Union Corruption Update

Since 1997, NLPC has become a high-profile and credible source for information about America’s labor unions through our publication Union Corruption Update.

The newsletter has been referenced in many other media outlets including the New York Times, Chicago Tribune and National Journal.

Long Island, N.Y. Couple Sentenced; Union Integrity in Question

Every so often, an accused person or persons, though guilty, invites a certain amount of sympathy.  Such appears to be the case of a Long Island, New York married couple, Michael and Dorothy Loguidice.  For a dozen years the pair had obtained public funds under false pretenses to run their trucking business, in the process misusing those funds.  On March 12, the Island Park pair was sentenced in U.S. District Court for the Eastern District of New York to 15 months of incarceration to be followed by three years of supervised release, plus nearly $300,000 in restitution payable to the IRS.  Operating through various enterprises, the Loguidices falsified information on application forms to obtain federal contracts and, once awarded, laundered funds to avoid paying taxes.  But underlying these acts are some highly disturbing aspects about how unions, particularly International Brotherhood of Teamsters Local 282, deal with “uncooperative” contractors.

Ex-IBT President, Comptroller in Chicago Indicted for Election Fraud

The old regime of Chicago’s Teamsters Local 743 is gone, but there’s some unfinished business – at least to federal prosecutors.  On March 6, Robert Walston and Thaddeus Bania, respectively, former president and comptroller of the local, were charged in U.S. District Court as part of a 14-count superseding indictment alleging conspiracy, mail fraud, services theft, and embezzlement related to a vote-fraud scheme.  As previously discussed in Union Corruption Update, Walston and other local officials had conspired to send ballots to wrong addresses in an October 2004 election.  That election was voided, and a subsequent re-run election was held two months later.  The incumbent “Unity” slate of Walston and Bania again won, but the U.S. Department of Labor, acting on a complaint by union dissenters, stepped in and filed a civil suit challenging the results.  The case finally was settled last July, when a federal court ordered another election to be held.  That September, federal prosecutors charged new President Richard Lopez and other persons associated with the union.

New Jersey Ex-Business Agent, Three Others Plead Guilty

The bribery scandal at International Union of Operating Engineers Local 825 seems to be producing dominoes by the month.  On or before March 26, four more persons associated with the Springfield, N.J.-based construction union pleaded guilty in federal court to accepting bribes from various contractors in return for permitting the contractors to avoid hiring and paying union labor.  The lead person in this group is Craig Wask, a former local business agent.  Wask, 60, a resident of Montvale, N.J., pleaded guilty to seven superseding counts before U.S. District Judge Stanley R. Chesler.  He’d been charged last July with, among other things, hiring the daughter of a union member for a no-show job at the construction site of the Goldman, Sachs tower (“30 Hudson”) in Jersey City.  Also pleading guilty were Francis Impeciati, Michael Giangrande and Manuel Pinto.

Former Business Manager in Pennsylvania Sentenced for Thefts

Of all circumstances surrounding union corruption, few are sadder than those triggered by gambling losses.  Such is the case of Joseph Capece, former longtime business manager of Local 163 of the International Brotherhood of Electrical Workers, based in Wilkes-Barre, Pa.  On March 18, Capece, 60, was sentenced in U.S. District Court to six months in prison and fined $4,000 for thefts from his union.  A resident of Nanticoke, Pa., he admitted in a February 2007 letter of resignation to the local president that his embezzlement was gambling-related.  He pleaded guilty last September to stealing overall around $256,000. 

Teamsters Oust Hahs; Await Response from Oversight Board

It may have been inevitable, but Don Hahs’ career as president of the Brotherhood of Locomotive Engineers and Trainmen has all but ended.  And it was Teamster General President James P. Hoffa, under the watchful eye of the feds, who performed the act of ending it.  On March 20, Hoffa removed Hahs from office on charges that he’d misspent tens of thousands of dollars in union funds, replacing him with Edward W. Rodzwicz, the BLE’s first vice president.  The Teamsters also fined Hahs nearly $45,000, and imposed a one-year suspension from union membership and contact with members of either the BLE or the Teamsters.  A Teamsters internal panel heard the charges and recommended the sanctions.  The case now will be submitted for approval by the Independent Review Board (IRB), the three-person entity created in the wake of the Teamsters-Justice Department 1989 civil RICO settlement.

International Union Takes Control of Shipbuilding Local in Maine

Having hardcore fun is one thing; using dues money to pay for it is another.  Unfortunately, Local S-6 of the International Association of Machinists and Aerospace Workers appears not to know the difference.  This past March 17, representatives from the IAM escorted eight local officials from the union hall, placing them on paid administrative leave pending an internal investigation of financial improprieties and misuse of computers.  In a letter sent to various media organizations dated February 19, regional IAM official Paul Shemanski cited “reports of financial and other mismanagement” and “complaints of vast amounts of pornography” accessed from computers belonging to the Bath, Maine union.  Local President Mike Keenan was among the local members removed.

Pennsylvania Ex-Local Secretary Pleads Guilty to Embezzlement

On March 14, Deborah Anthony, former financial secretary of United Steelworkers of America Local 1196, pleaded guilty in U.S. District Court for the Western District of Pennsylvania to one count of embezzling $1,245.45 in union funds.  The actual amount taken was far greater.  The plea agreement requires Anthony to make $34,134.47 in restitution.  She had been charged in November with eight counts of embezzlement totaling nearly $7,000 and one count of falsifying union records.  The guilty plea follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (OLMS, 4/4/08).

 

Former Treasurer in Ohio Charged with Embezzlement

NLRB Issues Proposal to Allow Quickie Union Elections

Some might call it Sudden Election Syndrome.  Others might call it the Stealth Employee Free Choice Act.  But a new proposal that effectively would bypass standard National Labor Relations Board-supervised elections could revolutionize labor relations in this country.  If nothing else, unions could make out like bandits in their organizing drives and corporate campaigns.  The source of this initiative:  the National Labor Relations Board.  On February 26, the NLRB published a notice of proposed rulemaking in the Federal Register that would allow a union and an employer to file a joint petition for a board-supervised election to be held on an agreed-upon date within 28 days.  This document, to be called an “RJ petition,” may have a good many dissenting workers crying foul.

New DOL Rule Would Promote Transparency in Trust Funds

Unions exist with an understanding that they are bound to uphold the trust of their members.  That principle, by definition, holds especially true for union trusts, which are designed to provide benefits for members and their families.  Examples of trusts include retirement plans, health and dental plans, apprenticeship funds, strike funds and credit unions.  Union officials don’t directly run these funds.  That job falls upon the shoulders of union-designated outsiders known as fiduciaries; i.e., trustees and managers.  As such, many financial transactions may operate outside the realm of documentation required by existing union disclosure forms – and miss a lot of corruption.  Over the years Union Corruption Update has uncovered numerous examples of fiduciary agents for the Carpenters, Teamsters, Laborers and other unions stealing from or otherwise mismanaging benefit funds, often with the full knowledge and cooperation of union officers.  For a half-decade, the U.S. Department of Labor (DOL), led by Secretary Elaine Chao, has sought to promote accountability in trust fund management.  It’s now attempting, for a third time, to get an initiative off the ground. 

                          

On March 4, the Labor Department published a notice in the Federal Register concerning a proposed rule on union reporting on trusts.

Ex-New York City Labor Council Head McLaughlin Pleads Guilty

Brian McLaughlin probably knew all along this was a rap he couldn’t beat.  The weight of evidence that he’d siphoned funds from his union federation and other organizations was too great.  On March 7, the former New York City labor leader and politician pleaded guilty in U.S. District Court in Manhattan to various racketeering charges.  McLaughlin, 55, had served as president of the New York City Central Labor Council (CLC) and as a seven-term Democratic New York State Assemblyman from Queens.  In 2006, a two-count federal indictment specified 21 offenses against him in connection with illegal obtaining of a combined $2.2 million from unions, contractors, taxpayers and his campaign re-election committee.  Union Corruption Update has covered the case since it first broke two years ago. 

Business Manager, Ex-President of New Jersey Local Indicted

Local 825 of the International Union of Operating Engineers has been a prime target of federal prosecutors as of late.  Last spring, more than two dozen officials, members and associates of the Springfield, N.J.-based union were arrested for a wide range of criminal acts.  Two more persons now can be added to the dragnet, Kenneth Campbell and Peter Strannemar, respectively, the union’s current business manager and former president.  On Tuesday, March 11, special agents with the FBI, IRS and Department of Labor unsealed a four-count indictment before U.S. Magistrate Judge Esther Salas charging the pair with receiving bribes in connection with two major construction projects in Jersey City.  The case, indirectly, is mob-connected.

Upstate New York Chieftain Sentenced for False Record-Keeping

To the Department of Labor, there was something strange about the way William Drake kept the books.  Their suspicions were well-founded.  On February 28, Drake, formerly president of United Steelworkers Local 1013T, was sentenced in U.S.

VW Union Organizer Convicted, Sentenced for Taking Bribes

Volkswagen is the world’s fourth-largest automaker, right behind General Motors, Toyota and Ford.  Nearly 25,000 vehicles roll off its assembly lines during a typical work day in more than 40 plants across Europe, the U.S. and elsewhere.  The Wolfsburg (Lower Saxony) Germany-headquartered company, with a worldwide work force of 325,000, is heavily dependent upon union cooperation to maintain smooth operations.  That’s true in industry in general throughout Western Europe, where labor officials take a far more active role than here in shaping key management decisions.  Unfortunately, this concentration of power presents possibilities for shady quid pro quo arrangements.  And union officials are no more immune to corruption than management, especially with the prospect of lusty sex.

Supreme Court Declines to Review Case of Hawaii Pair

They went down fighting to the very end.  And while nobody will question the tenacity of Gary Rodrigues and his daughter, Robin Rodrigues Sabatini, a good many might question their soundness of judgment and even mental well-being.  This past February, the U.S. Supreme Court announced that it had declined to hear their appeal.  Rodrigues, former longtime Hawaii state director of the United Public Workers, had been convicted in November 2002 by a Honolulu jury on dozens of criminal charges, including mail fraud, conspiracy, money-laundering and embezzlement in connection with the theft of about $380,000 in union funds.  Free on bail, he began serving a five-year prison sentence this past January.  His daughter, convicted on dozens of charges herself and sentenced to 46 months in prison, had laundered much of the money through her “consulting” operations.  It was an outcome neither could accept.

Southern California Teachers Plead No Contest to Thefts

Ava Shaw and Jennifer Boyd were the best of friends.  Fellow teachers and teachers’ union members in San Gabriel, Calif., they dined, shopped and vacationed together.  Unfortunately, those good times often came at the expense of their union – and without the union’s consent.  Their luck ended nearly two years ago with their arrest for embezzlement of around $85,000 in union funds.  On February 15, the pair pleaded no contest to theft in Los Angeles County Court.  Shaw awaits sentencing at a restitution hearing, while Boyd was placed on three years probation and ordered to perform 45 days of community service with the California Department of Transportation.

Former Administrator, Associate Charged with Embezzlement

With the three-month strike by the Writers Guild of America (WGA) now over, the 12,000-member film and television writers’ union now can concentrate on less pressing matters.  On at least one of them it can expect government help.  The U.S. Justice Department announced on February 28 that an information count had been filed against a former union assistant administrator and an associate for embezzling from a fund to pay guild members for works sold, distributed and aired in other countries.  Prosecutors allege the ex-official, Michelle Trinh, 28, had set up an accomplice, Tracey Howze, 45, as a guild member or heir so that the latter could receive three checks totaling $17,228.  Each was charged with conspiracy and has agreed to plead guilty.

Texas Secretary-Treasurer Pleads Guilty to Thefts

Kyle Batts tried to make ends meet on his union credit card.  He wasn’t thinking ahead.  On February 27, Batts, 38, former secretary-treasurer of International Brotherhood of Electrical Workers Local 738, pleaded guilty in U.S. District Court for the Eastern District of Texas to embezzling $40,580.83 in union assets.  Roughly during the period April 2003-August 2006, he used a union credit card to pay for personal expenses.  The union is based in Longview, about an hour and a half east of Dallas.  The guilty plea follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (States News Service, 2/27/08; OLMS, 3/6/08).

 

Tennessee Local President Sentenced for Embezzlement

AFL-CIO Files Suit to Block New Financial Reporting Rule

Theft within a labor organization, like theft within a corporation, can go undetected for years.  Union officials have become increasingly sophisticated in how they conduct financial transactions.  And like corporate theft, a good portion of union-related criminal activity could have been avoided if potential conflicts of interest were disclosed beforehand.  That’s why the U.S. Department of Labor (DOL), led by Secretary Elaine Chao, during this decade has been trying to inject more detail into union annual financial reports.  The added time and cost of compliance might seem an exercise in needless aggravation, but consider the alternative:  ever higher amounts of funds illegally diverted from union accounts into the pockets of their chieftains, families and associates.  Labor officials – the honest ones included – understandably don’t like the new rules.  Several years ago, the AFL-CIO, incensed over the department’s introduction of a longer Form LM-2 (the one required of larger unions), went to federal court to block its implementation.  It lost on appeal in May 2005.  But the Washington, D.C.-based federation hasn’t lost its taste for battle with the Labor Department.

Rift between International Union and California Affiliate Widens

The Service Employees International Union is growing at a time when most other unions are not.  It now has 1.9 million dues-paying members, a near doubling from early 1996 when current President Andrew Stern took over the helm.  Things, in other words, have worked out according to plan.  Stern’s grow-or-die gospel is central to the way his union organizes and negotiates.  It’s also the main reason for the eventual split that occurred between him and his predecessor, John Sweeney, who ascended to the AFL-CIO leadership.  That split became formalized in the summer of 2005, when the SEIU and a half-dozen other AFL-CIO affiliates formed their own federation, Change to Win.  But Stern has opponents within his own union, too, most of all in the form of Sal Rosselli, head of a 140,000-member, Oakland, Calif.-based affiliate, United Healthcare Workers-West.  Union Corruption Update reported last year that Rosselli was highly dissatisfied with the way SEIU leaders from Washington, D.C. headquarters apparently strong-armed into being a substandard contract between UHW-West and California nursing home operators.  Relations since have deteriorated further.

High Court to Review Complaint of Dissenting Workers in Maine

That state and local unions use dues to support political campaigns is neither shocking nor illegal.  But using fees collected from non-members in order to support litigation on a nationwide basis is another story.  The U.S. Supreme Court thinks so as well.  On February 19, the High Court granted a petition for a writ of certiorari (i.e., agreed to review a lower court decision) filed by the National Right to Work Legal Defense Foundation on behalf of 20 state employees in Maine.  The case, Daniel Locke et al. v. Edward Krauss et al., concerns the use of nonmember agency fees of the Maine State Employees Association (MSEA), also known as Local 1989 of the Service Employees International Union.

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