Union Labor Life Insurance Company (ULLICO)

Senator Susan Collins (R-Maine) blamed the union chiefs making up the bd. of the union-pension-owned ULLICO company for a insider stock-trading scandal, due to their infrequent meetings and poor attendance.  According to a June 2nd staff report by the U.S. Senate Cmte. on Governmental Affairs, the bd. members' lack of oversight allowed ex-CEO Robert Georgine to orchestrate a series of deals involving the private company's stock that enriched him and other employees and bd. members at the expense of the union pension funds supporting the company.  The 98-page majority staff report can be accessed on NLPC's website at http://www.nlpc.org/pdfs/ULLICO%20Report.pdf.

Key findings of the report include the following:

As Ullico Bd. members continued to cover up a report on their insider deals in the union-owned company's falling stock, AFL-CIO president John Sweeney resigned from the Bd. on Dec. 2. He claimed that he could not "adequately fulfill my obligations to Ullico" and to the union members whose pension funds largely finance the insurance company.

Sweeney, however, did not explain why he failed to publicly oppose the scheme in which Ullico directors were allowed to buy Ullico stock "low" in late 1999, knowing that its value would be readjusted upward in 2000. Ullico's stock was highly leveraged on Global Crossing, which rose with the telecom bubble, then deflated in 2000 and 2001. But in both years, Ullico directors were able to sell back their Ullico stock "high," before its price was lowered to reflect the falling
value of Global Crossing. Because only small shareholders could participate in the deals, the huge pension funds underwriting Ullico were stuck with its stock as it fell, along with Global Crossing's spiral toward the 4th largest bankruptcy in U.S. history.

U.S. Dist. Judge David Ezra (HI, Reagan) sentenced frmr. state govt. wrkrs. union chief Gary Rodrigues to 5 yrs., 4 mos. in federal prison for his crimes of embezzlement, mail fraud, money laundering and kickbacks. But Ezra also allowed Rodrigues to remain free on bail pending the appeal of his conviction last Nov. He also ordered Rodrigues to pay the union $378,103 in restitution. He was found guilty of accepting kickbacks from insurers doing business with the United Public Wrkrs. union of Hawaii, arranging for the UPW to pay his daughter to review union benefits while she actually did little or no work, and setting up a similar arrangement for the stepfather of his ex-mistress. After Rodrigues's conviction, the Amer. Fedtn. of State, County & Municipal Employees took over its Hawaii affiliate. [Honolulu Advertiser, 9/30/03]

AFL-CIO Raises $50 Million to Shore up Firm Damaged by Union Bosses' Insider Stock Deals

The U.S. Senate's Governmental Affairs Cmte. is preparing to subpoena 6 current or frmr. board members of the Union Labor Life Insurance Company, five of whom opposed returning their profits from selling ULLICO stock at the expense of the union pensions that own the company.  Five of the six are also current or retired union officials.  They are: William Bernard, ret. pres. of the Int'l Assn. of Heat & Frost Insulators & Asbestos Workers: Marvin Boede, ret. pres. of the United Assn. of Plumbers & Pipefitters: James La Sala, current pres. of the Amalgamated Transit Union: Billy Casstevens, ret. secy.-treas. of the United Auto Wrkrs. and Joseph Maloney, secy.-treas. emeritus of the AFL-CIO's Bldg. & Construction Trades Dept. (BCTD)