When contractors shortchange union benefit funds, it often involves help from at least someone up the union hierarchy. Gerardo and Vincent Fusella, Jr., owner-operators of a New Jersey-based trucking company, appear a classic case of paying a union boss to look the other way. On December 22, the two brothers were charged in Brooklyn, N.Y. federal court with various crimes, including embezzlement, mail fraud and tax evasion, after being indicted by a grand jury the previous day. The 31-count indictment accuses the pair, among other things, of withholding wages and benefits to members of International Brotherhood of Teamsters Local 282 and of embezzling from the union’s benefit funds. The total take is estimated at more than $1 million. Neither defendant yet has filed a plea.
Teamsters Local 282, based in Lake Success, Long Island, N.Y., is no stranger to scandal. Indeed, as Union Corruption Update has noted, for decades it served as a virtual branch office for the Mafia, initially for the Lucchese crime family and then for the Gambino family. Those mobster days are over (one only can hope), but apparently this remains a union where a man can be bought. At least the Fusellas thought so. Gerardo and Vincent Fusella, respectively, age 36 and 30, each a resident of East Hanover (Morris County), N.J., were trucking contractors who specialized in transporting debris between construction sites and landfills. During 2007-08, the pair, on behalf of their East Hanover-based company, the Fusella Group, LLC, entered into a collective bargaining agreement with Local 282, so as to be eligible for lucrative subcontracting work. One of the resulting projects involved hauling dirt and debris from the World Trade Center reconstruction site in Lower Manhattan. That’s when the brothers allegedly got greedy.
Federal prosecutors charge that during 2007-09 the Fusellas, in violation of the bargaining agreement, willfully avoided paying required hourly wages and scheduled contributions to union welfare, pension, annuity, job training, vacation, and sick leave funds. The contractors accomplished this by allegedly submitting false certifications that they had paid full wages and benefits, getting some help from within the union by paying off an unnamed union shop steward to hide the true work hours of drivers in order to skirt requirements, and then, starting in 2008, shifted assets of that company to a nonunion firm, Alpine Investment Group, to avoid making benefit contributions. Moreover, they embezzled more than $1 million of that money in 2009. It’s hard to avoid concluding that Alpine faciliated a double-breasting (i.e., union-nonunion dual shop) operation so that the Fusellas could at once avoid mandatory contributions and run a private slush fund. According to the indictment, the Fusella Group and Alpine used the same drivers, mechanics and office employees.
In addition to pocketing funds intended for Local 282, the Fusellas reportedly also evaded payroll and income taxes. The brothers falsely classified truck driver employees as “independent contractors.” They also failed to properly report salary payments to officer workers and mechanics, claiming instead these payments were deductible business expenses. The evasion of Social Security payroll tax contributions, say prosecutors, alone amounted to more than $150,000 during 2007-09.
The indictment stemmed from a lengthy joint investigation by the U.S. Department of Labor, the U.S. Department of Transportation, the IRS, the Port Authority of New York and New Jersey, and the New York City Business Integrity Commission. “The defendants allegedly chose to line their pockets and enrich themselves at the expense of their workers,” said Robert Van Etten, Port Authority inspector general. Special Agent-in-Charge Robert Panella, U.S. Department of Labor, Office of Inspector General, added: “Today’s indictment should serve as a deterrent to those who would defraud unions and their employee benefit funds and submit false wage and tax documents to conceal their crimes.” Teamsters Local 282 President Thomas Gesualdi had no comment. If convicted, the Fusellas face anywhere from five to 20 years in prison on each of the 31 counts. It’s worth adding that this case might not have materialized if New York were a Right to Work state. If employees of the Fusellas had the freedom to opt out of joining the union, the collective bargaining agreement likely would have provided a far smaller pool of funds, and hence, a far smaller incentive to steal.