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.

Inspector General Sees an Increase in Racketeering Case Activity

In a Mar. 21 interview with the Bureau of Nat'l Affairs' Daily Labor Report, the Dep't of Labor Inspector General Gordon S. Heddell said that recently released Office of the Inspector General statistics show an increase in labor racketeering case activity involving labor unions, with a specific focus on the four unions that have been identified as under the influence of organized crime -- the Int'l Bhd. of Teamsters, the Laborers' Int'l Union of N. Am., the Hotel Employees & Restaurant Employees' Int'l Union, and the Int'l Longshoremen's Ass'n.  Reportedly, there currently are 357 pending labor racketeering investigations under way at OIG, 39% of which involve organized crime. Of the 357 investigations, 44% involve pension and welfare benefit plans, according to the statistics.

Boss Serpico and his Mistress Sentenced for Fraud

On Mar. 15,  U.S. Dist. Judge Blanche M. Manning (N.D. Ill., Clinton) sentenced John Serpico, ex-president of the Cent. States Joint Bd. and ex-vice president of the Laborers' Int'l Union of N. Am. to six concurrent 30 months prison terms followed by three years of supervised release. CSJB is a labor organization which handles pension and other employee benefit funds for eight locals including locals of LIUNA and the Int'l Union of Allied Novelty & Production Workers. A jury convicted the powerful Chicago boss July 16 on six counts of mail fraud. Manning also fined him $100,000, ordered him to make restitution of $30,000, and ordered him to pay the cost of imprisonment. Serpico was CSJB president from 1975-94 and, at the time of the conviction, was a $50,000-a-year consultant. He was purged from LIUNA in 1995.

Southern California Bosses Admit Embezzlement, NLPC Petitions for Probe

Two former leaders of the Riverside County, Cal., chapter of a statewide fire fighters union have reportedly been "disciplined" after an internal union probe showed they embezzled at least $5,000 of the chapter's funds. Union spokesman Terry McHale said the ex-officers admitted they spent chapter money on personal uses -- for apartment rent and computers -- in 2001. McHale said the men,  whose names were not released, have signed agreements to reimburse the union and have their paychecks garnished if they fail to make  payments on time.

However, he said the union has not asked authorities to investigate. Many members know the identities of the two allegedly admitted embezzlers, and their reputations have been stained at the Cal. Dep't of Forestry & Fire Protection, McHale claimed. "What was done was wrong, and it is being dealt with in the firmest possible way," alleged McHale. "We're an association of human beings, and sometimes human beings make mistakes."

FBI and Police Investigating Austin Local for Racketeering, Death Threats

Int'l Bhd. of Elec. Workers Local 520 in Austin, Tex. are under investigation as a result of its intense representation battle that has produced a slew of charges of unfair labor practices, an arrest, and allegations of death threats, libel, racketeering, and slander. At issue is a $6.5 million City of Austin contract awarded to a nonunion firm, Titus Elec. Contracting. The local has tried pickets, a corporate campaign and formal complaints accusing Titus of violating federal labor law. Titus, which launched the publicity skirmish, has called police to the picket lines at least twice, resulting in a trespassing arrest, and has accused union supporters of phoning in death threats.

Minneapolis Boss Ousted, Trusteeship Imposed

United Ass'n of Plumbers & Pipe Fitters Local 15 business manager Thomas Martin resigned Mar. 15 and the Minneapolis-based local was placed into emergency trusteeship by its int'l union. UA's prepared statement cited a union constitutional provision allowing the int'l union to take control of the local's affairs "on being presented with a charge that an officer of a local union may have committed dishonest acts involving any of the local union's assets." UA int'l president Martin Maddaloni reportedly received such a complaint involving the Local's "market recovery fund."    Unions use market recovery funds to help union contractors compete with non-union firms that pay lower wages. Some developers say they prefer union labor if the wage rates are competitive because it is believed union projects get less scrutiny from local inspectors than when non-union labor is used.

On the Eve of D.C. Boss' Sentencing, Broader Allegations Surface

The ex-president of the Am. Fed'n of Gov't Employees Local 1812 in Washington, D.C., is scheduled to be sentenced Apr. 4 for felony misappropriation of union funds. Hope Butler, who headed the union local until June 2000, pled guilty Dec. 7 in to making false statements to federal agents. She and her sister-in-law, Nadine Crump Butler, were accused of embezzling union funds and then lying about it in reports to the Dep't of Labor. Crump Butler pled guilty to a misdemeanor charge of fraud. The scam reportedly netted some $20,600. Local 1812 represents about employees for Voice of America and other Int'l Broadcasting Bureau positions. IBB is an independent federal agency that formerly operated as the broadcast portion of the U.S. Information Agency, which merged into the State Dep't in 1999.

Washington Staffer Admits $15,600 Embezzlement

Geri E. Abbe, ex-office secretary for Ass'n of Western Pulp & Paper Workers Local 5 in Camas, Wash., pled guilty Mar. 22 to one count of embezzling $15,690.80 in union funds. The U.S. Atty.'s Office in Tacoma brought the charges on Feb. 22. The case has been assigned to U.S. Dist. Judge Franklin D. Burgess (W.D. Wash., Clinton).

According to the plea agreement, between Feb. 1998 and June 2001, Abbe was Local 5's office secretary, and her duties included filling out payroll vouchers.  On 16 occasions she embezzled funds through bogus payroll  claims. For example, on Feb. 18, 1998, she submitted a payroll voucher in which sought pay for 70 hours of work during the one-week period ending on that date. However, in truth, she worked only 35 hours during that period. After securing an offical's signature, Abbe issued the fraudulent check to herself. She embezzled $14,245 via this scheme.

Arizona Boss Pleads Guilty, Concealed Embezzlement

U.S. Customs Inspector Gregory B. Floto, who is the ex-president of Nat'l Treasury Employees Union Chapter 116 in Nogales, Ariz., pled guilty Mar. 15 to filing a false report with the Dep't of Labor to conceal his embezzlement of union funds, according to the Dep't of Justice's Office of Public Affairs. According to DOL's Office of Labor-Mgmt. Standards, Floto pled guilty to one count of making false statements in violation of 18 U.S.C. § 1001. The specific amount of the embezzlement was not disclosed.

Floto, who has been president of NTEU Chapter 116 since 1989, admitted to stealing thousands of dollars in union funds for his personal benefit between 1994-97. Floto confessed to using union checks to pay balances due on his credit cards bills for personal charges unrelated to union business, including charges for clothing, jewelry, and a family vacation. He also admitted using union checks to pay directly for painting his home and other home improvements.  Further, he admitted double billing the union and the U.S. Customs Service for identical official travel expenses.

Indictments Expected Soon for Western New York Local

A lengthy federal investigation into bombings, beatings, death threats and other incidents allegedly tied to a Laborers' Int'l Union of N. Am Local 91 in Niagara Falls, N.Y., is reportedly nearing a conclusion. Although Local 91's attorney, Paul J. Cambria, Jr., insists that there is no evidence of labor racketeering, other defense lawyers and law enforcement officials think that a series of felony charges will be filed -- both against the local and individuals -- possibly within the next two months.

The incidents under investigation include a 1997 bombing at a Town of Niagara home, which severely impaired the hearing of a construction worker; a 1998 beating and stomping attack on tile setters at a Wegmans supermarket construction site, a $100,000 vandalism incident at a Town of Niagara landfill as well as several other attacks. The sheriff and district attorney of Niagara County said intimidation by Local 91 has made some contractors and developers so fearful that they do not even bother trying to build projects in the county.

Indianapolis Boss Accused of Forgery, $7,100 Embezzlement

On Mar. 21, 2002, in Marion County (Ind.) court, Mack Dykes, ex-president of Am. Fed'n of Gov't Employees Local 1411 in Indianapolis, was indicted on five counts of forgery and one count of theft for embezzling approximately $7,100 in union funds. The local represents Dep't of Defense employees. [DOL 3/21/02]


Utah Boss' Spouse Pleads Guilty to Mail Fraud linked to Union Corruption
On Mar. 13, Jill C. Gonzales, spouse of an ex-secretary-treasurer of the Bhd. of Maintenance of Way Employees Local 1227 in Ogden, Utah, pled guilty to mail fraud relating to a loss of union funds.The charge was brought on Jan. 23.  U.S. Dist. Judge. J. Thomas Greene scheduled sentencing for May 17. Additional details were unavailable. [DOL 3/13/02; U.S. v. Gonzales, No. 02-CR-46-ALL (D. Utah Mar. 13, 2002)]

Death Threats Alleged in Connection to Racketeering Probe of Boston Local

The head of the Commonwealth of Mass.'s Film Office has allegedly received death threats stemming from her helping federal prosecutors probing alleged racketeering within Int'l Bhd. of Teamsters Local 25 in New England. Robin Dawson, who has testified before the federal grand jury investigating allegations of union shakedowns and strong-arming of movie makers filming in Mass., received the threats Mar. 22, sources told the Boston Herald.

Allegedly, the threats centered around Dawson's appearance at an Oscar party Sunday night to benefit Massachusetts 9-11 Fund for families of victims of the terrorist attacks last fall. Reportedly, officials at the Four Seasons hotel, where the gala was held, beefed up security because of the threat.

Federal Labor Law Probe Expands to Chicago City Hall

The federal labor law probe of the Chicago-based Liquor & Wine Sales Representatives, Tire, Plastic, and Allied Workers Union has reportedly expanded into a public corruption investigation. A federal grand jury has subpoenaed records from Chicago's City Hall related to a mob-connected family whose janitorial company has won tens of millions of dollars in city-related contracts since Mayor Richard Daley (D) took office.

Union Corruption Causes Employees to Seek to Switch Unions

Employees of the City of Sunrise, Fla., are taking steps to fire their union. Employees say they've lost faith in the Nat'l Fed'n of Public & Private Employees after years of watching management and commissioners increase their own benefits and salaries while neglecting the workers. In Mar. 2002, 72%  of the union and non-union employees have signed cards indicating their interest in switching over to the Fraternal Order of Police, general employees union member Paul Mink said.  FOP staff representative John Puleo said the FOP has already received 331 cards expressing interest in switching to FOP. Before any switch could be final, employees must take a formal vote.

NFPPE president Walter J. "Buster" Browne and his sister Patricia B. Devaney were indicted in Nov. 2001 on charges that they cheated their union out of more than $400,000. Browne is awaiting trial on charges of racketeering, embezzlement, and mail fraud.

Defendant and Attorney Blast Prosecutors Handling of Media Information

"It's the sort of news leak that can get someone killed." That's how the N.Y. Post summarized what William C. Barthold says about recent media accounts of his purported role in a 137-count federal indictment in which he and 25 bosses and members of Int'l Union of Elevator Constructors Local 1 were charged in a massive no-show job scheme. Even before the indictments were returned, The Post reported that a "little black book" belonging to Barthold, jammed with explosive evidence that includes telephone numbers and lists of no-show workers on the pad, was in the hands of prosecutors.  Barthold and 15 others on the list have been charged with collecting money for work they did not perform.

NLRB Reversed, High Court Says Organizer-Illegal Alien Not Eligible for Back Pay

The Supreme Court ruled, 5-4, Mar. 27 that undocumented aliens working illegally in the United States were not eligible for payments by employers who mistreated them. The Court set aside a Nat'l Labor Relations Bd. award of $66,000 in back pay, plus 13 years' interest, to Jose Castro, a Mexican national who lied to get his job in a Cal. plastics factory and was laid off for trying to organize a union. The Court said illegal aliens may not collect "such relief" as back pay for jobs they were not entitled to hold.

"However broad the NLRB's discretion to fashion remedies ... it is not so vagrant and unbounded as to authorize this sort of an award," Chief Justice William H. Rehnquist (Reagan) said.  He also said action by the NLRB, a federal agency, required Hoffman Plastic Compounds Inc. to violate a federal law against knowingly employing illegal aliens and contributed to keeping Castro in the United States illegally.

Ninth Circuit Chips Away at Beck Rights

On Mar. 25 an eleven-judge panel representing the the full U.S. Court of Appeals for the Ninth Circuit chipped away at the Supreme Court's landmark union dues decision, CWA v. Beck. The Ninth Circuit ruled that organizing costs may be included in the agency fees charged to nonmembers covered by a collective bargaining agreement's union-security clause, Mar. 25, upholding a 4-1 Nat'l Labor Relations Bd. decision. Circuit Judge Stephen R. Reinhardt (9th Cir., Carter), who is a ex-union attorney and ex-executive committee member of the Democratic Nat'l Committee, wrote for the court that a union "is permitted to charge all employees, members and nonmembers alike, the costs involved in organizing, at least when organizing employers within the same competitive market as the bargaining unit employer,"

Dissidents Win LMRDA Suit; Union Forced to Strike Anti-Speech Provision from its Constitution

U.S. Dist. Judge James Robertson (D.D.C., Clinton) ruled Mar. 6 that a provision of the United Ass'n of Plumbers & Pipe Fitters' constitution calling for expulsion of any member who distributes "letters of falsehood and misrepresentation" violates the Labor-Mgmt. Reporting & Disclosure Act of 1959 (a.k.a., the Landrum-Griffin Act) and must be excised. Robertson granted summary judgment to union members Charles Callihan and Wilmer Thomas, who claimed that Section 199 of the union's constitution violated their free speech rights under LMRDA, 29 U.S.C. § 411(a)(2).

Robertson ordered the union to excise the provision from its constitution and ordered the union to publish the court's ruling within 60 days in the union's membership publication. That notice, the court specified, should be mentioned in the publication's table of contents and printed in a type size no smaller than 22 point bold for the heading and 11 point for the body of the court order. Robertson also has scheduled a status conference for Apr. 2.

Discrimination Suit against Chicago Local Moves Forward

U.S. Dist. Judge Blanche M. Manning (N.D. Ill., Clinton) ruled Mar. 13 that a black pipe fitter,  Lawrence Malone, submitted sufficient evidence that his union instigated, supported, encouraged, or ratified such the presence of racist graffiti on portable toilets at a job site to avoid summary judgment for the union on his racial harassment claim under Title VII of the 1964 Civil Rights Act. Partially denying summary judgment to United Ass'n of Plumbers and Pipe Fitters' Local 597 in Chicago, Manning said Malone, a union member who worked at a job site in Robbins, Ill., in 1995-96, could proceed with his Title VII claim, even though he never had complained about the graffiti while he worked at the site or produced conclusive evidence that union members actually were responsible for the graffiti.

Ninth Circuit Side with Union in Religion-Dues Suit

The U.S. Court of Appeals for the Ninth Circuit has ruled Mar. 22 that Cal. professors may not  challenge the new state law that allows state and union officials to determine the acceptability of religious beliefs when employees seek an exemption  from the requirement to pay union dues.  The Cal. Faculty Ass'n initially sent a notice to 14,000 non-union  professors that a religious accommodation could be obtained only if they were a member of an approved  church - as stated in the statute. But later, CFA attorneys filed a sworn declaration with the court that despite its previous statements to 14,000 professors, the CFA union does not apply the statute as actually  written - or as advertised to this very day on the  union's web site. Based on that declaration filed  with the court only, the court ruled that the professors do not have standing to challenge the law even if it violates employees' freedom of association under the First Amendment.

New York Boss Sentenced, Benefit Funds Lost $1 Million

On Mar. 1, a boss and a member of the United Bhd. of Carpenters were indicted, pled guilty, and sentenced in Manhattan Supreme Court for taking bribes to let a contractor use nonunion workers at two Manhattan job sites. Stephen Goworek was sentenced to six months in jail and 54 months' probation, and Thomas Riccardo got five years' probation. A third, John Mingione, pled not guilty and will return to court. The scheme allegedly caused the union's pension and welfare fund to be deprived of more than $1 million that was supposed to be paid by the contractor.

The N.Y. State Atty. Gen. charged Goworek in an 11-count indictment, which included Grand Larceny in the First & Second Degrees, four counts of Bribe Receiving by a Labor Official, and five counts of Violating a Fiduciary Duty. Before his arrest, Goworek managed UBC's Stamps Enforcement Unit of the Benefit Funds of the Dist. Council of N.Y. & Vicinity. As the Stamps Enforcement manager, he was responsible for ensuring that contractors remitted the payments to the benefit funds required by contract.

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