Top Ten Union Corruption Stories of the Year
The increasing overlap of labor and political activism is an insidious form of public corruption in this country. It enables union officials to deemphasize their role of representing workers at the bargaining table in favor of advocating policies to socialize the economy, building incestuous relationships with politicians, and fattening their bank accounts. This tendency was heavily felt in 2012, a presidential election year. Union leaders recognized the need to re-elect their ally and benefactor, President Barack Obama, over someone a wealthy Republican with a strong business background; i.e., someone they truly could despise. They got what they wanted. In the process, they further built a political infrastructure. Yet union leaders also experienced reversals of fortune at the state level - most of all, in Michigan - where they had been used to getting their way.
The passage by the Michigan legislature this past December of a pair of Right to Work laws - one each covering the private and the public sector - has to rank as one of the most audacious moves in the history of American labor politics. Aggressive unionism, long a major factor behind the state's high unemployment rates and high budget deficits, led Republican Governor Rick Snyder to believe that such legislation was necessary. As such, unions no longer can negotiate a "security clause" into a collective bargaining agreement requiring an employer to fire employees refusing to pay dues or agency fees. Michigan thus becomes the nation's 24th state with such legislation. The move occurred in the immediate wake of voter rejection in November, by a 57-43 percent margin, of a union-driven initiative, Proposal 2, to provide almost unlimited opportunities for unions to file court challenges against legislation they find objectionable. Union activists, highly displeased by the outcome, took a cue from their Wisconsin neighbors, assembling outside the State Capitol in Lansing for a mass protest; a couple thousand demonstrators illegally occupied the interior.
In Wisconsin, union activists and their nonprofit network weren't on their worst behavior, as they had been during early 2011 when they took their Capitol building by force and shut down government for three weeks. Notwithstanding, they did what they could to make life miserable for Republican Governor Scott Walker whose proposed curbs on public-sector collective bargaining were passed by the legislature not long after the occupation died down. Activists that year tried to undo the legislation via legislative recall, an effort that in fact came close to succeeding, but ultimately failed. Their next move was to circulate a petition to recall Gov. Walker. The petition obtained a sufficient number of signatures, but the recall election, held June 5, 2012, didn't pan out. As back in November 2010, Walker defeated Democratic challenger Tom Barrett by a comfortable margin. But unions would recoup much of the lost ground in September when a state circuit judge invalidated the collective bargaining limits, as they applied to local government employees. State Attorney General J.B. Van Hollen quickly filed an appeal. The Wisconsin war continues.
Unions focused much of their attention last year on long-range institution-building, especially in tandem with the Democratic Party. The AFL-CIO, having endorsed Obama in March, turned loose hundreds of thousands of union members and allies to win support for Democratic candidates at all levels, employing such means as canvassing, social media and voter registration drives. A union-sponsored political action committee, Workers' Voice, raised much of the funding. Organized labor, especially the Service Employees International Union (SEIU), mobilized the most politically ambitious among Occupy Wall Street rabble (and offshoots) to form seemingly benign nonprofit front groups. Unions have deep pockets. During 2005-11, noted the Wall Street Journal, unions spent $4.4 billion on federal election campaigns and lobbying, of which three-fourths went for "hidden" expenses such as volunteer labor. To boost those numbers, they'll have help from a longstanding Workers United-owned, New York-based institution, Amalgamated Bank, now expanding its outreach to Democratic Party-connected depositors. Amalgamated had been on the verge of insolvency in 2011, but received bailout commitments from two Democratic Party-connected private equity funds.
If unions sent their people on political missions, they also, once again, produced their share of financial impropriety. Last year brought forth numerous instances of union officials, office employees, business agents and contractors ripping off members or the general public. The most far-reaching corruption story occurred in April when an 18-count indictment came down from Brooklyn federal court against 11 persons for racketeering, embezzlement, extortion and other offenses. The indictments were in conjunction with an FBI arrest raid. The charges underscored the inroads of the Genovese crime family in New York City-area locals and the larger reality that the Mafia-union connection is hardly a "thing of the past."
Union crooks don't necessarily need the Mafia's help to ply their skills. The New York City area alone provided a bumper crop of cases last year. Two separate ripoffs afflicted Teamsters Local 282, which until about a decade ago had been a branch office of the Gambino crime family. Gerardo and Vincent Fusella Jr., owner-operators of a New Jersey trucking company, were charged in Brooklyn federal court for stealing more than $1 million from the union. In another case, five persons involved in construction hauling were indicted for diverting in excess of $5 million of scheduled member benefits into their pockets, part of an illegal "double-breasting" scheme. Elsewhere, John McNamee Jr., boss of New York City's International Association of Theatrical Stage Employees (IATSE) Local 829, was indicted in February for embezzling hundreds of thousands of dollars; he pleaded guilty in October. This criminal case is separate from a civil suit against local trustees for mismanaging millions of dollars in benefits. In September, Hector Lopez, former boss of a Queens, N.Y. Painters union affiliate, was arrested and indicted for kickbacks and thefts totaling nearly $750,000. James Kearney Jr., former secretary-treasurer of Iron Workers Local 45, was sentenced to 30 months in prison for embezzling $560,000 from the Jersey City construction union. And in a fitting conclusion to a case that exploded in 2009, Melissa King, former benefits administrator for New York City's Laborers Local 147 - aka "the Sandhogs" - got her just deserts in June in the form of a six-year prison sentence for stealing a mind-boggling $42 million.
Financial impropriety and its consequences were news elsewhere. In the Milwaukee area, Sandra Jungbluth, an accountant for a consultant handling benefits for an Operating Engineers affiliate in Wisconsin, received a suspended three-year prison sentence, plus three years of probation, in June for stealing more than $450,000 in union funds following her no-contest plea the previous December. In suburban Maryland near Washington, D.C., Ava Ramey, an ex-trustee of United Government Security Officers of America Local 21, was charged with embezzling more than $375,000 from the union; she pleaded guilty later that month and was sentenced earlier this month. Another Washington-area security union boss, Caleb Gray-Burriss, was found guilty of mail fraud and embezzlement in the hundreds of thousands of dollars. A sheriffs' deputy union boss in El Dorado County, Calif., Donald Atkinson, pleaded no contest to stealing more than $400,000 from his union. T. J. Bonner, longtime head of the union representing U.S. Border Patrol agents, was indicted in San Diego federal court for ripping off hundreds of thousands of dollars. And ex-Cincinnati public employees boss Diana Frey was sentenced for stealing more than $750,000 from her union. And this is but a partial list.
The following, in reverse order, are the top ten union stories occurring and/or reported in these pages in 2012:
10) New Jersey construction boss, five others plead guilty to fleecing Laborers, Plasterers rank and file. The gleaming new 48-story towers at 77 Hudson Street in Jersey City, N.J., provide wonderful amenities, but the construction process provided six persons, including a reputed associate of the Gambino crime family, with amenities of different sort: under-the-table payments by a concrete subcontractor. The result was a shortchanging of Laborers Local 325 and Plasterers Local 780 members out of a combined $2.25 million in scheduled wages/salaries and benefits. Each defendant pleaded guilty Newark federal court.
9) Boilermakers top brass receive grossly outsized pay. Union officials often live a lot more lavishly than members. Yet if one labor organization stands out in this respect, it might well be the International Brotherhood of Boilermakers. A special report appearing in the Kansas City Star in May revealed IBB leadership to be a case of excess and nepotism run rampant. From President Newton Jones on down, dozens of officials and staffers at Kansas City, Kan. headquarters receive annual compensation well into the six figures. A group of union dissenters have voiced objections.
8) NLRB chaos continues. It's been years since the National Labor Relations Board has operated at full strength with five members with full appointments. The wait is likely going to be a good deal longer. President Obama, possibly in unconstitutional ways, appointed three persons - two Democrats and one Republican - in January 2012 to temporary recess appointments. The problem is that the congressional "recess" may have been anything but that. A federal appeals court this past December heard arguments in a case challenging the legitimacy of the appointments. Until the quagmire is cleared, NLRB will continue to be dysfunctional.
7) New book exposes dangers of public-sector unionism. Organized labor enjoys a special power in the public sector because employers usually bear the brunt of public wrath in the event of a strike or slowdown. Unions use this natural political advantage to secure unsustainable wage and benefit packages at taxpayer expense. Husband and wife Mallory and Elizabeth Factor, familiar with the mutually reinforcing nature of public-sector unionism, employee politicization, corruption, and the enlargement of government, decided to write a book about it. The result, "Shadowbosses: Government Unions Control America and Rob Taxpayers Blind," is a must-read indictment of how public-sector unions place the nation's welfare in jeopardy.
6) Contractors rip off New York City-area Teamsters Local 282. The practice of "double-breasting" - a contractor running a dual union-nonunion shop under different names to avoid paying unionized workers contracted wages or benefits - is a common arrangement that cheats dues-paying union members. Teamsters Local 282, formerly a ward of the Gambino crime family, twice was victimized in separate cases until indictments came down. Five persons involved with hauling operations for New York City construction projects were indicted for embezzlement, fraud and unlawful payments amounting to more than $5 million. And brothers Gerardo Fusella and Vincent Fusella Jr. were indicted for a similar $1 million scam.
5) SEIU-controlled nonprofit network grows. Occupy Wall Street rallies and their various knockoffs made headlines in the fall of 2011 by railing against the one percent of Americans who make, or have, "too much" money. Union outreach to these demonstrators in 2012 was less theatrical but more crucial. Led by the Service Employees, organized labor took the best and the brightest of the anti-corporate activists, such as they were, to run nonprofit front groups across the U.S. These organizations appear to be spontaneous grass-roots expressions, but the details reveal they're being directed by the same political team - the union team.
4) Public-sector unions in Wisconsin fail to oust governor; succeed in halting collective bargaining reform. The coordinated mass takeover of the Capitol building in Madison in February 2011 proved to be merely the first phase in a continuing campaign by Wisconsin's public-sector unions and allies to derail Republican Governor Scott Walker's sensible curbs on union benefits and bargaining privileges. Unable to create a Democratic Party majority in the state Senate via recall that year (they did come close), activists gathered petitions for the ultimate step: recalling Walker via election in June. That effort failed, too. But they managed to persuade a state circuit judge three months later to strike down the curbs as they applied to local government workers.
3) Unions finance Democratic Party growth; help re-elect Obama. Organized labor, most of all the AFL-CIO, thinks politically, especially in a presidential election year. Unions worked overtime to build their political infrastructure. They did everything they could to deliver for their candidates, whether it involved raising funds or spending them. They won the big prize - Obama's re-election - but were less successful at the state level, where Republicans now comprise 30 governors.
2) Michigan voters rebuke union power grab; legislature then enacts Right to Work law. Who would have guessed it? Michigan, long one of the most unionized states in the U.S., emerged as the leader in turning back private- and public-sector union intimidation. Union leaders and their allies managed to collect enough signatures for a November referendum, Proposal 2, to amend the state constitution to give labor unions enormous veto power over the legislature. Voters, however, turned back this unprecedented power grab by a 57-43 percent margin. The following month, led by emboldened GOP members, the legislature passed Right to Work laws applying to private- and public-sector unions.
1) Genovese mob indictments uncover extensive union ties. A mass arrest or indictment is often an excellent reminder of why organized crime and organized labor can be tough tell apart. This April, federal prosecutors announced an 18-count indictment of 11 persons involved in various offenses following their arrest by FBI agents. At least eight were soldiers or associates of the feared Genovese crime family. The maypole of this activity appears to be Conrad Ianniello, nephew of aging family ex-boss Matty "the Horse" Ianniello, who passed away in August. Two locals of the International Union of Journeymen and Allied Trades were among the mob fiefdoms.
(Dis)honorable mention: New York City Painters union boss Hector Lopez indicted for $750,000 in kickbacks, thefts; Cora Carper, Maryland-based manager of a political action committee sponsored by the Heat and Frost Insulators and Allied Workers, indicted for embezzling more than $500,000; Philadelphia AFSCME benefits contractor Jonathon Felix convicted of tax fraud in an amount of nearly $400,000; United Food and Commercial Workers Pennsylvania district boss Ernest Milewski sentenced for $200,000-plus embezzlement; Screen Actors Guild benefits boss Bruce Dow forced out in wake of lawsuit over missing funds; New York IATSE local president John McNamee Jr. indicted and later pleads guilty; T.J. Bonner, Border Patrol union president, indicted for theft; Raymond Norville, contractor for International Longshoremen's Association Local 1233 in Newark, N.J., arrested for massive ripoff; Pittsburgh-based Iron Workers Local 3 bookkeeper Jennine Prince sentenced for $400,000-plus theft; Queens, N.Y. Painters Boss Hector Lopez indicted; New York City Sandhogs ex-benefits manager Melissa King sentenced for $42 million in thefts; Steven Bako, Milwaukee Laborers local secretary-treasurer, loses more than $1 million in investments; four members of Teamsters Local 82 ("the Perry Crew")indicted for shakedowns at Boston convention/trade show events; Sandra Jungbluth, Milwaukee-based benefits accountant for Operating Engineers affiliate, sentenced for $450,000 theft; New York Thruway workers union lawyer Kevin Clor pleads guilty, sentenced for theft of nearly $200,000; Cincinnati public employees boss Diana Frey sentenced for $750,000-plus theft; Ava Ramey, Maryland-based security guard union trustee, indicted, pleads guilty, and is sentenced to embezzlement in excess of $375,000; Caleb Gray-Burriss, boss of Washington, D.C. security guard union, found guilty of mail fraud, embezzlement; James Kearney Jr., secretary-treasurer of New Jersey Iron Workers local, sentenced for $560,000 in thefts from union; Vernell Reynolds, president of Miami Police Benevolent Association, indicted, pleads guilty to $200,000-plus theft; Pat Santeramo, former president of the Broward County, Fla. affiliate of American Federation of Teachers, charged with stealing nearly $300,000 in union funds; El Dorado County, Calif. deputy sheriffs union president Donald Atkinson pleads no contest to $400,000 theft and is sentenced.