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.

Dallas Union Chief Indicted for Fraud and Lying

The U.S. Attny. for the Northern Dist. of Texas announced a two-count indictment against the frmr. president and treasurer of the Dallas Police Patrolman's Union on June 4.  Richard A. Wilson Jr. was president of the union, which was affiliated with the Intl. Union of Police Assns., AFL-CIO, as Local 588.  According to its constitution, any expense over $500 must be approved by the union's Bd. of Trustees.  In April, 2001, acc. to the indictment, Wilson used the union's American Express card to pay the $2,420 down payment for his new Ford F-150 truck.  For that, Wilson is charged with mail fraud in violation of 18 U.S.C., Sec. 1341.

Minn. Money Mgr. who Lost Millions in Union Pensions Indicted

David B. Welliver, who lost $19 million in speculative investments of Minneapolis police and fire fighter union pension funds in the 1990s, was indicted for embezzlement in late May.  But the indictment is not related to Welliver's handling of the union pension funds.  Instead, he is accused of stealing about $30,000 worth of pension funds from the retirement and savings accounts of employees at his investment companies.

In 1992, Welliver won the business of the Minneapolis Police Relief Assn., overseeing a $100,000 account.  In 1994, he was hired by Technimar Industries of Houston to raise capital for a plant in Minn. that would manufacture Stonite, an agglomeration of sand, stone and chemicals used to make floors, counter tops and bathroom tiles.  Technimar advertised Stonite as a low-cost alternative to DuPont's Corian.

Washington State Employee Under Investigation for Embezzling $220K

According to an affidavit for a search warrant, a frmr. union employee is suspected of stealing $220,000 from the union's trust fund.  According to the affidavit, the woman admitted taking $220,000 from the Northwest Sheet Metal Organizational Trust, purportedly to help her husband's struggling company.  The frmr. employee told Monroe police that she would repay the trust from a $1 million lottery payoff.  But acc. to the Washington State Lottery Commission, there is no outstanding payment of $1 million, and the woman's name is not on its list of prize winners.  Trust Attny. Greg Petrie does not expect the ex-employee to repay the money, but that the trust is insured for theft by employees. [Seattle Times, 5/23/03]


W.Va. Woman Sentenced for Embezzlement

No tax refunds on fake profits, senator says

05/03/03
Associated Press

Washington- The Senate Finance Committee chairman said yesterday he is asking federal prosecutors to move against companies caught up in accounting scandals that are seeking tax refunds because they overpaid based on the artificially inflated profits they reported.

WorldCom, Enron, Qwest Communications and HealthSouth are either pursuing or considering filing for federal tax refunds or credits for payments made on billions of dollars falsely claimed as earnings. Sen. Charles Grassley, an Iowa Republican, the finance panel chief, said he will "encourage [the Justice Department] to take aggressive action against the companies and individuals who were in on the con."

The action could include levying criminal fines, which Grassley said may have to be increased to cover the full amounts of tax refunds claimed by companies.

The four companies - all under investigation by federal authorities for accounting violations - were among the biggest corporate scandals that came to light over the past year and a half.

Georgine Out as CEO, Now Faces Hearings in House and Senate

Robert Georgine gave up his fight to keep his job as chairman of the union-pension-owned Ullico on May 8, recognizing that an almost entirely new board was intent on pushing him out.  "I can count the votes and it is clear to me that ULLICO will have new management," he said in a news release. 

Now John Sweeney is Willing to "Expose" Union Wrongdoing

Unions "must be just as willing to expose and remedy conflicts at Ullico as we have been at other companies in corporate America." [Wall Street Journal, 5/9/03]

John Sweeney may wax eloquent about the obligation of union leaders to protect the workers they claim to represent.  But he is more than three years too late.

As a Ullico director, Sweeney was there in late 1999, when Georgine offered the option of buying Ullico stock "low."  And he was there in 2000 and 2001 when the directors were allowed to sell it back "high."  Sweeney did not participate in the insider deals.  But he apparently did not protest what he must have realized was a rotten deal for the millions of workers whose dues and pensions were tied to the gyrations in Ullico's stock.

2nd AFT Local Implodes, this Time in Miami

For the second time this year, the Amer. Fedtn. of Teachers has taken over a local affiliate under investigation for possible embezzlement by the local hierarchy.  The first came early this year, in Washington, D.C., as the AFT took over that Local after a federal investigation and AFT audit found up to $5 million missing under the leadership of its ex-president, Barbara Bullock. 

The latest scandal is in Miami, Fla.  Pat Tornillo, who built the United Teachers of Dade (UTD) into a behemoth union overseeing all 27,900 teachers and support staff in Dade County over four decades, placed himself on indefinite leave on April 30.  He will continue to take in an annual salary of $243,000.  The takeover occurred the day after federal investigators raided the UTD's headquarters, seizing Tornillo's expense reports, reimbursement forms, credit cards records, appointment books and tax returns.

Fed. Judge Blasts AFT for Failing to Stop Massive Embezzlement in Wash., DC

"It's a sad commentary...It seems everyone in a responsible position fell asleep at the switch.  The only ones who were vigilant were the thieves, who took everything that wasn't nailed down." -- U.S. Dist. Judge Emmet G. Sullivan (Wash., D.C., Clinton)

Judge Sullivan made his comment during an April 30 hearing on a motion by local teacher Nathan Saunders to impose a court monitor on the Amer. Fedtn. of Teachers' temporary trusteeship of the Washington Teachers Union (WTU), from which its recently deposed leaders apparently stole $5 million.  He was shocked to hear AFT lawyers say that while the AFT requires audits from its affiliates every two years (which the WTU failed to do), it had no legal responsibility to even verify that the audits had been filed.

Jacksonville President "Reviewing" Offer of 1 Year in Jail for Witness Tampering in Rape Case

George Spencer, president of Local 1408 of the Intl. Longshoremen Assn. (ILA) will "review" an offer from an Asst. State Attny. that he serve one year in jail and pay $5,000 in investigative costs for witness tampering in a case involving a Local 1408 member.

The FBI says it taped Spencer offering to pay an undercover agent posing as the victim's boyfriend to persuade her not to testify at the trial of Jerome Williams.  Convicted of rape and armed kidnapping in May 2002, Williams was labelled a sexual predator by Circuit Judge Michael Weatherby, who sentenced Williams to life in prison. 

Amid publicity over the witness tampering case, Spencer was elected president of the Local last December.  But if he accepts the offer, ILA officials say they will recommend his resignation.  George and his brother, Charles Spencer, are also facing charges in a civil lawsuit that they made sexual advances and demanded favors for work from at least 12 women.  Asst. State Attny. Shannon McGillis said that the state's offer to forgo a trial was on the table until May 14. [Florida Times-Union, 5/1/03]

Fallout from Embezzlement Scandal Hits Law & Accounting Firms

The law and accounting firms whose partners assisted officials of the Intl. Assn. of Iron Wrkrs. (IAIW) in their massive embezzlement are now paying the price.  In an agreement deferring prosecution by the U.S. Attny's. Ofc. for Washington, D.C., the law firm has agreed to drop the name of the founding partner, the late Victor Van Bourg, who helped hide the embezzlement of some $1.5 million in the 1990s.  The accounting firm of Thomas Havey, LLC, whose partners also concealed the embezzlement, broke up in January with a new firm, Legacy Professionals, retaining its other numerous union clients.

Oklahoma Right to Work Law Goes Back to State Supreme Court

Ironically arguing that the state of Oklahoma cannot protect the right to join a union, union lawyers have successfully stalled a final decision as to whether Oklahoma’s popular Right to Work constitutional amendment will be upheld.

The U.S. Court of Appeals for the Tenth Circuit – based in Denver – has ruled that the provision in Oklahoma’s Right to Work Law that protects the right to join a union is also preempted by the NLRA (which already protects that very right), and thus can only be enforced as to public employees in the state. The State Supreme Court must now decide whether the preempted provisions of the law are severable from the core of the law, which establishes the right of employees not to join or financially support an unwanted union.

Jersey City Union Boss, Fla. Developer, Indicted for Embezzling Welfare Funds

On May 5, a federal grand jury returned a six-count indictment against two union officials and a building contractor in an embezzlement scheme against Local 148 of the Novelty and Production Workers Union in Jersey City, U.S. Attorney Christopher J. Christie announced.

The indictment alleges that between 1992 and 2001, Joseph Nardone, Jr., 49, of Bayonne, the Welfare and Pension Fund Administrator for Local 148 and the Local's recently removed President, and Stanley Rothman, 67, a building contractor now residing in Boynton Beach, Fla., conspired with each other and others to embezzle more than $350,000 in welfare and union funds through a multi-faceted fraud scheme.  The indictment also charges Peter Hasho, 67, of Long Island, President of Local 713 of the International Brotherhood of Trade Unions, located in Albertson, N.Y.

2 More Fish Netted in NYC Racketeering Scheme

Two of the leaders in the racketeering scheme at more than 20 New York City construction sites from 1989-2001 pled guilty in late April. The scheme of payments for no-show jobs and "labor peace" cost more than $6 million in lost wages and benefits.

On April 24, in the U.S. Dist. Court for the Eastern Dist. of NY, Matthew Joseph Downey, a representative of Local One of the Intl Union of Elevator Constructors, pled to racketeering, unlawful labor payments, money laundering conspiracy, witness tampering, and tax evasion.  He agreed to forfeit $800,000 to the United States Government within 120 days from his assets representing a portion of the racketeering profits.

Another Guilty Plea in NYC MTA Fraud Case

On April 11, Morris Diminno, a former representative of the Intl. Union of Operating Engineers Local 14, pled guilty to conspiracy to receive, possess and dispose of money obtained by fraud and transported across state lines, unlawful labor payment, engaging in an unlawful monetary transaction, and obstruction of justice.  He agreed to forfeit $800,000 to the United States Government within 90 days from various assets. He had been indicted on April 16, 2002 on charges relating to the taking of payoffs to help developers at the Metropolitan Transportation Authority's renovation site bill the MTA for no-show workers at inflated rates.  The charges had been brought following a joint investigation by the New York branch of the U.S. Ofc. of Labor-Mgmt. Standards (OLMS) and the FBI. [OLMS, 4/30/03]


Ohio Union Boss Held in Contempt

Grand Jury Closes in on Ullico Directors: Georgine Steps Down

A Washington, D.C. grand jury has subpoenaed union directors and executives of the Ullico board to testify about their buying and selling of Ullico stock at the expense of the union pension funds that underwrite the company.  At the time of the sales, that board included AFL-CIO chief John Sweeney, who didn't participate in the scheme, but has since resigned in protest over the sales, even though he apparently did not protest until the scandal became public last year.

Georgine agreed on April 23 not to run for another term on the Ullico board at its annual meeting in May, but also said he intends to remain as president and CEO.  However, with Sweeney and other disgruntled union chiefs pushing a slate of 13 new directors for the Ullico board, leaving only two from the board that approved the sales, Georgine may have trouble keeping his offices at Ullico come its May 8 annual meeting.

CA Labor Commissioner Used Taxpayer Dollars to Pay Personal Expenses

California labor commissioner Art Lujan charged over $17,000 in false relocation costs, as well as various travel and meal expenses, the California Bureau of State Audits concluded on April 17.  Before Gov. Gray Davis appointed him in 2000, Lujan was business mgr. of the San Diego Bldg. and Construction Trades Council.

The Dept. of Industrial Relations that Lujan heads is based in San Francisco.  Between April 2000, and Nov. 2001, Lujan claimed $1,524 in relocation costs within the allowable 30 days after his appointment, but without the approval of the Dept. of Personnel Admin.  After the 30-day window, Lujan wrongly claimed another $2,554 in relocation costs, as well as $861 in airfares between San Diego and San Francisco he claimed were related to his move.  The only problem, as Lujan later admitted, was that he considered the real estate costs too high to actually move to San Francisco, where his dept. had its headquarters.  During Lujan's supposed relocation, he also received $787 for lodging costs while in San Francisco.  In all, Lujan's dept. admitted that their boss was wrongly reimbursed $5,726.

Dems Ram Violent Union Boss thru IL Senate

Allowing no debate, democrats rammed the nomination of Michael Fenger as Labor Secy. through the Illinois Senate on April 10.  But Sen. Peter Roskam (R) managed to mention Fenger's "criminal background" three times during procedural questions.

The frmr. Business Mgr. of Intl. Bhd. of Electrical Wrkrs. Local 364 pled guilty to property damage and reckless conduct after police officers saw him puncture all four tires of a non union worker's car as he tried to leave a Wal-Mart construction site but was surrounded by union protesters in 1997.  When Gov. Rod Blagojevich appointed Fenger labor secy. earlier this year, Fenger claimed to have only pled "no contest."  But the prosecuting attny. pointed out that no such plea exists in IL law.

"Now I represent the workers of the state of Illinois -- all of them, union or not -- that's my new job," Fenger said after his committee hearing the week before the senate vote. [Rockford Register Star, 4/11/03]

Boston Teamster Boss, Accomplice Plead Guilty

Thomas Disilva pled guilty on April 18 to helping Intl. Bhd. of Teamsters Local 25 president George Cashman defraud the union's benefit plan, and using the union's pension funds for extortion.  Faced with Disilva's cooperation and testimony at his trial set to begin April 28, Cashman pled guilty to both charges as well.

Cashman and Disilva were originally indicted on Jan. 16, 2002, for allegedly arranging the placement of 19 non-employees on the payroll of Disilva's companies, thus robbing Local 25's Health Services and Insurance Plan of $72,000 from 1992-2001.  More recently, the two were indicted on March 13 for extorting payments to Disilva after Cardinal Health Inc. refused to pay $100,000 to Disilva in exchange for Cashman settling a suit over Cardinal's obligation to the Local 25 pension fund.  Cashman admitted to receiving $20,000 in the extortion case

Intl. Bosses Drop Fines against Atlanta Dissidents

On April 10, the General Exec. Board of the Intl. Assn. of Iron Workers dropped their massive fines of two Atlanta members who contacted NLPC for help in ferreting out corruption in their local union.

Local 387 member Carl Bishop and trustee Oscar Ingram had been fined a total of $11,000 for contacting NLPC and the U.S. Dept. of Labor in an effort to obtain documentation of expenses charged to Local 387 by its president, Hugh Dryden.  In July, Dryden used a union meeting to incite a mob against Bishop and Ingram, demanding that the two be expelled.  Soon after, the two were fined for violating the Ironworkers constitution for revealing information about the union to outside organizations, including NLPC and the labor dept.  At first, the Intl. hierarchy in Washington, D.C. supported the discipline, upholding Ingram's $1,000 fine, while reducing Bishop's from $10,000 to $5,000.

Judge Orders Miami Union Bosses to Repay Bilked Investors

U.S. Bankruptcy Judge Larry Lessen on April 11 ordered Miami police union officials to repay $909,000 they got back from their crooked accountant's investment fund before the other investors learned of his fraud.

Ronald Stern was hired to handle the Miami Police Relief and Pension Fund (MPRPF) in 1990 by its then-president, Donald Warshaw.  In 1996, Stern began diverting funds from the MPRPF into an investment account he called the Florida Fund.  He gained other clients for the fund with bogus reports of high returns.  In November 1998, union officials found discrepancies in the pension fund's certificate of deposit accounts.  In January 1999, an audit revealed that Stern had stolen $1.4 million from the pension trust.

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