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.

Colombo Crime Boss, Ex-Underboss Convicted of Murder

Surviving family members of the late William Cutolo can’t turn back the clock, but at least they can look to the future.  On December 28, a federal jury in Central Islip, Long Island, N.Y., after an eight-week trial, convicted Alphonse “Allie Boy” Persico and John “Jackie” DeRoss, respectively, acting boss and former underboss of New York’s Colombo crime family.  The pair had been accused of murdering Cutolo after his disappearance over eight years earlier.  Union Corruption Update has covered the story extensively, noting that a little-known New York City union, Industrial & Production Workers Local 400, likely had served as a parking place for mob profits from a stock fraud scheme run by Persico’s now-deceased brother, Frank.

Dissidents to Head Chicago Local; Win Contested Election

Richard Berg has been vindicated.  Convinced that a corrupt slate had stolen the officers’ election at International Brotherhood of Teamsters Local 743 in Chicago three years earlier, he complained to the U.S. Department of Labor, who responded with a civil suit against the union leadership.  In addition, federal prosecutors this past September filed a seven-count indictment of incoming President Richard Lopez and three other persons on the union payroll on charges of conspiracy to commit election fraud and embezzlement of ballots.  This past fall the effort paid off:  DOL announced that Berg and his New Leadership slate were the winners in the latest balloting to determine the leadership of the 12,000-member local.

Bus Inspector for NYC Union Charged with Theft, Bribery

On December 12, Jeffrey Berger, a New York City school bus inspector, was charged in U.S. District Court for the Southern District of New York with one count of conspiracy to commit theft and bribery concerning programs receiving federal funds.  He was arrested and released on $1 million bond.  Operators of the buses belong to the Queens, N.Y.-based Amalgamated Transit Union Local 1181, whose recently deposed leadership has been documented to have close ties to New York’s Genovese crime family.  The charge follows a joint investigation by the FBI and the U.S. Labor Department’s Office of Inspector General and Office of Labor-Management Standards.  (1/11/08).

 

Oregon Financial Secretary Indicted for Thefts, False Entries

Chicago Pair Pleads Guilty to Health Care Benefit Fraud

In an era of rapidly rising health care costs, almost any clinical service advertised as “free” is bound to attract lots of customers.  It also can produce lots of scandal.  Such was the case for seven years in a Chicago-area scheme operating under the guise of conducting blood tests and administering allergy shots.  The third parties fleeced were several insurance companies and more than two dozen union benefit plans in Illinois and Indiana.  Two principals, Edgar Vargas and Diane Smoot, pleaded guilty this past June, four months after being indicted with eight others in a scam netting at least $1.5 million and possibly a good deal more.

New York Senate Majority Leader Probed for Conflicts of Interest

Joseph Bruno has been trying to please a constituency that just can’t say “enough”:  New York’s labor unions.  For the last dozen years he’s been New York State Senate Majority Leader.  But with Eliot Spitzer, a Democrat, having taken over a year ago from Republican George Pataki as governor, Bruno by default has become the most powerful GOP official in a state where unions can make or break political careers.  Bruno knows this, which likely explains why his unusually close ties to organized labor for someone in his party.  Yet it appears certain union members want more from him.  And they’re willing to engage in behind-the-scenes skullduggery to get results.  Ironically, though their tactics may raise objections, their complaints are not without basis.  Sen. Bruno’s longtime business relationships really do raise conflict-of-interest issues.

Benefits Administrator for Virginia Contractor Sentenced

Edward J. Riley Jr. was an innovator.  Not only did he run a benefits firm, but he also developed software to speed the accounting process for construction contractors.  But he was innovative in a much different way when it came to the health care sector.  This past July in Virginia federal court Riley received a two-year prison sentence, to be followed by three years of supervised release, for wire fraud.  He’ll also have to pay $554,610.58 in restitution, mainly to union-sponsored benefit plans.  Most of the affected employees belong to the Security, Police, and Fire Professionals of North America. 

NYC Local President Indicted for Extorting Personal Services

There were two rules for working as Anthony Rumore’s handyman or chauffeur.  The first was that you worked for free.  The second was that you didn’t complain.  Rumore, who served as president of the New York City area’s International Brotherhood of Teamsters Local 812 from 1988 until September 2004, was arrested on December 18 for extortion and embezzlement.  For nearly his entire tenure in office, a two-count federal indictment noted, he had local officers, employees and business agents perform various domestic services under threat of discipline or even termination if they refused.  Rumore pleaded not guilty in Manhattan federal court and was released on $250,000 bond.

Indiana Police Local, County Sheriff Trade Charges over Theft

Allegations of corruption within or between law enforcement officers’ unions often have a nasty edge.  Its members, sworn to uphold the law, take insinuations of impropriety as an attack on their integrity.  Union Corruption Update over the past year has reported on separate cases of internal warfare at police or sheriffs’ unions in the Nashville, Sacramento and San Bernardino areas.  Add Lake County, Indiana to the list.  The police union there has been trying to remove the county sheriff in the wake of allegations that one of his employees had embezzled as much as $24,000 from the union.  And the sheriff has fired back, urging the union leader to resign for dereliction of duty.

National Boss Steps Aside in Face of Scandal; Will Repay Funds

The Brotherhood of Locomotive Engineers and Trainmen is affiliated with the International Brotherhood of Teamsters.  Membership has its disadvantages as well as advantages, most of all, subjection to the jurisdiction of the Teamsters’ federal receiver, the Independent Review Board (IRB).  Don Hahs, the Locomotive Engineers’ president, more than anyone else, knows the downside.  He’d been facing charges that he embezzled nearly $60,000 from the Cleveland-based union, mainly to secure NBA basketball tickets.   Under pressure from the IRB, the Teamsters announced a month ago it had reached a settlement.  Though Hahs will be allowed to remain a union member, he will step aside from his post for six months and repay all funds.

West Virginia Financial Secretary Sentenced for Theft

On December 10, Danny E. Beyser, former financial secretary for Local 1638 of the United Mine Workers, was sentenced in U.S. District Court for the Northern District of West Virginia to one year and one day of incarceration and three years of supervised release, and was ordered to pay $80,135.40 in restitution to the union.  Beyser, 52, a resident of Moundsville, W.V., pleaded guilty to embezzlement in October.  He has paid back some of the money, but still owes more than $54,000. The plea and sentencing follow an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (Associated Press, 12/12/07; OLMS, 12/22/07).

 

Former Presidents of Milwaukee Local Sentenced

Union-Backed Company, Labor Department Settle for $20 Million

Whatever happened to the ULLICO scandal?  Readers of this publication might have asked themselves that question more than once over the past few years.  The answer:  It’s been taken to a new level.  On Friday, November 16, the U.S. Department of Labor (DOL) announced a settlement with the union-backed ULLICO Inc., concluding a lengthy investigation into how certain company officers managed to get so wealthy while the company was racking up large operating losses.  Without formally admitting wrongdoing, ULLICO agreed to pay $20 million in restitution, back taxes and penalties by way of a one-time charge against earnings.  In the face of highly incriminating evidence, taking the government’s offer seems like a good move.

Union Monitoring Group Releases Worker Freedom Index

Defining “worker freedom” in this country is a subjective task.  At minimum, it ought to include a law protecting the right of individual workers to choose whether or not to join or remain in a labor union.  Yet other criteria also would seem to qualify – and on a state-by-state basis.  A Washington, D.C.-based nonprofit organization, the Alliance for Worker Freedom (AWF), has been doing just that.  And now the fruits of its labors have arrived.  On December 6, the alliance released a monograph titled, 2007 Index of Worker Freedom:  A National Report Card.  Prepared under the supervision of AWF Director of Policy Brian M. Johnson, the study assigned a grade to each state based on 10 factors affecting worker freedom.  The 75-page report, available in hard copy and on the group’s website (www.workerfreedom.org), should serve as a valuable reference for employers, employees, public officials and researchers.

Philadelphia Contractor Indicted for Bribery, Theft from Union

Donald “Gus” Dougherty, Jr. and John J. Dougherty aren’t related, but they’ve been friends since childhood.  This ongoing relationship lies at the heart of a scandal that’s been rocking the Philadelphia area for the past half-year.  This past June a federal grand jury indicted Gus Dougherty for diverting nearly $870,000 in union benefit plan contributions toward his own use and evading taxes as part of an off-the-books payroll scheme that lasted four years.  The sweeping 33-page, 100-count indictment, handed down after a joint investigation by the FBI, the IRS and the Labor Department, also accuses the Philadelphia electrical contractor of evading more than $1.6 million in taxes.  His lawyer, Nicholas Nastasi, would not comment on the case directly, but added that his client would cooperate with the courts. 

NYC Drywall Contractor Sentenced for Role in Mob Scheme

Much of the drywall industry in and around New York City has been under the thumb of an unholy alliance between the Genovese crime family and various contractors and labor unions crooked or desperate enough to business with them.  One of those contractors was Fred Nisall, among more than 20 persons indicted back in April 2004 on charges related to a mob-connected construction hiring scheme.  This September, standing before a judge in Manhattan federal court, he received 33 months in prison to be followed by three years of supervised release.  He already had agreed to forfeit $1.5 million, jointly and severally, with two other contractors, brothers James and Joseph Delio, as part of his guilty plea in April 2006.

Ohio Contractor, Wife Sentenced for Bribery, Pension Fraud

New York isn’t the only place where a contractor has lined his pockets by shortchanging workers in labor contracts.  In Ohio, such corruption paid off for Michael Lignos, at least for seven years.  This August, a federal court rewarded him with 21 months in prison and three years of supervised release.  He also ordered him to pay $1,055,942 in restitution to the Ohio Department of Transportation (ODOT) and $2,480 to a benefit plan run by the state chapter of the Laborers International Union of North America.  For taking part in her husband’s scam, Maria Lignos was sentenced to two years’ probation and 30 days’ home confinement.  The actions were part of a wider investigation resulting in the convictions thus far of more than a dozen individuals and at least four companies.

Texas Boss Charged with Embezzlement from Training Fund

A union job-training program isn’t a cookie jar.  Somehow that didn’t impress Willie Brown.  Brown, 52, was indicted in federal court for the Eastern District of Texas this April for embezzling at least $80,000 from the Apprenticeship and Training Fund of United Association of Plumbers and Pipefitters Local 237.  Brown, who previously had served as president and training fund coordinator of the Texarkana union, committed eight alleged acts of theft during 1997-2002.  The charges came in the wake of a joint investigation by the Labor Department’s Office of Labor-Management Standards and Employee Benefits Security Administration.  (U.S. Department of Labor, Office of Inspector General, April 1-September 30, 2007; John T. Floyd Law Firm, 12/10/07).  

 

Delta Airlines Union Treasurer Sentenced for Embezzlement

Board Allows Dissenting Employees to Void Union Card Check

Unions operate as democracies.  At least that’s what Congress had in mind back in 1935 when it enacted the National Labor Relations Act (NLRA).  Under the law, unions have the right to organize potential members at a particular work site without interference from the employer; individual workers, in turn, have the right to approve or reject the union as a collective-bargaining agent, preferably through the ballot box.  The National Labor Relations Board (NLRB) monitors the process and certifies the results.  But with unions accounting for an ever smaller share of the U.S. work force, they have resorted to unorthodox methods to gain worker support, chief among them the card check.

Judge Orders Hawaii Father, Daughter to Serve Sentences

Gary Rodrigues and his daughter, Robin Rodrigues Sabatini, don’t know the meaning of the word “quit.”  In their case, that’s not such an admirable trait.  Back in 2002, the two were convicted in federal court on nearly 200 charges of criminal misconduct, including embezzlement, mail fraud and money-laundering, in connection with the disappearance of nearly $380,000 from the United Public Workers (UPW).  Rodrigues, 65, had been state director of the Honolulu-based union, an affiliate of the American Federation of State, County and Municipal Employees.  Sabatini was a union contractor.  This past June, a federal appeals court in Hawaii affirmed the decision and prison sentences.  But the pair is pulling out all the stops to avoid their fate.  Now the court is signaling that its patience is limited.

Murder Retrial of Colombo Crime Family Enforcers Begins

Somebody out there knows who killed William “Wild Bill” Cutolo.  And if the guilty parties weren’t talking when a Brooklyn, N.Y. federal jury failed to reach a verdict last fall in the 1999 murder of the Colombo crime family underboss, they might be saying more soon.  At least that’s what federal prosecutors are hoping, as the retrial of Colombo boss Alphonse “Allie Boy” Persico and Cutolo’s replacement, former underboss John “Jackie” DeRoss, proceeds.  The case involves massive stock fraud, which in all likelihood helped fund a little-known, mobbed-up Manhattan-based labor union.  Union Corruption Update reported a year ago that the trial for the “disappearance” of Bill Cutolo ended in a hung jury after a five-week trial and five days of deliberation.  This time around, defense attorneys are up against a force they hadn’t had to deal with the last time around:  Cutolo’s family.

NYC Chieftain, Business Agent Face Retrial for Taking Bribe

Three years ago Michael Forde was one lucky man.  As president of one of the nation’s most powerful construction labor organizations, the 25,000-member New York District Council of the United Brotherhood of Carpenter and Joiners, Forde had been convicted in April 2004 for taking payoffs from a mob-linked contractor, part of a larger web of criminal activity involving the union.  He and District Council Business Agent Martin Devereaux each were facing up to 25 years in prison.  But their lawyers successfully persuaded Manhattan Supreme Court Judge Jeffrey Atlas to throw out the convictions on grounds of juror misconduct.  Now, after numerous delays, Forde and Devereaux are set to stand trial again starting November 26.

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