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.

Seventh Circuit Rules against Chicago Union in Illegal Slowdown Case

The Seventh Circuit Court of Appeals held Mar. 14 that U.S. Dist. Judge William J. Hibbler erred in refusing to issue a preliminary injunction to compel the Int'l Ass'n of Machinists to discourage its member mechanics from engaging in a work slowdown at United Air Lines. The appeals court remanded the case with instructions to enter a preliminary injunction against IAM Dist. Lodge 141-M and to quickly hold a trial on whether to grant a permanent injunction.

On remand, Hibbler granted UAL a preliminary injunction Mar. 22, barring IAM mechanics from engaging in a work slowdown. The preliminary injunction will remain in effect while Hibbler considers UAL's petition for a permanent injunction.

UAL claimed that IAM, frustrated with the pace of bargaining contract negotiations, orchestrated an illegal work slowdown by approximately 15,000 mechanics, resulting in hundreds of canceled and delayed flights since the alleged slowdown began last summer.

Wisconsin Boss Gets 5 Months for $28,000 Theft

U.S. Dist. Judge Rudolph T. Randa sentenced Pamela L. Schultz, ex-financial secretary of the Racine, Wis.-based United Auto Workers Local 553, Mar. 5 to five months in a halfway house for embezzling $28,088 from the local. Randa also ordered her to serve five months on home detention after her release and three years of supervised release. He also fined her $3,000. Schultz previously pled guilty and has paid Local 553 $36,000 in restitution. She allegedly wrote union checks to herself and others for her own benefit from 1996-99. [Milwaukee J.-Sent. 3/6/01]

Michigan Members' Suit Advances to Discovery
U.S. Dist. Paul V. Gadola ruled Mar. 7 that more than 140 UAW members may proceed with their suit against UAW and Gen. Motors. The $550 million suit claims UAW bosses demanded jobs for relatives and improper overtime payments in return for ending a 1997 strike at GM's Pontiac truck plants, thereby needlessly prolonging the 87-day strike. It also accuses GM of going along with the alleged scheme, which the suit alleges cost the average member $10,000-$20,000. Separately, federal investigators continue their probe into the strike.

South Carolina Local Accused of Misusing Tax Money

The S.C. Atty. Gen. Office has given the green light to a taxpayer's suit against United Steelworkers of Am. Local 7898 in Georgetown, S.C., to recover allegedly misused public funds. In a Jan. 19 letter to Georgetown County Council Member Tom L. Swatzel, Asst. Dep Atty. Gen. Robert D. Cook wrote that if Swatzel sues, the Office would join the suit as a friend of the court. Cook's letter follows S.C. Atty. Gen. Charlie Condon's Dec. 18 legal opinion to Swatzel stating: "To subsidize a labor union under the guise of a charitable purpose serves no public purpose. Taxpayers have a right to know that their tax dollars are not being spent for private purposes in support of special interests.  Accordingly, if the facts are as you have presented them, those expenditures are unconstitutional."

Illinois Boss puts $59,000 in Escrow

Patrick Stiles, the ex-boss of Aurora (Ill.) Firefighters Local 99 accused of embezzling up to $311,000, agreed Mar. 8 to place $59,000 in an escrow account pending the resolution of a civil suit. The account will hold his pension fund and deferred compensation account assets until Local 99 and Aurora Firefighters Relief Ass'n's suit is decided.

The suit alleges Stiles stole up to $240,000 from the union and up to $71,000 from the ass'n. Allegedly, the funds were used for personal purposes such as paying off credit card debt, paying phone bills, buying computer equipment and paying other unwitting firefighters who worked on his house. Additionally, the union and the ass'n filed criminal complaints that launched an investigation by Aurora police and the Kane County state's atty.'s office.

Oregon Fund Manger in Plea Talks

Ex-union fund manager Barclay Grayson is negotiating a deal with federal prosecutors investigating his firm's loss of more than $200 million, said U.S. Bankruptcy Judge Randall Dunn  Mar. 7. Dunn revealed the plea bargaining at a hearing on a personal bankruptcy petition that Grayson filed in Feb. He and his father, Jeffrey L. Grayson, the founder and chairman of Capital Consultants, surrendered the firm to a federal receiver in Sept. 2000 after the Sec. & Exch. Comm'n and the Dep't of Labor filed suits accusing them of defrauding clients. The hardest-hit clients were union pension funds, including the Laborer's Int'l Union of N. Am. SEC called the scam the biggest fraud involving a money manager in U.S. history.

The Graysons and others are targets of a federal criminal investigation. Lance Caldwell, Asst. U.S. Atty. in charge of the probe, declined to comment on Barclay Grayson's dealings with his office. But, Steven Ungar, Barclay Grayson's criminal defense attorney confirmed the bargaining.

Oklahoma Right-to-Work Law Closer to Reality

The Okla. Senate passed a right-to-work joint resolution Mar. 14 that would require a constitutional amendment be placed on a state ballot for voters to decide whether employees should be required to be members of a union or pay dues to a union as a condition of employment.  The initiative passed 31-17. Both Houses of the Legislature are controlled by Democrats.

A portion of the resolution that would have required a special election to be called Aug. 28, 2001, did not receive the required two-thirds vote to pass. Therefore, under the version passed by the Senate, the referendum would not take place until November 2002 -- during the next regularly scheduled election.

The initiative now will go to the House, where union bosses hope it will die in committee. Jim Curry, Okla. AFL-CIO boss, told BNA that "the fight isn't over yet." He said that organized labor is hopeful that the resolution will be assigned to the House Business & Labor Committee, in which legislators are supportive of labor. If it is assigned to that committee Curry believes "it will be killed there."

Federal Judges Apologies to California Retirees

U.S. Dist. Judge Marilyn Hall Patel apologized Mar. 7 to a trio of retired steel workers, saying she shouldn't have trusted a Palo Alto attorney who was supposed to redevelop their plant and use the money to benefit them. During Bruce Train's nine-year tenure, he and his associates earned $5 million while the pensioners didn't receive a penny.  It was Patel who in 1990 appointed Train to act as "special master" for the Pacific States Steel Corp. property in Union City, Cal. She is now sorry she did.   "I want to apologize to you -- this weighs heavily on my conscience," said Patel, who has handled a number of high-profile federal cases, including the Napster lawsuit. Turning sideways from the bench, Patel told three pensioners and their wives that Train misled her just as he misled them.

"I should have become aware much earlier that things weren't what they should be. I feel very, very badly that you have not been paid," she said. "I know that doesn't go very far -- it's not money you can take to the bank, but I'm going to try to make up for that now. I have to take responsibility."

Bush, Chao Focus on Fraud and Abuse in DOL Programs

According to BNA, the FY 2002 budget "blueprint" suggests that attention is being paid early in the Bush administration to longstanding concerns regarding a variety of Dep't of Labor programs that may be subject to fraud and abuse.  Issued Feb. 28, the preliminary budget referred to three areas identified in the past by the DOL's inspector general as in need of attention. These include programs that provide benefits to workers, such as the unemployment insurance (UI) program; administration of grant funds; and foreign labor certification programs.  DOL IG Gordon Heddell's spokesman said he "looks forward to working with" Labor Secretary Elaine L. Chao "and her management team to address these longstanding issues." Heddell, a 28-year veteran of the federal law enforcement system was confirmed IG by the Senate on Dec. 15.

Overnite's RICO Suit Rolls On

The U.S. Dist. Court for the W. Dist. of Tenn. has given a green light to Overnite Trans. Co. to proceed with a federal racketeering suit naming Int'l Bhd. of Teamsters boss James P. Hoffa and other bosses as defendants. In the suit filed last year by the Richmond, Va.-based company, Hoffa, Nat'l Freight Director Philip E. Young and other members of the IBT Exec. Bd. were named as defendants alleging a host of illegal activities, including attempted murder.

Overnite, one the nation's largest predominantly non-union carriers has been the target of an IBT job action since Oct. 1999.  Less than 5% of the firm's 13,000 employees have followed IBT's call to strike the firm. The job action, which has been marked by violence, has seen judges in 14 states issue retraining orders to curb union activity.

Pittsburgh Local Put in "Supervision" Not Trusteeship

The Laborers' Int'l Union of N. Am.'s "in-house judge" Peter F. Vaira ordered supervision -- not trusteeship -- for LIUNA Local 1058 in Pittsburgh Mar. 9 after finding that its officers have had associations with members of organized crime that "were more than fleeting or casual."  Vaira concluded that "in-house prosecutor" Robert D. Luskin, provided sufficient evidence to show that Local 1058's bosses "knew or should have known" that they were associating with members of the La Cosa Nostra crime family and that the association had direct or indirect effects on the local. "The possibility remains that Local 1058 officers' associations with the Pittsburgh LCN continues; uncontested elections may reflect a continued relationship with organized crime; and, the perception of organized crime association may remain with the membership," wrote Vaira.

Despite a lack of recent evidence of recent LCN association, Vaira held that the officers' past associations and over 30 years of uncontested elections of local officers "give LIUNA a bona fide reason to ferret out evidence of organized crime" under the union's sham "agreement" with the Dep't of Justice.

Guilty Rhode Island Boss Keeps Pension

Alan R. Gouveia, serving a prison sentence for embezzling from the E. Providence (R.I.) Fraternal Order of Police, will not lose his $27,122-a-year city pension. Acting on advice from the city solicitor William F. Conley, Jr., members of the local police and firefighter pension board decided Mar. 14 not to take action to revoke or reduce Gouveia's pension.   Conley said he reviewed the criminal complaint against Gouveia, as well as relevant legal precedents and the city's honorable-service ordinance, and concluded that there was no basis for the city to act. When Gouveia committed the embezzlement, Conley explained, he was "acting as an agent for the FOP lodge and not as an employee of the city."

SEIU Guilty of Illegal Secondary Activity

The First Circuit Court of Appeals held Mar. 2 that trial is required on an employer's claim that the Service Employees Int'l Union violated the Labor-Management Relations Act's ban on secondary activity by threatening to picket a customer. Judge Frank M. Coffin wrote the opinion reversing the district court's grant of judgment as a matter of law for SEIU, stating that a jury reasonably could have drawn inferences that SEIU's picketing threat caused Intercity Maintenance Co. to lose a contract five weeks later with Blue Cross/Blue Shield in Providence, R.I.

Intercity had provided janitorial services to Blue Cross since 1990. SEIU began attempts to organize Intercity in late 1994. Intercity's president refused to sign SEIU's proposed collective bargaining agreement, saying it was up to the workers to decide whether to unionize. SEIU's assistant director of organizing repeatedly warned Intercity's president, and later its attorney, to sign the agreement or SEIU would attempt to drive the company out of business by picketing its major customers.

Michigan Dissidents Seek Congressional Probe

In an effort to spark a congressional hearing or broad-based federal probe into the United Auto Workers, members of a dissident group, UAW Concern, traveled to D.C. Feb. 20 to talk with Senate staff and drop off materials they say show a pattern of corruption. A half-dozen members of the Kalamazoo-based  group met with the staff director of the Senate Commerce Committee, Mark Buse, as well as an aide to Sen. Carl Levin (D-Mich.), to urge them to get the Senate to investigate UAW.

"Our priority is to tell the Commerce Committee that we can show the UAW corruption and the collusion between the UAW and the companies. We've got 20 people or more who will come and testify about the UAW's lack of representation," said Pat Meyer, UAW Concern founder. Previously, Meyer helped members from UAW Local 594 in Pontiac meet with the Dep't of Labor and FBI investigators in Detroit. That criminal investigation recently proceeded onto the grand jury phase.

Oregon Boss Guilty of Racketeering in Pension Case

John D. Abbott, an ex-Laborers' Int'l Union of N. Am. business manager in Portland, Or., pled guilty Feb. 26 to criminal charges of receiving payoffs from Jeffrey Grayson, owner of an investment company, Capital Consultants LLC, that managed a share of LIUNA's pension funds. Allegedly, Capital misused union trust funds. Dep't of Labor and others placed Capital in receivership last year. An estimated 75% of the $927 million under Capital's management was union pension plans, including Taft-Hartley plans covering pension, health and welfare, and vacation benefits.

Civil suits have been filed by DOL, SEC, and union trusts against Capital. Members of some unions have filed actions against fund trustees. Further, federal agencies are investigating criminal charges against Grayson and others.

Chicago Murderer's Candidacy Denied

Kenneth E. Bates, convicted of shooting a woman in 1985, has been banned from holding office in LIUNA Local 2 in Chicago. He was nominated to run for executive board member. LIUNA's "in-house trial judge" Peter Vaira, ruled Feb. 23 that Bates is disqualified as a candidate because of his conviction. Federal labor law bars anyone convicted of murder and certain other felonies from holding union office for 13 years after being released from prison. But the federal judge who imposed the sentence can drop the restriction, which Bates said he'll attempt to have done. He was sentenced to prison in 1986 and released in 1997.

Jim McGough of Laborers for Justice, a dissident group, challenged Bates' nomination. McGough has dubbed the opposition the "Organized Crime Slate." Local 2 is part of the Chicago Laborers Dist. Council which voted in 1999 to cooperate with the DOJ and LIUNA's controversial "reform" effort. [Chi. Sun-Times 2/27/01]

Iron Workers' Top Boss Resigns

The president of the Int'l Ass'n of Bridge, Structural & Ornamental Iron Workers, Jake West, resigned Feb. 23 amid corruption allegations. West became president in 1989 and had appeared to be moving toward seeking another 5-year term this July. His annual salary was more than $200,000 and will be the unpaid president emeritus of the D.C.-based union. He was succeeded by Joe Hunt, Jr., who was general treasurer.

West's resignation comes as the FBI and U.S. Atty's Office in D.C. continue to investigate his ties to ex-D.C. police chief Larry D. Soulsby. Prosecutors have tried to determine whether West used union money to bestow favors on Soulsby and whether the ex-chief did anything in return. Prosecutors alleged unnamed D.C. police officials were treated to meals and entertainment with money embezzled from BSOIW. Sources have said that Soulsby was on at least one golf outing with West that was paid for with embezzled union funds.

President Bush Issues Beck Order

President Bush signed an executive order Feb. 17 to require government contractors to notify employees of their rights under the U.S. Supreme Court's 1988 holding in CWA v. Beck. The order, along with three other orders, "are based on the principles of fair and open competition, neutrality in government contracting, effective and efficient use of tax dollars and the legal right of workers to be notified of how their dues may be used," according to the White House press secretary's statement. With respect to the Beck order, the President agrees with the ruling "affirming the right of workers to be notified and object, if they so choose, to their union dues being used for purposes other than collective bargaining," the statement said. [BNA 2/21/01]

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.

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