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.

New Jersey Mobsters Charged in No-Show Union Job Scam

To get a job on the massive Goethals Bridge reconstruction project, Andrew Merola was the man to see.  Whether one actually did any work was a separate issue.  Asking too many questions could get someone hurt – at least until late last month.  The FBI and various state and local authorities in New Jersey, starting on May 21, arrested a reported 25 suspects involved in a wide variety of criminal schemes, including labor racketeering.  A reputed Gambino crime family soldier with close connections to the Lucchese family, Merola, 40, allegedly ran a ghost-worker operation for International Union of Operating Engineers Local 825 (Springfield, N.J.) and Laborers International Union of North America Local 1153 (Jersey City) from a taxpayer-funded construction site in Elizabeth underneath the Goethals Bridge (the section of I-278 connecting New Jersey with northern Staten Island, N.Y.), where he had obtained a job through Local 825.  “Merola benefits from the activities of dozens of associates who report to him on their activities, which range from gambling to loan-sharking to a highly organized theft ring dealing in high-end merchandise,” said Union County (N.J.) Assistant Prosecutor Scott Kraus.

Convicted Texas Boss Sentenced for Fraud, Embezzlement

When Chuck Crawley was convicted by a federal jury last December for arranging a $20,000 kickback from a union vendor and rigging his local’s 2002 election, few expected he would receive leniency come sentencing time.  He didn’t get much either.  On May 25, Crawley, formerly president of International Brotherhood of Teamsters Local 988 in Houston, Texas, was handed a six-and-a-half-year sentence by U.S. District Judge Melinda Harmon.  A jury had found him guilty of one count each of mail fraud and falsifying union records, and two counts of embezzlement.  He had been in custody since his arrest a year ago.  “This is a very, very, very serious crime that flies in the face of what a president of a union is supposed to be about,” said Judge Harmon.  “Not only did he get in there fraudulently, but he was fraudulently getting money.”  Crawley, 57, also will have to figure out how to make $121,478 in restitution, a sum representing a year’s pay plus $20,000.

Benefits Manager for Westchester County, N.Y. Local Sentenced

When the federal government assumed control over the Teamsters in 1989, it faced the task of rooting out corruption from any number of locals as well as from the international union.  One of the toughest cases has proven to be Local 456, based in the Westchester County, N.Y. village of Elmsford.  The union, for decades led by the Doyle family, is a tight fiefdom and a local power broker.  And a decade ago, knowingly or not, it allowed an embezzler to manage its benefit plans.  The recent sentencing of former benefits manager Kenneth Decter, owner of Unity Management, Inc., should serve as a reminder.  On December 20, 2006, Decter was ordered by a federal court to serve 23 months in prison and pay more than $4.25 million in restitution after pleading guilty in 2004 to wire fraud and theft from union funds.

Chicago Businessman Pleads Guilty to Benefit Fund Fraud

Stuart Levine’s ruse of innocence could last only so long.  The Chicago businessman and former board member of the Illinois Teachers Retirement System (TRS) pleaded guilty in U.S. District Court on October 27, 2006 to charges of mail fraud and money-laundering in connection with kickbacks of retirement funds of active and retired teachers outside the city of Chicago.  Levine had been indicted in August 2005 on 13 counts of wire fraud, mail fraud, soliciting a bribe, and attempted extortion.  He allegedly conspired with several other persons, including Tony Rezko, a top fundraiser to current Illinois Democratic Governor Rod Blagojevich, to obtain control over lucrative union-sponsored contracts, requiring that firms seeking to do business with the TRS pension fund and the Illinois Health Facilities Planning Board pay kickbacks to ensure approval of their applications.

Ex-Financial Secretary in Virginia Sentenced for Embezzlement

On May 25, David Taylor, formerly financial secretary for Carpenters and Millwrights Local 1402, was sentenced in U.S. District Court for the Eastern District of Virginia to 12 months and one day in prison and fined $35,074.18.  Last October he pleaded guilty to one count of making false statements on Department of Labor financial reporting forms in order to cover up his embezzlement of $72,422 in union funds.  He previously paid full restitution plus more than $14,000 in interest to the Richmond-based union, affiliated with the United Brotherhood of Carpenters and Joiners.  The sentencing comes after an investigation by the Labor Department’s Office of Labor-Management Standards.  (OLMS, 6/12/07).

 

Upstate New York Local Treasurer Sentenced for Embezzlement

Pension-Backed Film Studio in New Mexico Target of Fraud Suit

Albuquerque isn’t about to replace Hollywood anytime soon as the nation’s movie and television capital.  But a new studio nearing completion at least should make the fast-growing New Mexico city and surrounding area a major industry presence.  The $74 million, 50-acre facility, by all accounts, is state of the art.  The financing, however, has involved some old-fashioned expense-account fraud – or so certain Los Angeles businessmen allege.  On April 9, Pacific Coast Capital Partners (PCCP), the majority owner of Hollywood’s famed Culver Studios, filed suit in Los Angeles County Superior Court.  The partnership charges that the project’s main financial backer, the Santa Monica, Calif.-based Pacifica Ventures, and its two principal officers, Hal Katersky and Dana Arnold, fraudulently billed Culver Studios more than $1 million for various services.  What makes this action particularly intriguing is that Pacifica received extensive funding from union pensions to get the project off the ground.

ACORN Worker Pleads Guilty to Vote Fraud in Kansas City, Mo.

The Association of Community Organizations for Reform Now, or ACORN, has done a lot of heavy lifting over the past few decades for the Democratic Party Left.   Launched in 1970 and still run by Service Employees International Union Local 100 chief organizer Wade Rathke, the massive nationwide nonprofit network of anti-poverty activists has been focusing much of its firepower lately on voter registration.  They play hardball and are proud of it, regardless of whether their tactics are legal.  Results are what matters.  And last year in Missouri, the group delivered results.  By a less than 50,000-vote margin, State Auditor Claire McCaskill, a Democrat, was elected as the state’s newest U.S. Senator over GOP incumbent Jim Talent.  In the process, ACORN unwittingly set the stage, especially in Kansas City, for indictments and guilty pleas against several of their former workers.

Chicago Local, Building Owners Set for Trial Over Secret Deal

It seems like a classic labor-management sweetheart deal.  But a case set to go before a federal administrative law judge in Chicago is likely to have implications well beyond the deal itself.  The trial, scheduled for June 11, pits a major security firm, the Wackenhut Corporation, against the defendants, Service Employees International Union Local 1 and the Chicago Building Owners and Managers’ Association (BOMA).  Wackenhut earlier had filed an unfair labor practice charge with the National Labor Relations Board, charging the SEIU and BOMA with entering into agreements that effectively forced association members to hire security companies with SEIU-unionized work forces.  Additionally, Wackenhut charged, the defendants coerced building managers to end any existing business relationships with nonunion security companies.  The real significance of the case, however, may be as a test of the legitimacy of pending card-check legislation.

S.F. Bay Area Boss Indicted for Embezzlement, Records Fraud

Graham Paul Vane liked to live well.  Most people do.  The problem was that he made fellow dues-paying union members poorer in the process.  On May 24, a federal grand jury in San Francisco indicted Vane for embezzling more than $170,000 in funds from Branch 1280 of the National Association of Letter Carriers, and falsifying union records to conceal his thefts.  Graham, 59, a resident of Pacifica, Calif., during January 2002-March 2006 allegedly diverted union funds to pay for such personal expenses as dining, travel, massages, jewelry, wine and gasoline.

Ex-Employee of Maine Union Sentenced for Embezzlement

Catherine Crosier didn’t set a good example to students.  She got a stern reminder of that at her sentencing hearing in federal court.  Crosier, a former employee of the 25,000-member Maine Education Association, an affiliate of the National Education Association, was sentenced on May 7 to six months in prison to be followed by three years of supervised release.  Crosier, 46, a resident of Augusta, pled guilty last November to one count of embezzling more than $45,000 in union funds during June 2002-January 2004.  She had made out about 180 union checks either to herself or petty cash.

Maryland Local Treasurer Pleads Guilty to Embezzlement

On May 3, Walter Fisher, former treasurer for Local 1949 of the United Transportation Union, pleaded guilty in federal court for the District of Maryland to one count of embezzling funds from the Ellicott City-based union in an amount greater than $30,000 but less than $70,000.  The guilty plea follows an investigation by the Labor Department.  (OLMS, 5/30/07).  

  

Former Secretary-Treasurer of Pittsburgh-Area Local Sentenced

Billionaire Clinton Friend, Union Accused of Racketeering

Ron Burkle is a very wealthy man, with a net worth listed last year in Forbes magazine at $2.5 billion.  He’s also a close friend of former President Bill Clinton.  That relationship is now coming under greater scrutiny given the backdrop of Burkle’s now-successful attempt to buy out a major long-distance car-hauling company, with an able assist from the International Brotherhood of Teamsters.  On April 23, investors of Hawk Opportunity Fund sued Burkle’s private-equity company, Yucaipa Companies, in Atlanta federal court, charging Yucaipa and IBT leaders with racketeering in Yucaipa’s takeover of Allied Holdings, Inc., North America’s largest hauler.  The plaintiff is demanding $200 million in damages, a figure that could triple under RICO statutes. Yucaipa thinks the case is groundless.  “We think that this suit is totally without merit,” said company lawyer Robert Klyman.  A Teamsters spokesperson likewise dismissed the suit as having no basis.  But the surrounding facts notwithstanding provide a window to the ways in which Hillary Clinton will fund her bid to become the next U.S. President.

Founder-President of D.C. Union Searched, Faces Probe

Caleb A. Gray-Burriss built his union from the ground up.  Now he’s run aground, and might be headed for an indictment.  Federal authorities revealed that in April they had raided the home and office of Burriss, founder and head of the 800-member National Association of Special Police and Security Officers (NASPSO), based in Washington, D.C.  According to an affidavit filed by the U.S. Labor Department’s Office of Inspector General, department investigators searched for documents related to the disappearance of $95,000 in pension and health plan dues, plus “numerous, ongoing withdrawals” from the accounts to cover travel and other personal expenses.

South Florida Local Bosses Ousted by Internal Ethics Board

A theft in the four figures might not seem worth a year-long investigation.  But UNITE HERE is a union unlikely to leave things to chance – especially given its recent history of federal supervision.  On May 1, the union’s ethics board took disciplinary action against two top officials of Local 355, representing 2,700 hotel, restaurant and catering workers in the Miami-Ft. Lauderdale area.  Jorge Santiesteban and Andre J. Balash, respectively, the local’s president and secretary-treasurer, were forced out of their positions after a UNITE HERE internal probe concluded the pair had diverted union funds toward personal expenses, among other violations.  The New York City-based international union also recommended placing the local under trusteeship.

Ousted Chicago Official Faces Fine, Jail for Violating Gag Rule

Part of the federal oversight of the International Brotherhood of Teamsters involves barring expelled members from talking to existing ones – and vice versa.  It can get pretty frustrating.  Just ask William Hogan, Jr.  In May 2002, the Teamsters’ three-member court-monitored investigation and ethics panel, the Independent Review Board (IRB), imposed a lifetime ban on Hogan’s participation in union affairs, the result of his involvement in a scheme to deliver a substandard contract while enriching himself.  What’s more, pursuant to the terms of the union’s 1989 out-of-court civil RICO settlement with the federal government, the IRB barred Hogan and members from communicating with each other.  Hogan, a former big gun in the Chicago Teamsters hierarchy and an ally of current General President James P. Hoffa, suddenly was a non-person in his own union.  Now the IRB is saying the firewall created by its 2002 ruling wasn’t thick enough.  Hogan, the panel charges, made more than 150 union contacts prior to the close of 2005.  If the allegation is true, Hogan faces a $5,000 fine and a six-month stretch in jail.

Ex-Employee of Florida Union Sentenced for Role in Scam

James Lynch was a mere boat captain employed by Michael McKay, the now-imprisoned ex-president of the American Maritime Officers union.  But McKay, along with his younger brother, former secretary-treasurer Robert McKay, has begun doing time in federal prison on racketeering charges.  And the U.S. Justice Department believed Lynch had participated in their theft.  On Friday, April 27, prosecutors announced that Lynch, 56, had received a 30-month-prison sentence for his role in defrauding the union.  He also will undergo two years of supervised release and make restitution in the amount of at least $103,119 to the union’s benefit plans plus forfeiture in that same amount to the government.

Detroit-Area Official Charged with Embezzlement, Bank Fraud

For seven years Alan Raines thought he could outsmart his union.  Then reality caught up.  Raines, financial secretary for Local 1358 of the United Steelworkers, recently was charged in Detroit federal court with embezzlement and bank fraud.  During 1999-2006, say federal prosecutors, Raines stole nearly $275,000 in funds from the 300-member Southfield, Mich. union, forging a third-party name on union checks, and using the proceeds to pay for personal expenses.  (Detroit News, 5/14/07).

 

NYC Union Member Sentenced for Role in Racketeering Scam

California Nursing Home Pact Stiffs Workers, Taxpayers

SEIU logoIf growth in numbers were all that mattered, the Service Employees International Union’s Andrew Stern would be America’s most successful labor leader, hands down.  As a top lieutenant in that union to president and future AFL-CIO head John Sweeney, and then, starting in early 1996, as SEIU president himself, Stern has built his union into a powerhouse – “1.8 million members and growing,” to quote the union’s website.  Supporters of mass immigration among organized labor officials point to the fact that a huge portion of that growth is attributable to foreign-born persons, especially from Mexico and other Spanish-speaking countries.  This, they argue, is evidence that Third World mass immigration is good for the SEIU and for unions as a whole.  But growth may have come at a steep price:  sweetheart deals that all but in name deliver substandard contracts for members.  One large health-care workers’ local in California thinks Stern has sold out his people, a rift suggesting a major power struggle ahead within the Service Employees and its parent federation, Change to Win.

Ex-Official of New Mexico Local on Trial for Murder of Member

Take two men with a temper, and mix them with alcohol, a gun, and union business.  The results can be lethal.  That was the case five years ago at International Brotherhood of Electrical Workers Local 611 in Albuquerque.  Andrew Palmer, former union president and business manager, shot union member and independent contractor Chris Romero to death after an argument at a local bar over union financial affairs.  Charged with one count of murder, Palmer, now 58, belatedly went on trial last month.  That Palmer was the triggerman is not in doubt – in fact, he’d turned himself into police on the day of the shooting.  But the circumstances surrounding the death were ambiguous enough to produce a hung jury on April 27 following several days of deliberation.

Family, Associates Indicted for Looting New Jersey Local

The family that played together may wind up going to prison together.  On April 24, a federal grand jury indicted a family of three for embezzling from an Ocean County, N.J. labor union in excess of $250,000 over seven years.  Named in the indictment are August and Rhoda Vergallito, each aged 72, and their daughter Kimberly Vergallito, 42, all residents of Brick Township.  The trio, along with associates Isaac Barocas, 66, and Charles Purcel, 46, allegedly ripped off Local 911 of the International Union of Production, Clerical, and Public Employees during 1999-2006.  Kimberly Vergallito’s positions within the union – board member, vice-president and secretary-treasurer – enabled her parents and the two others to help themselves.  All five individuals are charged with conspiracy.

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