Corrupt Coli Family, Chicago Teamsters under Fresh Scrutiny

dt_common_streams_streamserverThe good old days of union nepotism never really went away – not in Chicago anyway. According to published sources, International Brotherhood of Teamsters Local 727, long a virtual candy store for boss John Coli Sr. (in photo, on right) and extended family, has been providing lavish compensation for a law firm whose managing partner is one of Coli’s sons. The firm has been busy as of late. In July, a Cook County judge ruled that the elder Coli and Teamsters Local 700, of which he is a trustee, were jointly liable for $2.3 million for breaking a building lease. That’s not even taking into account a now-dismissed RICO suit charging the Colis and Local 727 with stiffing a funeral employee pension plan out of contributions. If the family needs allies, it knows where to look, especially Teamsters General President James P. Hoffa and Chicago Mayor Rahm Emanuel.

The Park Ridge, Ill.-based Teamsters Local 727, which claims 9,000 members, mainly bus drivers, funeral directors, trade show workers and parking garage attendants, for decades has been a dominant force in Chicago organized labor. Current boss John Coli Sr.’s late father, Secretary-Treasurer Eco James Coli, had run the local until the latter’s death in 1982. With John Coli at the helm (his official title likewise is secretary-treasurer), the union has elevated self-dealing into a high art. Back in January 2005, Union Corruption Update reported that the FBI had launched a criminal probe into allegations that Coli family members from 1993 to 2000 fleeced a dental plan that represented employees of Chicago-area undertakers. A team of investigators working for IBT internal ethics overseer Edwin Stier at the time had just released a 303-page report addressing a wide range of allegations directed at the international union and various affiliates. Stier and his entire staff already had resigned in April 2004, convinced IBT General President James P. Hoffa was interfering with investigations in Chicago and Houston. The report was an outgrowth of the 1989 settlement of a civil RICO suit filed by the U.S. Justice Department against the IBT, alleging that for decades the union had been controlled by the criminal underworld.

With respect to Teamsters Local 727, the Stier report concluded that 30 percent of employer reimbursements to union-sponsored benefit funds had gone for “grossly excessive” administrative expenses. A local contractor, the Florida-based Dental Consultants and Management, alone had received more than $4 million in payments. Were that not enough, the report cited payments from the plan to “persons and entities…having had ties to organized crime figures, been implicated in racketeering schemes or both.” These shakedowns, argued investigators, very likely reduced hourly wages. The cost of being buried in Chicago, never cheap in the first place, apparently had gone up.

The probe indirectly led to a private civil RICO suit filed on November 1, 2011 against John Coli Sr., other family members, and Local 727. The plaintiff, SCI Illinois Services Inc., a unionized Chicago-area provider of funeral services, alleged that local officials had been ripping off the company’s health, pension and education plans. It was no coincidence, noted the complaint, that three of the four appointed trustees of these plans were Coli family members. The lawsuit alleged that the union created “a scheme to defraud and extort” money from SCI by wildly inflating the value of scheduled benefit contributions. The lawsuit read:

Defendants have conspired to and have falsely and intentionally inflated audits relating to how much was owed to the Local 727 Funds, continually abusing the legitimate audit process year after year to extort as much money as possible from Plaintiff for the Funds.

Finally, after years of Plaintiff submitting to extortion and incurring enormous legal expenses, Plaintiff decided to fight instead. In litigation brought by the Funds at the control and direction of the Defendants, Plaintiff sought the deposition of key individuals, including Defendant John Coli Sr.  Coli Sr. resisted his deposition vigorously. When the court finally ordered him to attend, he did appear, but was belligerent and uncooperative, stating, “For the record, go f**k yourself.”

Predictably, the Local 727 crew filed a motion to dismiss the case. U.S. District Judge James Zagel denied the motion, stating, “The Complaint contains enough facts to infer the existence of an agreement between Defendants to violate [the federal ERISA law]. The conspiracy claim stands. Causation and injury have been sufficiently pled…” In September 2013, Judge Zagel slapped a preliminary injunction against local Teamsters who were engaging in extremely abusive behavior at funeral sites and services. Court records state that SCI “asked for preliminary and permanent injunctions due to repeated incidents of gross insensitivity and harassment directed at grieving families by Teamsters’ picketers outside of funeral homes affected by the union’s labor dispute with the company.” The Teamsters, however, had the last laugh: The court, presided over by U.S. District Judge Sara Ellis, dismissed the case in January 2014.

The Coli family’s behavior has been manifest in other ways. And recent investigative reports by the Chicago Sun-Times’ Dan Mihalopoulos have revealed that Teamsters Local 727 isn’t the only vehicle for their ambitions. This July 14, Cook County Judge Raymond W. Mitchell ruled on behalf of a property owner in suburban Des Plaines, Ill., who had filed suit against John Coli and Teamsters Local 700; the local represents more than 12,000 public employees of the City of Chicago and other local jurisdictions in Illinois. As head of the Teamsters Joint District Council 25 and as a trustee of Local 700, a Council 25 affiliate, Coli had a stake in this.

The case centered upon the union’s breaking of a lease of an area building. Back in 2010, barely a year into a 15-year rent-to-own lease on the Des Plaines building, located at 1550 Mount Prospect Road, Local 700 leaders abruptly moved the union into its current abode in Park Ridge, which happens to be owned by Local 727. The Des Plaines lease, renting for more than $16,000 a month with an option to buy for $2.15 million, had been signed by officials of Teamsters Local 726, which represents certain Chicago city workers. But Teamsters headquarters in Washington, D.C. in 2009 already had placed the corruption-ridden Local 726 under trusteeship at the urging of the three-person federal Teamsters oversight entity, the Independent Review Board; at least six members had been disciplined by the IRB. Headquarters proceeded to dissolve Local 726 and move members into Local 700. Leaders of Local 700, insisting they weren’t bound by the lease, stopped making rental payments. This triggered a lawsuit by the plaintiff, 1550 MP Road LLC.

Judge Mitchell was not impressed with the union’s behavior. Local 700, he wrote, was seeking to “escape liability.” He specifically pointed a finger at John Coli, whom he said was behind the dissolution of Local 726. Local 700 “unilaterally chose to accept all of the assets of Local 726 while representing its most significant liability, the [Des Plaines] lease…Coli’s actions are unjustified and not protected…precisely because he orchestrated an unlawful act:  a scheme to defraud a creditor.” Coli, he concluded, “alone decided to abandon” the Des Plaines offices and move Local 700 to the Park Ridge building,” the latter structure managed by John Coli’s sister, Susan Fosco. The decision to move was “plainly against the interests of the members of Local 700 and wholly unjustified.” Toward that end, Judge Mitchell ordered the local to pay the plaintiff about $2.3 million. Nearly $2 million of that would cover damages and more than $300,000 would cover legal fees and court costs. Lawyers for Local 700 still believe the case has legs. They have asked Judge Mitchell to reconsider his ruling, claiming that leaders of Local 726 lacked the authority to sign the lease on the Des Plaines building.

With a track record like this, putting the Coli clan in charge of a trusteeship would seem little short of bizarre. But then, a close working relationship with International President James P. Hoffa has its benefits. On July 30, 2014, Hoffa took control of Teamsters Local 710, removing all seven officers from the local executive board and appointing John Coli, now 55, as trustee to manage the union. A 152-page report issued not long before by the international union’s federal overseer, the Independent Review Board, had concluded that the 14,000-member Mokena, Ill.-based local, especially due to acts of malfeasance by leaders Patrick Flynn and Michael Sweeney, was rife with embezzlement and false financial reporting. The union at that point was heavily in debt, even though its records showed net assets of more than $500,000.

Meanwhile, the Coli patronage machine is grooming its next generation. One John Sr.’s sons, Joseph Coli, now 28, is a lawyer – and a lucky one. Just weeks after receiving his license to practice, his firm, Illinois Advocates, effective December 1, 2012, was retained by Local 727 as the union’s “exclusive provider of legal services.” Illinois Advocates, founded by the younger Coli that September 24 – five weeks before his admission to the state bar – has done extremely well. According to the U.S. Labor Department, the Local 727 Legal Aid Fund paid Illinois Advocates $171,000 during the first three months of the contract period. Then, during the 12-month period of March 1, 2013-February 28, 2014, it disbursed a whopping $1.86 million. That’s a hefty sum directed to any union law firm, to say nothing of one whose only partner (out of more than 10 staff lawyers) was a complete neophyte. And it’s roughly twice the average annual amount paid to the union’s previous firm, Klein, Daday, Aretos and O’Donoghue. Shocker alert: John Coli Jr. and William Coli, respectively, son and brother of John Coli Sr., reportedly made the decision to retain Joseph Coli. Also, an official of the Legal Aid Fund at the time of Joseph Coli’s hiring, Jonathan Magna, was co-owner of a condo with the younger Coli in Chicago’s Lincoln Park neighborhood. Magna since has left the union and now works as a senior associate for Illinois Advocates.

It’s not as if the Coli extended family needs all this money. In fact, they are among the best-compensated union chieftains in the nation. During fiscal year 2014, John Coli Sr. collected more than $347,000 in combined salary from Teamsters Local 727, Teamsters Joint Council 25 and the Teamsters international, the latter of which he serves as Central Region vice president. That’s not even including roughly $40,000 as a board member of the union-backed Amalgamated Bank. His son, John Coli Jr., pulled in nearly $257,000, who is a year older than his lawyer brother. And William Coli, John Sr.’s brother, made more than $255,000 managing local benefit funds; it was William Coli, in fact, who swung the $7.4 million purchase of the Local 727 headquarters in 2010. Another brother of John Sr., James Coli, was secretary-treasurer of Local 727 until the feds permanently barred him from the Teamsters in July 1992 for failure to investigate a local business agent, Joseph Talerico, who allegedly had close ties to the Mafia. Another brother, Michael Coli, also a former officer with Local 727, was appointed by current Republican Governor Bruce Rauner to the Illinois Labor Relations Board.

The Coli fiefdom somehow has managed to weather its legal storms. One reason may be its ability to win friends in high places, such as Teamster international boss James Hoffa. Like his late father, Jimmy Hoffa, the younger Hoffa’s primary base of support is the Midwest. In November 2011, John Coli, on the same ballot as Hoffa and General Secretary-Treasurer Ken Hall, was re-elected by an overwhelming margin as IBT Central Region Vice President. The 20 local affiliates of Joint Council 25 gave the Hoffa-Hall slate an even greater percentage of their vote than did the other locals. Hoffa always watches the backsides of loyalists. That’s why he dissolved Local 726 and created in its place Local 700, thus paving the way for his appointment of Coli as a trustee of the latter. And that’s why he handed over the Local 710 trusteeship to Coli.

The Coli family also has cultivated strong relationships with Illinois political leaders, especially Chicago Mayor Rahm Emanuel. In the fall of 2010, John Coli Sr. formally endorsed Emanuel for mayor at a time when other area labor leaders were reluctant to do so. It was a smart move. Emanuel, first elected in February 2011 and re-elected this year, for the most part has spared Teamster-member City employees from work rule changes that City Hall has required of other unionized City employees. And according to court records, during the SCI case John Coli left a message related to his June 2011 deposition indicating that “the mayor of Chicago, Rahm Emanuel, needed him on an emergency basis.” The mayor that day had a 45-minute meeting with Coli. The partnership at least has had an upside: In October 2011, Teamsters and Carpenters bosses, coaxed by Mayor Emanuel, agreed to abandon certain absurd work rules that had been discouraging trade show exhibitors from holding events in Chicago.

Teamsters Local 727 also supported former Democratic Governor Pat Quinn, who had taken over from the doomed Rod Blagojevich early in 2009. Quinn proved a trustworthy ally, signing nearly 700 union-driven Project Labor Agreements by the summer of 2013. Teamsters Joint Council 25 endorsed Quinn for re-election, but it wasn’t enough for Quinn to win re-election last November. The union quickly allied itself with the new governor. Its flexibility paid off. Rauner appointed John Coli Sr. to an unpaid position on the Illinois Labor Advisory Board, which works with the state Department of Labor on a variety of employment policies, laws and regulations. In addition, as mentioned earlier, Rauner appointed Michael Coli to another term on the Illinois Labor Relations Board.

President Barack Obama, of course, comes from this neck of the woods. A number of observers believe that his administration’s decision this January to phase out the direct federal oversight of the Teamsters international union mandated by the 1989 RICO consent decree was a political IOU. Back in May 2008, during primary season, the Wall Street Journal reported that then-Sen. Obama, D-Ill., met with John Coli Sr. over the possibility of an endorsement. The article cited a comment by IBT spokesman Bret Caldwell that Obama in March 2007 had told Teamster leaders that the union “deserved to find a way to end the consent decree.” Caldwell said that the future president and Coli had met “on a pretty regular basis,” with Coli spending some time “educating Obama” about the Teamsters. Bill Burton, chief spokesman for the 2008 Obama campaign, termed “completely ludicrous” assertions of a quid pro quo arrangement. That said, Obama was and remains a shrewd politician. Whether out of conviction or self-interest, he knows to stay on the good side of organized labor, including its corrupt elements.

The Coli family saga harkens back to an era when a great many unions were “family businesses.” The family has been a major force in Chicago labor and politics for decades. And they have critics within their union as well as on the outside. Ken Paff, an activist with the Detroit-based reform group, Teamsters for a Democratic Union, recently criticized John Coli’s real estate dealings as “clearly for his own benefit and not for the members.” The latest revelations about the family’s abuses of power hopefully will spark renewed attention by federal and state investigators.