Top Ten Union Corruption Stories of the Year

Though union membership as a share of  American workers continues its long decline, union officials in 2013 showed they’re not the sort to stand on the sidelines, especially in the legal realm. Organized labor was unusually active last year in using the courts and Congress to press their interests. Their ultimate weapon: immigration amnesty/surge legislation. Eight members of the Senate, four from each party (“the Gang of Eight”), solicited advice exclusively from supporters of open borders in hopes of achieving their idea of “comprehensive reform.” The Senators unveiled the measure in April and passed it by 68-32 in June, Yet the bill, deservedly, has stalled in the House. Drafted in secret, with no hearings or debate, it represents a corruption of the political process. If the since-amended proposal becomes law, the result would be a further undercutting of entry-level wages for U.S. workers. Whether sinister or simply naive, union leaders have much to answer for either way.

The immigration proposal, which would radically transform the nature of this country, was very much the doing of labor organizations, especially the AFL-CIO. The Washington, D.C.-based labor federation, working in tandem with business, ethnic and other interest groups, during the early months of 2013 developed the contents, and staffers for Sens. Charles Schumer, D-N.Y., and John McCain, R-Ariz., then smoothed out the differences. This was to be expected. Unions, as National Legal and Policy Center often has argued, have promoted explosive immigration growth since the Nineties, effectively negating their historic position.

The immigration bill was the most blatant vehicle that unions employed to import a new labor force. Union leaders, more than ever, also provided extensive backing for so-called day laborer centers, which serve as enablers for illegal immigration, especially from Hispanic countries. These centers are a subset of a type of nonprofit group known as worker centers. Now numbering more than 200 around the U.S., they behave as unions in their picketing and organizing yet are not subject to federal laws governing unions. Labor bosses see a potential win-win situation in teaming up with these centers: Worker centers gain expertise and funds; unions gain new members from unassimilated and unskilled immigrant populations. At least that’s the plan.

The union-worker center coalition operates in a legal gray area. But don’t expect the Department of Labor to discourage this practice, at least not with Thomas Perez at the helm. As a union and open borders partisan, Perez may even outdo his immediate predecessor, Hilda Solis. He served in the first Obama term as chief civil rights enforcer for the U.S. Justice Department, engaging in a number of disturbingly extra-legal moves. Before assuming that post, he had served for a while as board president of a day laborer worker center, Casa de Maryland, which has done everything possible to circumvent U.S. immigration laws. As an ethnic radical, Perez seeks a transformation of the American work force. NLPC, in strong language, made clear during the nomination process, that he was not the right man for the job. The Senate approved Perez anyway by a 54-46 margin. At least some members of Congress continue to hold his feet to the fire. Reps. John Kline, R-Minn., and Phil Roe, R-Tenn, in July wrote a letter of inquiry to the newly-sworn-in Perez, asking him to clarify the legal status of worker centers. They have not received a response.

Unions long have used the courts to authorize the use of force, subtle or otherwise, to expand their membership. But in 2013, they encountered some unexpected setbacks. In separate cases, a federal appeals court upheld a 2011 law in Wisconsin restricting the authority of public employee unions in that state to negotiate excessive salary and (especially) benefit packages. A state appeals court in Michigan did likewise in the case of the applicability of new Right to Work legislation to state civil service employees. The U.S. Supreme Court, meanwhile, heard UNITE HERE Local 355 v. Mulhall, filed by a Miami, Fla.-based union appealing a circuit court ruling that invalidated a 2004 neutrality agreement. That deal had committed the owner-operator of a Broward County dog racing track to allow the union total worksite access for organizing purposes. In return, the union contributed more than $100,000 to a group pushing a statewide ballot initiative that would allow dog tracks in Broward and Dade Counties to expand into casino gambling (the measure passed). In a separate case, the Supreme Court agreed to hear an appeal by home care workers in Illinois (Harris v. Quinn) less than enthusiastic about having their employment status converted to “state employee” for the purpose of union fee collections.

The National Labor Relations Board, the primary arbiter of the nation’s labor law disputes, itself was embroiled in a court case last year – actually, the culmination (for now) of a running legislative and court battle. The board’s revolving-door membership, exacerbated by constitutionally questionable recess appointments by President Obama in January 2012, had made the agency, normally containing five members, into a source of embarrassment. A Washington, D.C. federal appeals court, in Noel Canning v. NLRB, struck down the recess appointments of Sharon Block, Richard Griffin and Terence Flynn in January 2013, leaving only one person, Chairman Mark Pearce, as a sitting member. Obama in response named two Democrats, Nancy Schiffer and Kent Hirozawa, to replace Block and Griffin, plus two Republicans, Harry Johnson III and Philip Miscimarra (Flynn by then had departed as well). He also renominated Pearce to a full-length term. Senate Majority Leader Harry Reid in July strongarmed his colleagues into holding a same-day vote on all five nominees. All were approved either via roll-call or voice vote. The issue still hasn’t been resolved, as the Supreme Court currently is reviewing Noel Canning.

There was no shortage of corruption last year of the more traditional sort.  Among noteworthy ripoff cases, Tyrone Freeman, during the last decade a rising star of the Service Employees International Union (SEIU) and a player in Los Angeles County politics, was convicted by a jury on more than a dozen criminal counts. He eventually received a 33-month prison sentence. Cora Carper, a political action committee office manager for the Insulators union, pleaded guilty to embezzling more than $500,000. Angela Heninger, office manager of an International Brotherhood of Boilermakers job training fund at union headquarters in Kansas City, Kan., pleaded guilty to fraud in the amount of about $50,000, though her true take may have been about ten times that. Deborah DiFrancesco, a Las Vegas tax consultant, pleaded guilty to stealing $3.3 million from her clients. Of that sum, $673,000 belonged to the powerful UNITE HERE Local 226, which represents tens of thousands of hotel-casino employees in Las Vegas and elsewhere in Nevada.

Teachers unions, and not for the first time, figured prominently in embezzlement  scandals. Denise Owens (Tull), treasurer of a National Education Assocation affiliate in coastal Maryland, was found guilty of embezzling more than $400,000 in union money to cover her casino gambling losses, apparently with the tacit coverup by her colleagues. Sally Jo Widmer, president of a teachers union in upstate New York, managed to steal twice that, much of which went to cover her own casino losses. Sadly, after Widmer sensed that the authorities were onto her, she committed suicide. On a grand scale, down in Mexico, the teachers union boss known as “La Maestra” (“The Teacher”), Esther Gordillo, was arrested near Mexico City upon her arrival from the U.S. via private jet. She and her network of cronies had pilfered a staggering $150 million or more from the union over the years. A powerful political as well as labor figure, her reign of terror is no more. The jet, like her other luxury goods, was bought with stolen union funds.

Based on timeliness, impact and other criteria, the following are the ten union corruption stories (or sets of stories) from last year that mattered most, listed in reverse order:

10) Federal appeals court upholds curbs on state public employee unions. Unions in recent years have created enormous fiscal stress for state and local governments by negotiating costly salary and benefit packages. In response, some states have acted to curb public-sector union bargaining power. Nowhere has this battle more intense, or watched, than in Wisconsin, where for three years Republican Governor Scott Walker has been under public fire for his own collective bargaining and benefit curb proposal (“Act 10”). This plan, whose introduction  sparked a takeover by demonstrators of the State Capitol Building in Madison in February 2011, eventually passed the legislature and was upheld by the State Supreme Court. In June 2012, Walker survived a recall election. And this past January, the law itself survived another union-led legal challenge, when a federal appeals court in Chicago, by 2-1, ruled that Act 10 did not violate union free-speech rights. The decision overturned a lower court ruling from the previous March.

9) Mexican teachers’ union boss arrested for stealing $150+ million. It isn’t every day that a foreign case makes the top ten list. But Esther Gordillo, the longtime autocratic head of Mexico’s National Union of Education Workers, isn’t an everyday union leader. For decades, she and her network of cronies, which included family members, dominated the nation’s educational system and fleeced the union, instilling fear in any teacher, school administrator or politician who crossed her the wrong way or asked the wrong questions. But the political landscape had changed in recent years, enough at any rate to erode her reputation. This past February, Gordillo was arrested at an airport near Mexico City upon her arrival by jet from the U.S. Hopefully, American teacher unions, no strangers to scandal, will draw a lesson from this.

8) Supreme Court hears challenge to neutrality agreement in Florida – then backs away. Union officials long have used neutrality agreements during workplace organizing drives to ensure “labor peace.” Yet such peace usually serves to muzzle employers who might object to union representation. Nonunion workers don’t necessarily like this arrangement either. The most important among them right now may be a group of employees of a Broward County, Fla. dog track and casino. Back in 2004, the owner-operators of the facility and a Miami-Dade County UNITE HERE local entered into a quid pro quo neutrality pact. The dissenting employees argued that the arrangement violated the Taft-Hartley Act’s ban on unions and employers offering things of value (i.e., bribes) to each other. They won in federal circuit court in January 2012, whereupon the union appealed to the U.S. Supreme Court and won standing. The Court heard arguments in the case, UNITE HERE Local 355 v. Mulhall, in November. Update: On December 10, only a week after Union Corruption Update reported on this case, the Supreme Court, with only minimal explanation, declared, for the time being, it would not rule on the case. Certiorari, several justices argued, had been “improvidently granted,” a move suggesting the Court doesn’t see a problem with unions coercing employers into becoming business partners. The employees’ victory remains binding in states comprising the 11th Circuit – Alabama, Florida and Georgia – but remains an open book elsewhere.

7) Supreme Court agrees to hear appeal by dissenting home care workers. State governments are becoming de facto partners with public-sector union organizers, and perhaps no more so than in Illinois. This October, the U.S. Supreme Court granted standing to a group of private-sector home care providers objecting to a 2009 executive order by Gov. Pat Quinn reclassifying them as state employees, so as to bring them under a union contract and force them to pay agency fees. In a subsequent mail ballot election, employees rejected attempts at representation by a Service Employees International Union (SEIU) local and an AFSCME district council. The case, Harris v. Quinn, will test the Supreme Court’s willingness to build on its Knox v. SEIU ruling of 2012, which held that a California SEIU local could not force covered nonunion employees to pay fees to support political activism. Given the details of the current case, the Court reportedly may rule against the entire practice of public-sector unions charging nonmembers agency fees, regardless of purpose.

6) Southern California SEIU boss convicted and sentenced. Tyrone Freeman, former head of the 180,000-member Service Employees International Union Local 6434 in Los Angeles, and a related organization, until late 2008 had been a major force in area labor and political activism. But an expose that year by the Los Angeles Times revealed extensive self-dealing and fraud by Freeman, especially on behalf of family members. Months later, then-SEIU International President Andrew Stern, upon reviewing the evidence, banned him for life from union activity. A long hiatus followed, but in July 2012 a federal grand jury indicted Freeman on 15 counts. In January 2013 a trial jury convicted him on 14 charges. This past October, Freeman received a 33-month sentence and was ordered to pay restitution in the amount of $150,000, though his actual take, according to the SEIU, had exceeded $1 million.

5) Project Labor Agreement bills thwarted in two states. In October 2012, Hurricane Sandy left a trail of devastation along the Middle Atlantic coastline, especially in New Jersey, damaging or destroying tens of thousands of homes, businesses and other properties. The state’s estimated reconstruction cost of roughly $30 billion might wind up significantly higher were it not for Governor Chris Christie’s sensible veto of a union-backed legislative proposal to expand the range of large-scale public works projects requiring a Project Labor Agreement (PLA). Such agreements commit contractors to hire union labor before work commences, effectively knocking nonunion contractors out of the competitive bidding process. Several months later, in September, a U.S. appeals court upheld a Michigan law enacted in 2012 to bar the use of government-mandated PLAs. Score two victories for the merit shop.

4) Ethnic radical Thomas Perez becomes labor secretary. When Hilda Solis resigned at the beginning of 2013 as Secretary of Labor, it was hard to imagine President Obama finding a replacement more radical. But in fact he did find such a person in Thomas Perez, chief civil rights enforcer at the Department of Justice. A zealot for multiculturalism and mass immigration, Perez had amassed a highly disturbing track record at DOJ. Despite strong Republican opposition, the Senate approved him as Labor Secretary in July by 54-46. Perez, while on the job, has appeared to ignore an inquiry from two House members about the legality of ‘worker centers,’ which operate like unions but without being subject to labor laws applicable to unions.

3) Senate Democrats approve five NLRB nominees; overrides appeals court. The ongoing game of musical chairs at the National Labor Relations Board, fraught with legal disputes, came to a head. For several months last year, the normally five-member board was down to one undisputed member, Chairman Mark Pearce. And his existing term was set to expire in August. In late July, the full Senate, in the face of parliamentary maneuvering by Majority Leader Harry Reid, approved five nominees, including Pearce, all at once. Much of this drama would not have been necessary had President Obama not made three temporary recess appointments in January 2012 when Congress formally wasn’t in recess. The issue is still up in the air given that the Noel Canning v. NLRB case is now before the Supreme Court. If the High Court rules in favor of the plaintiff, the issue will be a live one again.

2) Worker centers proliferate as union fronts. They’re called worker centers. They’re not exactly labor unions. But they behave like them when it comes to  picketing employers and organizing Third World labor forces. And in practice, they flout laws governing union behavior. Unions don’t mind. Indeed, they have found an ideal stalking-horse in these nonprofit groups, now numbering more than 200 around the U.S. For example, the worker centers Fast Food Forward, Restaurant Opportunities Centers United, and OUR Walmart, are fronts, respectively, for the SEIU, UNITE HERE and the United Food and Commercial Workers. Worker centers have become increasingly brazen in their tactics – and effective in their results. Their most visible campaign lately would raise the federal minimum wage to $15 an hour, especially in the fast food industry.

1) Unions back amnesty/immigration surge legislation; ignore dissenters. No legislation has the capacity to shape America’s long-term future, and for the worse, than the “Gang of Eight” Senate immigration bill (S. 744), introduced in April and passed by the Senate by a 68-32 margin in June. Under the guise of fixing a “broken” system, this amnesty/surge surge proposal would double and possibly triple existing levels of immigration, creating almost intolerable strains on law enforcement and public benefits availability – a self-fulfilling prophecy, if ever there was one. The AFL-CIO played a central role, along with business and ethnic interest groups, in developing the bill. So eager have labor bosses been to secure passage that they have ignored credible objections by unions whose members are on the front lines of border protection and customs enforcement.

(Dis)honorable mention: Tax consultant Deborah DiFrancesco pleads guilty to embezzling $673,000 from UNITE HERE Las Vegas casino workers local, part of a $3.3 million take; Michigan public-sector unions appeal a decision that upheld a state civil service Right to Work law; Angela Heninger, manager of Boilermakers training fund, pleads guilty to fraud totaling $50,000, but her actual thefts may total $480,000; Ava Ramey, trustee for the United Government Security Officers Association, sentenced for embezzling over $375,000 in union funds; National Labor Relations Board signs letter of cooperative agreement with Mexico to promote the rights of Mexican workers in the U.S., regardless of legal status; ethnic day laborer center activists escalate campaign in U.S. cities to block deportations of Mexican workers living here illegally; Joseph Lombardo, founder of a Cleveland-area investment company, pleads guilty to forgery in order to retain a $3 million multiyear benefit contract with NBA Players Association; Teamsters oversight board charges Minnesota father-and-son local bosses Bradley Slawson Sr. and Bradley Slawson Jr. with stealing $450,000+ through various schemes; Denise Owens (Tull), treasurer of Maryland teachers local, found guilty and sentenced for embezzling $430,000; construction union goon squads in Philadelphia terrorize nonunion workers and contractors; deceased upstate New York teachers union president Sally Jo Widmer embezzled more than $800,000 from union; United Auto Workers steps up campaign at nonunion Volkswagen plant in Tennessee in order to gain union recognition, despite worker opposition; Insulators union PAC office manager Cora Carper sentenced for embezzling more than $500,000; New York City Theatrical and Stage Employees local president John McNamee Jr. sentenced for embezzling $150,000, though originally he had been charged with stealing $250,000; Laborers office manager in Rockford, Ill., Grace Rathke, pleads guilty to embezzling about $200,000.


Top Ten Union Corruption Stories of the Year (2012)

Top Ten Union Corruption Stories of the Year (2011)

Top Ten Union Corruption Stories of the Year (2010)

Top Ten Union Corruption Stories of the Year (2009)