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.

Film & TV Writers Union Sits on $20 Million in Back Royalties

It’s a scandal right out of a movie plot.  And it’s more than a little ironic that the people allegedly being scammed make a living writing movie plots.  A Los Angeles-based union, the Writers Guild of America, West (WGA), has been deliberately withholding and/or siphoning off about $20 million in accumulated royalty checks to which screenwriters or their estates are legally entitled – or so a class-action suit filed in Los Angeles federal court in September 2005 alleges, a suit recently sent back to a state court.  In the nearly two years since, accusations continue to fly.  The guild stands accused by four parties of sitting on a huge pile of revenues from foreign levies rather than distributing them to their rightful claimants.  Worse, though not the subject of the suit, the union may have funneled far greater sums of money to major studios and producers, and keeping some of it.  Guild officials insist they want to mail all checks to their proper recipients, but can’t find them.  A number of writers, led by ex-WGA member William Richert, say this is a fish story, another example of creative accounting, Hollywood-style.

U.S. Supreme Court Sides with Washington State Dissenters

Dissenting teachers in Washington State put forth a long and mighty effort, and were rewarded for their patience – even though the rewards may be more psychic than monetary.  In a unanimous 9-0 decision, the U.S. Supreme Court on June 14 ruled in favor of the right of nonunion employees to exercise discretion over how their mandatory union fees are spent.  Consolidating the cases of Davenport v. Washington Education Association (No. 05-1589) and Washington v. Washington Education Association (No. 05-1657), the Court upheld a Washington State law passed by voter referendum a decade and a half ago giving public-school teachers the right to withhold payments for what they might consider objectionable political purposes.  In so doing, the court overturned a state decision holding this “paycheck protection” law to be a violation of a union’s free-speech rights.  At the same time, it’s a limited victory.  The High Court sidestepped the issue of constitutionality of union forced-dues collections.  Moreover, just weeks before the decision, the state’s union-friendly Democrat political establishment gutted the law.

DOL Unveils Plan to Reduce Financial Reporting Delinquencies

The Internet may be one of the best things ever to happen to public transparency.  That’s why the Department of Labor now requires unions to file their annual financial reports online.  Presumably, union members and the general public benefit.

NYC Labor Council Elects Successor, Institutes Reforms

The New York City Labor Council (CLC) has found a permanent successor to fallen president Brian McLaughlin.  On June 25, delegates at a meeting of the AFL-CIO-chartered federation, representing some 400 unions, overwhelmingly elected Gary La Barbera, an official with the International Brotherhood of Teamsters, as its new head.  Though that union bolted from the AFL-CIO to help form a rival group, Change to Win, La Barbera, 47, impressed the CLC with his track record as a corruption fighter.  More than a decade ago, he’d begun serving as a trustee overseeing the cleanup of Teamsters Local 282, a cement-truck drivers’ union previously under the thumb of the Gambino crime family.

Federal Court Upholds Convictions of Hawaii Boss, Daughter

Fathers have a lot to teach their offspring, and unfortunately, that includes the finer points of stealing from a labor union.  Escaping detection may be easy for a while, but if and when caught, the culprits aren’t likely to come up with too many convincing alibis.  On June 11, a federal appeals court in Hawaii belatedly upheld mail fraud, money-laundering and embezzlement convictions of a powerful state labor chieftain and his daughter.  Gary Rodrigues, former state director of the United Public Workers, an affiliate of the American Federation of State, County and Municipal Employees, had been sentenced in 2003 to more than five years in prison following his conviction the previous fall.  His daughter, Robin Rodrigues Sabatini, received a sentence of three years and 10 months for helping her father defraud the union through her consulting firms.  Each had been free while appealing their convictions.

Brooklyn, N.Y. Shop Steward Pleads Guilty to Accepting Bribe

David Veltri may have been a bit player, but his role in a much larger 11-year scam to defraud the New York City District Council of Carpenters wasn’t about to go unnoticed.  Federal authorities on June 15 announced that Veltri, a shop steward for the council, an affiliate of the United Brotherhood of Carpenters and Joiners, had pleaded guilty to accepting bribes totaling at least $8,000 from the owners of a contracting firm, Tri-Built Construction, Inc.  He was one of several people who skimmed union benefit funds to pay nonunion workers off the books and underreport hours worked by union employees.

CPA Sentenced for Misclassifying Costs of Seattle-Area Union

On June 5, James A. Pulsifer, a certified public accountant, was sentenced to one year of probation and fined $1,000 for knowingly making false entries in the annual Labor Department reporting form of the Society of Professional Engineering Employees in Aerospace (SPEEA).  In the course of making accounting adjustments, he had misclassified some $500,000 in union expenditures.  SPEEA officers who signed the report believed it was free of errors and in compliance with federal regulations.  Pulsifer was charged in November and pleaded guilty in February.  The union, based in Seattle, represents professional employees of Boeing, BAE Systems and other aerospace companies.  The action comes in the wake of an investigation by the Labor Department’s Office of Labor-Management Standards.  (OLMS, 6/15/07).  


Former Treasurer of Atlanta Union Indicted for Embezzlement

Union Bosses, Researchers Distort Data to Push Card-Check Bill

One of the more time-tested ways of getting Congress to pass legislation of dubious value is to lie with numbers.  Interest groups with a stake in passage know the drill.  They invent numbers, or failing that, take them out of context.  Either way, the intent is to convey the impression of an exploding problem rectifiable only by emergency national action.  Whether the crisis at hand is “three million homeless,” “skyrocketing divorce rates,” or “plummeting SAT scores,” the point is to scare lawmakers into rapid action, bypassing consideration of serious objections.  Organized labor’s aggressive campaign on behalf of the misnamed Employee Free Choice Act, or EFCA, follows this pattern.  And like many other efforts at panic-peddling, union-sponsored or otherwise, this one seems to be succeeding.

New Jersey Mobsters Charged in No-Show Union Job Scam

To get a job on the massive Goethals Bridge reconstruction project, Andrew Merola was the man to see.  Whether one actually did any work was a separate issue.  Asking too many questions could get someone hurt – at least until late last month.  The FBI and various state and local authorities in New Jersey, starting on May 21, arrested a reported 25 suspects involved in a wide variety of criminal schemes, including labor racketeering.  A reputed Gambino crime family soldier with close connections to the Lucchese family, Merola, 40, allegedly ran a ghost-worker operation for International Union of Operating Engineers Local 825 (Springfield, N.J.) and Laborers International Union of North America Local 1153 (Jersey City) from a taxpayer-funded construction site in Elizabeth underneath the Goethals Bridge (the section of I-278 connecting New Jersey with northern Staten Island, N.Y.), where he had obtained a job through Local 825.  “Merola benefits from the activities of dozens of associates who report to him on their activities, which range from gambling to loan-sharking to a highly organized theft ring dealing in high-end merchandise,” said Union County (N.J.) Assistant Prosecutor Scott Kraus.

Convicted Texas Boss Sentenced for Fraud, Embezzlement

When Chuck Crawley was convicted by a federal jury last December for arranging a $20,000 kickback from a union vendor and rigging his local’s 2002 election, few expected he would receive leniency come sentencing time.  He didn’t get much either.  On May 25, Crawley, formerly president of International Brotherhood of Teamsters Local 988 in Houston, Texas, was handed a six-and-a-half-year sentence by U.S. District Judge Melinda Harmon.  A jury had found him guilty of one count each of mail fraud and falsifying union records, and two counts of embezzlement.  He had been in custody since his arrest a year ago.  “This is a very, very, very serious crime that flies in the face of what a president of a union is supposed to be about,” said Judge Harmon.  “Not only did he get in there fraudulently, but he was fraudulently getting money.”  Crawley, 57, also will have to figure out how to make $121,478 in restitution, a sum representing a year’s pay plus $20,000.

Benefits Manager for Westchester County, N.Y. Local Sentenced

When the federal government assumed control over the Teamsters in 1989, it faced the task of rooting out corruption from any number of locals as well as from the international union.  One of the toughest cases has proven to be Local 456, based in the Westchester County, N.Y. village of Elmsford.  The union, for decades led by the Doyle family, is a tight fiefdom and a local power broker.  And a decade ago, knowingly or not, it allowed an embezzler to manage its benefit plans.  The recent sentencing of former benefits manager Kenneth Decter, owner of Unity Management, Inc., should serve as a reminder.  On December 20, 2006, Decter was ordered by a federal court to serve 23 months in prison and pay more than $4.25 million in restitution after pleading guilty in 2004 to wire fraud and theft from union funds.

Chicago Businessman Pleads Guilty to Benefit Fund Fraud

Stuart Levine’s ruse of innocence could last only so long.  The Chicago businessman and former board member of the Illinois Teachers Retirement System (TRS) pleaded guilty in U.S. District Court on October 27, 2006 to charges of mail fraud and money-laundering in connection with kickbacks of retirement funds of active and retired teachers outside the city of Chicago.  Levine had been indicted in August 2005 on 13 counts of wire fraud, mail fraud, soliciting a bribe, and attempted extortion.  He allegedly conspired with several other persons, including Tony Rezko, a top fundraiser to current Illinois Democratic Governor Rod Blagojevich, to obtain control over lucrative union-sponsored contracts, requiring that firms seeking to do business with the TRS pension fund and the Illinois Health Facilities Planning Board pay kickbacks to ensure approval of their applications.

Ex-Financial Secretary in Virginia Sentenced for Embezzlement

On May 25, David Taylor, formerly financial secretary for Carpenters and Millwrights Local 1402, was sentenced in U.S. District Court for the Eastern District of Virginia to 12 months and one day in prison and fined $35,074.18.  Last October he pleaded guilty to one count of making false statements on Department of Labor financial reporting forms in order to cover up his embezzlement of $72,422 in union funds.  He previously paid full restitution plus more than $14,000 in interest to the Richmond-based union, affiliated with the United Brotherhood of Carpenters and Joiners.  The sentencing comes after an investigation by the Labor Department’s Office of Labor-Management Standards.  (OLMS, 6/12/07).


Upstate New York Local Treasurer Sentenced for Embezzlement

Pension-Backed Film Studio in New Mexico Target of Fraud Suit

Albuquerque isn’t about to replace Hollywood anytime soon as the nation’s movie and television capital.  But a new studio nearing completion at least should make the fast-growing New Mexico city and surrounding area a major industry presence.  The $74 million, 50-acre facility, by all accounts, is state of the art.  The financing, however, has involved some old-fashioned expense-account fraud – or so certain Los Angeles businessmen allege.  On April 9, Pacific Coast Capital Partners (PCCP), the majority owner of Hollywood’s famed Culver Studios, filed suit in Los Angeles County Superior Court.  The partnership charges that the project’s main financial backer, the Santa Monica, Calif.-based Pacifica Ventures, and its two principal officers, Hal Katersky and Dana Arnold, fraudulently billed Culver Studios more than $1 million for various services.  What makes this action particularly intriguing is that Pacifica received extensive funding from union pensions to get the project off the ground.

ACORN Worker Pleads Guilty to Vote Fraud in Kansas City, Mo.

The Association of Community Organizations for Reform Now, or ACORN, has done a lot of heavy lifting over the past few decades for the Democratic Party Left.   Launched in 1970 and still run by Service Employees International Union Local 100 chief organizer Wade Rathke, the massive nationwide nonprofit network of anti-poverty activists has been focusing much of its firepower lately on voter registration.  They play hardball and are proud of it, regardless of whether their tactics are legal.  Results are what matters.  And last year in Missouri, the group delivered results.  By a less than 50,000-vote margin, State Auditor Claire McCaskill, a Democrat, was elected as the state’s newest U.S. Senator over GOP incumbent Jim Talent.  In the process, ACORN unwittingly set the stage, especially in Kansas City, for indictments and guilty pleas against several of their former workers.

Chicago Local, Building Owners Set for Trial Over Secret Deal

It seems like a classic labor-management sweetheart deal.  But a case set to go before a federal administrative law judge in Chicago is likely to have implications well beyond the deal itself.  The trial, scheduled for June 11, pits a major security firm, the Wackenhut Corporation, against the defendants, Service Employees International Union Local 1 and the Chicago Building Owners and Managers’ Association (BOMA).  Wackenhut earlier had filed an unfair labor practice charge with the National Labor Relations Board, charging the SEIU and BOMA with entering into agreements that effectively forced association members to hire security companies with SEIU-unionized work forces.  Additionally, Wackenhut charged, the defendants coerced building managers to end any existing business relationships with nonunion security companies.  The real significance of the case, however, may be as a test of the legitimacy of pending card-check legislation.

S.F. Bay Area Boss Indicted for Embezzlement, Records Fraud

Graham Paul Vane liked to live well.  Most people do.  The problem was that he made fellow dues-paying union members poorer in the process.  On May 24, a federal grand jury in San Francisco indicted Vane for embezzling more than $170,000 in funds from Branch 1280 of the National Association of Letter Carriers, and falsifying union records to conceal his thefts.  Graham, 59, a resident of Pacifica, Calif., during January 2002-March 2006 allegedly diverted union funds to pay for such personal expenses as dining, travel, massages, jewelry, wine and gasoline.

Ex-Employee of Maine Union Sentenced for Embezzlement

Catherine Crosier didn’t set a good example to students.  She got a stern reminder of that at her sentencing hearing in federal court.  Crosier, a former employee of the 25,000-member Maine Education Association, an affiliate of the National Education Association, was sentenced on May 7 to six months in prison to be followed by three years of supervised release.  Crosier, 46, a resident of Augusta, pled guilty last November to one count of embezzling more than $45,000 in union funds during June 2002-January 2004.  She had made out about 180 union checks either to herself or petty cash.

Maryland Local Treasurer Pleads Guilty to Embezzlement

On May 3, Walter Fisher, former treasurer for Local 1949 of the United Transportation Union, pleaded guilty in federal court for the District of Maryland to one count of embezzling funds from the Ellicott City-based union in an amount greater than $30,000 but less than $70,000.  The guilty plea follows an investigation by the Labor Department.  (OLMS, 5/30/07).  


Former Secretary-Treasurer of Pittsburgh-Area Local Sentenced

Billionaire Clinton Friend, Union Accused of Racketeering

Ron Burkle is a very wealthy man, with a net worth listed last year in Forbes magazine at $2.5 billion.  He’s also a close friend of former President Bill Clinton.  That relationship is now coming under greater scrutiny given the backdrop of Burkle’s now-successful attempt to buy out a major long-distance car-hauling company, with an able assist from the International Brotherhood of Teamsters.  On April 23, investors of Hawk Opportunity Fund sued Burkle’s private-equity company, Yucaipa Companies, in Atlanta federal court, charging Yucaipa and IBT leaders with racketeering in Yucaipa’s takeover of Allied Holdings, Inc., North America’s largest hauler.  The plaintiff is demanding $200 million in damages, a figure that could triple under RICO statutes. Yucaipa thinks the case is groundless.  “We think that this suit is totally without merit,” said company lawyer Robert Klyman.  A Teamsters spokesperson likewise dismissed the suit as having no basis.  But the surrounding facts notwithstanding provide a window to the ways in which Hillary Clinton will fund her bid to become the next U.S. President.

Syndicate content