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.

Ex-Girlfriend of New Jersey Governor Forced Out as Local CWA Chief

In New Jersey politics, it isn’t just governors who have come to feel embattled.  Take a look at the longtime head of the state’s largest public employees’ union, Carla Katz, a former girlfriend of current Democratic Governor Jon Corzine.  Katz very recently was removed from the presidency of Local 1034 of the Communications Workers of America following years of suspicion that she had misused her post for personal and political gain.  In a unanimous vote on July 7, the CWA national executive board dismissed her and the rest of the local board, asserting she had misappropriated union funds and violated federal labor law.  Up until that point, the focus was on an unusual financial arrangement she had with Corzine prior to his initial run for governor in 2005.  The new CWA allegations go a standard “he said, she said” face-off.

Union-Sponsored Pension Plans May Be Unstable Investments

One of organized labor’s strongest calling cards, politically if not economically, is that unions protect the long-term interests of employees.  If workers join, the argument goes, they will be far better off.  Yet rhetoric too often hasn’t matched reality, and perhaps nowhere more so than in the area of retirement plans.  That’s the conclusion of a recent study by Diana Furchtgott-Roth, senior fellow with the Hudson Institute in Washington, D.C.  Furchtgott-Roth, chief economist for the U.S. Department of Labor (DOL) during 2003-05, authored a report released this month by the institute titled, “Unions vs. Private Pension Plans:  How Secure Are Union Members’ Retirements?”  Employer-sponsored pensions, she concludes, deliver more security for nonunion employees than union-managed funds do for their own members.

Court Rejects Appeal by Convicted Houston Local Boss

Charles “Chuck” Crawley has just about run out of options.  On June 27, a three-judge panel for the U.S. Fifth Circuit Court unanimously rejected the appeal of the conviction and sentencing of Crawley, formerly president of International Brotherhood of Teamsters Local 988 in Houston.  Crawley in May 2007 had received a 78-month prison sentence and an order to pay $121,478 in restitution and penalties following his jury conviction for election fraud, mail fraud and embezzlement.  He’d served as head of the local from 1997 until his removal by Teamsters General President James P. Hoffa in October 2003.  The following year he was permanently barred from the local.

Former School Head in Japan Charged with Massive Theft

In plain English, it was a staggering sum of money.  And Nozumu Sahashi had his own ideas about what to do with it.  Sahashi is the former president of Nova Corporation, a Japan-based chain of for-profit English-language schools.  On June 24, Sahashi was arrested by Osaka police on suspicion that last July he’d illegally diverted 320 million yen ($3.1 million) from a teachers’ union reserve fund to the company through an affiliated firm he effectively owned.  The embezzlement contributed to Nova’s already weakened condition and eventual bankruptcy – and a few thousand employees now out of a job.

DOL Clarifies ERISA Rules; Restricts Use of Benefit Plan Assets

Union officials have made little secret of their desire to use member benefit plans as leverage to achieve a higher social good.  Such a goal, however, may conflict with another, overriding goal inscribed in federal law:  prudent and sound asset management.  The Employee Retirement Income Security Act of 1974, or ERISA, requires fiduciaries of most private-sector benefit plans to base investment decisions solely on the welfare of their participants and beneficiaries.  Advancement of broader social objectives, however desirable they might be, is not a criterion.  The U.S. Chamber of Commerce, in recent years a target of union shareholder activists, recently wrote a letter to the U.S. Department of Labor asking for a clarification of the permissibility of a planned AFL-CIO shareholder campaign.  In its response, dated June 27, 2008, the DOL wrote back that it was not.  Employers thus won – that is, until the next round.      

 

NYC Shop Stewards Convicted, Sentenced for Embezzlement

Michael “Mickey” Annucci is a lucky man, all things considered.  Back in 2006, a Manhattan federal grand jury indicted him for embezzling a reported “at least” $10,000 from the union for which he served as shop steward, Local 157 of the United Brotherhood of Carpenters and Joiners.  That was a fraction of the actual take.  This past February, a trial jury convicted Annucci on charges of conspiracy, embezzlement, wire fraud, and unlawful acceptance of payments from a union representative.  The lost wages and benefits due to Annucci’s actions was more than $500,000.  That sum in turn was only about a fourth of the overall amount taken by a contractor with whom he had worked.  This past May 9, he received his sentence before U.S. District Judge Barbara Jones:  five months in prison and five months of home confinement.  Given the facts of the case, it could have been a lot worse.

Associates of New Jersey Family Racket Plead Guilty

There wasn’t much of a difference at the top between Local 734 of the Laborers International Union of North America and Local 911 of the International Union of Production, Clerical and Public Employees.  And that was the way August Vergallito liked it.  But when a federal grand jury handed down a series of indictments last year, the end was in sight for him, his family and associates.  Union Corruption Update earlier this year had reported Vergallito, his wife Rhoda, and their daughter, Kim, all residents of Ocean County, New Jersey, pleaded guilty in Newark federal court on February 5 to various thefts adding up to more than $250,000.  An associate of Mr. Vergallito, Isaac Barocas, also pled guilty.  Add two names to the list:  Charles Purcel and Bernard Dwyer.

Former NYC Local President Sentenced for Racketeering

At least Salvatore “Hot Dogs” Battaglia didn’t get the maximum punishment.  But that’s not going to revive his career as a labor leader.  Battaglia, a reputed Genovese crime family associate, during 2002-06 headed Local 1181 of the Amalgamated Transit Union, a Queens, New York-based labor organization representing about 15,000 bus drivers and escorts for New York City school pupils.  His tenure wasn’t long for this world following RICO charges in June 2005 against him and more than a dozen other persons.  He pleaded guilty in U.S.

NYC Benefit Fund Trustee, Administrator Sentenced for Thefts

Local 23 of the Printing, Publishing and Media Workers had more than $150,000 missing from a union-sponsored health plan.  Manuel Moscoso and Jadwiga Grace made the mistake of believing the money wouldn’t be tracked down.  The two persons, respectively, a trustee and administrator for the fund, were sentenced on December 14, 2007 in U.S. District Court for the Southern District of New York for their roles in embezzling a combined roughly $155,000.  Moscoso will spend a year in prison; Grace, nine months.  Following release, each will undergo three years of supervision and make full restitution.  He and she also will have to forfeit, respectively, $80,000 and $70,000.

Ex-Headquarters General Services Manager Sentenced

Zona Albritton submitted bid proposals and invoices on behalf of her union.  That was until the union discovered the true beneficiary of these awards – herself.  On June 26, Albritton was sentenced to one year in prison in U.S. District Court for the District of Columbia for embezzling slightly over $75,000 in funds from the American Federation of State, County, and Municipal Employees.  Albritton, manager of general services for AFSCME, the nation’s largest public employees’ union, was charged in March and pleaded guilty in April.  She’ll also have to pay restitution.

New York Local Member Sentenced for Making Death Threats

Joseph Totaro believes very strongly in improving the quality of his union’s leadership.  Unfortunately, his methods leave much to be desired.  He’ll have some time to think about it during his stay in federal prison.  Totaro, a member of United Association of Plumbers & Pipefitters Local 1 in New York City, was sentenced in U.S. District Court for the Southern District of New York on January 30 for making numerous death threats against an unnamed candidate for union business manager.  His sentence includes 27 months of incarceration, 21 months of which would have to be served, followed by three years of supervised release and enrollment in a substance abuse program.

Secretary-Treasurer in Michigan Pleads Guilty to Embezzlement

There always seemed to be money missing when Betty Wing served as secretary-treasurer of United Steelworkers Local 1077.  Now after several years of trying, the union will get the money back.  Wing, 42, a resident of Ann Arbor, Mich., pleaded guilty on Friday, June 27 in Detroit federal court to embezzling $6,584 in union funds.  Under the terms of the agreement, Wing faces up to six months in prison and a fine of up to $10,000, and will have to pay restitution to the Lambertville, Mich.-based union.

Ohio Ex-Financial Secretary Sentenced for Embezzlement

On June 16, Kurt Swanstrom, former financial secretary of United Steelworkers Local 5-1560, was sentenced in U.S. District Court for the Northern District of Ohio to three years probation and ordered to pay $12,327.52 in restitution plus a $150 special assessment.  Swanstrom pled guilty in March to embezzlement, falsification of union records and filing false financial reports.  The local is based in Ashland, Ohio.  (OLMS, 7/7/08).

 

Ex-Israeli Finance Minister Charged in Union Fraud Scandal

Corruption might not rank quite as high as terrorism as the main concern of the Israelis.  But that doesn’t mean it doesn’t exist – or gets investigated or punished.  Just ask Avraham Hirchson, Israel’s finance minister during May 2006-July 2007.  As reported in these pages last September, Israeli police identified Hirchson as a central figure in a theft and money-laundering scheme that netted participants a combined $2.4 million from a prominent labor union.  Though not indicted at the time, it seemed only a matter of time that he would, especially given that at least five alleged participants themselves had been arrested in January 2007.  Now the indictment has come down.

Pennsylvania Local Officers Charged with Embezzlement

Local 594 of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers no longer is active, but it still has some unfinished business.  On May 29, two of the Bethlehem, Pa.-area union’s former officers, Scott Gehringer and Alex Margaritis, were indicted in U.S. District Court for the Eastern District of Pennsylvania on charges of embezzling a combined sum of more than $16,000.  According to documents filed by U.S. Attorney Patrick Meehan, Gehringer and Margaritis, respectively, former president and financial secretary, diverted the money from a union checking account during July 2005-May 2006.  Prosecutors did not specify the name of the company whose workers the union represented, except to say that it is in “an industry affecting interstate commerce.”

Labor, Political Corruption Is Undermining Mexican Oil Industry

Unless one has been in hiding these past few months, the most defining aspect of our nation’s daily life, beyond the inevitable rah-rah of the presidential campaign, has been soaring crude oil and retail gasoline prices, now well over $4 a gallon – unthinkable even a half-year ago.  Of the many explanations for this state of affairs, one in particular merits more attention:  the oil industry south of the border.  For better or worse, Mexico is America’s third-largest foreign supplier of crude oil, right behind Canada and Saudi Arabia.  And the union representing most of the workers in that industry is shot through with corruption.  That’s something that may come to play a greater role than ever in our own energy and immigration policies.

New Jersey Gambino Mobsters, Associates Plead Not Guilty

For a mob whose heyday was at least 15 years ago, the Gambino crime family appears pretty confident.  But that may be a case of good acting.  On June 2, 23 persons, all of them New Jersey-based members and associates of the Gambinos, pleaded not guilty in Newark federal court.  They’d been arrested by FBI agents on May 8 following the handing down of an 82-page indictment listing a wide range of illegal activities dating back a half-dozen years.  The schemes, allegedly guided by Gambino capo Andrew Merola, 41, a resident of East Hanover, N.J., consisted of such offenses as extortion of receipts from construction site lunch trucks, operation of an illegal overseas gambling ring, and creation of phony barcode labels to acquire merchandise at deep discounts from major retailers.

Indictment of Niagara Falls Dentist May Lead to New Charges

Associating with the wrong kind of people is not a crime.  But Scott Geise may have done more than pick his friends less than well.  The Niagara Falls, N.Y.-area dentist was indicted a year ago for processing phony benefit claims for members of Laborers International Union of North America Local 91.  Geise pleaded not guilty in Buffalo federal court, claiming in effect he’d been set up.  But the case may hinge on his word versus that of an imprisoned former member of the local, whose goon-squad style of intimidation of contractors and nonunion workers has been chronicled frequently in this publication.  And that individual, former Local President Robert Malvestuto Jr., helped put away several of the roughly dozen and a half persons eventually pleading guilty to various charges.

S.F. Bay Area Local President Sentenced for Embezzlement

When Graham Paul Vane needed a lifestyle boost, he turned to embezzling from the San Mateo, Calif. union he ran.  He eventually was caught.  And now his case is closed.  On June 18, the Justice Department announced that Vane, former president of National Association of Letter Carriers Branch 1280, had been sentenced in San Francisco federal court to one year and three months in prison for diverting more than $170,000 in local funds toward his own personal use and making subsequent false statements on union financial reporting forms.  He’ll also have to pay $150,000 in restitution and undergo three years of supervision following release.

Wisconsin Court Orders Ex-Union Employees to Stand Trial

The pasts of Lori Sommers and Tracy Shultz are one step closer to haunting them.  The pair, currently a site manager and an administrative assistant for the City of Madison, Wisconsin’s Community Development Authority (CDA), each for a few years had worked for Local 60 of the American Federation of State, County and Municipal Employees.  That’s the part of their past they wish would go away.  The pair had been charged in Dane County Circuit Court in April with defrauding the union out of more than $17,000.  Now, following a preliminary hearing, the court on June 3 ordered them to stand trial.

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