mailing of the contract without the new hires section to local members constituted Mail Fraud in violation of U.S.C. 18, Sections 1341, 1346 & 2. Each of the three face up to 30 years in prison and/or fines totaling $750,000. [U.S.A.O. E.D. MI 9/25/02, Detroit Free Press 9/26/02]
QUOTABLE QUOTE/ AUTO WORKERS
Union "Expert" Sees "Commonplace" in Nepotism Indictment
"In some unions, it is rather commonplace that negotiators are negotiating
for themselves while negotiating for the union."
Prof. Clyde Summers, dismissing as "difficult to prove," (acc. to reporter
Jeffrey McCracken) the indictment of three Pontiac, Mich., bosses for steering
jobs to their unqualified relatives as the price of settling a 1997 strike.
[Detroit Free Press 9/26/02]
AUTO WORKERS (UAW)
Ex-Milwaukee Treas. Pleads Guilty to Embezzlement, Falsification
The frmr. Fin. Secy./Treasurer of United Auto Workers (UAW) Local 469
pled guilty on Sept. 17 to embezzling $54,317 from the union, and concealing
those excess payments on the union's financial disclosure form.
Kim M. Connor confessed in the U.S. Dist. Ct. for the Eastern Dist.
of Wisconsin that from Jan. 1996 to Nov. 2000, she wrote $34,281 in union
checks to herself, along with $17,831 in false claims for lost work time
spent on union business. On the union's 1999 LM-2 disclosure form filed
with the U.S. Dept. of Labor, Connor claimed to have received only $11,199
from the union. She pled guilty to one count of violating U.S.C. 29, Sec.
501(c), and one count of violating U.S.C. 29, Sec. 439(b). She agreed to
pay complete restitution. No sentencing date has been set. [U.S.A.O. E.D.
WI 9/16/02]
OPERATING ENGINEERS (IUOE)/ LABORERS (LIUNA)/ GOVERNMENT
WORKERS (AFSCME)
Union-Backed "Issue Ad" PAC under Investigation Reappears in Wisc.
A Wisc. political action cmte. (PAC), backed by several unions and
under investigation for alleged illegal coordination with a state senator,
has reappeared with a new "issue ad" targeting a Republican senator.
In 2000, the so-called "Independent Citizens for Democracy" (ICD) was the second biggest spender in Wisc. leg. races behind the Wisc. Educ. Assn. Council. ICD received $202,500 from local unions, incl. $60,000 from Local 139 of the Intl Union of Operating Engineers (IUOE), $59,500 from the Wisc. Dist. Council of the Laborers Intl. Union of N. Amer., and $26,500 from the Wisc. PAC of the Amer. Fed. of State, County & Municipal Employees (AFSCME). Two ICD officials -- ex-treasurer Scott McCormick and current director Tom Boeder -- have been granted immunity in an investigation of allegations that ICD illegally coordinated its advertising with Senate Majority Leader Chuck Chvala. Ex-Chvala aide Sara Benedict sits on the ICD Board of Directors.
Despite the cloud of the investigation, ICD is sponsoring an ad targeting state Sen. Dave Zein for his support of a bill allowing Wisc. residents to carry concealed weapons. Zein charges that ICD falsely implies that the bill would allow the carrying of firearms into locations where they are currently banned altogether. The investigation is being carried out by prosecutors in Dane and Milwaukee counties. [Madison, WI, Capital Times 9/24/02, Wisc. Democracy Campaign]
STEELWORKERS
Boyfriend of Fugitive Union Boss in Va. Detained as Flight Risk
A fed. magistrate ordered Robert Martin to be held in fed. custody
after a Labor Dept. agent testified that he helped his girlfriend, Elizabeth
George, evade arrest on charges of union embezzlement. U.S. Magistrate
Judge Glen Conrad issued the ruling on Sept. 23 in the U.S. Dist. Ct. in
Roanoke, Va.
Four ex-officials of United Steelworkers Local 9336 have already pled guilty to looting more than $10,000 from a relief fund formed after a fatal explosion at the Intermet New River Foundry in Radford, Va. George is charged with taking some $4,100 in lost work reimbursements for herself and Martin when they were actually working at the foundry. The day before George and the others were indicted on Feb. 19 this year, Martin testified before a fed. grand jury. When law enforcement officials arrived at George's home to arrest her, she and Martin were gone.
On Sept. 9, state troopers stopped Martin and George on a traffic violation. But George escaped arrest when she showed a W. Va. driver's license identifying her as Maggie Bates. After later linking Martin to George as a fugitive from justice, police found them in W. Va. But while Martin was speaking to them, George snuck out of the house, took Martin's car, and hasn't been seen since. Martin is now being held for aiding and abetting a fugitive. [Roanoke Times & World News, 9/24/02]
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ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:
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STAGE EMPLOYEES (IATSE)
Expelled Buffalo Govt. Union Chief now "Cleaning Up" Stage Union
Three years after the local govt. union expelled its president, that
same man now heads the local stagehands union after dissidents ousted its
frmr. president on charges of favoritism in job assignments.
In Nov. 1999, John Scardino Jr. was suspended from the presidency of Amer. Fed. of State, County & Municipal Employees (AFSCME) Local 264 in Buffalo, after an internal audit found evidence that he had written checks to himself from the union's checking acct. In Feb. 2000, an AFSCME judicial panel convicted him on six counts of improper use of $4,421 in union funds, and barred him from union leadership.
After making restitution, Scardino ended up supervising Buffalo's garbage crews. He also continued his union involvement, first as business agent of Local 121 of the Intl. Alliance of Theatrical & Stage Employees (IATSE), then also as regional rep. of Motion Picture Studio Mechanics Local 52. This past August, Scardino was appointed trustee of IATSE Local 10 by the Intl. hierarchy. Two dissidents proved in hearings that the then-president, Randall Krautsack, and business agent Charles Avery, diverted job assignments to their families and friends, while shutting out other local members.
The attny. representing the two dissidents doubted whether Scardino could juggle all his union jobs. "I don't have a problem with Scardino," said Richard D. Furlong, "but he's got to be committed to cleaning up the union." And one of the dissidents, Bruce Beyer, has already questioned that commitment, filing charges against Scardino with the Natl. Labor Relations Bd. after Scardino called in Niagra Falls workers for a Buffalo show. [Buffalo News 9/16/02]
TEAMSTERS
Teamsters Charged with Using Corrupt Audit Firm in Pol. Spending
Disclosure
A union-abused worker today filed class-action federal charges with
the National Labor Relations Board (NLRB) against the Intl Bhd. of Teamsters
(IBT) for using a firm involved in fraudulent accounting practices to justify
the union's forced union dues demands nationwide. The charges followed
multiple guilty pleas to federal criminal charges by a partner at Thomas
Havey LLP, the nation's top union accounting firm.
Meanwhile, Congressman Charlie Norwood (R-GA), chairman of the Workforce Protections subcommittee, publicly released a stern letter to Arthur Rosenfeld, NLRB General Counsel, arguing that the audits the Havey firm conducted for 700 unions nationwide cannot be relied upon, in light of "clear evidence that the Havey firm has engaged in fraudulent and criminal activity in auditing union books and records."
Under current law, union officials must provide objecting employees with independently audited disclosure of how forced union dues are spent so the employees can determine if they are subsidizing activities unrelated to collective bargaining, including electioneering and other political activity.
In August, Thomas Havey partner Frank Massey pleaded guilty to federal criminal charges of "aiding a conspiracy to defraud the United States" by helping union officials hide on government disclosure forms how they spent over $1.5 million in union dues. Havey accountants listed union officers' expenses for alcohol, expensive dining, and golfing trips as "Office and Administrative expenses" or "Education and Publicity." These practices kept the top union officials from having to itemize the costs of these activities and thereby revealing how they spend workers' mandatory union dues.
With the help of Foundation attorneys, Mark Simpson, an employee of Shenango Presbyterian Seniorcare, filed the unfair labor practice claim with the NLRB. Until IBT union officials give objecting employees like Simpson a credible independent audit, it is impossible for them to determine if they are unlawfully being charged for activities unrelated to collective bargaining, including union politics. [NRTWLDF 9/19/02]
TREASURY EMPLOYEES (NTEU)
Ex-AZ Boss Faces Music for nearly $16K Embezzlement
Gregory Floto, ex-President of Natl. Treas. Employees Union (NTEU)
Chap. 116, was sentenced on Sept. 10 for embezzlement and falsification
in the U.S. Dist. Ct. for Ariz. He pled guilty on March 15 to filiing a
false report with the Dept. of Labor to conceal the $15,714 he embezzled
from the chapter from 1994-97. The ex-U.S. Customs inspector was sentenced
to six months of home detention, three years probation, fined $2,000 and
ordered to pay $7,714 in remaining restitution to the union. This case
was prosecuted by the Public Integrity Sec. of the U.S. Dept. of Justice,
following a joint investigation by the Los Angeles branch of the U.S. Ofc.
of Labor-Mgmt. Standards and the Tucson Internal Affairs ofc. of the Customs
Service. [DOL OLMS 9/10/02]
ELECTRICAL WORKERS (IBEW)/ SHEET METAL WORKERS
Two More Union Officials Swept up in Cap. Consultants Pension Scandal
On Sept. 5, in the U.S. Dist. Ct. for the Dist. of Oregon, Robert Mayhew
and John Lontine, ex- union pension fund trustees, pled guilty to charges
that they knowingly and willfully caused false reports to be filed on behalf
of their respective trust funds.
Both failed to disclose gifts received from Capital Consultants, LLC (CCL). CCL substantially paid the expense for Mayhew to take a hunting trip to New Mexico. Mayhew was a trustee for the Intl. Bhd. of Electrical Workers (IBEW) 8th Dist. Pension Fund, to which CCL provided investment management services.
Lontine took a fishing trip to Alaska and accepted season tickets for both the Denver Broncos and Colorado Rockies, all paid for by CCL. Lontine was a trustee for the Sheet Metal Workers Local 9 Pension Plan, to which CCL also provided investment management services. The charges were brought following a joint investigation by the Seattle branch of the U.S. Ofc. of Labor-Mgmt. Standards, the Dept. of Labor's Pension and Welfare Benefits Admin. and Ofc. of the Inspector General, the IRS, and the FBI.
RETAIL UNION (RWDSU)
Ex-FL Pres. Confesses to Embezzlement
Jack Hatch, frmr. President of a Dade City-based Retail union, pled
guilty on Sept. 18 to union embezzlement in violation of U.S.C. 29 , Sec.
501(c). Hatch entered his plea in the U.S. Dist. Ct. for the Middle Dist.
of Fla. According to the plea agreement, Hatch used credit cards belonging
to Local 43 of the Retail, Wholesale Dept. Store Union, and spent union
funds without authorization. From Nov. 1996 through March 2000, Hatch stole
over $70,000 from the union. As part of his plea, Hatch agreed to forfeit
any assets, incl. cash, stocks, bonds, certificates of deposit, personal
property and real estate, resulting from his theft. [U.S.A.O. M.D. Fla.
9/18/02]
CARPENTERS
Ex-Bus. Mgr. Charged with Embezzlement in Pensacola, Fla.
On Sept. 17, in the U.S. Dist. Ct. for the Northern Dist. of Fla.,
Geoffrey R. Barron, frmr. business manager/financial secy.-treasurer of
United Bhd. of Carpenters Local 2471, was indicted on one count of embezzlement
of $29,855 of local union funds following an investigation by the Atlanta
branch of the U.S. Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/26/02]
AUTO WORKERS (UAW)
Ex-Local Pres. Pleads Guilty in Ind. Ct. to Theft, Forgery
On Aug. 27, Priscilla Crist, frmr. President of United Auto Workers
Local 2374, pled guilty to stealing some $4,000 from the union. She entered
her plea in the Superior Ct. of Wayne County, Indiana.
From Sept. 1999 through Feb. 2000, acc. to the Cause filed by local prosecutors, Crist "exert[ed] unauthorized control over the property of the UAW Local 2374." On March 7, 2000, Crist also committed forgery on union bank records, acc. to the Cause filed on Dec. 14, 2001. According to the U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards (OLMS), Crist embezzled $4,092 from the union.
Crist was sentenced to one year in prison, all but ten days of which she will serve on probation. She must also perform 32 hrs of community service. As of publication of this issue, it is unclear whether Crist must return the full $4,092 she embezzled, acc. to OLMS, or $665 acc. to the Wayne County sentencing order. [Wayne County, Ind., Superior Ct., DOL OLMS]
Ex-Fin. Secy. in OH Pleads Guilty to Embezzlement
On Sept. 13, 2002, in the U.S. Dist. Ct. for the N. Dist. of Ohio,
Martin J. Mone, former financial secretary of Auto Workers Local 1052,
pled guilty to embezzling $6,264.97 in union funds. The charges were brought
following an investigation by the Cleveland branch of the U.S. Ofc. of
Labor-Mgmt. Standards [DOL OLMS 9/13/02]
TRANSIT WORKERS (ATU & others)
Ex-Secy.-Treas. in Penn. Charged with Embezzlement & Cover-Up
On September 3, 2002, in the U.S Dist. Ct. for the Middle Dist. of
Penn., Laura L. McClurg, former secretary-treasurer of the Amalgamated
Transit Union Local 1195, was charged in an information with concealment
of labor union records. The information charges that she concealed and
withheld records and statements required to be kept by a labor union in
order to conceal her embezzlement of $2,295 in union funds. The charges
were brought following an investigation by the Philadelphia branch of the
U.S. Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/26/02]
SHEET METAL WORKERS
Ex-St. Louis Pres. Confesses to Fraud
On Sept. 17, in the U.S. Dist. Ct. for the Eastern Dist. of Missouri,
Gregory Carpenter, frmr. president of Sheet Metal Workers Local 93, pled
guilty to falsifying union records. An information filed on August 15,
2002, charged Carpenter with the submission of fraudulent lost time claims
to his union. These charges were brought following an investigation by
the St. Louis branch of the U.S. Ofc. of Labor-Mgmt. Standards. [DOL OLMS
9/26/02]
TEAMSTERS
Ex-Bookkepper Pleads to Falsification of Records in CA
On Sept. 9, 2002, in the U.S. Dist. Ct. for the Northern Dist. of Calif.,
Cathy R. Josselyn, frmr. bookkeeper of Intl. Bhd. of Teamsters Local 853
in San Leandro, Calif., pled guilty to one count of making false entries
in union financial records, following an investigation by the San Francisco
branch of the U.S. Ofc. of Labor-Mgmt. Standards and the Dept. of Labor's
Ofc. of the Inspector General. [DOL OLMS 9/26/02]
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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