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-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.

Last Member of Niagara Falls, N.Y. Local Goon Squad Sentenced

Randall Butler wasn’t among the ringleaders of an extortion racket operating through Local 91 of the Laborers International Union of North America in Niagara Falls, New York.  But his date with justice was inevitable all the same.  On April 19, Butler was sentenced in federal court to two years and 10 months in prison for his role as an enforcer.  He was the last of a dozen and a half union members and associates to be sentenced for crimes against persons and property.  Butler, 40, a resident of Lockport, N.Y., pleaded guilty last April to felony extortion.

Genovese Boss Sentenced for NYC Local Racketeering

At 86, Matthew “Matty the Horse” Ianniello, reputed acting boss of the Genovese crime family of New York, has managed to outlive virtually all of his contemporaries.  But the ailing mobster might not outlive a stretch in federal prison, even a brief one.  On Monday, April 16, Ianniello was sentenced in U.S. District Court to 18 months in prison on a racketeering charge stemming from his involvement with the Queens, N.Y.-based Amalgamated Transit Union Local 1181, which represents bus drivers.

Twin Cities Local Treasurer Sues President for Defamation

If stealing money is enough to get someone thrown out of a union, what does that say about falsely accusing someone of stealing money from a union?  That’s the question before Ramsey County (Minnesota) District Court, in reviewing a claim by a former treasurer of a St. Paul public employees’ union, Local 21 of the International Association of Fire Fighters, against current president Pat Flanagan.  Flanagan stated at a union meeting last year that then-treasurer Fred Babekuhl mishandled a check in 2005 for more than $3,000.  Babekuhl responded with a lawsuit charging defamation of character.

CFO of New York State Union Sentenced for Thefts

John T. Daley for four years embezzled nearly $1.2 million from the New York State Nurses Association, the 34,000-member union of which he had been chief financial officer.  Now he’s going to pay a price.  On March 30, Daley received a prison sentence in Albany County Court of three-and-a-third years to 10 years.  He also will have to make restitution.  Daley pleaded guilty in January to second-degree grand larceny, after initially claiming innocence due to impaired judgment from overuse of prescription drugs.  The sentencing follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards and the police department of the Town of Colonie, located north of Albany.  (OLMS, 4/23/07). 


Business Manager of Texas Local Indicted for Embezzlement

San Francisco Union, Politicians Focus of Indian Casino Deal

When Nancy Pelosi became Speaker of the House early in January, she vowed that her tenure in office heralded a new era of transparency.  The days of lawmakers being bought by cash-flashing lobbyists offering skybox parties and Scotland golf junkets were over.  Quickly, the House tightened internal rules governing gifts, travel and earmarks.  Not long after, the Senate overwhelmingly passed a lobbying restriction bill, the Legislative Transparency and Accountability Act; the House is set to take up its own version by the end of the spring.  But this display of moral rectitude is colliding with the reality of a political network, of which Pelosi is very much a part, centering on a San Francisco union in hot water with federal regulators.  The union, Local 38 of the United Association of Plumbers, Pipefitters and Journeymen, is currently under investigation by the U.S. Department of Labor (DOL) for using member benefit funds to prop up a money-losing resort in rural Northern California.

International Bosses’ Pay Sky High; Assets, Membership Down

“Pay for performance” is an idea that has gained currency in many organizations in this country.  The International Longshoremen’s Association, which represents dockworkers and auxiliary employees along the Atlantic and Gulf coasts, and the Great Lakes, appears not to be one of them.  According to the union’s recent “LM-2” financial reporting form submitted to the U.S. Department of Labor, the ILA pays its top people way up in the six figures.  President John Bowers made $587,078 in 2006 in international and district salary and expenses.  Bowers’ son, John Jr., a union vice president, received $292,440.  Already among the highest levels of compensation in organized labor, such money is especially significant in the context of the Justice Department’s civil racketeering suit against Longshoremen leadership filed in July 2005.  The suit, which has yet to go to trial, seeks the removal of Bowers and several other union officials, and their replacement with a court-appointed trustee.

Northern New Jersey Local Appears Free of Mob Control

In its long history, the International Longshoremen’s Association has had many bad apples, but arguably none as notorious as Local 1588.  For decades, the local, located in Bayonne, N.J. across the Hudson River from ILA headquarters in Manhattan, had been a hobby horse of the Genovese crime family.  The mob would choose local leaders to make sure the steady stream of income from extortion, embezzlement, kickbacks and ghost jobs would go uninterrupted.  The mob-union relationship seemed invincible, even though federal prosecutors secured numerous convictions starting in the late 70s.  Finally, the racket crashed during 2002-03, when the feds indicted and convicted various union members and associates, and a federal judge appointed former New York City Police Commissioner Robert McGuire to clean up the union.  Four years later, as the Newark Star-Ledger indicates, the program has been proof that the good guys win once in a while.

Former Puerto Rican Boss Convicted in Massive Scheme

Though most of the principals in the massive embezzlement scheme involving Puerto Rico’s UTM Local 1740 had been convicted and sentenced, there was a major piece of unfinished business:  the man at the top, former union President Jorge Aponte-Figueroa.  On Monday, April 2, a federal jury made sure that he, too, joined the ranks of the guilty.  After deliberating less than two hours, the jury convicted Aponte on a variety of counts, including embezzlement, conspiracy and money-laundering.  He is scheduled to be sentenced in July and faces up to 15 years in prison.

Northern California Local Benefit Plan Administrator Sentenced

James W. James was too clever by a half.  As a result, he’s getting a half-year in prison, plus another half-year in home detention.  That was the sentence that James, benefit plan administrator for Local 159 of the United Association of Plumbers and Pipefitters, received in Oakland, Calif. federal court on April 6.  He also will have to pay nearly $180,000 in restitution to the union, plus a $10,000 fine.  The action comes in the wake of a three-year investigation by the U.S. Department of Labor.

Connecticut Treasurer Sentenced for Embezzlement

Andrew Konspore couldn’t quite game the system.  The former treasurer of Northeast Emergency Services Union, representing about 400 employees of American Medical Response of New Haven and Greater New Haven Transit Company, was sentenced in U.S. District Court on April 2 to five months in prison for embezzling funds from his union.  Konspore, 34, who pleaded guilty last year, also will have to serve the first five months of supervised release in home confinement and pay $91,000 in restitution to the union.

Bookkeeper for Las Vegas Local Sentenced for Embezzlement

On March 23, Kay Joy Andrews, former bookkeeper for Local 1780 of the United Brotherhood of Carpenters and Joiners, was sentenced in U.S. District Court for the District of Nevada to five years probation, including six months of home confinement, and ordered to pay $40,086.50 in restitution.  She pleaded guilty last September to one count of embezzling union funds in the amount of $55,765.55.  The sentencing follows a joint investigation by the U.S. Labor Department’s Office of Labor-Management Standards and Office of Inspector General.  (OLMS, 4/5/07). 


Ex-Bookkeeper of Atlanta Local Agrees to Probation, Restitution

Player Suit Against NFL, Union in Hedge-Fund Scam to Proceed

It’s become a familiar story.  High-paid professional athletes, advised by aggressive financial managers, put their assets in investments that go bust.  In football alone, casualties have included Tony Dorsett, Lawrence Taylor and the late Johnny Unitas.  Now several former pro football players burned out of an estimated combined $20 million believe they have a case against both their league and union.  On Thursday, March 29, they got a major piece of good news in Atlanta federal court.  U.S. District Judge Julie E. Carnes denied a motion to dismiss their civil suit against the National Football League, the National Football League Players Association, and several unidentified entities whose job it was to perform background checks of investment managers.

Alcoa Workers in Ohio Accuse Union of Suppressing Dissent

The leaders of the International Association of Machinists and Aerospace Workers don’t like it when workers leave their union.  And they seem intent on exacting a high price upon those who go their own way.  But in two member employees at Alcoa’s Cleveland plant, Mark Bedenik and Matthew Slatten, the IAM may have met its match.  On March 26, the pair filed an unfair labor practice charge, the third in less than a month, against the union.  Aided by attorneys from the Springfield, Va.-based National Right to Work Legal Defense Foundation, Bedenik and Slatten alleged that the union retaliated in various illegal ways in response to inquiries about their retaining employment without formal membership.

Union Sued for Infringing on Members’ Right to Communicate

One doesn’t usually associate the cause of worker freedom with organizations headed by Ralph Nader.  But then, unions have a long track record of avoiding transparency.  And promoting transparency is Nader’s specialty.  On March 29, the Washington, D.C.-based nonprofit group, Public Citizen, filed suit in U.S. District Court for the District of Columbia on behalf of dissenting members of the International Union of Operating Engineers.  The complaint alleges that the union, through a new rule, is infringing upon its members’ right to communicate with each other via the Web.  The hidden purpose, argues Public Citizen, is to suppress debate over union elections.

McKay Brothers Sentenced in Florida Federal Court

The curtain closed for the old regime of the American Maritime Officers in a Ft. Lauderdale federal courtroom on March 29.  Michael McKay, president of the 4,000-member Dania Beach, Fla.-based union, convicted on racketeering conspiracy and fraud charges in early January after a four-week trial, received a six-and-a-half-year prison sentence.  His younger brother, Robert, the union’s secretary-treasurer, also convicted by a jury, got 15 months for lesser offenses.  “This case ultimately boils down to three words – ‘violation of trust,’” said U.S. District Judge James Cohn.  “Ultimately, it was union members and plan participants who were the victims.”

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