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.

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.

Secretary-Treasurer in Cleveland Sentenced for Records Fraud

On June 10, Kristen Swint, former vice president and secretary treasurer of International Association of Machinists Inflight Aircraft Lodge 2339 in Cleveland, was sentenced in U.S. District Court for the Northern District of Ohio to two years probation and ordered to pay $30,256 in restitution.  Swint pled guilty in January to falsifying union records to cover up theft.  The sentencing follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (OLMS, 6/21/08).  

 

Former Cleveland-Area President Sentenced for Embezzlement

Atlanta Hedge Fund Manager Found Guilty, Kills Self

As far as swindlers went, Kirk Wright hadn’t quite ascended to the top of the mountain.  But he was fast coming within range.  Wright, 37, had started and run International Management Associates (IMA), an Atlanta-based hedge fund which came to amass somewhere between $150 million and $200 million in paper assets.  The problem was that these assets weren’t worth much more than the paper they were printed on.  The fund collapsed in 2006, triggering a rash of federal indictments.  The Securities and Exchange Commission slapped Wright with a separate $20 million civil suit.  Other legal action resulted, too, most notably a civil suit filed by several retired pro football players against their union, the NFL Players Association, plus the NFL itself and certain individuals for failing to perform due diligence on Wright.  The players had lost a combined $20 million or more.

United Steelworkers, British Union Announce Merger

If corporations can go global, why can’t unions?  That’s a question American labor officials are asking with increasing frequency.  And at least one union has taken the step of merging with another union across the Atlantic.  On Sunday, May 25, the United Steelworkers of America and Britain’s largest union, UNITE (not to be confused with the American textile and garment workers organization bearing the same acronym), announced they had agreed to join forces.  The agreement, still in the initial stages of development, would be the first of its kind.

NYC School Bus Inspectors Charged with Extortion, Bribe-Taking

Local 1181 of the Amalgamated Transit Union in Queens, N.Y. long had operated as a subsidiary of the Genovese crime family before its leaders were taken down on racketeering charges by federal prosecutors a couple of years ago.  Local President Salvatore Battaglia, Secretary-Treasurer Julius Bernstein, and benefits manager Ann Chiarovano either had been convicted by a jury or entered a guilty plea.  One-time acting Genovese boss Matty “the Horse” Ianniello also went down.  Late in 2006 ATU International President Warren George placed the local under temporary trusteeship.  Yet there was some unfinished business.  On May 13, four New York City school bus inspectors and supervisors – Neil Cremin, George Ortiz (retired), Milton Smith, and Ira Sokol – were arraigned in Manhattan federal court following the unsealing of indictments against them for acts of extortion, bribery and bribe-taking going back to the mid Nineties and totaling at least $1 million.

Boston-Area Man Pleads Guilty to Payroll-Padding Scheme

More than once, Union Corruption Update has described the workings of a well-organized scam on the Boston docks.  Members of the International Longshoremen Association would place young adults and children, typically sons, on union payrolls for part-time work so as to qualify them for “seniority,” and hence a higher starting pay grade, if and when they become full-time workers.  They also allegedly submitted bogus unemployment claims.  Then-Massachusetts Attorney General Tom Reilly in April 2005 initiated an investigation.  The following year a Suffolk County grand jury returned a 118-count indictment against 20 persons.  In Reilly’s words, the probe had uncovered “a system of fraud and corruption on Boston’s waterfront…where a few insiders gamed the system to benefit themselves and their friends and took opportunities and benefits away from other longshoremen who played by the rules.”

Philadelphia Contractor Pleads Guilty to Bribery, Theft

Being a union contractor can be risky, even if the labor boss with whom he does shady business has the same last name and is a lifelong friend.  Such was the case for Donald “Gus” Dougherty, president of Dougherty Electric, Inc., in Philadelphia.  On Monday, May 19, Dougherty pleaded guilty in federal court to bribing a business manager of International Brotherhood of Electrical Workers Local 98 to facilitate an off-the-books payroll scheme.  He’d been charged last June in a 100-count indictment handed down following a joint investigation by the FBI, the IRS and the Department of Labor.  The guilty plea comes on the heels of another guilty plea by him on April 15 to 98 counts that included operating an illegal cash payroll, stealing from a union benefit plan, and bribing a bank official.

New LM-2 Regulations Set to Improve Union Transparency

The Department of Labor’s financial reporting forms are a work in progress.  And officials there have proposed some fine tuning they believe will make labor unions more accountable to their members and the public at large.  On May 12, the department’s Office of Labor-Management Standards (OLMS) released new “LM-2 Form and Regulations,” part of a larger effort to expand its authority under the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).  The rules, whose comment period closes on June 26, are designed to close loopholes not addressed during the previous round of reforms a half-decade ago.

 

Specifically, the new LM-2 form would clarify several corruption-prone areas.  Unions would have to:

Former Southern California Local President Sentenced for Theft

Officials of the San Gabriel Teachers Association are relieved.  In a different way, so is Ava Shaw.  Shaw, 52, a resident of Pasadena, California, had taught special education at Jefferson Middle School in nearby San Gabriel for several years.  She also headed the SGTA for four years.  After she left to take a job at a private school, her past caught up with her.  She was arrested and eventually pleaded no contest this past February to thefts from her union totaling around $85,000.  On May 28, Shaw was sentenced in Alhambra (Los Angeles County) Superior Court to three years probation, and ordered to complete 120 days of community service and repay $64,000 in stolen union funds.  A second teacher, Jennifer Boyd (now Boyd-Oliver), also had been charged in the case; she pleaded no contest to theft of a much smaller amount.  Like Shaw, she was placed on three years probation, and will have to perform 45 days of community service.

Union Steps Up Campaign against Private Equity Funds

The Service Employees International Union is a leader when it comes to wielding a now-common weapon in American unionism’s strategic arsenal:  the corporate campaign.  As Wackenhut has learned for the last couple years, the SEIU knows how to conduct a multi-pronged attack against an employer’s reputation.  Whether through demonstrations, media campaigns or boycotts (among other tactics), the purpose is always the same:  to induce surrender by the targeted corporation on key issues, often beginning with recognition of the union as the sole collective bargaining agent.  The Service Employees, which represents about 1.9 million security guards, janitors, health care workers and other primarily unskilled employees, for a little over a year has broadened its target range to include private-equity funds.  These institutional investors, though usually not publicly-traded, are best-known for engineering buyouts of public companies.  And as they bring major corporations under their wing (e.g., last year’s purchase of Chrysler by Cerberus Capital Management), anti-corporate activism by necessity to a great extent now also means anti-equity fund activism.

Former Treasurer of Oregon Local Pleads Guilty to Thefts

Local 757 of the Amalgamated Transit Union for years paid a price for Thomas V. Wallace‘s gambling habit.  Now it’s time to collect.  Wallace, financial secretary and treasurer of the Portland, Oregon union since 1997, pleaded guilty to federal court on May 20 to one count of forgery in connection with massive thefts from a possibly fictitious benefit fund.  He admitted to forging checks drawn upon union bank accounts.  According to the U.S. Attorney’s Office, Wallace, 50, had forged 176 checks totaling about $454,000 during 2000-06.  He faces a maximum of 10 years in prison, a $250,000 fine, and three years of supervised release.  His punishment may be lessened by the fact that he already had partly repaid the union by February 2007 when the offenses came to light.

TV Program Sponsors May Have Swayed Lawmaker’s Votes

Satveer Chaudhary loves the outdoors.  An avid hunter and fisherman, the Fridley, Minnesota resident hosts a television show on the 24/7 cable television network, The Sportsman Channel.  But he has another role as well:  member of the Minnesota legislature.  And a number of people are wondering about the consequences of what appears to be the convergence of the two.  In Minnesota, at least, renowned for high ethical standards for public officials, this may amount to more than a tempest in a teapot.

Central Pennsylvania Treasurer Charged with Embezzlement

On April 24, Richard J. Vincent, former treasurer of American Federation of Government Employees Local 3951, was charged in Cambria County (Pa.) Court with two counts of embezzling funds from the Altoona-based union in the amount of $43,694.85.  The charges follow a joint investigation by the U.S. Department of Labor’s Office of Labor-Management Standards and Office of Inspector General.  The local represents employees at the federal prison in Loretto, Pa., west of Altoona.  (OLMS, 5/21/08).   

 

Local Secretary-Treasurer in Ohio Pleads Guilty to Theft

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