The most important changes are proposed for the LM-2 form, required of unions with yearly receipts of at least $200,000. Under the proposal, those unions would be required to list their expenses for eight new "functional categories: Contract Negotiation & Administration, Organizing, Political Activities, Lobbying, Contributions, Gifts & Grants, Benefits, and General Overhead.

With these changes, unions would finally be forced to account for their finances in terms laid out by the U.S. Supreme Ct. in their 1988 decision, Communications Wrkrs. v. Beck. In that ruling, the Court held that forced union dues could not be spent on political and other non-bargaining activities. In addition to those direct expenses, unions would also be required to allocate the salaries of their officers and employees by the time spent on the eight functional categories.

The proposed rule defines political activities as any expenses "intended to influence the selection, nomination, election, or appointment of anyone to a Federal, State, or local executive, legislative or judicial public office, or office in a political organization, or the election of Presidential or Vice Presidential electors, and support for or opposition to ballot referenda." Also included are "political communications with members (or agency fee paying nonmembers) and their families, registration, get-out-the-vote and voter education campaigns."

Currently, unions must only report the finances of "subsidiary" organizations that are "wholly owned, wholly controlled, and wholly financed by the reporting union." To cover groups like the insurance company, Ullico--financed by several union pension funds, but not controlled by any one union--any "trust in which a labor organization is interested" with at least $200,000 in yearly receipts must be reported on a proposed new form, T-1 (Trusts Annual Report).

Boehm expressed concern about the proposed requirement of the itemization of "major" expenses paid to an individual or group within the fiscal year. The proposed rule leaves open whether unions will be required to itemize payments to individuals or groups at either $2,000, $5,000, or somewhere in between.

"Unions already have to report PAC expenses of at least $200 to the Federal Election Commission," Boehm said, "so they ought to be able to report them to the Labor Department. And it's very worrisome that union bosses could steal up to $5,000 a year for a decade and never have to account for it under the proposed rule."

Individuals and groups have until Feb. 25 to send their comments on the proposed rule to the Labor Dept. Comments should be sent to Victoria A. Lipnic, Assistant Secretary for Employment Standards, U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5605, Washington, DC 20210. Comments may be transmitted by e-mail to FormLM2-comments@dol-esa.gov or by facsimile (FAX) machine to (202) 693-1340. To assure access to the FAX equipment, only comments of five or fewer pages will be accepted via FAX transmittal, unless arrangements are made prior to faxing, by calling the number below and scheduling a time for fax receipt by OLMS. Confirmation of receipt can be made by contacting (202) 693-0122. [DOL 12/27/02]

TEACHERS (AFT)
DC Teacher Sues Union Hierarchy as Investigation Continues.
A high school history teacher on Dec. 27 asked a fed. judge to throw out his local union's executive bd. for failing to prevent several years of alleged embezzlement by the union's president and two other officers. The teacher, Nathan Saunders, also asked Judge Emmet G. Sullivan (U.S.D.C., DC, Clinton) for a restraining order against the 21-member ex. bd. of the Washington Teachers Union (WTU) and its parent union, the Amer. Fedtn. of Teachers (AFT). A hearing is scheduled for Jan. 7.

Saunders was one of many teachers who saw a deduction of $160 from his paycheck for union dues last summer when only about $20 was expected. Saunders contacted the WTU several times to try and resolve the overcharge, but was rebuffed. Finally, officials from the AFT began a probe which has now expanded into a federal investigation of WTU president Barbara Bullock, chief asst. Gwendolyn Hemphill and treasurer James Baxter. The three are alleged to have stolen some $2 million from the WTU since 1995.

Local AFT affiliates are required to submit an audit of their finances to the natl. headquarters every two years. But the WTU never submitted an audit under Bullock's reign, and Saunders blames both the WTU ex. bd. and the AFT for failing to properly oversee the officers' actions.

Fed. investigators have retrieved hundreds of expensive clothes, shoes, artwork and electronics allegedly bought with union dues by the three officers, but prosecutors have yet to file formal charges against the three, who have been forced to resign their offices by the AFT. [Washington Post 12/31/02]

GOVERNMENT WORKERS (AFSCME)
PAC Pays $60K Penalty for Lack of Disclosure
Officials of the Amer. Fedtn. of State, County & Municipal Employees on Sept. 19 paid a $60,000 penalty to the Fed. Election Commission (FEC) for failing to disclose spending by their political action cmte. (PAC) on non-federal campaigns.

From 1995 through 2000, the PAC, Public Employees Organized to Promote Legislative Equality (PEOPLE) failed to disclose $10,092,568 in transfers from its accounts for federal campaigns to those set aside for state and local races, thus falsely inflating their claims of how much cash they had on hand. In Oct. 2000, PAC officials notified the FEC of the false reporting, and eventually corrected their reports from January 1995 to Sept. 2000. After receiving the penalty payment , the FEC voted unanimously on Sept. 25 to conclude the case. [FEC MUR 5270, 9/25/02]

LONGSHOREMEN (ILA)
Lawyer Claims Indicted Local NJ Chief will Run Clean Union
Fighting efforts by fed. prosecutors to take over a local union described as "a hospitable environment for mobsters," natl. union officials claim to have taken over and already cleaned up the Bayonne union. The current president of Local 1588 of the Intl. Longshoremen's Assn., John Timpanaro, stands indicted by NJ prosecutors on charges of collecting cash for favored jobs. But the lawyer for Local 1588, Ralph Lamparello, claims that the state's indictment against the reputed Genovese crime family associate "is going to be dismissed." Meanwhile, ILA Vice President John D. Baker claims to have already taken action to clean up the mob-riddled local, and that the proposed fed. takeover is unnecessary.

In 1992, The U.S. Attny. agreed to settle a racketeering lawsuit against 1588, based on the replacement of two mob-controlled officers, and a promise by the new officers to keep organized crime out of the union. In fact, both would later admit that a Genovese associate ordered the two to run for union office, then continued to control the union until all three were convicted in Dec., 2001 of embezzling close to $2 million.

Fed. Dist. Judge John Martin (S.D. NY, G.H.W. Bush) is scheduled to hold a hearing on Jan. 16 on U.S. Attny. James B. Comey's motion for the appointment of an adminsistrator to run the union, free of mob influence. [Jeresy Journal 12/30/02]

Ex-Trustee Sentenced for Fleecing Indiana Local's Pensions
John Dunsmoor was sentenced in a South Bend fed. ct. (U.S.D.C. S.D. IN) on Dec. 22 to 18 mos. in prison, and ordered to pay $2.05 million to the union pension & benefit plans he stole from, beginning in 1993.

Dunsmoor falsely misrepresented himself as an investment adviser and licensed attny. to Local 1969 of the Intl. Longshoremen's Assn. in Portage, Indiana. In ‘93, he and his accomplice, Michael Daher, persuaded the Local to invest more than $3.5 million in two pieces of property in Mesquite, Nev., which the U.S. Dept. of Labor later concluded was highly inflated. Dunsmoor later swindled another $10,000 from the local union by charging legal fees to recover what he claimed were misspent funds.

Eventually, local members who retired, then found there was no money for them in the pension plan, brought the scheme to light. DOL is suing a number of other trustees for approving the payments to Dunsmoor and Daher, who is already serving a 41 month sentence for his role in the fraud.

POLICE UNIONS
Ex-Orange County Receptionist Charged with Embezzlement
Tamara Sanchez pled not guilty on Dec. 23 to embezzling $108,000 from the Assn. of Orange County Deputy Sheriffs, allegedly to "fund her shopping," acc. to a spokeswoman for the Dist. Attny.

The wife of a Los Angeles County deputy, Sanchez allegedly stole the funds between Feb. 1, 2001 and Nov. 30, 2002, while she worked as a receptionist for the 1,850-member union. Reportedly, she forged signatures and misused a singnature stamp to modify about 80 checks from the union's general acct., not the acct. set aside for families of fallen deputies. Police arrested her on Nov. 19. Union president Wayne Quint fired her shortly after, and she was formally charged with grand theft and falsification of records on Dec. 19. Sanchez faces a maximum punnishment of 5 yrs., 8 mos. in prison if convicted. [Orange County Register 12/21/02]

LABORERS (LIUNA)
Ex-Texas City Secy. Pleads Guilty to Embezzlement
On Dec. 12, 2002, in the U.S. Dist. Ct. in Houston (S.D. TX), Cheryl Rowe, frmr. secy. of Local 80 of the Laborers Intl. Union of N. Amer., pled guilty to one count of embezzling $93,430 in union funds. She had been indicted on March 15, 2002, following an investigation by the New Orleans branch of the U.S. Ofc. of Labor-Mgmt. Standards and the Department of Labor's Ofc. of the Inspector General. [DOL OLMS 1/2/03]

GOVERNEMENT WORKERS (AFGE)
Ex-Officer Charged with Embezzling from Crane, IN, Union
On Dec. 16, 2002, in Martin County (IN) Circuit Court, Joetta A. Axe, secretary-treasurer of Amer. Fedtn. of Govt. Employees Local 1415, was charged in a one-count information with the theft of $10,232.62 in union funds following an investigation by the Cincinnati branch of the U.S. Ofc. of Labor-Mgmt. Standards. [DOL OLMS 1/2/03]

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ADDITIONAL BRIEFS NOT INCLUDED ON THE FAX EDITION OF THIS UNION CORRUPTION UPDATE:

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IRON WORKERS
Hung D.C. Jury Leads to Dismissal of Embezzlement Charges
On Dec. 11, 2002, in the U.S. Dist. Ct. for the Wash., D.C., federal prosecutors decided not to seek a new trial against ex-Intl. Assn. of Iron Wrkrs. official LeRoy Worley. A jury's failure to reach a verdict caused a mistrial to be declared on Nov. 15, 2002.

Worley and former Iron Workers President Jake West were the subjects of a superceding indictment handed down by a fed. grand jury on August 7, 2002, that accused both men of funneling illegal payments to Worley, totaling more than $217,000, from the union pension plan for salary and expenses after Worley retired. The indictment also listed more than $37,000 for a pension that Worley was not entitled to receive.

West pled guilty on Oct. 25, 2002, to one count of embezzling from an employee pension benefit fund and one count of making a material false statement in exchange for the remaining charges against him being dropped after sentencing. The charges had been brought following an extensive, joint investigation by the Washington branch of the U.S. Ofc. of Labor-Mgmt. Standards, the FBI, and the U.S. Department of Labor's Pension and Welfare Benefits Admin. [DOL OLMS 1/2/03]

UNION DEMOCRACY
U.S. Dept. of Labor Files Suit Against Puerto Rican Union's Misuse of Discipline to Quell Dissent
On Dec. 20, 2002, the Secy. of Labor filed suit to force a new election for officers of a Puerto Rican union, charging that the local hierarchy unfairly disqualified three challengers through a misuse of internal union discipline.

According to the lawsuit, filed in the U.S. Dist. Ct. for Puerto Rico, the Sindicato De Guardias De Seguridad conducted an election for officers on Dec. 18, 2001. Three challengers were disqualified from running or voting on the basis of disciplinary procedures in which no specific charges were brought, the three were not given enough time to prepare a defense and little, if any, evidence was presented at the hearing. According to the DOL, the Sindicato hierarchy violated the three challengers' rights under the Landrum-Griffin Act of 1959 [29 U.S.C., Sec. 411(a)(5)].

DOL attnys. are seeking a new election, supervised by DOL

ELECTRICAL WORKERS (IBEW)
Ex-Secy.-Treasurer Pleads Guilty to Embezzlement in Tenn. Fed. Ct.
On Dec. 18, 2002, in the U.S. Dist. Ct. for the Middle Dist. of Tenn., a plea agreement was filed in which Robert "Blackie" Emery, Sr., former secretary-treasurer for Local 429 of the Intl. Bhd. of Electrical Wrkrs., pled guilty to one count of embezzling approximately $5,200 from Local 429 and one count of failure to file a required officer report, Form LM-30. The charges were brought following an investigation by the Nashville branch of the U.S. Ofc. of Labor-Mgmt. Standards. [DOL OLMS 1/2/03]

GOVERNMENT WORKERS (AFGE)
Border Patrol Union Chief Charged with Embezzlement
On Dec. 10, 2002, in Kern County, California Superior Court, a 5-count criminal complaint was filed charging Mark D. Marquez, president of American Fedtn. of Government Employees Local 2730 (which represents U.S. Border Patrol Agents), with embezzling $1,297.14 in union funds. The charges were brought following a joint investigation by the Los Angeles branch of the U.S. Ofc. of Labor-Mgmt. Standards and the U.S. Dept. of Labor's Ofc. of the Inspector General. [DOL OLMS 1/2/03]

GLASS WORKERS (GMP)
Ex-Trustee Sentenced in Minn. State Ct.
On Dec. 9, 2002, in Winona County (Minnesota) District Court, Jeffrey J. Schueler, former trustee of Glass, Molders, Pottery Plastics & Allied Workers Local 63B, and former chairman of the Badger Foundry unit of Local 63B, was sentenced to 96 hours of community service, fined $300, ordered to make restitution totaling $9,422.82 to Local 63B and other parties, and placed on 10 years probation. Schueler pled guilty on October 28, 2002, to one count of check forgery in excess of $2,500 after being charged on June 14, 2002, with two counts of check forgery and one count of theft in relation to the embezzlement of $7,743 in union funds. The charges were brought following an investigation by the U.S. Ofc. of Labor-Mgmt. Standards Minneapolis Resident Investigator Office. [DOL OLMS 1/2/03]
 

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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