Subcontractors Sentenced in New York Teamster Double-Breasting Scam

International Brotherhood of Teamsters Local 282 isn’t the Mafia branch it was around 30 years ago. But it still offers opportunities for illicit gain. Prosecutors have taken notice. On March 15, Nicholas Farnsworth, front man for several New York City-area trucking companies, was sentenced in Brooklyn federal court to three years of probation and ordered to pay $1 million in restitution for his part in a scheme to defraud local members of about $5 million in benefits. Another participant, Toni Thomson, had received a similar sentence on January 23. Farnsworth’s father owned a unionized firm called Greenwood 2; the other firms were nonunion. The actions follow a probe by the U.S. Labor Department’s Employee Benefits Security Administration, the U.S. Transportation Department’s Office of Inspector General and the New York City Business Integrity Commission.

Union Corruption Update described the details of this case five years ago. It was a classic ‘double-breasting’ scam. In such arrangements, a union contractor, rather than pay wages and benefits as specified by a collective bargaining agreement, creates one or more parallel nonunion companies identical all but in name that pays lower wages and/or benefits without the knowledge of the affected workers. The practice is illegal. Yet it is common, especially in non-Right to Work states, where construction unions are powerful. In March 2012, five persons involved in hauling operations at various metropolitan New York construction projects were indicted in U.S. District Court for the Eastern District of New York on embezzlement, fraud and unlawful payment charges. These scams, said prosecutors, deprived Teamsters Local 282 members out of more than $5 million in benefit contributions. Charged were Greenwood 2 owner John Farnsworth, son Nicholas Farnsworth, Toni Thomson, William Taylor and Stephen Tripodi.

The case originated a decade ago. Back in June 2007, John Farnsworth entered into a bargaining agreement with the Lake Success, L.I. (Nassau County)-based Teamsters Local 282. The contract called for Greenwood 2 and its subcontractors to pay around $30 an hour in drivers’ wages and contribute payments to the union’s pension, welfare, job training and other benefit plans. The company decided to play by different rules. According to prosecutors, the elder Farnsworth and the other defendants conducted a substantial portion of their business through nonunion firms with names such as Rainbow Transport Corp. They underreported the actual number of hours worked by drivers, thus enabling them to make smaller benefit contributions than those stipulated in the union contract. By 2011, Greenwood 2 had shortchanged Local 282 benefit funds of about $5 million. In addition, Farnsworth rewarded William Taylor and Stephen Tripodi via misrepresentation. He provided Taylor with health care benefits even though Taylor worked as a Rainbow dispatcher, not as a union truck driver. He also paid more than $20,000 to Tripodi during which time Tripodi was a steward. There is no evidence of any action against the three since their indictment.

The recently sentenced defendants, Nicholas Farnsworth and Toni Thomson, fronted for nonunion “companies” effectively identical to Greenwood 2. All the firms shared the same offices, yards, drivers, mechanics and office staff, the difference being that some of the union drivers did not receive union benefits. That was the essence of double-breasting: A contractor keeps two sets of books for the purpose of underpaying workers who are unlikely to complain. It is worth noting that such schemes are heavily driven by legally enshrined monopoly privilege. By having the authority under the National Labor Relations Act to write a “security” clause into a contract, a union can force an employer to fire employees who do not pay dues. Make no mistake: Double-breasting should be punished. It denies workers contractually guaranteed compensation. But through Right to Work laws – thus far, 28 states have enacted them – the practice at least can be held in check.

For decades, International Brotherhood of Teamsters Local 282, whose membership has peaked at around 5,000, was barely distinguishable from the Mafia. Representing truck drivers handling concrete and other construction supplies, the union and its unofficial enforcers had many New York City-area builders at their mercy. John O’Rourke, president of the union during 1931-65, was a close associate of Lucchese crime family bosses Johnny Dioguardi and Anthony “Ducks” Corallo. Subsequent presidents John Cody (1976-84) and Robert Sasso (1984-92) did the bidding of the Gambino crime family. Cody spent five years in prison on federal racketeering charges, while Sasso resigned from his post following an investigation by a court-appointed officer overseeing Teamster international compliance with a 1989 racketeering settlement with the government.

The Mafia may be out of the picture, but double-breasting has remained well and alive at Teamsters Local 282. And it’s not just the Farnsworth case that serves as evidence. In December 2011, brothers Gerardo and Vincent Fusella, owner-operators of a Morris County, N.J.-based trucking firm, were indicted on multiple counts in Brooklyn federal court in a highly similar scheme that wound up netting the defendants more than $1 million. Also indicted was a local steward, Willie Spikes. All eventually pleaded guilty and received sentences. With or without the mob, rank and file pay the price.