National Legal and Policy Center -- Organized Labor Accountability Project
 
UNION CORRUPTION UPDATE
 
April 14, 2003 -- Vol. 6, Issue 8

For Influential Leaders & Important Decision Makers:
Information on America's most corrupt & aggressive unions

 
ULLICO
Ullico Chief Tries to Trump Thompson Report with "Special Committee"
Former Illinois Gov. James Thompson found "compelling evidence" that the union boss directors of Ullico violated their fiduciary duty to the union members whose pension funds support the insurance company.  In Maryland, where the union insurance company is based, state law requires company directors to act in the best interests of the company, not themselves.  But from 1999 to 2001, 19 Ullico directors took advantage of insider stock deals disproportionally structured to favor them even as the company finished 2002 in debt, and has seen its insurance rating downgraded twice this year.

Thompson handed over his report to Ullico CEO, and former construction union boss Robert Georgine last November.  But Georgine refused to release the report to the public, and has fought efforts by U.S. labor dept. and Maryland insurance officials to see the report, claiming attorney-client privilege.  In response to the Thompson report, Georgine formed a "Special Committee" of Ullico directors who reportedly did not take part in the stock deal. 

Faced with Thompson's conclusion that Maryland securities laws were likely broken, Georgine and the Committee obtained an opinion from James J. Hanks, a Maryland corporate lawyer, claiming that no state laws had been broken in Ullico's handling of the stock trades.  With Hanks' opinion in hand, to counter the Thompson report, the special committee voted on March 28 to release the report, but also voted against requiring any of the insider profits to be returned.

But Thompson shot back at Georgine on April 4, accusing Ullico officials of lying about his report to the press.  In response to an April 2 news release in which Ullico claimed that Thompson's staff had failed to "fully explore...[the] applicable law on the breach of fiduciary duty," Thompson pointed out that the release itself characterized the Thompson investigation as "exhaustive."  Thompson also blasted Ullico spokesman John Rodgers for claiming that Thompson had found "no violation of the fiduciary duty" by Georgine or other directors, when in fact, Thompson did conclude that such violations occurred.

"It is one thing for you and your advisors to take issue with the conclusions in our Report.  It is quite another for ULLICO and its press officers to make misleading, false or defamatory statements about the Report and my staff," Thompson told Georgine by letter. [Press Release, James R., Thompson, Chairman, Winston & Strawn, 4/4/03, Associated Press, 4/1/03]

TEAMSTERS (IBT)
Mass. City Workers Revolt Against Local 25
With its president, George Cashman, set to be tried for extortion on April 22, Intl. Bhd. of Teamsters Local 25 faces a revolt by Cambridge city workers seeking to form their own union.  According to the dissidents, Local 25 has resorted to harassment and intimidation of those leading the effort.

The Local has been under federal investigation for years for allegedly extorting filmmakers in Massachusetts.  A number of former local officials have already been convicted of defrauding the union's pension fund, charges that Cashman also faces.  Now, 220 of the 330 municipal employees of Cambridge have signed a petition asking for an election on forming a new union no longer under Local 25's control. 

The employees voted for Local 25 to represent them in 1999.  But dissident leader Ron Baldasaro listed a number of local grievances against the Teamsters.  Local 25 officials will not represent any employees fired by the city, resulting in newly hired workers who must then pay a $500 initiation fee.  Cambridge workers also wonder why some of their dues are funneled to a "strike fund" when striking is illegal for public workers.  The final straw for the employees came when Local 25 officials signed a contract with the city govt. after a negotiating committee of Cambridge workers voted to reject it.

Since asking for the vote, several dissidents have reported being harassed by Local 25 militants.  Late last year, a workers with a heart infection was encircled in his car and harassed by three goons.  Shortly afterward, the employee spent nine days in the hospital.  An attorney representing the dissidents was confronted by five business agents who tried to shout him down.  And Baldasaro says that he has seen a large number of cars slowly circling the cul-de-sac of his home, then peeling off.  "Do I feel it's intimidation?  Yes," Baldasaro said. [Cambridge Chronicle 4/9/03]

OPERATING ENGINEERS (IUOE) / ELEVATOR CONSTRUCTORS (IUEC)
NY Developer, Union Boss, Plead Guilty in $10 Million Fraud Case
A Manhattan developer and two former union bosses have confessed to defrauding the taxpayers of NYC by helping to steal more than $10 million from the N.Y. Metro. Transportation Authority (MTA).  That brings to four the number of defendants who have pled guilty to the scheme in which developers overcharged the MTA for construction projects, then conspired with officials from Local 14 of the Intl. Union of Operating Engineers (IUOE), and Local 1 of the Intl. Union of Elevator Constructors, to pocket the savings from using lower-paid non-union workers.

On March 31, Frederick Contini pled guilty to his major role in the conspiracy.  In Feb. 1999, the MTA contracted with Contini to renovate a 1.2 million-sq. ft. space on Broadway at a cost of $55 million, which eventually grew to $155 million.  Contini, using a sham company called Links Construction, billed the MTA at the highest possible wage for labor to be supplied by the two unions.  In addition to the use of non-union workers, Contini also inflated the number of hours actually worked. 

Those funds were then spread around to the benefit of the co-conspirators.  For instance, the ex-treasurer of IUOE Local 14, James Roemer, who pled guilty on April 3, pocketed more $800,000 through companies he owned to buy a country home he planned to run as a bed-and-breakfast.  Also pleading guilty the week before was David Coakley, the representative for Local 1 of the IUEC.  In his plea, Contini agreed to forfeit $1 million to the government.  he faces up to eight years in prison.  Roemer agreed to serve at least four years, and as much as five years, three months, in prison, and to repay the funds he stole in the scheme. [New York Times 4/1/03, New York Daily News 4/1/03, New York Post 4/4/03]

GOVERNMENT WORKERS (AFSCME)
New DC 37 Local President Sues Ex-Boss for more than $1.5 Million
Carmen Charles, the new president of a NYC local union in the scandal-tarred Dist. Council 37, sued the ex-president for squandering nearly $2 million of union funds for 30 years. 

Last spring, James Butler lost an election for president of Local 420 of the Amer. Fedtn. of State, County & Municipal Employees to Charles.  With Butler's exit, an audit by KPMG of the Local's finances from 1995-98 finally was released.  The accountants found that Butler had spent nearly $2 million for a new headquarters that remains a dilapidated shell, and charged tens of thousands of dollars worth of his and his wife's travel expenses to the union without documentation.

In the lawsuit filed in the New York Supreme Court in Manhattan, Charles also accused Butler and the Local's executive board of spending $14,600 for alcohol at union meetings, held in hospitals where alcohol is not permitted.  In addition to the KPMG findings, Charles accused Butler and four board members of taking $767,300 in pay hikes and expense stipends without the members' required approval from 1997-2002.  In the same period, Butler took $77,860 in "vacation benefits" paid in cash, according to the suit.

In the suit, Charles is seeking $1,602,858 in restitution to the members of Local 420. [Newsday 4/9/03]

TEACHERS (AFT)
DC Man Charged with Laundering Embezzled Union Funds
Michael Martin was charged on April 2 with laundering over $480,000 embezzled from the Washington Teachers Union

According to the information, Martin and a "business partner" (identified earlier as Errol Alderman) formed a fictitious company, Expressions Unlimited, in July 1998.  For the next four years, Bullock, Hemphill and Baxter manufactured invoices for Expressions, and wrote checks to Martin for $483,543.  After depositing them into the sham company's account, Martin gave back many of the funds to Bullock and Hemphill, who allegedly used the money to pay for personal purchases with the WTU's credit card.  On the WTU's LM-2 financial disclosure form filed with the U.S. Dept. of Labor, the payments to Martin were categorized as "membership services," "per capita tax," and "printing" expenses.

Martin was charged with money laundering in violation of 18 U.S.C., Sections 1956 and 57.  He is the second person to be charged in the scandal, which appears to have cost Washington, D.C. teachers $5 million. [U.S.A.O. D.C. 4/2/03, Washington Post 4/3/03, WMAL 4/11/03]

TEACHERS (NEA)
Fla. School Bus Drivers Charge Natl. Union Bosses with Ignoring Financial Wrongdoing
Dissident bus drivers in the Tallahassee, Fla. area, are looking at an auditor's suspicion of fraud in their union as evidence of mismanagement and unaccountability in the state and national union hierarchies benefiting from their dues payments.

Members of the Collier [County] Support Personnel Union accused local officials of mismanaging more than $25,000 in October.  That figure has now grown to $36,000.  They also accused the three organizations that pocket 78 percent of their dues -- the Natl. Education Assn. (NEA), the Fla. Education Assn. (FEA) and the Amer. Fedtn. of Teachers (AFT) -- of ignoring their complaints for more than a year.  In January, several members, led by Richard Arena, were elected as shop stewards and began their own inquiry.  Among other problems, they noticed numerous ATM transactions involving hotels and other businesses in which the institution's name was written in ink on the carbon.

Then, in March, auditor Tina King of Kelley, King and Associates, informed local officials of her suspicions of fraud.  Initially, FEA officials claimed they had passed on King's March 18 letter to the State Attorney's office.  After that office denied having received the report, an attorney for the union's officers claimed they were gathering records to transfer to the state's economic crimes unit.

With the NEA, FEA and AFT getting $95,000 a year from the bus drivers and other support personnel, shop steward Pete Cullen accused state and national officials of using the Collier union as "a cash cow." [Naples Daily News 4/5/03]

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

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POLICE UNIONS
San Antonio Boss Convicted of Influence Peddling Released to Halfway House
Harold Flammia, convicted of using his position as San Antonio police union chief to steer taxpayer and union funds to favored lawyers, is serving the last five months of his four-year sentence in a halfway house.  He is still perceived as having influence through his wife, deputy police chief Rosemary Flammia.

After becoming president of the San Antonio Police Officers Assn. in 1988, Flammia negotiated a contract that funneled union dues and city taxes to a legal fund for police officers.  In exchange for $500,000 in kickbacks from one of the legal aid attorneys, Flammia ensured that the attorney kept the legal aid contract.  Flammia pled guilty to fraud and money laundering in May 1998.  He was sentenced to four years, seven months in federal prison and ordered to pay full restitution in Feb. 1999. [San Antonio Express-News 4/10/03]

CARPENTERS (UBC)
DOL Sues Carpenters Pension Trustees for Misuse of Plan Assets
On March 27 the U.S. Dept. of Labor sued the trustees of the pension and welfare plans of Local 2682 of the United Bhd. of Carpenters in Bronx, New York, for improperly using plan assets to pay unreasonable expenses in excess of $900,000.  Named as defendants in the lawsuit are current and former trustees Anthony Prezioso, Joseph Cruz, Manuel Dos Santos, Edward Orlando, and Mark Goldsmith.  Prezioso was the plan administrator. Cruz was a trustee of the Local 2682 pension and welfare plans and president of Local 2682. 

The lawsuit, filed in federal district court in Manhattan, alleges that the trustees of Local 2682's benefit plans paid the Local 2682 union an unreasonable amount for services unnecessary or not provided to the plans.  Specifically, the suit alleges that the trustees:  According to the Labor Dept., the officials violated ERISA by:
The labor dept. is seeking to require that the defendants reimburse the plans for losses in excess of $900,000 with interest, to permanently bar Cruz from serving employee benefit plans in the future, to correct any prohibited transactions with the plans, and to offset the defendants’ pension benefits to repay money owed to the pension plan.
   
The case was investigated the New York Regional Office of the department’s Employee Benefits Security Administration. [EBSA 3/28/03]

TRANSPORTATION UNION (UTU)
Former Official Charged with Obstruction in Houston Federal Court
U.S. Attny. Michael Shelby announced a superseding indictment on April 3 charging Neil Francis Babineaux, 50, of Katy, Texas, with obstruction of justice and making false declarations to a federal grand jury relating to testimony he provided to a federal grand jury in October 2001.

Babineaux, formerly employed by the United Transportation Union (UTU) in Cleveland Ohio, denied soliciting and accepting cash contributions from designated legal counsel and others seeking to be designated counsel for the UTU before and after the July 1995 election of Charles Little as UTU president. Babineaux is charged with obstructing the grand jury’s investigation into these payments and with making false statements to the grand jury. He will soon appear before U.S. Magistrate Judge Marcia Crone who will set conditions of release pending trial to be scheduled before U.S. Dist. Judge Nancy F. Atlas (S.D. TX, Clinton).  Babineaux faces up to ten years imprisonment and $250,000 fine for obstructing justice and up to five years imprisonment and $250,000 fine for making false declaration to a grand jury.

Investigation of other former and current officers of the UTU continues and is being handled by agents from the FBI, U.S. Dept. of Labor, and the IRS. [U.S.A.O. S.D. TX 4/3/03]

PLUMBERS (UA)
Frmr. Minneapolis Official Sentenced for Embezzlement
Thomas Martin, who confessed last November to misusing union funds to influence elected officials, was sentenced to two years in federal prison and ordered to pay $43,000 in restitution and a $5,000 fine on April 1.  The frmr. business mgr. of Local 15 of the United Assn. of Plumbers, Steamfitters and Pipefitters pled guilty last November to arranging free plumbing work at the home of Minneapolis city councilman Joseph Biernat in exchange for an appointment to the city's plumbers licensing board.

U.S. Dist. Judge Ann Montgomery (D. MN, Clinton) received a "large volume" of letters on Martin's behalf, but opted for a heavier sentence after prosecutors charged Martin with hindering the investigation.  In one case, Martin asked that check for plumbing work paid out of union funds done at a friend's house be backdated. [Minneapolis Star Tribune 4/2/03]

STEELWORKERS
Ex-Penn. President  Sentenced for Embezzlement
On April 1, in the U.S. District Court for the Western District of Pennsylvania, Albert Dishong, frmr. president of Steelworkers Local 2635, was sentenced to five months imprisonment, five months monitored home detention, and three years probation. He was ordered to make restitution to the union in the amount of $30,509.89 plus interest in monthly payments of not less than $847.00 plus interest. He had pled guilty on January 10, 2003 to one count of embezzling union funds. The charges had been brought following an investigation by the Pittsburgh branch of the U.S. Office of Labor-Mgmt. Standards. [OLMS 4/9/03]

GOVERNMENT WORKERS
Ex-Mass. Treasurer Charged with Embezzlement
On March 28, the Massachusetts Attorney General's Office issued a criminal complaint against Susan Bertram, former treasurer of National Association of Government Employees Local 01-195, charging her with one count of larceny over $250.  After becoming the Local's treasurer in 1995, Bertram allegedly embezzled over $21,000 from the local by withdrawing cash, writing checks and money orders to herself, and making wire transfers to her credit accounts from union funds. The charges were brought following an investigation by the Boston branch of the U.S. Office of Labor-Mgmt. Standards. [OLMS 4/1/03, Mass. AG 3/28/03]

BAKERY & TOBACCO WORKERS (BC&T)
Frmr. Fla. President Charged with Embezzlement
On March 20, in the U.S. District Court for the Middle District of Florida, Anibal Roldan, frmr. president of Bakery, Tobacco and Grain Workers Local 361, was charged in a one-count information with embezzling $14,684.28 in union funds. The charges were brought following an investigation by the Atlanta branch of the U.S. Office of Labor-Mgmt. Standards. [OLMS 4/9/03]

BRICKLAYERS (BAC)
Ex-ND Union Boss Sentenced for Embezzlement
On March 28, in the U.S. Dist. Court for the Dist. of North Dakota, Gary Halvorson, former financial secretary and business manager of Local 3 of the Intl. Union of Bricklayers & Allied Craftworkers, pled guilty to one count of embezzling $9,975 in union funds. After acceptance of his plea, he was sentenced to three years probation and 100 hours of community service and was ordered to make full restitution of $9,975. He had been indicted on February 11, 2003 following an investigation by the Minneapolis Resident Investigator Office of the U.S. Office of Labor-Mgmt. Standards. [OLMS 4/9/03]

LABORERS (LIUNA)
Frmr. Des Moines Office Secy. Confesses to Role in $100K Embezzlement Scheme
On March 27, Joleen Coughlon pled guilty to embezzlement and falsification of records, as part of a case in which over $100,000 was stolen from a Des Moines union.  Fred Risius, frmr. president of Local 177 of the Laborers Intl. Union of N. Amer., has already pled guilty to embezzlement.  Coughlon, the office secy., stole $6,445 from the union, and made personal purchases from the union's Bldg. Maintenance Fund.  She is the fifth defendant to plead guilty in the case. [OLMS 4/9/03]

TEAMSTERS (IBT)
Federal Judge Upholds Teamster Trusteeship of Northwest Attendants Union
Late in March, U.S. Dist. Judge Victoria A. Roberts (D. East. MI, Clinton) upheld the takeover of the local union representing flight attendants at Northwest Airlines by its parent, the Intl. Bhd. of Teamsters.  In approving the takeover, Judge Roberts rejected the arguments of the ousted leadership that the IBT takeover was improper.  The IBT took over the local union last July, claiming that the local leadership was not aggressively opposing an organizing effort to create an independent union, the Professional Flight Attendants Assn. [Minneapolis Star Tribune 4/3/03]

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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