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.

NY Developer, Union Boss, Plead Guilty in $10 Million Fraud Case

A Manhattan developer and two former union bosses have confessed to defrauding the taxpayers of NYC by helping to steal more than $10 million from the N.Y. Metro. Transportation Authority (MTA).  That brings to four the number of defendants who have pled guilty to the scheme in which developers overcharged the MTA for construction projects, then conspired with officials from Local 14 of the Intl. Union of Operating Engineers (IUOE), and Local 1 of the Intl. Union of Elevator Constructors, to pocket the savings from using lower-paid non-union workers.

On March 31, Frederick Contini pled guilty to his major role in the conspiracy.  In Feb. 1999, the MTA contracted with Contini to renovate a 1.2 million-sq. ft. space on Broadway at a cost of $55 million, which eventually grew to $155 million.  Contini, using a sham company called Links Construction, billed the MTA at the highest possible wage for labor to be supplied by the two unions.  In addition to the use of non-union workers, Contini also inflated the number of hours actually worked. 

New DC 37 Local President Sues Ex-Boss for more than $1.5 Million

Carmen Charles, the new president of a NYC local union in the scandal-tarred Dist. Council 37, sued the ex-president for squandering nearly $2 million of union funds for 30 years. 

Last spring, James Butler lost an election for president of Local 420 of the Amer. Fedtn. of State, County & Municipal Employees to Charles.  With Butler's exit, an audit by KPMG of the Local's finances from 1995-98 finally was released.  The accountants found that Butler had spent nearly $2 million for a new headquarters that remains a dilapidated shell, and charged tens of thousands of dollars worth of his and his wife's travel expenses to the union without documentation.

DC Man Charged with Laundering Embezzled Union Funds

Michael Martin was charged on April 2 with laundering over $480,000 embezzled from the Washington Teachers Union

According to the information, Martin and a "business partner" (identified earlier as Errol Alderman) formed a fictitious company, Expressions Unlimited, in July 1998.  For the next four years, Bullock, Hemphill and Baxter manufactured invoices for Expressions, and wrote checks to Martin for $483,543.  After depositing them into the sham company's account, Martin gave back many of the funds to Bullock and Hemphill, who allegedly used the money to pay for personal purchases with the WTU's credit card.  On the WTU's LM-2 financial disclosure form filed with the U.S. Dept. of Labor, the payments to Martin were categorized as "membership services," "per capita tax," and "printing" expenses.

Martin was charged with money laundering in violation of 18 U.S.C., Sections 1956 and 57.  He is the second person to be charged in the scandal, which appears to have cost Washington, D.C. teachers $5 million. [U.S.A.O. D.C. 4/2/03, Washington Post 4/3/03, WMAL 4/11/03]

Fla. School Bus Drivers Charge Natl. Union Bosses with Ignoring Financial Wrongdoing

Dissident bus drivers in the Tallahassee, Fla. area, are looking at an auditor's suspicion of fraud in their union as evidence of mismanagement and unaccountability in the state and national union hierarchies benefiting from their dues payments.

Members of the Collier [County] Support Personnel Union accused local officials of mismanaging more than $25,000 in October.  That figure has now grown to $36,000.  They also accused the three organizations that pocket 78 percent of their dues -- the Natl. Education Assn. (NEA), the Fla. Education Assn. (FEA) and the Amer. Fedtn. of Teachers (AFT) -- of ignoring their complaints for more than a year.  In January, several members, led by Richard Arena, were elected as shop stewards and began their own inquiry.  Among other problems, they noticed numerous ATM transactions involving hotels and other businesses in which the institution's name was written in ink on the carbon.

San Antonio Boss Convicted of Influence Peddling Released to Halfway House

Harold Flammia, convicted of using his position as San Antonio police union chief to steer taxpayer and union funds to favored lawyers, is serving the last five months of his four-year sentence in a halfway house.  He is still perceived as having influence through his wife, deputy police chief Rosemary Flammia.

After becoming president of the San Antonio Police Officers Assn. in 1988, Flammia negotiated a contract that funneled union dues and city taxes to a legal fund for police officers.  In exchange for $500,000 in kickbacks from one of the legal aid attorneys, Flammia ensured that the attorney kept the legal aid contract.  Flammia pled guilty to fraud and money laundering in May 1998.  He was sentenced to four years, seven months in federal prison and ordered to pay full restitution in Feb. 1999. [San Antonio Express-News 4/10/03]

DOL Sues Carpenters Pension Trustees for Misuse of Plan Assets

On March 27 the U.S. Dept. of Labor sued the trustees of the pension and welfare plans of Local 2682 of the United Bhd. of Carpenters in Bronx, New York, for improperly using plan assets to pay unreasonable expenses in excess of $900,000.  Named as defendants in the lawsuit are current and former trustees Anthony Prezioso, Joseph Cruz, Manuel Dos Santos, Edward Orlando, and Mark Goldsmith.  Prezioso was the plan administrator. Cruz was a trustee of the Local 2682 pension and welfare plans and president of Local 2682. 

The lawsuit, filed in federal district court in Manhattan, alleges that the trustees of Local 2682's benefit plans paid the Local 2682 union an unreasonable amount for services unnecessary or not provided to the plans.  Specifically, the suit alleges that the trustees: 

Former Official Charged with Obstruction in Houston Federal Court

U.S. Attny. Michael Shelby announced a superseding indictment on April 3 charging Neil Francis Babineaux, 50, of Katy, Texas, with obstruction of justice and making false declarations to a federal grand jury relating to testimony he provided to a federal grand jury in October 2001.

Babineaux, formerly employed by the United Transportation Union (UTU) in Cleveland Ohio, denied soliciting and accepting cash contributions from designated legal counsel and others seeking to be designated counsel for the UTU before and after the July 1995 election of Charles Little as UTU president. Babineaux is charged with obstructing the grand jury’s investigation into these payments and with making false statements to the grand jury. He will soon appear before U.S. Magistrate Judge Marcia Crone who will set conditions of release pending trial to be scheduled before U.S. Dist. Judge Nancy F. Atlas (S.D. TX, Clinton).  Babineaux faces up to ten years imprisonment and $250,000 fine for obstructing justice and up to five years imprisonment and $250,000 fine for making false declaration to a grand jury.

Frmr. Minneapolis Official Sentenced for Embezzlement

Thomas Martin, who confessed last November to misusing union funds to influence elected officials, was sentenced to two years in federal prison and ordered to pay $43,000 in restitution and a $5,000 fine on April 1.  The frmr. business mgr. of Local 15 of the United Assn. of Plumbers, Steamfitters and Pipefitters pled guilty last November to arranging free plumbing work at the home of Minneapolis city councilman Joseph Biernat in exchange for an appointment to the city's plumbers licensing board.

U.S. Dist. Judge Ann Montgomery (D. MN, Clinton) received a "large volume" of letters on Martin's behalf, but opted for a heavier sentence after prosecutors charged Martin with hindering the investigation.  In one case, Martin asked that check for plumbing work paid out of union funds done at a friend's house be backdated. [Minneapolis Star Tribune 4/2/03]


Ex-Penn. President  Sentenced for Embezzlement

Union Pension-Owned Company Set to Lose $20-$30 Million

Its stock windfall from the bankrupt Global Crossing now gone, the union pension-owned Ullico company lost money in 2002 for the first time in 11 years, its CEO, Robert Georgine, admitted on Feb. 21.  In a meeting with the Board of Directors, Georgine, former head of the AFL-CIO's Bldg. & Construction Trades Dept., blamed chief financial officer John Grelle for the losses.  Days later, Grelle resigned in protest, blasting Georgine for not selling the company jet, which costs $3 million a year.

There was no indication if Grelle also called on Georgine and other union boss directors of Ullico to return the more than $6 million they made in inside deals of Ullico stock in 2000 and 2001.  In the late 90s, Ullico was able to buy Global Crossing stock at its initial public offering (IPO) price.  By 1999, a $7.6 million investment had mushroomed to $335 million.  After pricing its own stock at a set $25 per share, Ullico directors changed the rules, setting a new price at the beginning of each year.

Peter Gotti, frmr. Union Boss, Convicted of Racketeering, Extortion

Seven members of the Gambino crime family, including the reputed acting boss, Peter Gotti, were convicted on March 17 of racketeering and extortion within the Intl. Longshoremen's Assn.  One of those convicted was Anthony "Sonny" Ciccone.  Though prohibited by a 1991 federal civil consent decree barring him from union affairs, Ciccone continued to oversee the Gambinos' criminal interests in the ILA, including Locals 1 and 1814 on the Brooklyn and Staten Island waterfronts.
    

Ex-Mass. State Financial Director Investigated for $800K Theft

Massachusetts Attny. General Thomas F. Reilly announced the indictment of the former financial director of the Mass. Teachers Assn. (MTA) for reportedly embezzling $802,000 from the state affiliate of the National Education Assn. (NEA) union.
 
Richard Anzivino began working in the MTA's finance and accounting office and became its director in 1995.  Starting in 1996, until his discovery by MTA officials in September 2002, he cashed or deposited 270 MTA checks from, and into, his personal accounts.  
    
Anzivino reportedly hid his embezzlement by keeping the checks under $5,000, so that only his signature was needed.  He also wrote the checks from "transfer" account, and at the end of the fiscal year, he would spread the stolen funds over various expense accounts.  The 270 checks Anzivino allegedly used represent only a fraction of the 68,000 checks issued by the MTA from 1996-2002, when the embezzlement reportedly took place.  
    

New Indictments of Boston Teamster Boss

George Cashman, president of Intl. Bhd. of Teamsters Local 25, now faces charges that he extorted employer kickbacks, put his personal interests above the union's pension fund, and undermined his own union's organizing efforts.  
    
The charges were outlined in a 10-count indictment unsealed by the U.S. Attny. for Mass. on March 13.  Count One of the indictment lays out a conspiracy by Cashman and business owner Thomas DiSilva to funnel payments from Cardinal Health, Inc. to DiSilva, in exchange for Cashman using his position as a Teamster pension trustee to settle a lawsuit over Cardinal's obligations to the pension fund.  
    

Confirmation of Convicted Union Boss on Hold in IL Senate

Two months after Illinois Gov. Rod Blagojevich nominated him for Director of the state labor department, Michael Fenger's confirmation is on hold in the state Senate.  But that hasn't stopped the Rockford-area union boss, convicted in 1997 of slashing the tires of a non-union truck, from setting up shop as the acting director.
    
Fenger was the business manager of Intl. Bhd. Of Elec. Wrkrs. Local 364 when several militants surrounded the truck of a non-union worker as he tried to leave a Wal-Mart construction site.  With the truck stopped, two police officers saw Fenger use a five-in. awl to puncture all four tires. Sterling police were videotaping the protest and recorded him puncturing at least one of them.  Fenger denied any involvement in the tire-slashing, but later pled guilty to two misdemeanor charges of property damage and reckless conduct.  
    

Ex-Atlanta Apprentice Coordinator Confesses to Embezzling from Training Fund

Tony Mancel Davis pled guilty on March 18 to embezzling nearly $40,000 from a union apprentice training fund in an Atlanta federal court.  The fund was administered by Local 48 of the Int'l Assn. of Heat & Frost Insulators & Asbestos Workers.

From June 1998 to October 2001, David used his position as coordinator of the fund to reimburse his food, clothing and travel expenses of $8,310, and stealing $31,647 in illegal salary advances, duplicated salary and fraudulent overtime.  The fund has about 200 participants and $56,000 in assets.

David is scheduled to be sentenced in the U.S. District Court for Northern Ga. on June 2.  He faces a maximum prison sentence of five years on each of the two embezzlement counts and $250,000 in fines.  As part of his plea agreement, Davis agreed to repay the full amount he embezzled.  David was charged on Feb. 24 after an investigation by the Atlanta branch of the U.S. Dept. of Labor's Employee Benefits Security Administration. [EBSA 3/26/03]


Granddaughter of SD Union Founder Sentenced for Embezzlement

More Allegations Surface of Union Featherbedding on Boston Film Sets

A fed. grand jury is investigating new allegations that bosses of a Boston Teamsters union forced the hiring of no-show drivers on the set of "Mystic River," directed by Clint Eastwood.  According to the Boston Globe, the grand jury in Worcester summoned Keith Dillon, a Teamster from Los Angeles who has worked on previous Eastwood films, to testify about his dealings with Local 25 of the Intl. Bhd. of Teamsters in Boston.

"Mystic River" was the first feature film to be shot in Mass. in two years.  Local 25 has been under investigation since 2000 for allegedly extorting job favors for organized crime associates on the sets of such films as "The Perfect Storm," "The Cider House Rules," and "Good Will Hunting."  On the set of "What's the Worst that Could Happen," Local 25 boss George Cashman approved the beating of a female snack truck driver who refused to turn her concession contract over to a Teamster member.

Atlanta Workers Sue Hierarchy for Violating Free Speech Rights

Two dissidents from Atlanta Local 387 sued the Intl. Assn. of Iron Wrkrs. on Feb. 25 for using union discipline to squash their efforts to ferret out corruption in the troubled Local.  Carl Bishop has been a union member for 20 years, and a member of Local 387 for seven.  Oscar Ingram has been a trustee of the Local since Feb. 2000.

The two have joined other members in trying to get information about the Local's finances for years.  In April of last year, Steven Jones, the Local's ex-secy. treasurer, was sentenced for embezzling $90,000 from the Local and an apprenticeship fund.  Throughout the Spring, Bishop and Ingram sought to verify that Local bus. mgr. Hugh Dryden Jr. had reimbursed the Local for personal airfare they believed he had charged to the union credit card.  They also tried to obtain records of Dryden's cell phone usage, paid for by Local 387.

Bookkeeper Fired, Accused of Stealing over $400 K from MI Union

Debra Lewis, an 18-year employee of the Mich. Nurses Assn. until her recent firing, as admitted to embezzling at least $418,000 from the union.  She has not been charged, but is cooperating with an investigation by the Meridian Township Police Dept.

Although Lewis, as the state union's office mgr., has always been responsible for paying the union's bills, her apparent theft was only discovered at the end of February, when auditors began looking for some missing cancelled checks.  According to the Union's 2001 LM-2 disclosure form filed with the U.S. Dept. of Labor, an audit failed to uncover the missing funds.  "It's shocking," said union spokeswoman Carol Feuss.  "We are trying to figure out how it happened and how we can prevent it from happening again."  Lewis made $47,474 in 2001.

Lewis's attny. has contacted the Ingham County prosecutor's ofc.  According to the attorney, Lewis is remorseful, and is aware that she faces a decade in prison and could be required to fully repay the stolen funds. [Lansing State Journal 3/11/03, WILX-TV 3/12/03]

Iowa Officials Sentenced for Embezzlement

Two frmr. union officials have been sentenced for working together to embezzle more than $120,000 between them from Des Moines Local 177 of the Laborers Intl. Union of N. Amer.  On Feb. 28, frmr. president Fred T. Risius and ex-VP Henry Jannenga were sentenced, followed by local member Norval Craig Michael on March 6.

Risius was sentenced to 15 mos. in prison, followed by three yrs. of supervised release, and was ordered to repay the union for the $100,000 he embezzled from Local 177 through payments to, and kickbacks from, a phony construction firm, payments to fictitious picketers, and personal purchases on the union credit card.

Jannenga received three months in prison, and was ordered to repay the $22,500 he embezzled from the Iowa State Laborers' Training Fund.  Michael was sentenced to five yrs. probation, and was ordered to join with Risius in repaying $16,900 he received from Risius, ostensibly for materials Michael sold to the union but which he and Risius split between themselves. [U.S. Ofc of Labor-Mgmt. Standards 3/13/03]

Ex-Bus. Agent Sentenced for Embezzling Strike Funds in Penn. Fed. Ct.

Sr. U.S. Dist. Judge William Standish (W.D. Pa., Reagan) sentenced John Dorrier on Feb. 28 to a year in prison and ordered him to repay $56,195 he stole from Local 66 of the Intl. Union of Operating Engineers.  Dorrier must begin paying $1,000 a month in restitution after his release.

From 1993 through 1998, Dorrier cashed $137,645 in vouchers for fictitious picketers, of which he kept $41,795 for himself while he paid the rest to relatives and friends and to some of the supposed "picketers" to keep them silent after they received IRS tax forms for their false picketing payments.  Dorrier pled guilty on Nov. 14 last year to embezzlement, forgery and tax evasion after a joint investigation by the Pittsburgh branch of the U.S. Ofc. of Labor-Mgmt. Standards and the Criminal Investigative Div. of the IRS. [OLMS 3/11/03, Butler Eagle 3/4/03]

Ex-Secy.-Treasurer Confesses to Bank Fraud in Ohio Federal Court

Thomas M. Payne pled guilty on Feb. 28 to one count of bank fraud (18 U.S.C., Sec. 1344) in the U.S. Dist. Ct. for the Southern Dist. of Ohio, Western Division.  From March 1998 until his resignation on Sept. 1, 2000, Payne was Secy.-Treasurer of Local 1938 of the Amer. Fedtn. of Govt. Employees.  On nine occasions, he endorsed dues checks from members, then deposited less than the full amount of the checks at the Star Bank in South Point.

Payne also forged the signature of the Local president on checks made payable to himself.  To conceal the theft, he made false entries in the check stubs and used cancelled checks to create false duplicates of the checks he had cashed for himself.  In the plea agreement, the U.S. Attny. and Payne agreed that the total amount he fraudulently obtained was $12,184. [U.S.A.O. S.D. OH, OLMS 3/13/03]

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