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.

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.

Court Oversight of Boxing Union Continues

The Int'l Boxing Federation was denied a request in Newark, N.J., Jan 8. for its court-appointed monitor to be removed. The monitor had been installed to oversee the sanctioning body following the corruption indictment of its now-convicted founder, Robert W. Lee. U.S. Dist. Judge John Bissell rejected the request and said he would decide later whether to expand the monitor's powers, as sought by government lawyers pursuing a racketeering lawsuit against Lee. [Times Union (Albany) 01/09/01]

Supreme Court Reverses Chicago Boss' Conviction
On Jan. 9, the U.S. Supreme Court reversed the conviction of Paul Glover, ex-vice president and ex-general counsel of the Chicago Truck Drivers, Helpers, & Warehouse Workers Union,  who alleged his attorney was ineffective for failing to challenge the calculation of his sentence, and held that the U.S. Court of Appeals for the 7th Circuit erred in holding that the increase in the sentence was not significant enough to be prejudicial.

Florida Probe of Campaign Contributions Moves Forward

A Port Everglades firm, Eller & Co., is negotiating with federal prosecutors in Tampa who want to force the firm to restore about $230,000 to a pension fund of Int'l Longshoremen's Ass'n Local 1402. The negotiations were disclosed in a criminal plea agreement between the U.S. Attorneys' office and former Eller & Co. president and chief executive Arthur C. Novacek. Novacek pled guilty in Sept. 2000 to making an illegal campaign contribution. As part of the deal, Novacek agreed to cooperate in the governments ongoing investigation.

Novacek, now a consultant to Eller, got into trouble for authorizing $1,000 in corporate contributions to Perry C. Harvey, who ran unsuccessfully for a seat on the Hillsborough County Commission in 1996. Harvey is the longtime president of Local 1402. At the time the contributions were made, Local 1402 represented Ellers' Tampa-based employees, including workers at Harborside Refrigerated Services, then a wholly owned subsidiary. Harvey at the time was negotiating a new labor contract for the ILA with one of Novaceks subordinates, Joseph Casella. One of Casellas duties was to keep labor costs down.

DOL: Wilhelm-Imposed Trusteeship Invalid

The U.S. Dep't of Labor recently found that a trusteeship imposed by John Wilhelm, president of Hotel Employees & Restaurant Employees Int'l Union, on HERE Local 1 in Chicago failed to comply with federal labor law. After an investigation of alleged violations of Title III of the Labor-Mgmt. Reporting & Disclosure Act, popularly known as the Landrum-Griffin Act, DOL's Office of Labor-Mgmt. Standards concluded that HERE had failed to hold a hearing either before or after the imposition of the trusteeship. In a Nov. 29, 2000 letter to HERE, OLMS's enforcement division chief, Lary Yud, called on HERE to hold a hearing to, "rectify the trusteeship's lack of validity under Section 304(c) of the LMRDA."

Coia Crony, Sabitoni, New #2 at LIUNA

Armand E. Sabitoni of Rhode Island will succeed Carl E. Booker as secretary-treasurer of the Laborers' Int'l Union of N. Am., according to a union announcement Dec. 20. Sabitoni, currently a LIUNA vice-president, is a second-generation LIUNA boss. He was named assistant to the  president Jan. 1, 2000. Sabitoni is expected to run for formal election for secretary-treasurer at LIUNA's 2001 convention in (where else?) Las Vegas. [BNA 12/21/00]

Here's a quick Sabitoni bio. Sabitoni was one of 39 named defendants in the U.S. Dep't of Justice's 1994 draft racketeering complaint against LIUNA. Another was disgraced ex-LIUNA president and admitted criminal Arthur Armand Coia. DOJ wrote: "Armand Sabitoni is a long-time associate of Arthur A. Coia, whom he replaced as regional manager of the New England Regional Office of LIUNA in February 1993."

Further, like Coia, Sabitoni is an attorney by trade. Coia recently lost his law license for two years because of his guilty plea to tax crimes.  The Providence firm that still has Coia's name, Coia & Lepore, Ltd., lists Sabitoni on its website: <www.coialepore.com>.

D.C. Probe Charges Fourth Boss with Embezzlement

James E. Cole, the general secretary of the Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers, was secretly indicted last month by a federal grand jury for union embezzlement. The 18-count indictment was unsealed Jan. 3 in U.S. Dist. Court in Wash., D.C. Cole is the fourth BSOIW boss to face charges in a FBI probe involving allegations of corruption within the BSOIW hierarchy and D.C. police force. The others have pled guilty.

The indictment alleges that starting in 1992, Cole and others cheated the union by using its money to pay for personal outings and services from restaurants, hotels and golf courses. It accuses Cole of mail fraud, embezzlement, making false statements and concealment. Cole allegedly used union credit cards and other accounts to benefit himself, his family and friends. For example, he allegedly used  more that $10,000 for a Scotland vacation, a high school reunion trip, and anniversary flowers for his wife.  Further, he allegedly failed to report nearly $20,000 in disbursements to BSOIW president Jake West in 1996-98. West has not been charged.

Hoffa Ally Allegedly Lied about Organized Crime Ties

A new report accuses Michael C. Bane, president of Int'l Bhd. of Teamsters Local 614 in Pontiac, Mich., of lying under oath about his personal relationships with Detroit organized crime figures. Bane, who was convicted of embezzlement in the 1970s, has been affiliated with the local for more than 30 years and became president in 1990.

The new accusations were detailed in a 23-page report by Charles M. Carberry, chief investigator for IBT's Independent Review Bd. The Dec. 21 report, submitted to IBT president James P. Hoffa, charges that Bane "brought reproach" on IBT because he failed to cooperate with IRB. Bane gave "intentionally misleading testimony" to IRB concerning his relationship and association with Vincent Meli, Vito Giacalone, Anthony LaPiana, Jr., and Nove Tocco, identified by the FBI or court testimony as members of the Detroit mob. The charges arose from sworn testimony Bane gave to IRB during four separate hearings conducted between 1991 and Oct. 6, 2000.

Diop Mentally Unfit for Trial

N.Y. State Justice William Leibovitz ruled Dec. 21 that ex-Am. Fed'n of State, County & Municipal Employees Dist. Council 37 boss Albert A. Diop was not mentally fit to stand trial on charges of embezzling more than $1 million from the union's Local 1549. Leibovitz said that Diop was "an incapacitated person" and that he be committed to a state mental hospital.  Leibovitz issued his ruling after hearing the reports of two court-appointed psychiatrists. Diop was to go on trial for allegedly stealing money from his local for lavish vacations and personal items.

AFSCME forced Diop to resign for alleged financial misconduct after an audit found $2 million in improper expenditures by Diop, Local 1549 officials James Edey, Lionel Scott and Mary Wilson. The four made more than $1 million in "unexplained payments" and from 1994-98 made almost $1 million credit card purchases for alleged personal expenses. Reportedly, Diop lived in a secret penthouse apartment above union headquarters paid for by the union. He was one of the best paid union bosses in the city, earning $191,000 a year from the local and another $18,000 from AFSCME.

Teamsters Ethics Code Behind Schedule

The Int'l Bhd. of Teamsters is several months behind schedule in its development and implementation of a comprehensive ethics code. The code was to have been unveiled in Oct. 2000. But after undergoing two draft versions, it now looks like the final document will not be ready for the IBT board's final consideration and approval until at least Feb. 2001, according to Edwin H. Stier, ex-assistant U.S. attorney hired by IBT to head internal reform effort.  Also delayed is a comprehensive review of the degree of organized crime influence still found in the union long troubled by a history of organized crime connections. The report originally was due for release this fall.

Las Vegas Dissident Loses NLRB Case

Textile Processors, Serv. Trades, Healthcare, Prof'l & Tech. Employees Local 311 in Las Vegas did not violate the Nat'l Labor Relations Act by removing a dissident from membership status a week after she lost her job, thereby causing her to be ineligible to run for office, the Nat'l Labor Relations Bd. ruled Dec. 15.  Reversing the finding of an administrative law judge, the Board determined the local's decisions were "strictly internal union matters" and, therefore not an unfair labor practice under Section 8(b) of the act.

Suzanne Pollack was a "long-time dissident" member of Local 311. After she was discharged from her job with Tiffany Cleaners, a unionized firm, in 1988, she took a job with a nonunion cleaner for a year. During this time, Pollack continued to pay her dues and ran unsuccessfully for president of the local.  Pollack subsequently wrote to the Dep't of Labor challenging the election and filed other complaints with the local's executive board regarding officers' salaries. DOL and the union both rejected her charges.

Trumka in Trouble? Finally?

According to columnist Robert Novak, the Dep't of Justice's decision to remove government oversight of the Hotel Employees & Restaurant Employees Int'l Union, after a surprisingly short five years to monitor any connections with organized crime, has raised speculation in labor circles that its president, John Wilhelm, soon might replace Richard Trumka in the AFL-CIO's No.2 job.

Wilhelm became a “rising star” in the union movement when he organized 22,000 new hotel employees in Las Vegas. Now he is incorrectly being credited with cleaning up a mob-infested union.

Trumka was permitted to stay on as AFL-CIO secretary-treasurer by president John Sweeney in violation of union rules after he invoked the 5th Amendment to avoid federal investigators' questions.  Novak said, “If the Republicans take over [DOJ], Trumka could be a target of a new investigation.”  [Chi. Sun-Times 12/10/00] Here, here. It's about time. Trumka needs to be brought to justice.

New Report: Union Pension Funds at Risk

The U.S. Dep't of Labor believes funds in union-sponsored employee benefit plans are vulnerable to “corrupt plan officials, service providers, and organized crime elements,” according to DOL's Office of Inspector Gen.'s semiannual report to Congress for Apr. 1 to Sept. 30, 2000. The OIG report said it was concerned about corrupt lawyers, accountants, and investment advisors who provide services to union pension plans. OIG currently is pursuing 28 cases involving service providers to pension plans with over $1.5 billion in total assets.

“The OIG remains concerned that with such large amounts of money and limited oversight, union-affiliated benefit plans remain vulnerable to fraud and corruption,” the report said.

New York Union Fund Manager Indicted for $314,000 Theft

Anthony DiPace, a union investment manager, was indicted Dec. 18 on embezzlement and wire fraud charges for allegedly stealing $314,000 from a union's pension fund by concealing commissions he made on dozens of stock and bond trades. From 1988 to 1996, DiPace managed the health and welfare plan for the Laborers Int'l Union of N. Am. Local 190 in Glenmont, N.Y.

While managing the fund, DiPace allegedly executed a series of trades through his private brokerage practice, Direction Planning. DiPace allegedly collected commissions on the trades without the fund's trustees' knowledge, violating federal rules that bar investment managers from acting as brokers in order to avoid potential conflicts of interest. The trustees paid DiPace to manage the fund based on a formula they had established.

Union Pension Managers Guilty of Racketeering

Two men pled guilty on Dec. 18 in Chicago to federal racketeering conspiracy and pension fund kickback charges arising out of hundreds of thousands of dollars in commission kickbacks paid to two trustees of Chicago-based labor union pension funds.

U.S. Atty. Donald K. Stern in Boston, announced that Christopher P. Roach and Richard S. Tringale pled guilty to a conspiracy that involved paying kickbacks to trustees of employee benefit plans. The racketeering conspiracy charges against Roach and Tringale also include allegations of international money laundering and interstate and foreign travel in aid of racketeering. William V. Close, a former trustee of Int'l Bhd. of Teamsters Local 710 and Auto. Mechanics Local 701's pension funds, earlier pled guilty to receiving kickbacks and to money laundering.

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