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.

Members of NHL Hockey Players Union Vow Reforms

The owners’ lockout that wiped out the 2004-05 National Hockey League season left a lot of fans with a bad taste in their mouths.  Many cited the demands of the NHL Players Association as well as the owners as being unreasonable.  Who was more responsible for the fiasco is a separate issue.  But it’s a fact that the union’s former executive director, Ted Saskin, was not a confidence-builder, least of all among the players he represented.  Saskin had been fired in May by a unanimous player representative vote.  A group of players, led by Detroit Red Wings defenseman Chris Chelios, had accused him winning his job without the proper course of action, and then once in office, teaming up with NHLPA Senior Director Ken Kim (also forced out) to spy on player e-mails and phone calls.  But the union now has a new leader and organizational structure.

Northern N.J. Town Official Revealed as Friend of Mob Associate

Guilt by association isn’t the way justice operates in this country.  Still, there are a few people out there scrutinizing the associations of Paramus, N.J. Administrator Anthony Iacono.  Iacono, hired by the Borough of Paramus this past August, had been a member of Hotel Employees and Restaurant Employees International Union Local 69 until he resigned in 2002.  His resignation, noted the union public review board, had an ulterior motive:  to avoid talking to an investigator working for a federal monitor assigned to oversee the affairs of HERE.  He might have had good reason.

Delaware Financial Secretary Indicted for Embezzlement

On October 23, Stephen Priest, former financial secretary for United Auto Workers Local 1516, was indicted in U.S. District Court for the District of Delaware on 12 counts of embezzling funds from his union in the amount of $97,899.19.  Federal prosecutors charge that during September 2005-May 2006 Priest wrote himself 57 unauthorized checks, forging the signature of the union president.  He also allegedly wrote checks to pay personal bills.  The local represents workers at the Johnson Controls battery manufacturing plant in Middletown, Del.  The indictment follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (Associated Press, 10/31/07; OLMS, 11/10/07).


Financial Secretary in Michigan Sentenced for False Statements

Smithfield Foods Files Civil RICO Suit against Union

Organizing workers can be a time-consuming, nerve-wracking and confrontational activity.  The main purpose of labor law is to prevent the process from degenerating into open warfare between employer and union.  Thus, there are ground rules for conduct.  Just as an employer may not prevent a union from organizing or individual workers from joining, neither may a union make false and inflammatory statements about an employer in order to persuade workers to join.  Unfortunately, there are no guarantees either side will play by the rules.  Such allegedly has been the case with the campaign by the United Food & Commercial Workers (UFCW) to organize more than 5,000 workers at the massive pork-processing plant of Smithfield Foods, Inc.  The facility, located in the town of Tar Heel, N.C., about 80 miles south of Raleigh, has been the focus of a bitter labor dispute for more than a decade.  And thanks to recent legal action, it’s likely to become more acrimonious.

Senate Reduces Funding for Department Oversight Agency

The Office of Labor-Management Standards (OLMS), an agency within the U.S. Department of Labor, performs a thankless, but necessary task:  keeping the nation’s unions honest.  Congressional Democrats, many of them beholden to campaign contributions from organized labor, understandably have no more need for the agency than do their benefactors.  And now both houses have approved respective spending bills that would reduce agency funding.  Back in July, the House of Representatives, as part of a larger appropriations bill, rejected by 186-237 an amendment offered by John Kline, R-Minn., to restore OLMS funding to last year’s level.  The vote effectively set the office’s fiscal 2008 budget at $45.7 million, down from $47.8 million in fiscal 2007.  Now the Senate has endorsed the House bill, and by a razor-thin margin.  On October 18, lawmakers voted 46-47 to reject an eleventh-hour amendment introduced by Jeff Sessions, R-Ala., that would have restored the OLMS budget to last year’s level, and added another $3 million.

Congressional Audit Agency Researchers Vote to Unionize

Ask almost anyone in Washington to name the best public policy analysis shop in town, and a common response would be the Government Accountability Office (GAO).  Created in 1921, this agency, known until July 2004 as the General Accounting Office, performs hundreds of program audits each year for Congress, often at the behest of one or more of its members.  These studies are widely trusted for their timeliness, depth and accuracy.  A major reason for the high quality is the agency’s lack of an ideological axe to grind.  The GAO’s nonpartisan status gives its analysts maximum leeway to investigate and evaluate federal activity of all kinds, without fear of political reprisals.  But that freedom could be jeopardized in the wake of the recent vote to form a union by analysts at agency headquarters and 11 field offices.

Former Bookkeeper in Houston Indicted for Embezzlement

Heather Lott had a three-year run stealing from her union.  Her greatest challenge now will be to avoid a three-year run in prison.  Lott, 36, served as a bookkeeper for International Brotherhood of Teamsters Local 19 in Houston from 1999 until her termination in January 2006.  Her departure was the result of a Labor Department investigation pursuant to a request from the union, concluding that she had embezzled $140,000.  On October 18, a federal grand jury returned a one-count indictment alleging that she diverted union funds to her own personal use during January 2003-January 2006.  A little over a week later, on October 26, Lott, now a resident of Wichita Falls, Tex., surrendered to the U.S. Marshals Service in Fort Worth.

IRB Declines to Hear Case against Ohio Union Chieftain

Don Hahs may be a thief, but he’s neither high-level nor mob-connected.  That’s why the Independent Review Board (IRB) recently informed International Brotherhood of Teamsters President James P. Hoffa that the ball is in his court in determining whether Hahs is guilty and, if so, what sanctions should be taken.  Hahs is national president of the Brotherhood of Locomotive Engineers and Trainmen, a Teamsters-affiliated union based in Cleveland.  Months ago, the IRB, the three-member board set up to monitor Teamster operations following the union’s 1989 civil RICO settlement with the government, conducted an investigation, concluding that Hahs had embezzled more than $58,000 in union funds for his personal use, most of it going for Cleveland Cavaliers NBA tickets.

Upstate New York Office Manager Pleads Guilty to Thefts

Mary Hartsock is living proof that longevity with an employer is no guarantee of honesty.  The ex-office manager for Laborers International Union of North America Local 1358, based in Elmira, N.Y., pleaded guilty on October 29 in U.S. District Court for the Western District of New York to embezzling $17,958 in funds.  Hartsock, 49, a resident of nearby Millport, N.Y., had served in her position from 1980 until January 2007.  Federal prosecutors charged that from January 2002 until her dismissal five years later, she converted union receipts to her own use by not depositing or reporting member dues payments.  The guilty plea came as the result of an investigation by the Labor Department’s Office of Labor-Management Standards.  (Elmira Star-Gazette, 10/30/07; OLMS, 11/1/07).                            


St. Louis Ex-Financial Secretary Pleads Guilty to Embezzlement

Congress May Pass Law Expanding Union Eligibility, Members

Organized labor has become unusually resourceful in seeking members.  Representing only 12 percent of the U.S. work force in 2006, union leaders know they have to pull out the stops, especially as their bill to force private-sector employers to recognize union card-check majorities has stalled in the Senate.  But as a backup, lawmakers on Democrat-controlled Capitol Hill already had another idea in the works.  It’s called RESPECT, an ingenious acronym for the Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers Act (H.R. 1644, S. 969), introduced back in March.  The House and Senate bills would redefine “supervisors” under the National Labor Relations Act, so as to make more of them eligible to become union members.  The full House Education and Labor Committee on September 19 took a big step toward making that ambition a reality, voting 26-20 in favor.  Whether the bill is on sound legal footing, or whether it would yield a bumper crop of new union members, is less than certain.

New York City Labor Leader-Politician Prepares for Trial

For someone who might wind up doing a long prison stretch, Brian McLaughlin for the past several months has been leading a normal life, working as a full-time electrician in Midtown Manhattan.  But appearances are deceiving.  McLaughlin, a Queens, N.Y., Democratic State Assemblyman and head of the New York City Central Labor Council until a year ago, is set to go on trial on federal charges that he embezzled or otherwise took without authorization a combined $2.2 million from unions, contractors, taxpayers and even a baseball Little League over the years.  The jury selection process in Manhattan federal court is now in the beginning stages.  If convicted, McLaughlin, 55, could get life in prison.

New York City Chieftain to Return Improper Payments to HMO

It was a friendly relationship that Carroll Haynes had with a union health care contractor – too friendly, in fact, for a number of rank-and-file members who’d suspected something was up.  Haynes, a vice president for the International Brotherhood of Teamsters and a former president of New York City’s Local 237, has agreed to return more than $100,000 in questionable payments he had received from an HMO that manages the local health plan.  The agreement follows an investigation by a Teamsters dissident group, Teamsters for a Democratic Union (TDU).

Tennessee Spook Pleads Guilty to Making False Statements

When two unions decide a town isn’t big enough for both of them, officials of one union aren’t necessarily respectful of the niceties of law in winning members away from the other.  Such has been the case in the Nashville area, where a Teamsters local has been engaging in low-intensity guerrilla warfare with a rival union affiliated with the Fraternal Order of Police (FOP).  Secrets of that battle continue to emerge.  On Friday, September 21, Joe Everson, a resident of Memphis, pleaded guilty in U.S. District Court to making false statements in connection with a joint FBI-Department of Labor-Tennessee Bureau of Investigation probe surrounding the discovery in July of surveillance equipment at an FOP summer youth camp.

Secretary-Treasurer in Wisconsin Charged with Theft, Forgery

John Sigafus didn’t take the union auditor seriously.  He now has to take the county prosecutor seriously.  Sigafus, formerly secretary-treasurer of International Association of Machinists and Aerospace Workers Lodge W-335 in Superior, Wisconsin, was charged on September 27 in Douglas County District Court with embezzling more than $7,000 from his union.  According to the criminal complaint, Sigafus, 42, a resident of nearby South Range, Wisc., committed various acts of check forgery and improper bonus disbursements over a four-year period.  The local represents employees at Koppers Industries Inc., where Sigafus had worked.

West Virginia Local Financial Secretary Pleads Guilty to Theft

On October 2, Danny Beyser, ex-financial secretary of United Mine Workers Local 1638, pleaded guilty in U.S. District Court for the Northern District of West Virginia to embezzlement.  He had been charged in June with one count of embezzling $83,274.39 in funds from the Moundsville, West Va.-based union.  The guilty plea follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (OLMS, 10/12/07).


Alabama Business Manager Indicted for Embezzlement

GM Health Plan Transfer to Union Could Invite Corruption

The strike lasted two days.  The effects, for better or worse, will last decades.  On Wednesday, September 26, the United Auto Workers (UAW) and General Motors (GM) reached a contract agreement effectively ending a walkout by nearly 75,000 hourly employees of the Big Three automaker.  Among the deal’s key features is a proposed shift of more than $35 billion from GM’s estimated $51 billion in unfunded retiree health care liabilities into a UAW-managed trust fund designed to appreciate in value.  Given the extensive occurrence of benefit fraud in many unions, if not necessarily the UAW, the transfer, to be funded by cash and stock, is raising concerns over the possibility of corruption and insolvency.

S.F. Federal Court Again Delays No-Match Letter Mailings

Immigration reform continues to be a hot potato, and perhaps no more so than in Northern California.  For the second time in a little over a month, a federal judge in San Francisco has decided to delay an effort by the Department of Homeland Security (DHS) to enforce the integrity of the Social Security program.  Union Corruption Update reported two issues ago that U.S. District Judge Maxine Chesney on August 31 had issued a temporary restraining order barring DHS from mailing notices to some 140,000 employers across the nation, warning them about discrepancies between employer and employee Social Security information.  These “no-match” letters would be amplified by a separate notice indicating the potential penalties for failing to resolve differences.  DHS, under great pressure from the American people, seeks to discourage employers from hiring illegal immigrants.  It now will have to wait a little longer.

New Report Shows Some Progress in Union Transparency

Experience has shown that America’s labor unions, in absence of mechanisms to enforce accountability, have a penchant for disguising how they derive and spend their money.  The Bush administration, led by Labor Secretary Elaine Chao, from the start has been engaged in an ongoing effort to combat union corruption before it happens.  The centerpiece of that effort for several years has been an expanded, more detailed version of the “LM-2” annual financial reporting form for decades required of larger unions.  The AFL-CIO went to U.S. District Court late in 2003 to block implementation of the new rule, but lost in federal appeals court a year and a half later.  But many have wondered since:  What effect is the new regime having on the way unions operate?  A new report by Hudson Institute scholar Diana Furchtgott-Roth gives more than a few answers.  Using extensive charts as well as narratives, she argues that unions have made some progress in improving their public transparency, but that this is primarily the result of government pressure.

Panel Seeks Theft Charges against Cleveland Locomotive Boss

As far as corrupt Teamster bosses from Cleveland go, Don Hahs isn’t remotely in the same league as the union’s general president during the mid to late 80s, the late Jackie Presser, a kept man of the Mob.  But the discovery that Hahs likely embezzled funds has raised concerns of a federally-appointed oversight body.  In a September 13 letter to International Brotherhood of Teamsters General President James P. Hoffa, the Independent Review Board (IRB) recommended that Hoffa bring embezzlement charges against Hahs, who heads the Brotherhood of Locomotive Engineers and Trainmen (BLE).  Hahs, the three-member board charged, diverted more than $58,000 in BLE funds to cover personal expenses.  It’s an internal matter – at least for now.  But the IRB has a track record of limited patience.

Ex-Treasurer of Wisconsin Local Charged with Embezzlement

Tracy Stelter didn’t think she would get caught dipping into the union till.  It was an unwise gamble.  Last month, Stelter, 44, a special education teacher in the school system of Shiocton (northwest of Appleton), was charged with felony embezzlement from the Shiocton Education Association during her tenure as union treasurer.  According to the complaint filed in Outagamie County Circuit Court, Stelter between 2002 and the beginning of this year had stolen more than $9,000 from the union.

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