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.

McConnell Outlines Strategy on Campaign Finance Regulation

Sen. Mitch McConnell (R-Ky.) acknowledged Feb. 16 at the Conservative Political Action Conference that he has abandoned his decade-long filibuster against campaign finance reform legislation.  But McConnell said the "McCain-Feingold bill" (S27) still could be stopped by a veto from President Bush. The reason for such a veto, he indicated, would be the measure's failure to include a "paycheck protection" provision to limit unions' political power.  "Let's keep up the fight against McCain-Feingold," McConnell told a cheering crowd "We can stop it if you'll be energized and go after it."

McConnell signaled that he has not softened his opposition to the campaign finance regulation bill sponsored by Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.). The bill, set to be debated in the Senate this month, would ban unregulated "soft money" contributions to political parties and restrict so-called issue ads that refer to candidates in the weeks before an election.

Rhode Island Union Fund Manager Pleads Guilty

Union pension manager Todd J. LaScola pled guilty in U.S. Dist. Court in Providence, R.I., Feb. 26  to embezzling from his clients to subsidize a lavish lifestyle and to shore up a failing union investment. LaScola admitted defrauding several clients of more than $6 million to pay for a $9,600 diamond engagement ring, among other personal items.

At his peak, the cigar-smoking LaScola pledged $500,000 to his alma mater, St. Raphael's Academy. His business had an office in Switzerland. At its downtown office, Governor Almond (R) made fundraising calls for his campaign. But his success began to unravel in late 1997, prosecutors said, when he began to invest pension money from Int'l Bhd. of Elec. Workers Local 99 against its investment guidelines.

Obituary: Detroit Boss Anthony J. Giacalone

Anthony J. ("Tony Jack") Giacalone, who was reputed to be a Detroit gangster and was investigated in the disappearance of the ex-Int'l Bhd. of Teamsters boss James R. Hoffa, died Friday at St. John Hosp. & Med. Ctr. in Detroit. He was 82. The cause of death was not disclosed. The Detroit Free Press reported early last week that Mr. Giacalone was being treated for heart failure and complications from kidney disease.

Giacalone, who federal authorities contend was a high-ranking figure in Detroit organized crime, was investigated for possible involvement in Hoffa's disappearance on July 30, 1975. Hoffa told a relative on the day he disappeared that he was meeting Giacalone at the Machus R. Fox restaurant near Detroit. Hoffa has not been seen since.

Supreme Court Upholds $45.5 Million Fine Against Union

The U.S. Supreme Court refused Feb. 25 to overturn one of the largest fines against a labor union, a $45.5 million penalty against the Allied Pilots Ass'n at American Airlines for civil contempt for failing to quickly end a 1999 sickout that forced the airline to cancel thousands of flights.The APA has already put $20 million in escrow against the possibility it would have to pay the fine. But the union estimates the total fine would exceed its assets by approximately $10 million.

APA made it clear that if the company tried to collect the fine the union would consider it a very unfriendly act. "The next step is going to be a management decision," said APA spokesman James Philpot. Philpot noted that American was "in the middle of lots of important discussions" with the pilots on a number of issues, including the proposed acquisition of Trans World Airlines Inc. and the purchase of 20 percent of U.S. Airways as part of the U.S. Airways-United Airlines merger.

Illinois Local and Fund Sue Boss for $311,000

Kane County (Ill.) Judge Michael Colwell has frozen the assets of Patrick Stiles, an ex-Aurora firefighter accused of embezzling up to $311,000 from Aurora Firefighters Local 99 and Aurora Firefighters Relief Ass'n as new details emerged about the extent of the alleged scheme. Colwell's temporary restraining order came in response to a civil suit filed against Stiles, who resigned from the Aurora Fire Dep't in Jan.

Local 99 is seeking to recover $240,000 from Stiles and the Relief Ass'n $71,000. The complaint alleges that $38,000 in 1997-98 union dues "were apparently not deposited," and Stiles provided no records "as to the existence or expenditure" of more than $150,000 in 1999-2000 union dues. Allegedly, Stiles made out union checks to pay for non-union expenses, including $16,800 to credit card firms, $8,839 for telephone bills during 1997-98, $3,250 for computer equipment and $8,000 for payments to a non-union bank account. The complaint states that an embroidery firm received $5,120 during 1997-98 "with no apparent connection to union activity" and a flower shop received $1,420 during the same period "when there was no known union need for flowers."

Boxing Boss Sentenced; He and Son Banned

Robert W. Lee, Sr., ex-president of the N.J.-based Int'l Boxing Fed'n, was sentenced Feb. 14 to 22 months in prison for his corruption convictions. U.S. Dist. Judge John W. Bissell ordered Lee to surrender by Mar. 30 to begin serving the sentence. Bissell also fined Lee $25,000.

A federal jury convicted Lee on Aug. 17 of one count of money laundering, three counts of interstate travel in aid of racketeering and two counts of filing false tax returns. The jury acquitted Lee's son, Robert Lee, Jr., of all charges. The indictment against the Lees described a corrupt fighter rating system in which bribes were routinely paid by boxing promoters and managers to alter ratings of particular boxers and to provide others with favorable treatment. During the trial, the government called as witnesses numerous promoters and insiders who described instances where they paid Lee to have their fighters ranked and positioned for upcoming bouts and purses. Bribes ranged from $1,000 to $25,000. In one instance, testimony revealed that promoter Cedric Kushner paid Lee $100,000 to bring about a heavyweight championship fight between George Foreman and Axel Schulz.

Pension Scam Leader Pleads Guilty

The highest-ranking Mafia member in the government's "Mob on Wall Street" case pled guilty Feb. 15 to taking part in a massive scheme that allegedly cheated investors out of $50 million. Robert A. Lino, a reputed "capo" of the Bonanno crime family, topped the list of 120 defendants (some union bosses) charged last June.

Lino admitted to manipulating stocks through DMN Capital, a N.Y.C. firm that prosecutors have described as "fraud central." He told U.S. Dist. Judge William H. Pauley III that he and others bribed brokers to tout stocks and sell them at artificially high prices. He also described a plan to defraud several union pension funds through a kickback scheme. It reportedly included three N.Y.-based funds: the Detectives' Endowment Ass'n, Production Workers Local 400 and Int'l Union of Operating Engineers Local 137. Lino is scheduled to be sentenced June 1. [Newsday 02/16/01]

Sweeney Still High on Trumka

AFL-CIO boss John J. Sweeney insisted Feb. 5 at a Nat'l Press Club Luncheon that is second-in-command, secretary-treasurer Richard L. Trumka, has done nothing illegal in connection with the money-laundering scandal that led to the Jan. indictment of ex-Int'l Bhd. of Teamsters boss Ron Carey.  Sweeney said the "Teamster situation is really a tragic situation," but said Trumka had the "highest integrity [and a] wonderful character."  [Det. News 02/06/01]

Has Sweeney read the Teamsters case?  According to court documents, Trumka help routed $150,000 from the Teamsters' treasury to Carey's reelection campaign, and he allegedly contributed/solicited another $50,000 to the Carey campaign in violation of federal labor law. According to the trial transcript of convicted union embezzler William W. Hamilton, one of the key meetings that helped facilitate the $150,000 transaction reportedly took place in Trumka's AFL-CIO office with him present.  Trumka has used the Fifth Amendment at least twice to avoid questions from federal investigators.

Boston Local, Under a Cloud, Slated for Massachusetts Funds

The Boston Herald wants to know: "How lucky can a union local--especially one under federal investigation -- get? And how tone deaf can Gov. Paul Cellucci (R)be to EARMARK $125,000 in 'worker development' funds for Local 25 of the Teamsters, the local run by George Cashman?"

Reportedly, this is the second year that Local 25 has been included Cellucci's budget for a special appropriation. The money would be channeled through the quasi-public Commonwealth Corp., which last year actually saw its overall funding cut from $757,000 to $507,000. "Not a problem for Local 25 though, which is apparently 'more equal' than its brother Teamsters locals that have to compete with other AFL-CIO members for the rest of the pie," says the Herald.

Review Board Hears Case Against Detroit Bosses

Two federal investigators testified Feb. 5 that the leadership of Int'l Bhd. of Teamsters Local 337 in Detroit misused members' dues to fund their own reelection campaigns. At a hearing of the Independent Review Board, retired Dep't of Labor investigator Craig Woodhouse said officers in the local nion voted to give themselves a $100-a-week pay raise in 1996 without approval of the rank and file, and that some of that money went into the local officers' reelection campaign.

On June 2, IRB recommended that six Local 337 board members, including president Lawrence P. Brennan, be disciplined over allegedly funneling at least $14,000 in union dues into their reelection coffers, without members' permission. An IBT panel dismissed the charges and referred its decision to the board, which now will decide whether to take action. Brennan, who is also president of Joint Council 43 and a close ally of IBT boss James P. Hoffa, denied the allegations.

Carey Indicted! Trumka Next? Hamilton Loses Appeal

Ex-Int'l Bhd. of Teamsters president Ron Carey pled not guilty Feb. 1 to federal criminal charges that he knowingly participated in a complex scheme to funnel more than $538,000 in union funds to his failed 1996 reelection campaign. Carey was indicted Jan. 25 on seven counts of perjury and making false statements in connection with the probe of the money-laundering scandal, an action long urged by Carey's IBT rivals and watchdogs, such as the Nat'l Legal & Policy Ctr. Prosecutors alleged that Carey lied when he denied knowledge of a swap of IBT contributions to various groups in return for their arranging for donations to his campaign. Upon arraignment before a federal magistrate judge, Carey was released on his own recognizance.

Carey's campaign manager, Jere Nash, and two consultants, Martin Davis and Michael Ansara, were the first defendants in the scandal to plead guilty to criminal charges way back in Sept. 1997. Although they have cooperated with the government, they have yet to be sentenced.

Illinois Firefighter Suspected of Union Embezzlement

An ex-firefighter member of two Aurora, Ill., firefighters' organizations is suspected of embezzling nearly $156,000 from the groups. No charges have been filed in the case, but the matter was discussed Jan. 23 at the Firefighters Pension Fund board of trustees meeting by attorney Wade Joyner on behalf of the Aurora Firefighters Relief Ass'n.

Allegedly, the unnamed individual embezzled $92,000 from Aurora Firefighters Local 99 between 1992-2001. Further, the individual allegedly embezzled $63,933 the Relief Ass'n between 1995-99. Audits of the Relief Ass'n triggered the probe. Local 99's attorney, J. Dale Berry, declined to say how the embezzlement is alleged to have happened. [Chi. Trib. 01/24/01]

Oregon Local Placed in Trusteeship

The Serv. Employees Int'l Union placed Local 49 in Portland, Or. into trusteeship on Jan. 19. Local 49's ex-secretary-treasurer, Don Weston, resigned Jan. 19 and SEIU appointed trustees Alice Dale and Alonzo Suson as interim managers. Dale is executive director of SEIU Local 503 in Salem, and Suson is SEIU's regional organizing director based in Seattle. Allegedly, internal dissension, and not financial wrongdoing, prompted the move. No time limit was placed on the trusteeship. [BNA 01/24/01]

Members' Suit Against UAW Proceeds

U.S. Dist. Judge Paul Gadola in Flint, Mich., delayed ruling on whether a high-profile lawsuit filed by 142 United Auto Workers members against their union and General Motors should proceed and postponed further arguments in the case until Mar. 1. Gadola heard arguments Friday from GM and the UAW that the lawsuit alleging collusion between them to extend a 1997 strike at a Pontiac truck plant was filed long after a six-month statute of limitations. GM also argued that labor negotiations and bargaining are outside the purview of the court and should be regulated only by the Nat'l Labor Relations Bd., if at all.

The members' attorney, Harold Dunne, argued the members didn't know of the alleged collusion and breach of representation by GM and the UAW until this summer, which explained the delay in their filing of the suit. Dunne added that for the court to dismiss the suit was tantamount to "sanctioning criminal conduct by this huge national corporation and this huge union." GM, the UAW and UAW Local 594 in Pontiac seek to dismiss the $550-million lawsuit before it moves to the discovery phase.

Court May Allow Delta to Terminate Unionists

The Jan. 18 decision by an U.S. Court of Appeals for the 11th Circuit could force the Air Line Pilots Ass'n to end a no-overtime campaign by Delta Air Lines pilots.The opinion, written by U.S. Circuit Judge Gerald B. Tjoflat, affirmed that Delta's pilots "were engaged in an unlawful no-overtime campaign," in violation of a contract that expired in 1999 but remains in collective bargaining." While ALPA attorneys insist the union has directed the pilots to cease their no-overtime campaign, Tjoflat's opinion noted the judges "seriously doubt" that ALPA has done all it can to stop it. ALPA's constitution permits the union "to discipline, fire or expel any member for a number of reasons, including 'acting in any manner to circumvent, defeat or interfere with collective bargaining,'" the opinion states. Tjoflat's opinion suggests that if ALPA "has lost control of its members," Delta may return to court and seek permission to terminate some of the participating pilots.

FBI Raids Detroit Council's Offices

Federal agents reportedly raided the Michigan Reg'l Council of Carpenters' offices in Detroit and several construction firms elsewhere in the state on Jan. 12.  They seized several boxes of records. The FBI and Dep't of Labor reportedly conducted the raid. The probe is reportedly targeting the union's pension funds.

An official with the FBI regional office in Detroit confirmed that federal agents "executed a search warrant" at the Carpenter offices but declined further comment because the search warrant was sealed. There was no comment on similar action taken by federal agents elsewhere in the state.

Ralph Maybry, secretary-treasurer for the Council, said he was "disappointed with the way the whole thing went down." The Council "has never hidden anything from the government" and "always cooperated" with any investigations. Maybry said there was no cause for the hostile entry made by federal agents into the union's offices. As for the related visits on the same day to companies in Ann Arbor, Southfield, and Livonia, Maybry said the union pension fund had invested in projects in those cities.  [BNA 01/17/01]

Rhode Island Boss Off to Prison

An ex-East Providence police officer, Alan A. Gouveia, who admitted embezzling $26,190 while treasurer of the local Fraternal Order of Police was handcuffed Jan. 9 and sent to prison by Superior Court Magistrate Joseph Keough who said police must be held to a higher standard. Before imposing the 10-year sentence, with 9 months to serve, Keough rejected a plea from Gouveia's attorney, Stephen R. Famiglietti, that he be spared from any prison time because his mother is dying of cancer.

Keough said he had reduced prison time for Gouveia from 12 months to 9 months so as to give Gouveia time in the end to do something useful: 150 hours of community service that would begin after the prison time is finished, most of it devoted to giving lectures to students about his prison experience. Keough had previously ordered Gouveia to also make restitution for the $26,190 he admitted stealing by Jan 9. or face even more stringent punishment.

North Dakota Boss Embezzled $2,300

Ex-president of Nat'l Fed'n of Fed. Employees Local 225 in Fargo, N.D., Richard LaRue of Shevlin, Minn., was sentenced Jan. 16 to two years probation for embezzling union funds.  He pled guilty to misappropriating $2,300 in union funds between Oct. 1996 and Dec. 1997. U.S. Dist. Judge Rodney Webb in Fargo ordered LaRue to spend four months in home confinement, pay a $500 fine and make restitution. [Bismarck Trib. 01/17/01]

Three Chicago Bosses Removed

Laborers' Int'l Union of N. Am.'s "in-house judge" Peter F. Vaira permanently barred three Chicago bosses Jan. 10, finding that they were trusted members of organized crime and used their union positions to achieve Mafia objectives such as rigged union elections.  The Jan. 10 decision should end the Caruso family's long-running control over two LIUNA locals and the Chicago Dist. Council, which oversees the pension, training, and health-welfare funds of 21 Chicago locals.

The decision removes: Bruno Caruso, the business manager of Local 1001 and the former president and business manager of the CDC; Frank "Toots" Caruso, Jr., a member of Local 1006 and the former president and business manager of the local; and Leo Caruso, the president and business manager of Local 1006. Bruno and Frank are brothers and Leo is their first cousin. The decision permanently revokes the Carusos' LIUNA membership and bars them from holding any office or employment with LIUNA or any affiliated entities. No word if the Bush Dep't of Justice will pursue criminal (a.k.a. real) sanctions for the Carusos.

Hollywood Talks to Boston Grand Jury

The federal grand jury investigation of alleged corruption within Int'l Bhd. of Teamsters Local 25 in Boston has had a parade of Hollywood filmmakers testified in recent weeks, according to a Boston Herald source. But some industry officials are reportedly fearful of cooperating with federal investigators. "These people in L.A. are scared of these guys (Teamsters)," said the source. It is unclear which film producers have testified so far, but a number of movies filmed in and near Boston including  Good Will Hunting, Cider House Rules, The Good Son, and Blown Away are reportedly "on the radar screen" of investigators. Additionally, the Dep't of Justice has put a halt to IBT and state investigations of Local 25 bosses, worried that the probes could undercut the ongoing grand jury.

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