Plumbers and Pipefitters (UA)

Ex-WI Secy.-Treas. Sentenced for $60K Theft

On September 6, 2002, in the U.S. Dist. Ct. for the East. Dist. of Wisc., David Dobry, former Secy.-Treas. of Boilermakers Lodge 177, was sentenced to five months imprisonment followed by five months of home detention followed by three years of supervision. He was also ordered to pay restitution in the amount of $61,510. He pled guilty to embezzling $61,510 in union funds on July 2, 2002, following an investigation by the Milwaukee branch of the U.S. Dept. of Labor's Ofc. of Labor-Mgmt. Standards. [DOL OLMS 9/12/02]

Minneapolis Boss' Brother Admits $9,100 Theft

Joseph W. Martin, who with his union-boss brother and Minneapolis City Council Member Joe Biernat (DFL) was charged with corruption, pled guilty June 21 to federal charges of aiding and abetting the theft of $9,177 from union coffers. He is the first in the scandal to plead guilty. Martin confessed  to using union funds from the United Assn. of Plumbers & Pipe Fitters Local 15 for plumbing work in his own home. His attorney, Gerald Yost, reported that Martin claims his brother, Thomas J. Martin, Local 15 business manager, assured him the transaction was all right.

U.S. Dist. Judge Ann D. Montgomery (D. Minn., Clinton) has not set a date for Joseph Martin's sentencing. That's probably because he agreed to testify against his brother and Biernat at their trials, which were scheduled for July 1 but are expected to be held at a later date. Biernat is accused of receiving $2,700 in free plumbing work at the same time he and council colleagues were considering the appointment of Thomas Martin to the city board that licenses plumbers. Thomas Martin is accused of embezzling some $43,300 from the local. [Star-Trib. (Minneapolis) 6/22/02]

Judge Refuses to Erase Fund Manger's Prison Sentence

Convicted union pension fund manager Barclay Grayson's attorney and prosecutors argued for three hours May 30 that Grayson, who has emerged as the government's lead witness in the Capital Consultants scandal, deserved to have his prison sentence eliminated. Thankfully, U.S. Dist. Judge Anna J. Brown (D. Or., Clinton) didn't buy it. She sentenced the one-time president of Capital Consultants to eighteen months in federal prison for his role in the investment scam that cost the firm's clients, including many union pension funds, about $355 million.

Grayson was initially sentenced to two years in Nov. 2001, but prosecutors asked that his sentence be reduced to probation and nine months home confinement based on the "substantial assistance" he's been in the ongoing criminal investigation. His importance to the government increased earlier this month when his father, Jeffrey Grayson, suffered a stroke that has left him unable to communicate.

New Charges in Minnesota Case; $43,300 Theft

A federal grand jury returned additional felony charges May 21 against Thomas J. Martin, ex-business manager of United Ass'n of Plumbers & Pipe Fitters Local 15 in Minneapolis, and Minneapolis City Council member Joe Biernat  (DFL).  Each face two added mail fraud charges in connection with Martin's alleged use of $2,700 in union funds to pay for plumbing work in 1999 at Biernat's home.

The original indictment, unsealed Apr. 18, charged that Martin paid for Biernat's plumbing work at the same time Biernat and his colleagues were approving Martin's appointment to the city board that certifies plumbers to work in the city. The new indictment also increases the amount of money Martin is charged with stealing to $43,323, taken on six occasions between 1998-2001. Originally, he was charged with a $17,877 embezzlement. The indictment gives no indication of how Martin used the other money he allegedly stole.

Grayson and Ten Other Defendants Settle $110 Million Pension Suit

Dozens of union pension and other benefit funds reached a settlement May 13 with eleven parties to recover $110 million of losses involving allegations of pension fraud by the Portland, Or., based Capital Consultants LLC.  Capital Consultants had $927 million under its management when federal agents seized its assets in Sept. 2000. Funds from Taft-Hartley plans and other employee benefit plans accounted for a large share of nearly $500 million in estimated investment losses  The demise of Capital Consultants sparked lawsuits by a number of union trusts, alleging fraud and seeking to recover some of their losses. The proposed settlement, yet to be approved by the district court, calls for payments to the trusts by 11 companies and professional advisers, including legal and accounting firms.

California Boss Gets Away With Tainted Election Victory

U.S. Dist. Judge David F. Levi (E.D. Cal., G.H.W. Bush) ruled May 2 that the Dep't of Labor failed to show that a candidate for business agent of United Ass'n of Plumbers & Pipe Fitters Local 442 violated the union's election bylaws against electioneering and campaigning within 100 feet of the polling place on election day. In 1997, the local based in Stockton and Modesto, Cal., adopted bylaws that included detailed rules for conducting elections. Section 28(j) of the bylaws states: "No campaigning or electioneering shall be allowed inside the building where the election is conducted or closer than 100 feet from the entrance to the building."

Ullico Board on Defensive; Fashions an "Investigation"

The scandal-scarred board of Ullico, Inc., appointed labor-friendly ex-Ill. Gov. James R. Thompson (R) Apr. 29 to "review" the insider trading scheme that allowed some directors of the union-dominated insurance company to make hundreds of thousands in tainted profits. To see just how labor-friendly, visit, for a picture from when Thompson was governor. It shows Thompson with Robert A. Georgine, now the Ullico president, who helped select Thompson for the lucrative investigatory job and who Thompson is supposed to be investigating. Also pictured is Angelo Fosco. The deceased Fosco was president, as was his father, of the Laborers' Int'l Union of N. Am from 1975-1993. The government's draft 1994 racketeering suit that led to a quasi-government takeover of LIUNA, stated that Fosco "was an associate of the Chicago [La Costa Nostra] family" and accused him of racketeering acts related to extortion of LIUNA members. Also in the picture is deceased plumbers and AFL-CIO boss Edward Brabec.

Feds Indict Minneapolis City Councilman & Union Boss

Stolen union money paid for plumbing work at property owned by Minneapolis City Councilman Joe Biernat (DFL), according to federal charges against Biernat, a boss of United Ass'n of Plumbers & Pipe Fitters Local 15 in Minneapolis, and the boss' brother. The indictments unsealed Apr. 18 allege that in 1999, Thomas J. Martin, ex-Local 15 business agent used $2,700 in union funds to pay for Biernat's plumbing work at the same time the council member and his colleagues were approving Martin's appointment to the city board that licenses plumbers. The specific charge is conspiracy to extort under color of official right in violation of 18 U.S.C. § 1951 (Hobbs Act). Biernat also was charged with making a false statement to the FBI, aiding and abetting union embezzlement, and mail fraud.

Oregon Fund Manager Agrees to Plead Guilty

Jeffrey L. Grayson agreed Apr. 16 to plead guilty to two felony counts in connection with the collapse of his union pension management firm, Capital Consultants LLC of Portland, Or., which will likely result in a prison term. Grayson is cooperating with federal prosecutors in hopes of getting a lighter sentence and has provided new information on Andrew Wiederhorn's role in the firm's downfall. Wiederhorn was the chief executive officer and controlling stockholder of Wilshire Credit Corp., which defaulted on $160 million in loans and contributed to the collapse of Capital Consultants. Total client losses, mostly from union members, are estimated to be $355 million.

The U.S. Atty.'s Office in Portland filed revised charges against Grayson, accusing him of two felonies: one count of mail fraud and one count assisting the filing of a false tax return. The charges, filed as a criminal information, described Wiederhorn's involvement in deals that allegedly compromised Grayson's independence as an investment manager. Wiederhorn has not been charged, but the U.S. Attorney has notified him that he is the subject of an ongoing grand jury investigation.

ULLICO Scandal Grows: Maddaloni, McCarron, Bahr Sold Shares

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.

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