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-New York City Labor Council Head McLaughlin Pleads Guilty

Brian McLaughlin probably knew all along this was a rap he couldn’t beat.  The weight of evidence that he’d siphoned funds from his union federation and other organizations was too great.  On March 7, the former New York City labor leader and politician pleaded guilty in U.S. District Court in Manhattan to various racketeering charges.  McLaughlin, 55, had served as president of the New York City Central Labor Council (CLC) and as a seven-term Democratic New York State Assemblyman from Queens.  In 2006, a two-count federal indictment specified 21 offenses against him in connection with illegal obtaining of a combined $2.2 million from unions, contractors, taxpayers and his campaign re-election committee.  Union Corruption Update has covered the case since it first broke two years ago. 

Business Manager, Ex-President of New Jersey Local Indicted

Local 825 of the International Union of Operating Engineers has been a prime target of federal prosecutors as of late.  Last spring, more than two dozen officials, members and associates of the Springfield, N.J.-based union were arrested for a wide range of criminal acts.  Two more persons now can be added to the dragnet, Kenneth Campbell and Peter Strannemar, respectively, the union’s current business manager and former president.  On Tuesday, March 11, special agents with the FBI, IRS and Department of Labor unsealed a four-count indictment before U.S. Magistrate Judge Esther Salas charging the pair with receiving bribes in connection with two major construction projects in Jersey City.  The case, indirectly, is mob-connected.

Upstate New York Chieftain Sentenced for False Record-Keeping

To the Department of Labor, there was something strange about the way William Drake kept the books.  Their suspicions were well-founded.  On February 28, Drake, formerly president of United Steelworkers Local 1013T, was sentenced in U.S.

VW Union Organizer Convicted, Sentenced for Taking Bribes

Volkswagen is the world’s fourth-largest automaker, right behind General Motors, Toyota and Ford.  Nearly 25,000 vehicles roll off its assembly lines during a typical work day in more than 40 plants across Europe, the U.S. and elsewhere.  The Wolfsburg (Lower Saxony) Germany-headquartered company, with a worldwide work force of 325,000, is heavily dependent upon union cooperation to maintain smooth operations.  That’s true in industry in general throughout Western Europe, where labor officials take a far more active role than here in shaping key management decisions.  Unfortunately, this concentration of power presents possibilities for shady quid pro quo arrangements.  And union officials are no more immune to corruption than management, especially with the prospect of lusty sex.

Supreme Court Declines to Review Case of Hawaii Pair

They went down fighting to the very end.  And while nobody will question the tenacity of Gary Rodrigues and his daughter, Robin Rodrigues Sabatini, a good many might question their soundness of judgment and even mental well-being.  This past February, the U.S. Supreme Court announced that it had declined to hear their appeal.  Rodrigues, former longtime Hawaii state director of the United Public Workers, had been convicted in November 2002 by a Honolulu jury on dozens of criminal charges, including mail fraud, conspiracy, money-laundering and embezzlement in connection with the theft of about $380,000 in union funds.  Free on bail, he began serving a five-year prison sentence this past January.  His daughter, convicted on dozens of charges herself and sentenced to 46 months in prison, had laundered much of the money through her “consulting” operations.  It was an outcome neither could accept.

Southern California Teachers Plead No Contest to Thefts

Ava Shaw and Jennifer Boyd were the best of friends.  Fellow teachers and teachers’ union members in San Gabriel, Calif., they dined, shopped and vacationed together.  Unfortunately, those good times often came at the expense of their union – and without the union’s consent.  Their luck ended nearly two years ago with their arrest for embezzlement of around $85,000 in union funds.  On February 15, the pair pleaded no contest to theft in Los Angeles County Court.  Shaw awaits sentencing at a restitution hearing, while Boyd was placed on three years probation and ordered to perform 45 days of community service with the California Department of Transportation.

Former Administrator, Associate Charged with Embezzlement

With the three-month strike by the Writers Guild of America (WGA) now over, the 12,000-member film and television writers’ union now can concentrate on less pressing matters.  On at least one of them it can expect government help.  The U.S. Justice Department announced on February 28 that an information count had been filed against a former union assistant administrator and an associate for embezzling from a fund to pay guild members for works sold, distributed and aired in other countries.  Prosecutors allege the ex-official, Michelle Trinh, 28, had set up an accomplice, Tracey Howze, 45, as a guild member or heir so that the latter could receive three checks totaling $17,228.  Each was charged with conspiracy and has agreed to plead guilty.

Texas Secretary-Treasurer Pleads Guilty to Thefts

Kyle Batts tried to make ends meet on his union credit card.  He wasn’t thinking ahead.  On February 27, Batts, 38, former secretary-treasurer of International Brotherhood of Electrical Workers Local 738, pleaded guilty in U.S. District Court for the Eastern District of Texas to embezzling $40,580.83 in union assets.  Roughly during the period April 2003-August 2006, he used a union credit card to pay for personal expenses.  The union is based in Longview, about an hour and a half east of Dallas.  The guilty plea follows an investigation by the U.S. Labor Department’s Office of Labor-Management Standards.  (States News Service, 2/27/08; OLMS, 3/6/08).


Tennessee Local President Sentenced for Embezzlement

AFL-CIO Files Suit to Block New Financial Reporting Rule

Theft within a labor organization, like theft within a corporation, can go undetected for years.  Union officials have become increasingly sophisticated in how they conduct financial transactions.  And like corporate theft, a good portion of union-related criminal activity could have been avoided if potential conflicts of interest were disclosed beforehand.  That’s why the U.S. Department of Labor (DOL), led by Secretary Elaine Chao, during this decade has been trying to inject more detail into union annual financial reports.  The added time and cost of compliance might seem an exercise in needless aggravation, but consider the alternative:  ever higher amounts of funds illegally diverted from union accounts into the pockets of their chieftains, families and associates.  Labor officials – the honest ones included – understandably don’t like the new rules.  Several years ago, the AFL-CIO, incensed over the department’s introduction of a longer Form LM-2 (the one required of larger unions), went to federal court to block its implementation.  It lost on appeal in May 2005.  But the Washington, D.C.-based federation hasn’t lost its taste for battle with the Labor Department.

Rift between International Union and California Affiliate Widens

The Service Employees International Union is growing at a time when most other unions are not.  It now has 1.9 million dues-paying members, a near doubling from early 1996 when current President Andrew Stern took over the helm.  Things, in other words, have worked out according to plan.  Stern’s grow-or-die gospel is central to the way his union organizes and negotiates.  It’s also the main reason for the eventual split that occurred between him and his predecessor, John Sweeney, who ascended to the AFL-CIO leadership.  That split became formalized in the summer of 2005, when the SEIU and a half-dozen other AFL-CIO affiliates formed their own federation, Change to Win.  But Stern has opponents within his own union, too, most of all in the form of Sal Rosselli, head of a 140,000-member, Oakland, Calif.-based affiliate, United Healthcare Workers-West.  Union Corruption Update reported last year that Rosselli was highly dissatisfied with the way SEIU leaders from Washington, D.C. headquarters apparently strong-armed into being a substandard contract between UHW-West and California nursing home operators.  Relations since have deteriorated further.

High Court to Review Complaint of Dissenting Workers in Maine

That state and local unions use dues to support political campaigns is neither shocking nor illegal.  But using fees collected from non-members in order to support litigation on a nationwide basis is another story.  The U.S. Supreme Court thinks so as well.  On February 19, the High Court granted a petition for a writ of certiorari (i.e., agreed to review a lower court decision) filed by the National Right to Work Legal Defense Foundation on behalf of 20 state employees in Maine.  The case, Daniel Locke et al. v. Edward Krauss et al., concerns the use of nonmember agency fees of the Maine State Employees Association (MSEA), also known as Local 1989 of the Service Employees International Union.

Ohio Secretary-Treasurer Pleads Guilty to Embezzlement

On February 8, Betty Illig, former secretary-treasurer for Graphic Communications International Union Local 638-S and the Tri-State District Joint Council, pleaded guilty in U.S. District Court for the Northern District of Ohio to embezzling $145,675 in union funds and covering up the thefts by submitting false information on the union’s financial reporting forms.  Illig, a resident of East Liverpool, Ohio, a half-hour drive south of Youngstown, had been indicted last November.  The local is also based in East Liverpool.  (OLMS, 2/19/07; other sources). 


Former Treasurer in Michigan Sentenced for Records Fraud

Gambino Crime Soldier Gets 30 Years for Murder of Cousin

Edward “Cousin Eddie” Garafola had been a made man in New York’s Gambino crime family for 30 years or more.  And that may be how long he’ll wind up behind bars – assuming he makes it that far.  On September 5, 2007, Garafola, now 69, was sentenced in Manhattan federal court to 30 years in prison for taking part in separate plots to kill a cousin and a brother-in-law.  The former plot was successful; the latter was not.  Garafola pleaded guilty in October 2004 to luring a cousin, Edward “Eddie the Chink” Garofalo (note: the last names are spelled differently), to his death at the hands of two hit men back in 1990.  Additionally, Garafola had participated in the planning of a hit, never carried out, on former Gambino underboss Salvatore “Sammy the Bull” Gravano nearly a decade later.  Garafola, moreover, was deeply involved in union corruption.

Key Congressman Warns that Unions See 2008 as Pivotal Year

Rep. Howard “Buck” McKeon of California is the ranking Republican on the House Committee on Education and Labor.  As much as any member of Congress, he is attuned to what organized labor is seeking for 2008 and beyond – and the lengths to which unions are prepared to achieve them.  He recently shared his thoughts in an exclusive interview for Labor Watch, a monthly publication of a Washington, D.C. nonprofit monitoring group, the Capital Research Center.  The unions are pulling out the stops, he noted, and they mean to persuade what remains of the 110th Congress to make good on its legislative pledges, especially the Employee Free Choice Act, which would mandate employers to recognize the results of a simple-majority union card check, thus overriding any possibility of holding a secret-ballot election afterward.

Feds Subpoena Union Records in Probe of NY Senate Leader

New York State Senate Majority Leader Joe Bruno’s outside employment as a union pension manager has been neither a secret nor a crime.  But the possibility his clients have created conflicts of interest have prompted federal authorities to step up action initiated over a year and a half ago.  According to court documents, the Department of Justice (DOJ) sometime around the end of January subpoenaed leaders of the pension and welfare fund of an upstate local of the Laborers International Union of North America (LIUNA).  FBI investigators think there is a link between the union’s affairs and certain business dealings of the Milford, Conn.-based Wright Investors Service, part of a holding company, Winthrop Corporation.  Senator Bruno for over a decade has handled accounts for the financial-services firm.  As reported in Union Corruption Update this past December, Bruno was a pension manager for several labor unions.  Since then, however, Bruno resigned his position in the firm, apparently weary of public scrutiny.  As things stand, he might receive more.

Unions in Alberta, Canada Force Members to Subsidize Politics

The United States isn’t the only country where unions have flouted the principle that it is wrong to route dues to political causes against the wishes of individual workers.  At least one province in Canada has the same problem.  And that has a nonprofit workers’ rights group riled up enough to call organized labor’s number.  Residents of the western province of Alberta may have noticed lately a spate of radio and television political ads sponsored by a group called Albertans for Change.  Though innocuous-sounding, it’s a hardball coalition run by the leaders of the Alberta Federation of Labor (AFL) and the Alberta Building Trades Council (ABTC).

Connecticut President Sentenced for False Record-Keeping

The Northeast Emergency Services Union operated as a family business.  It’s too bad part of the business involved embezzlement.  On January 23, Timothy Ferrucci, who had been the union’s president, was sentenced in U.S. District Court for the District of Connecticut to one year of probation, the first six months of which would be spent in home confinement, and fined $2,000.  Ferrucci, 55, a resident of West Haven, Conn., had pleaded guilty in November to four counts of filing false information on the union’s annual financial reporting forms to the Department of Labor during 2001-04.  The independent union represents about 400 ambulance drivers and other emergency personnel in the New Haven area.

Dissenting Employees Sue Wisconsin Local for Exorbitant Fines

A union has the right to run its own affairs, but at the same time it has to play by the rules.  And one of those rules is to refrain from imposing excessive fines and penalties upon dissenting members – or indeed any fines if those members decide to become ex-members.  Unfortunately, Sheet Metal Workers International Union Local 18 doesn’t adhere to this view.  Late last year the union imposed a $30,000 fine on each of four members who earlier had resigned in protest.  But with free legal aid provided by the Springfield, Va.-based National Right to Work Legal Defense Foundation, the workers, all employees of Pre-Heat, Inc., located in the village of Oostburg, Wisconsin (near Sheboygan), are mounting a defense.  On January 7, they filed an unfair labor practices suit with the National Labor Relations Board against the union for levying exorbitant and illegal retaliatory fines.  It’s a case certain to test the scope of union power.

Board Defends Employer’s Right to Restrict Employee E-Mail

The purpose of e-mail is to speed communication.  That would seem to hold true in the workplace as in any other setting.  But if an employer stipulates that union organizing, among other solicitations, is an off-limits topic, does that constitute interference with a worker’s right to organize or join a union?  And if it is off-limits, wouldn’t this imply that it’s permissible for the employer to ban organizing altogether, regardless of the medium of communication?  The National Labor Relations Board recently ruled on this very issue.  And though the case involved an already unionized workplace, its main significance may be the clarification of boundaries for future union organizing drives, especially those involving a card-check process.

Former Seattle Bookkeeper Pleads Guilty to Embezzlement

Tara Mullins committed theft, but at least she was quick to recognize the error of her ways.  On January 15, the Seattle Police Officers’ Guild ex-bookkeeper pleaded guilty in federal court to embezzling almost $42,000 from the organization.  A resident of the Seattle suburb of Renton, Wash., Mullins had been indicted for forging the guild officer’s name onto checks from an employee benefit plan, depositing them into a personal account and then transferring the money into a PayPal account.  She admitted to engaging in the thefts for almost a year.

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