Top Ten Union Corruption Stories of the Year

Printer-friendlyPrinter-friendlyEmail to friendEmail to friend

Top Ten logoUnions for many years have been a highly reliable segment of the Democratic Party Left. Yet this perhaps no more was this true than in 2011 - and with good reason. The year began with the Republicans holding a nearly 50-seat edge in the House of Representatives following the GOP's smashing wins in the November 2010 midterm elections. Avoiding legislative process became a top priority for organized labor. Union officials and organizers at every opportunity created and exploited populist rage toward the wealthy, now redubbed "the 1 percent," playing a key role in shutting down the Wisconsin State Capitol, organizing Occupy Wall Street protests, and conducting corporate harassment campaigns. Taking the high road, unions also heavily relied on the National Labor Relations Board (NLRB) to enact what amounted to stealth legislation. 

In the NLRB, at least, unions had a true ally. By law, the normally five-member NLRB must consist of three members of one major party and two of the other. With Barack Obama in the White House, Democrats now provided the tiebreaker vote. The president's recess appointments in March 2010 of two party members, Craig Becker and Mark Pearce, both experienced union lawyers, paid off handsomely last year. This past April the board filed a complaint against Boeing Co., claiming the company had deprived an International Association of Machinists local in Washington State of its right to strike when it located a second production line for a new jumbo jet to South Carolina, a Right to Work state. The board effectively sent a message to unionized manufacturers that they must subject key expansion decisions to union veto power. Every union, not just the IAM, stood to gain. And in the end, they did. The NLRB dropped the suit in December, providing Boeing with a nominal victory, but only after the Machinists had worked out a favorable contract extension with the company several days earlier.

The NLRB, meanwhile, unveiled a new rule in June to reduce drastically the time elapse between a union filing for representation petition and workers voting on whether to unionize. The board finalized the regulation in December in the face of intense House GOP opposition, thus assuring (for now) that employers will have little time to oppose a union organizing campaign. And the NLRB ruling by 3 to 1 in UNICCO Service Co. made it more difficult for an employer taking over a unionized company to avoid recognition of the union as a bargaining agent (i.e., the "successor bar").

The board invited scrutiny in other ways. Sen. Orrin Hatch, R-Utah, in September wrote Becker on what role he played, if any, in preparing an anti-corporate organizing manual for the Service Employees International Union (SEIU) where he formerly served as associate general counsel. The SEIU found this manual highly useful in its more than year-long campaign to destroy the brand name of Sodexo, which eventually, this March, countered with a racketeering suit against the SEIU. Sen. Hatch's request might seem moot in the aftermath of President Obama's withdrawal of his nomination in December of Becker for a full term on the board. But the president, faced with another protracted period with a nonfunctioning two-member board, only days ago appointed Left-leaning Democrats Sharon Block and Richard Griffin, along with the obligatory second Republican, Terence Flynn, to the board during a Senate "recess" of dubious constitutionality.

The Service Employees revealed themselves once more to be masters of political agitprop. Not only did the union engage in an intimidation campaign against Sodexo, it also played a central role in fomenting Occupy Wall Street and offshoot campaigns. Moreover, as reported in February, two of the Midwest residences raided by the FBI in September 2010 for possible linkages to the terrorist groups Hamas (Gaza and the West Bank) and FARC (Colombia) belonged, respectively, to a current and former official of Chicago-based SEIU Local 73, Joe Iosbaker and Tom Burke. Iosbaker, at least, is back in the news. He and another FBI suspect, Andy Thayer, helped lead Occupy Chicago protests in October. And a longtime prominent SEIU organizer, Stephen Lerner, not only was active in the Occupy movement, but earlier in the year laid out an economic destabilization plan - caught on tape during a speech in New York - to decimate America's banks and corporations. Lerner, several times a visitor to the Obama White House, has been all over the map since, identifying and denouncing "billionaires" at whom activists could vent their wrath.

Other unions flexed their muscles at the perfidious "1 percent." AFL-CIO-affiliated labor federations in Boston, Chicago and Orange County, Calif., for instance, organized "Occupy" protests. Along with the SEIU, the Amalgamated Transit Union, the International Brotherhood of Teamsters, the Communications Workers of America, AFSCME and the New York State United Teachers each endorsed Occupy Wall Street squatters. Even AFL-CIO President Richard Trumka paid the Wall Street occupiers a friendly personal visit. Trumka had plenty else to keep him busy, most notably, a fledgling "Super PAC" to raise money for progressive candidates in 2012. He'll have plenty of allies in Wisconsin, where public employees unions spearheaded a three-week mass takeover of the State Capitol in Madison and surrounding grounds starting in mid-February. Supportive Democratic state senators fled town in unison with the intention of preventing a quorum for a vote on GOP Governor Scott Walker's budget, a large portion of which contained proposals to curtail union collective bargaining authority. They lost - temporarily. After the AWOL senators returned home to a hero's welcome, the GOP-majority legislature passed the bill and the Wisconsin Supreme Court in June, by a 4-3 margin, upheld the law, reversing a permanent injunction issued the previous month by a state circuit court. A union-driven recall campaign against certain pro-Walker legislators proved mostly unsuccessful. But activists on November 15 launched a petition drive to recall the governor and are reportedly close to acquiring the minimum required signatures for submission by the January 17 deadline.

Political confrontation wasn't the whole story in 2011. As usual, union officials and functionaries produced numerous examples of financial impropriety. Among the more dramatic stories: Tim Foley, business manager of International Brotherhood of Electrical Workers (IBEW) Local 134 in Chicago, resigned his post in October following revelations that he and three other union officials had been illegally double-dipping into their municipal and union pension plans. The leaders of a United Food and Commercial Workers local in Brooklyn, N.Y. were arrested and charged with shaking down or stealing $2.4 million from employers and members. Screen Actors Guild (SAG) health and pension plan boss Bruce Dow and his cronies faced unexpected scrutiny for the disappearance of possibly $10 million in union benefits. Hundreds of FBI and other law enforcement agents in a single January morning arrested well over 100 Mafia wise guys and associates, mainly in the New York City area, for murder, racketeering, money-laundering, loan-sharking, extortion and other offenses going back some three decades. The FBI in October arrested nearly a dozen persons, including retired union employees of the Long Island Rail Road (LIRR), for conspiring to concoct phony medical histories in order to expand eligibility for outsized pension and "disability" checks, a scheme that over the long term could cost U.S. taxpayers at least $1 billion. And Melissa King, first exposed in late 2009, pleaded guilty to fleecing the New York-area Laborers International Union of North America (LIUNA) "Sandhogs" local where she served as benefits manager, though in an amount less than the alleged sum of more than $40 million.

Taking into account the subjective criteria used in the past for ranking importance, here are the ten corruption/aggression stories, in reverse order, that stood out most in 2011:

10) Chicago Electrical Workers bosses collect lavish pensions and stick city taxpayers with bills. Collecting two pensions, one from an employer and the other from a union, isn't unknown in organized labor. But sometimes it's illegal. And Tim Foley, former business manager-financial secretary of IBEW Local 134, along with other officials of the 15,000-member Chicago local, likely broke Illinois law by purchasing credits for a city pension plan to be based on their higher union salary, while falsely claiming they were not participating in any other plan. The city pension credit program itself is a legal scam, potentially costing taxpayers possibly tens of millions of dollars. Foley, under intense media scrutiny, resigned his union post in October.

9) FBI raid nets dozens of New York City-area mobsters and associates. There's almost nothing like a good mob takedown to keep union bosses honest. A year ago, hundreds of FBI agents, U.S. marshals, and various state and local law enforcement agents fanned out and in single morning arrested nearly 120 Mafia members and associates named in a lengthy indictment for murder, racketeering, extortion and other acts committed over three decades, mainly in and around New York City. The raids netted wise guys of all five New York Mafia families, especially the Colombos. Equally significantly, many of the crimes centered upon three New York-area unions with a reputation for being mobbed-up: the Laborers-affiliated Cement and Concrete Workers Local 6A; Teamsters Local 282; and International Longshoremen's Association Local 1235.

8) United Food and Commercial Workers officials in Brooklyn charged with massive extortion, fraud. Extracting payments from employers and stealing from member benefit plans came easy to the leaders of UFCW Local 348 in Brooklyn. It helped that the leaders of the racket were family. A six-count federal indictment handed down in October ended the decade and a half run of Anthony Fazio Sr., Anthony Fazio Jr. and John Fazio. Arrested and charged with racketeering, extortion, money-laundering and other offenses, the Fazios allegedly pocketed $2.4 million in coerced employer "donations" and fake invoices paid out of local accounts.

7) Organized labor foments, endorses Occupy Wall Street protests. Time magazine named "The Protestor" as its Person of the Year for 2011. And no protesters, at least in the West, made a bigger impact than those taking part in Occupy Wall Street and similar Left-populist appropriations of public space. While spokesmen for these outpourings of anti-capitalist street theater may pride themselves on their leaderless resistance, the reality is that unions have been more than ephemeral players. The Amalgamated Transit Union, the Teamsters, AFSCME and the SEIU each publicly endorsed the demonstrators, while AFL-CIO area labor councils made protests possible in any number of cities. SEIU revolutionary organizer Stephen Lerner appears to have a prime mover in Chicago and elsewhere. Belated municipal crackdowns, cold weather and no doubt a certain amount of tedium have forced most occupiers indoors for now, but the movement they birthed will be here for years to come if unions have any say in it.

6) Unions were major recipients of waivers from Obama health care law they lobbied to create. The Patient Protection and Affordable Care Act, better known as "Obamacare," promised better and more affordable health care to a wider range of Americans when it was enacted in March 2010. Yet few people want to pay for the law's mandates, including - ironically - organizations, such as labor unions, that lobbied for the law. By last spring, the Department of Health and Human Services had awarded nearly 1,400 waivers to various group health plans from a requirement forcing sponsors to offer at least $750,000 in coverage per enrollee in 2011, a figure set to rise even higher until its phase-out in 2014. About a fourth of the waivers went to union- or unionized employer-sponsored plans representing about half of all covered workers. Hypocrisy rarely has been so expensive.

5) Former official of Screen Actors Guild benefit plan files complaint against SAG benefit plan bosses. Actors who belong to SAG have gotten a rude set of revelations over the last several months: The people in charge of their health and pension funds are in it for the money. Last September a recently terminated SAG benefits official, Craig Simmons, filed a complaint with the U.S. Department of Labor that it investigate plan managers for fraud, excessive compensation and other acts of malfeasance totaling anywhere from $5 million to $10 million. The likely culprits are SAG benefits plan CEO Bruce Dow and his cronies. Simmons and lately various SAG members are accusing Dow of whitewashing facts and blocking outside probes. Hopefully, this movie will have a happy ending.

4) Public-sector unions lead Wisconsin legislature shutdown. The unprecedented occupation of the Wisconsin State Capitol and surrounding area, far from being a spontaneous happening, was well-planned and coordinated. And it was state and local affiliates of AFSCME and teachers unions who provided the main guidance for this paramilitary campaign to turn the city of Madison into a virtual combat zone. All Democratic state senators, as an act of solidarity, absconded town and decamped to undisclosed locations in order to block a quorum necessary for action on new Republican Governor Scott Walker's budget proposals to close a two-year $3.6 billion deficit. The Battle of Wisconsin, in a sense, marked a new chapter in union aggression, going well beyond the strike as a tool to advance employee interests. And thanks to a union-dominated recall campaign, Walker's tenure in office remains in the balance.

3) SEIU anti-corporate radical activism continues. Andrew Stern resigned the presidency of the Service Employees International Union more than a year and a half ago, but the union under successor Mary Kay Henry continues to set the gold standard for labor radicalism. In 2011 the union, which now claims more than 2 million members, among other activities, stepped up its corporate campaign against Sodexo until slapped with a racketeering suit by the company, organized and endorsed "Occupy" rallies in cities throughout the nation, worked with a reconstituted ACORN chapter to invade a Southern California bank, and played a key role in the ongoing recall effort of Governor Walker in Wisconsin. In other words, the SEIU is being its usual self.

2) National Labor Relations Board serves as union advocate. Facing a clear Republican majority in the House and a significantly reduced Democratic majority in the Senate, organized labor last year found itself relying heavily on the executive branch to realize tangible gains. It knew it had an ally in the NLRB. The board, among other things, ruled in favor of unions in a "successor bar" case; established a rule shortening the time elapse between a petition filing for representation and a worker vote; and most dramatically, sided with the Machinists union's attempt to block production of the Boeing 787 Dreamliner jumbo jet at a second, nonunion plant in South Carolina. The board called off the dogs in December only because the international union and the company had just reached an agreement favorable to the union. As long as Obama, or any other Democrat, is president, more actions like these are likely.

1) FBI arrests 11 in probe of $1 billion+ Long Island Rail Road disability scheme. Since the late Nineties a thousand or more retired LIRR workers have known how to boost their income on the sly: Declare themselves "disabled." And they did it by visiting doctors with a reputation for manufacturing phony medical histories. FBI and New York State law enforcement agents, following a three-year probe, this past October arrested nearly a dozen persons, including a former United Transportation Union local president. But the damage has been done and may continue. A federal agency, the Railroad Retirement Board, may be on the hook for at least $1 billion in long-term payments if it can't declare beneficiaries ineligible. That the scam occurred and continued for so long owed largely to lavish benefit packages negotiated by various unions representing LIRR workers.

(Dis)honorable mention. Florida IBEW local benefits manager Gregory Sims sentenced for $800,000 embezzlement; Cincinnati public employees boss Diana Frey charged, pleads guilty to $750,000 embezzlement; Melissa King, benefits manager of New York City Laborers local, pleads guilty to theft, but denies she took the alleged $40 million; NYC ballet dancers union representative Leonard Leibowitz indicted, pleads guilty to $350,000 theft; Pittsburgh-area Iron Workers bookkeeper Jennine Prince indicted, pleads guilty to $400,000+ theft; Mia Garza, California SEIU health care local benefits clerk, sentenced for $1 million+ theft; ILWU workers riot at Washington State rail terminal to block grain shipment; Michigan Plumbers secretary April Franklin sentenced for stealing more than $400,000 from union; Louisiana-based Laborers benefits manager Theresa Waters pleads guilty to nearly $500,000 embezzlement; builders trade association boss Joseph Olivieri sentenced for role in $10 million NYC-area Carpenters benefit scam; SEIU and Teamsters-affiliated City of New York snow removal crews likely engaged in post-blizzard work slowdown as political payback; NYC-area bus drivers union boss Warren Annunziata sentenced for extorting $500,000 from bus companies; Wayne Mitchell, president of Communications Workers of America (CWA)-affiliated newspapers mailroom employees local in New York, sentenced for embezzlement; Puerto Rican sugar workers union boss pleads guilty to $450,000 in thefts; Montana Plumbers local secretary Teresa Wilson pleads guilty to stealing about $200,000; civil turmoil at Verizon employees CWA Local 1101 in New York takes new turn; Florida CWA local secretary-treasurer James Drury pleads guilty, sentenced for $300,000+ embezzlement; business agents of New Jersey Iron Workers, Laborers locals arrested for bribe-taking, while son of the Iron Workers agent pleads guilty to $560,000 theft.