Top Ten Union Corruption Stories of the Year
Organized labor, masters of aggressive politics, had its share of triumphs in 2010. With Democrats, their natural ally, the previous year having taken control of the White House and the Senate while increasing their advantage in the House, this was to be expected. AFL-CIO President Richard Trumka and other union officials used their window of opportunity to pressure Congress into passing a health care overhaul mandating unprecedented degrees of government intrusion, and by extension, major opportunities for unionization of the health care labor force. They also secured key presidential appointments.
That said, the year was noteworthy for legislative mandates unions didn't achieve, especially forced private-sector employer recognition of majority union "card checks" and forced state and local government bargaining with public-safety unions. The new Congress, with a GOP House majority, is far less likely to deliver on either count. Meanwhile, Justice Department crackdowns finished off various union-Mafia scams. Embezzlers, great and small, got their comeuppance. And the unions' favorite nonprofit, the once-thriving ACORN, is no more. In other words, liberty and public accountability had their share of triumphs, too.
Union leaders put their penchant for political backroom dealing to good use in 2010, helping to deliver for constituents health care "reform" legislation that will cost taxpayers $940 billion over the next decade (if not more), and with far less consumer choice. Richard Trumka and soon-to-depart Service Employees International Union (SEIU) President Andrew Stern operated as virtual White House lobbyists to shape the final package, which the House of Representatives passed in March by a slim 219-212 margin. Parliamentary maneuvering led by union ally Sen. Harry Reid, D-Nev., had short-circuited a Senate filibuster. It's not as if union bosses in Reid's home state forgot their benefactor come election time. Highly persuasive evidence emerged that SEIU-affiliated workers in Clark County, where three-fourth's of Nevada's population resides, rigged voting machines to bring about Reid's improbable come-from-behind win against GOP challenger Sharron Angle.
Labor's handprints were on presidential appointments. M. Patricia Smith, after several months of delay, won Senate approval in February as solicitor for the Labor Department. Having previously served as New York State Commissioner of Labor, she has put into place an aggressive litigation program to go after employers presumably in violation of wage and hour laws and a lawyer referral program for aggrieved employees. President Obama, for his part, in a March recess appointment named SEIU lawyer Craig Becker to the National Labor Relations Board. Union officials couldn't have asked for a better choice; as a law professor in the Nineties, Becker argued the case for giving unions the right to muzzle employer free speech during an organizing drive. Two pending appointments also underscore union clout with the current administration. Paul Tiao, Obama's nominee for Labor Department Inspector General, has expressed a belief that immigrants, even those here illegally, ought to be granted voting rights - a welcome piece of news for union leaders, who for at least a decade have been enthusiastic proponents of open borders. And Leon Rodriguez, the nominee for head of DOL's Wage and Hour Division, though thoroughly inexperienced in labor law, has shown in his pronouncements and track record as a civil-rights prosecutor that he leans as far leftward as virtually any union official.
The year witnessed federal prosecutions ending mob-assisted union scams in the New York City area. New York District Council of Carpenters longtime boss Michael Forde and nine other defendants pleaded guilty or were convicted by a jury of participating in a scheme to siphon off more than $10 million in scheduled contributions to Carpenters benefit funds and receive bribes from contractors. One of the defendants, contractor Joseph Olivieri, had ties to the Genovese crime family. Federal prosecutors in Brooklyn announced the results of a multiple racketeering indictment against eight suspected Colombo crime family members and associates; two of the defendants had ripped off benefits from Teamsters Local 282, one of the most notorious Mafia-connected unions in New York or anywhere else. And Warren Annunziata, former president of Local 91 of the United Craft and Industrial Workers, pleaded guilty in Manhattan federal court in July to extorting at least $500,000 from local school bus companies. As the indictment had referred to "others known and unknown," he's likely to have had help in the shakedowns.
Embezzlement stories abounded. In the worst single-person case ever, a Manhattan federal grand jury indicted Melissa King, former benefits manager for Laborers Local 147 ("the Sandhogs"), for fleecing members out of $42 million. The indictment followed her arraignment the previous December, an event that earned her the number-three spot on the Top Ten list for 2009. John Orecchio, a Chicago-based financial manager, was sentenced for embezzling more than $24 million from various Michigan-based union pension plans. Joseph Castello, a Greenwich, Conn.-based businessman, was ordered by a federal appeals court to pay more than $12 million that he'd generated from his check-cashing scheme about a third of which represented pension funds from unnamed labor unions - they didn't call him "Joey Checks" for nothing. Noteworthy, if less flagrant, were: Carolyn Sue Alderman-Connon, manager of a regional Boilermakers union training program in Florida, pleaded guilty in October to embezzling more than $1.2 million; Wayne Mitchell and Lawrence DeAngelis, successive bosses of a Communications Workers newspaper print shop and mail room workers local in New York City, pleaded guilty to combined theft of more than $300,000; Florida pastor Gregory Sims, moonlighting as an Electrical Workers benefits manager, pleaded guilty to diverting more than $800,000 in union funds to his church; and Stephen Arena and David Caivano, respectively, president and secretary-treasurer of a Jersey City Production Workers local, were arrested for embezzling more than $375,000.
Taking into account subjective criteria used in years past, here are the ten stories that stuck out the most in 2010:
10) John Orecchio receives a lengthy sentence for union benefit scams. This story ranked number eight the last time around, and it is number-ten here for good measure. Orecchio, CEO of the Chicago-based equity fund AA Capital Partners, managed about $170 million in trust accounts on behalf for union clients, mainly in the Detroit area. During 2002-06 he converted as much as $60 million of that to his own consumption or investment and eventually was indicted for ripping off $24 million. This past June in federal court he learned the price of his ways - a nine-year, four-month prison sentence and a full restitution order.
9) M. Patricia Smith, confirmed by the Senate as Labor Solicitor, goes after private-sector employers. Solicitor is the third-highest ranking position at the U.S. Department of Labor. Trisha Smith, belatedly confirmed by the Senate to this post in February, isn't wasting any time in going after private-sector employers - and to the applause of union leaders. Her office in September issued a draft plan to aggressively step up DOL pressure upon employers it suspects of violating federal wage and hour laws. Look for union rank and file to be deputized as investigators, as was the case in the Wage Watch program she instituted while serving as New York State Labor Commissioner.
8) Former Sandhogs union benefits manager Melissa King indicted for $42 million theft. Though the indictment amounted to a formality, this story still qualifies as a shocker. King, accused late last year of fleecing Laborers International Union of North America Local 147 out of $42 million during 2002-08, was indicted by a Manhattan grand jury in February. A half-year later she complained about her high legal bills. She's not getting any sympathy from the union, whose rank and file dig subway and water tunnels underneath New York City and surrounding areas. Were the sybaritic Ms. King's thefts "only" $4.2 million, this still would be a major story. But $42 million is almost inconceivable.
7) Union official Warren Annunziata pleads guilty to extortion of school bus companies. United Craft and Industrial Workers Local 91, which represents about 2,000 drivers and auxiliary employees of New York City-area school bus companies, has about $85 million in pension and other assets. Now we know where at least some of that money comes from. Annunziata, the union's former president and current pension fund administrator, pleaded guilty in Manhattan federal court in July to extorting more than $500,000 in payoffs from unionized bus company officials.
6) Andrew Stern yields SEIU presidency to Mary Kay Henry. The Service Employees International Union has well over 2 million members and associates, a more than doubling from 1996, when Andrew Stern took over. In his 14-year reign, Stern boosted membership with his take-no-prisoners style of organizing, though (as critics frequently maintained) at the cost of winning quality contracts, especially in the health care sector. Flush with victory from the Obama health care bill signing, he resigned this spring with two years remaining in his current term. SEIU Vice President Mary Kay Henry defeated Secretary-Treasurer Anna Burger in the succession battle. Several months after Stern's departure, media reports circulated that the FBI and the DOL were probing Stern for potential ethical violations.
5) President Obama appoints Craig Becker to National Labor Relations Board. By law, the NLRB must have three members from one major party and two from the other. Union leaders couldn't have been more delighted with President Obama's nomination of SEIU Associate General Counsel Craig Becker as one of the Democrats - or with Obama's late March recess appointment of Becker, sidestepping a Senate filibuster. As a law professor in the Nineties, Becker argued that unions should have the right to veto employer free speech rights during organizing drives. If he's backed away from this view, he hasn't let it show. And he's already made his presence felt; he cast the tiebreaker vote in August (despite a clear conflict of interest) in the board's decision to revisit the Dana case, which NLRB in 2007 had decided in favor of making it easier for dissenting workers to undo a successful union card check campaign.
4) Grand jury indicts Colombo mobsters and associates; two defendants may have fleeced Teamsters benefit fund. Organized crime in New York experienced a major blow last march when a Brooklyn federal grand jury indicted eight suspected members or associates of the Colombo crime family, including son and nephew of now-imprisoned family boss Carmine Persico, on racketeering and other charges. Two of the defendants, Colombo associate Edward Garofalo Jr. and his wife, Alicia DiMichele, embezzled an unspecified sum from Teamsters Local 282, a concrete and construction materials truck drivers union long under control of the Gambino, Genevese and Lucchese crime families. There's nothing like a piece of the action.
3) Unions negotiate key provisions in final health care bill. Organized labor obviously has a major stake in unionizing the health care labor force. So when it came time a year ago to hammer out a bill reconciling differences between House and Senate health care overhauls, union leaders played a prominent role in shaping the final measure. Led by AFL-CIO President Richard Trumka, union leaders engaged in a three-day marathon session with White House negotiators to break the impasse, especially on how to tax high-end insurance plans. The result: A five-year delay on applying a surtax on such plans, if union-sponsored. The decks cleared, Congress passed the conference bill in March. Obamacare will cost taxpayers an estimated $940 billion over the first ten years, and possibly a good deal more. Thank union hardball in some measure for this.
2) SEIU likely rigged ballots to win Senate re-election for Harry Reid. The 2010 congressional elections were a disaster for Democrats. The party lost its majority in the House and came close to losing it in the Senate. Things could have been far worse had Senate Majority Leader Harry Reid, D-Nev., not rallied from behind to defeat Republican challenger Sharron Angle. This "miracle" may have been union-initiated. Evidence indicates that in October, during early balloting, SEIU-affiliated voting machine workers in Clark County (Las Vegas) had been tampering with the devices; they rigged machines to record a check mark next to Reid's name without the benefit a ballot being cast. Union leaders deny any wrongdoing. Yet a full investigation very easily could turn up something, especially given that one of Sen. Reid's sons is Clark County Commission chairman.
1) Michael Forde, nine others convicted in Carpenters district council racket scheme in New York. The leadership of the New York District Council of Carpenters, representing some 25,000 workers in 11 unions, ran a lucrative racket for more than two decades, siphoning off more than $10 million from scheduled benefit contributions and accepting to $1 million in illegal contractor bribes. In 2010, the fun ended. Free-spending district boss Michael Forde pleaded guilty, as did eight other union members and associates. Additionally, Long Island-based contractor association president Joseph Olivieri, a reputed Genovese crime family associate, was found guilty by a jury. Forde had beaten the rap twice before, but this time the feds were determined to not let him walk. He wound up with an 11-year prison sentence. Perseverance does pay.
(Dis)honorable mention. Joseph "Joey Checks" Castello, a Greenwich, Conn.-based businessman, ordered by a federal appeals court to forfeit more than $12 million; manager of a Florida-based Boilermakers regional training program, rips off $1.2 million from the union; president and secretary-treasurer of Jersey City Production Workers local arrested for embezzling more than $375,000; Milwaukee AFSCME activist embezzles $180,000 from union voter registration drive fund; Operating Engineers bookkeeper in Las Vegas steals $230,000; United Auto Workers bookkeeper in Michigan embezzles $200,000; Buffalo transit union treasurer sentenced for theft of more than $250,000; Vince Anello, former mayor of Niagara Falls, N.Y. pleads guilty to Electrical Workers benefit fraud, tests U.S. Supreme Court ruling on "honest services" statute; New York-New Jersey Port Authority union boss Daniel Hughes pleads guilty to embezzling nearly $300,000; Locomotive Engineers President Edward Rodzwicz pleads guilty to bribery, related charge; NYC newspaper workers bosses sentenced for thefts; Colombo mob-connected Operating Engineers local business agent Joey Coriasco sentenced in NYC construction scam; Florida pastor moonlighting as Electrical Workers benefits manager diverts $800,000 from union to church; former Aerospace Workers boss Anthony Forte, brother sentenced in Philadelphia-area Boeing workers credit union fraud and kickback scheme.