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.

Kickbacks Charges Brought Against New York City School Custodians

Eleven N.Y. City public school custodians, all members of Int'l Union of Operating Engineers Local 891, were arrested and charged Dec. 11 with receiving bribes and kickbacks and rigging bids for window cleaning services. According to N.Y. State Atty. Gen. Eliot Spitzer, from June 2000 to Nov. 2001 the suspects received kickbacks of $300 to $2,000 in cash, or 10% of the contract price, from the cleaning services in exchange for selecting them for their schools. The suspects allegedly asked contractors to supply false bids as a way to circumvent NYC Board of Educ. requirements for at least three bids for services costing more than $250.

D.C. Circuit Overturns NLRB's Approval of "Staggering" Fine by Milwaukee Union

The U.S. Court of Appeals for the Dist. of Columbia Circuit ruled Dec. 28 that the National Labor Relations Board erred in exculpating Int'l Bhd. of Elec. Workers Local 494 in Milwaukee for fining a member $100,000 after he took a supervisor's job at a nonunion shop. The appeals court said NLRB was "flatly unreasonable" for finding that the union did not commit an unfair labor practice by fining the member. NLRB's conclusion, that no violation of the act occurred because the local union was not seeking a collective bargaining relationship with the nonunion employer, was not supported by substantial evidence, the court held. Comments from the union business agent, as well as the "staggering" size of the fine, which was later reduced to $10,000 by the int'l union, "conclusively establish[ed] that the local sought a collective bargaining relationship with [the nonunion company] and retaliated against [Joseph] Podewils for not providing it," wrote U.S. Circuit Judge Laurence H. Silberman (D.C. Cir., Reagan).

Judge Keeps AFL-CIO Documents Secret

U.S. Dist. Judge Gladys Kessler  (D.D.C., Clinton) ruled Dec. 19 that documents collected by the Fed. Election Comm'n in investigating alleged campaign finance violations must be kept secret even after the investigation has ended. Kessler acknowledged her ruling "ends a 25-year practice by the FEC to make available to the public the full investigatory record pertaining to any complaint filed once the complaint is resolved."

The case involved an FEC investigation of links between the AFL-CIO and the Democratic Party during the 1996 campaign. Kessler said she recognized the "serious policy arguments raised" in the case but added that her decision was "compelled by the plain wording" of a provision of the Fed. Election Campaign Act, which requires that FEC investigations be kept secret and sets no time when the investigations can be disclosed. Previously, the FEC has read this confidentiality provision to expire once an investigation was closed.

Southern California Boss Indicted for Election Law Violations

Raymond Busch, an Orange County, Cal., teachers union boss, was charged Dec. 12 with nine criminal counts of participating in the illegal gathering of petition signatures to recall school board trustees. The case is the newest chapter in the continuing saga of the Orange Unified Sch. Dist., for which control of the board has been an ongoing battle, beginning with the June 2001 recall of three board members and culminating with a Nov. election, which brought in a new slate of trustees.

According to the charges brought by the Orange County District Attorney's Office, Busch attested that he had gathered signatures for the recall, though others had actually done the signature-gathering, a possible violation of state election laws.  Busch, a teacher and member of the board of directors of the Orange Unified Educ. Ass'n, could be sentenced to up to nine years in jail if convicted on all counts. He is not under arrest, prosecutors said, because he is not a flight risk. He is scheduled to be arraigned Jan. 7.

Traficant Allegedly Sought Labor Peace in Exchange for Personal Construction Work

U.S. Rep. James A. Traficant (D-Ohio) asked a grocer to build him a barn and buy him a truck in exchange for helping settle a union dispute, according to documents filed Dec. 21 in U.S. Dist. Court in Cleveland. Federal prosecutors said businessman Henry Nemenz gave Traficant more than $115,000 in work and gifts. They say it illustrates how Youngstown Democrat routinely shook down businessmen. Traficant is scheduled to go on trial in Feb. on a 10-count indictment that alleges he took free work and meals from contractors in exchange for helping them with business needs. Nemenz is the seventh businessman who prosecutors said did work for Traficant in exchange for favors. Traficant denies wrongdoing. Nemenz has never been charged and will testify in Traficant's trial about the work and gifts.

When Nemenz tired of Traficant's requests for additional work, the contractor demanded payment. Traficant allegedly said he couldn't afford to pay him. Traficant later reimbursed him for about a third of what Nemenz paid out of his pocket, leaving Nemenz unpaid for more than $50,000 of work, according to the documents. The barn and materials cost more than $89,000.

New Jersey Boss Accused of Embezzling $2 Million

Carmelo J. Sita, ex-fund manager for the Hudson County (N.J.) Dist. Council of Laborers, was arrested the morning of Dec. 12 at his home in Mountainside, N.J., and accused of embezzling more than $2 million from HCDCL and its benefit funds. He used the money for a lavish  lifestyle, including a Martha's Vineyard vacation home and luxury cars, according to the 59-count indictment handed up Dec. 10. U.S. Magistrate Judge Susan D. Wigenton set bail at $250,000, which was reportedly secured by a coop apartment that Sita owns on Manhattan's Upper West Side.

Genovese Allegedly Stole $1 Million from Union Funds

The Dep't of Justice brought a 98-count indictment against 73 members and associates the Genovese crime family in N.Y. The charges include embezzlement, extortion, labor racketeering, loansharking, illegal gambling operations, selling counterfeit money, gun trafficking, credit card fraud, and attempted bank fraud, some of which led to conspiracy and racketeering counts. The crimes reportedly earned about $14 million this year. At least 60 defendants were arrested Dec. 5; some were already in custody. If convicted, some defendants would face as little as 5 years in prison while others would face hundreds of years; one could face up to 530 years.

Among those indicted are 3 alleged "capos" or captains, who are responsible for supervising the criminal activities of the members of their crews. They were identified as Pasquale "Patsy" Parrello, Joseph Dente, Jr., and Rosario "Ross" Gangi, who is already serving a 97-month sentence in federal prison for his role in a penny stock fraud.

Ohio Boss Stole $130,500 to Cover Gambling Debts

Robert D. King, Jr., admitted Dec. 11 that a gambling habit led him to embezzle $130,507 from the United Union of Roofers, Waterproofers & Allied Workers Local 86 in Columbus, Ohio. Specifically, he embezzled $88,757 from the local and $41,750 from local's employee benefit funds. During his arraignment before U.S. Dist. Judge George C. Smith (S.D. Ohio, Reagan), King pled guilty to 2 embezzlement-related charges. King stole the money from Aug. 1999 to Jan. 2001 by writing himself checks from Local 86's general and apprentice-training funds. King told the Columbus Dispatch, "I got hooked on gambling and got in over my head. I got deeper and deeper." He bet at casinos on the Ohio River and in Las Vegas and placed sports bets with bookmakers.

King served as the local's business manager and financial secretary for 6 years until the int'l removed him in Jan. 2001. Local 86 officers became suspicious of King because his sloppy record-keeping. The int'l union audited the local's books and confronted King with numerous discrepancies. King admitted stealing the funds, and the case was turned over to the Dep't of Labor. [Columbus Dispatch 12/12/01]

Virginia Boss Admits Theft, Must Repay $44,000 to Avoid Jail

Judge Johnny E. Morrison of the Circuit Court for the City of Portsmouth (Va.) sentenced Alan F. White, ex-treasurer of Int'l Ass'n of Fire Fighters Local 539, Dec. 5 to 12 months in jail on each of 4 embezzlement counts. The sentences were to run consecutively, but, Morrison suspended all jail time on the condition that White repay $44,000. Morrison also placed White on unsupervised probation until the final payment is made.

A state grand jury indicted White in June on 9 embezzlement counts. He pled guilty to 4 misdemeanor counts just before sentencing. In the plea deal, prosecutors withdrew 5 felony counts. White has repaid $13,000, including a lump-sum installment of $10,000, to the local, which is also known as the Portsmouth Prof'l Firefighters. He will make $500 monthly payments. White served as treasurer for 6 years and resigned in Apr. when an audit revealed discrepancies in the local's books.

Union officials, who were present in court, approved of the plea agreement and restitution plan.  Dues at the local start at about $240 a year. [Virginian-Pilot (Norfolk) 12/6/01]

Missouri Boss Admits $18,500 Theft

Ex-boss of Am. Fed'n Musicians Local 150, James Steven Call, admitted embezzling $18,536.50 from the Branson, Mo., based local which represented entertainers in Mo., Kan., Okla., and Ark. He entered a guilty plea Nov. 29 to a one-count information before U.S. Magistrate Judge James C. England, and U.S. Dist. Judge Ortrie D. Smith (W.D. Mo., Clinton) will sentence Call at a date to be determined.

The scheme ran from Apr. 1997 to Mar. 1999. The local was placed in trusteeship by the int'l union in 1995 because of financial difficulties; as the the trusteeship was ending, int'l trustee Theresa Gafford made a poor judgment of character and groomed Call to run the local. He was elected president and secretary-treasurer in Apr. 1997. In an apparent cost-cutting move, Call relocated the local's office to his leased house on about May 1, 1997. He received no salary from the local, but the local's board agreed to pay him $100 for rent and utility-related costs of running the local out of his home plus any expense he incurred in the course of his work for the local.

West Virginia Boss, Wife Accused of $15,600 Theft

A federal grand jury indicted Thomas C. "Tom" Bailey, president of Am. Fed'n of Musicians Local 136 in Charleston, W. Va., and his wife for embezzling some $15,601 from union coffers. Bailey's wife, Deborah S., was office manager for the local. Their theft of dues and other revenues allegedly occurred between Jan. 1997 and June 5, 2001. The union president is also accused of filing a false annual financial report with the Dep't of Labor in Jan. 2001. Bailey was elected president of Local 136 in 1985, after previously serving as vice president. He was reelected in Jan. 2001.

Bailey, a saxophone player, was a longtime organizer of a local event called the "Charleston Sternwheel Regatta." Last year, Bailey alleged that the now-defunct Charleston Festival Comm'n owed Local 136 nearly $10,000 for the 1997-99 Regattas. However, unlike other vendors owed by the Comm'n, Bailey could not produce receipts for the debt when asked to by city officials. The Comm'n collapsed under mounting debts, and was replaced by the Charleston Regatta Comm'n. Bailey served on the boards of both organizations.

Iowa Boss Admits $5,300 Theft

Terrance P. Baldridge, ex-financial secretary of United Auto Workers Local 1349 in Cedar Rapids, Iowa, pled guilty Dec. 3 to embezzling $5,307.34 from the local. From Oct. 1996 to July 2000, he wrote checks on union accounts and used the money for personal expenses including $1,150 for a bail bond for his son. He has agreed to make full restitution. He was indicted Oct. 5. U.S. Dist. Judge Michael J. Melloy (N.D. Iowa, H.W. Bush) set sentencing for Feb. 25.  [USAO N.D. Iowa 12/17/01; DOL 12/3/01]

QUOTABLE QUOTE
"Great to have you back. Just don't steal the silverware!" President Bush greeting Terry McAuliffe, Democratic Nat'l Comm. Chairman, Clinton crony, and high-profile figure in both the Teamsters money-laundering scandal and the recently settled $4.9 million Int'l Bhd. of Elec. Workers' benefit fund scandal involving shaky Fla. real estate deals, in a White House receiving line for the Dec. 2 Kennedy Ctr. Honors.

Convention Sides Against Rank-and-File

Many wacky and outrageous items came out of the recently ended AFL-CIO convention in Las Vegas. For example, AFL-CIO boss John J. Sweeney said there was a "conservative conspiracy in Congress" and "[t]he sleaziness o the Republicans in the House is the shame of the nation." But one of most troubling moves was the AFL-CIO's Dec. 4 resolution, called by some the "Mohamed Atta Resolution," supporting amnesty for millions of illegal immigrants in the United States. A recent Ctr. for Immigration Studies survey said the majority of Americans, including union members, oppose amnesty.  It found that 55% of Americans oppose amnesty and 34 % support it. However, among union households, 60% oppose amnesty, while 32% support it. [CNSNews.com 12/4/01; Wash. Times 12/5/01]

Two Michigan Bosses Charged with Embezzling $10,800

On Dec. 7, U.S. Magistrate Judge Steven Pepe (E.D. Mich.) signed a criminal complaint that charging Isador Hampton and Willie Lyons, ex-president and financial secretary, respectively, of United Auto Workers Local 835 in Warren, Mich., with embezzling union funds.

According to an affidavit in support of probable cause from Dep't of Labor investigator Anthony Fritz, Hampton received approximately $10,389 in union funds between Mar. and Sept. 2000 as compensation to which he was not entitled.  Allegedly, Hampton knowingly received and cashed for his own use, nine checks drawn on Local 835's account as payment for unauthorized compensation and expenses as follows :$1,099 for unauthorized salary, $1,300 for duplicate salary, $1,040 for duplicate vacation pay, $400 for advance salary, $750 for undocumented expenses, $3,200 for unknown expenses, and $2,600 unexplained. Similarly, Lyons allegedly obtained $500 in unauthorized expenses via four checks. In DOL interview, Lyons admitted that he was not entitled to the $500 and offered to make full restitution.

DOL Wins Court Order Invalidating International Union's Elections

On Mar. 28, 2001, U.S. Dist. Judge Joyce H. Green (D.D.C., Carter) granted the Dep't of Labor's motion for summary judgment and declared the Amalgamated Transit Union's 1998 election of int'l officers void. DOL's suit charged that the ATU, headquartered in Washington, D.C., imposed an unreasonable candidacy qualification when it applied a meeting attendance requirement for the nomination and election of delegates to its 1998 int'l union convention. DOL's Office of Labor-Mgmt. Standards Washington District Office conducted the investigation leading to the complaint and will supervise the remedial election ordered by the court. [DOL 3/28/01]

New Orleans Embezzler's Wife Denied Share of His Pension

U.S. Dist.. Judge Stanwood R. Duval (E.D. La., Clinton) ruled Nov. 28 that Audrey Gaudet, the wife of a union boss who had been convicted of embezzling funds from retirement plans of the Sheet Metal Workers Int'l Ass'n , cannot collect the pension funds that her husband accrued because he embezzled more than he was owed by the plan. To allow Gaudet "in essence, to receive double benefits under the plan could penalize innocent beneficiaries and would defy common sense and the fundamental protections" under the Employee Retirement Income Security Act (ERISA).

Union Protesters Crash Right-to-Work Meetings

The battle over whether union officials should be able to force workers to join a union and pay dues escalated Dec.12  when AFL-CIO protesters used bullhorns to interrupt a meeting of right-to-work advocates at the Heritage Fdn. near Capitol Hill.  More than 30 demonstrators stormed the lobby of the Heritage Fdn., staging a sit-in outside the door of the auditorium and using bullhorns and chants to interrupt the meeting until Capitol Police arrived.

As right-to-work advocates listened to R. Marc Nuttle, the chief strategist of Oklahoma's recent right-to-work initiative, describe the success of the campaign, AFL-CIO members and supporters crashed the meeting. Using bullhorns, protesters chanted, "Hey Hey, Ho Ho, Right To Work Has Got To Go." and "Right To Work Means Work For Less." Steve Rosenthal, AFL-CIO political director, led the protest.

Protesters peacefully filed out of the Heritage Fdn. lobby when Capitol Police arrived. A picket line was formed outside the building and protesters marched and chanted but quickly left the premises. There was no report about whether any criminal or civil trespass charges will be brought.

Pennsylvania Bosses Accused of Campaigning on Local's Time

The Dep't of Labor filed suit Aug. 30 in the U.S. Dist. Court for the W. Dist. of Pa. against United Ass'n of Plumbers & Pipefitters Local 354 in Youngwood, Pa. DOL's investigation into the local's Apr. 7 election found that, during the 2-week period prior to the election, the incumbent business manager, along with business agents, campaigned to members at several work sites while on time paid for by the local. DOL's complaint seeks a new election for 4 positions under DOL supervision. [DOL 8/30/01]

DOL Seeks New Election at California Local
The Dep't of Labor filed a complaint May 4 in the U.S. Dist. Court for the E. Dist. of Cal. against the United Ass'n of Plumbers & Pipefitters Local 442 in Stockton, Cal.. DOL's investigation into the local's Dec. 16, 2000 election uncovered that a candidate violated the local's bylaws when he campaigned for office by "meeting and greeting" voters on election day within a prohibited area. The complaint seeks a new election under DOL supervision for one local union officer position. [DOL 5/4/01]

DOL Sues Southern California Local over Tainted Elections

The Dep't of Labor filed suit June 14 against the S. Cal. Prof'l Eng'g Ass'n (SCPEA) in the U.S. Dist. Court for the Cent. Dist. of Cal. DOL's investigation of SCPEA's Dec. 20, 2000 officers election found that the union improperly disqualified the winning vice-presidential candidate and improperly permitted an unqualified (and winning) candidate to run for executive board member-at-large. The union represents workers in Huntington Beach and Long Beach, Cal. DOL's suit seeks installation of the improperly disqualified vice presidential candidate to his office and new nominations and a new election for the executive board member-at-large position under DOL supervision. [DOL 6/14/01]

Rich Devens and Steve Weixel were among a field of newly elected SCPEA officers, but Devens and Weixel were later declared ineligible because their candidacies violated SCPEA's constitution. Devens was disqualified as vice president because he sat on the nominating committee prior to his election. Weixel was declared ineligible to become an at-large officer because he had not been a union member for two years and thus was not considered to be in good standing.

Charleston Local Defies Int'l Union, DOL Goes to Court to Force New Local Election

The Dep't of Labor filed suit June 7 in the U.S. Dist. Court for the Dist. of S.C. against Int'l Longshoremen's Ass'n Local 1422 in Charleston, S.C. DOL investigated the local's Jan. 28, 2000 officer election and determined that the local violated ILA's constitution by permitting members who fell within the category of individuals employed in supervisory positions to run for and hold the office of trustee. ILA has ordered Local 1422 to conduct a new election for the office of trustee, but Local 1422 failed to do so. DOL's suit seeks to have the court order a new election under DOL supervision. [DOL 6/7/01]

In a related development, on Aug. 14, the court granted DOL's motion to dismiss a complaint filed by Leonard Riley, Jr., and Charles Brave, winning candidates for trustee in Local 1422's tainted Jan. 2000 election. The two bosses sought to enjoin ILA from requiring Local 1422 to conduct a new election. In addition to DOL's June 7 suit, it intervened in the private civil action to protect the DOL's exclusive jurisdiction over such federal labor law matters governed by the Labor Mgmt. Reporting & Disclosure Act of 1959. [DOL 8/14/01]

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