Federal prosecutors in Springfield, Ill., have reportedly opened a criminal investigation into a 2001 labor dispute at E. Ill. Univ., and have subpoenaed records from the office of Ill. House Speaker Michael Madigan (D), the Ill. Bd. of Higher Educ., the Ill. Educ. Labor Relations Bd., the Ill. Dep't of Labor, and others. Reportedly, the subpoenas were delivered to the IBHE only a day after the Mar. 19, 2002, primary (in which Madigan's daughter Lisa, also a state senator, won the Democratic nomination for Ill. Atty. Gen.) and sought documents relating to negotiations between EIU, located in Charleston, Ill., and Int'l Union of Operating Eng'rs Local 399 in Chicago. The subpoenas reportedly sought materials related to the role any state employee might have played concerning a new labor contract. Reportedly, the federal grand jury in the case is also currently taking testimony from a number of individuals.
As reported in the last issue, a federal grand jury in Washington, D.C., is probing stock transactions by directors of a union-dominated insurance firm ULLICO linked to the now bankrupt firm, Global Crossing. The Wall St. Journal reports that internal documents reveal that ULLICO officers and board members cashed in on some 71,000 ULLICO shares between Jan. 2000 and Sept. 2001, possibly at the expense of the very union pension funds to which they owed a fiduciary duty. The profits were potentially huge. For example, Martin J. Maddaloni, president of the United Ass'n of Plumbers & Pipe Fitters, allegedly reaped a $184,000 profit from timely selling of a mere 2,000 shares of his ULLICO stock back to ULLICO in 2000.
Dominick Bentivegna, a union staffer who stood up to corruption in a powerful N.Y.C. local, was fired Apr. 9 from his $85,000-a-year union job after declaring he would run for president of Serv. Employees Int'l Union Local 32B-32J. He helped oust local boss Gus Bevona in 1999 amid reports of financial irregularities and a $6 million black marble penthouse.
Under new leadership, Bentivegna took a job supervising shop stewards. But he became fed up with excessive spending and a lack of union democracy, and he marched into local president Michael Fishman's office and declared he was running against the boss in Sept. 2003. Twenty minutes later, he says, he was terminated. "He said, 'You're not going to work for me and run for office,'" Bentivegna said.
"It's not about democracy," Fishman said. "If you disagree with the program, you can't be working here." Attorney Alan Serrins said Bentivegna will contest the firing in federal court. Bentivegna retains his elected position as assistant secretary to local. [Daily News; N.Y. Post 4/11/02]
More than two dozen union presidents were reportedly invited to buy shares in Global Crossing, as the Bermuda-based telecom was first offering its stock to the general public. Now a federal grand jury in Washington, D.C., is probing stock transactions by directors of insurance and investment firm ULLICO (f.k.a. Union Labor Life Ins. Co.), a union-dominated firm founded by the AFL. ULLICO's board is chaired by ex-AFL-CIO Building & Construction Trades Dep't president Robert A. Georgine and includes many current and ex-union presidents.
Reportedly, the investigations focus on trading privileges that allegedly allowed ULLICO's board members to profit from the purchase and sale of its shares. The transactions were lucrative because the privately held company's stock price was reset each year based on its book value and the board members could anticipate the change. ULLICO's shares had risen on the strength of several deals, including a $500 million profit on a $7.6 million investment in telecom firm Global Crossing, which declared bankruptcy in Jan. 2002.
A N.Y. stockbroker and a Chicago futures trader were convicted Feb. 13 of scheming to bribe union bosses to invest millions of dollars of pension fund money with a corrupt money manager. Stockbroker John M. Black, who authorities say was a Luchese organized crime family associate, and futures trader Glenn B. Laken were convicted today of racketeering, bribery and fraud. Among those whom they planned to bribe were bosses with the Annuity Fund of the N.Y.C. Police Detectives Endowment Ass'n, the independent Production Workers Local 400 in N.Y.C., and Int'l Union of Operating Engineers Local 137 in Briarcliff Manor, N.Y. The verdict was reached at the conclusion of a three-month trial before U.S. Dist. Judge William H. Pauley, III (S.D.N.Y., Clinton).
On Jan. 17, James Bryant, ex-secretary-treasurer of Am. Fed'n of Gov't Employees Local 2061 in Philadelphia, was sentenced to three years probation, ordered to make restitution of $1,980, and fined $500. (He had previously made restitution of $1,500.) He had pled guilty on Sept. 12, to two counts of theft by unlawful taking $3,480 within the territorial jurisdiction of the U.S. Local 2061 is connected to the Gen. Serv. Admin. [DOL 1/17/02]
N.Y. prosecutors have reportedly launched a racketeering probe of a Queens local whose members run the cranes and other earth-moving equipment at site of the World Trade Ctr. massacre. The N.Y. State Organized Crime Task Force agents turned up at Int'l Union of Operating Eng'rs Local 14's offices on Jan. 8 and carted off documents and payroll records. The raid was the first action taken in a new probe into reports that mid-level union bosses allegedly doled out no-show jobs, shook down contractors, and engaged in other traditional labor racketeering crimes. Local 14's offices were shut down for more than an hour as agents loaded records into a van. One boss who asked agents for a search warrant was reportedly put up against a wall and frisked. Seized documents reportedly included bank, pension, and annuity fund records. [N.Y. Post 1/13/02]
Eleven N.Y. City public school custodians, all members of Int'l Union of Operating Engineers Local 891, were arrested and charged Dec. 11 with receiving bribes and kickbacks and rigging bids for window cleaning services. According to N.Y. State Atty. Gen. Eliot Spitzer, from June 2000 to Nov. 2001 the suspects received kickbacks of $300 to $2,000 in cash, or 10% of the contract price, from the cleaning services in exchange for selecting them for their schools. The suspects allegedly asked contractors to supply false bids as a way to circumvent NYC Board of Educ. requirements for at least three bids for services costing more than $250.
The highest-ranking Mafia member in the government's "Mob on Wall Street" case pled guilty Feb. 15 to taking part in a massive scheme that allegedly cheated investors out of $50 million. Robert A. Lino, a reputed "capo" of the Bonanno crime family, topped the list of 120 defendants (some union bosses) charged last June.
Lino admitted to manipulating stocks through DMN Capital, a N.Y.C. firm that prosecutors have described as "fraud central." He told U.S. Dist. Judge William H. Pauley III that he and others bribed brokers to tout stocks and sell them at artificially high prices. He also described a plan to defraud several union pension funds through a kickback scheme. It reportedly included three N.Y.-based funds: the Detectives' Endowment Ass'n, Production Workers Local 400 and Int'l Union of Operating Engineers Local 137. Lino is scheduled to be sentenced June 1. [Newsday 02/16/01]
On June 15, federal authorities began arresting 120 defendants across the country in a far-reaching securities racket involving three unions and five La Cosa Nostra families: Bananno, Colombo, Gambino, Genovese and Luchese. The suit filed in U.S. Dist. Court in Manhattan included charges of racketeering, conspiracy, wire fraud, securities fraud, mail fraud, pension fund fraud, bribery, illegal kickbacks, money laundering, witness tampering, extortion, physical intimidation and the solicitation of murder. A year-long probe, Operation Uptick, uncovered the racket.
It included defrauding three N.Y.-based union pension funds: the Detectives' Endowment Ass'n (DEA), which serves NYPD detectives, Production Workers Local 400 and Int'l Union of Operating Engineers Local 137. Defendants allegedly used corrupt securities professionals to manage union pension funds and craft investments in a way that allowed for a secret diversion of money as kickbacks.