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.

$160,000 Embezzlement Reported in Cleveland Local

Allegedly, members of the N. Ohio Firefighters Union have accused a member of Local 639 of embezzling money from union coffers. The thefts are alleged to have occurred over more than a decade and total as much as $160,000. The FBI is reportedly investigating. Further details were not available. [Cleveland Scene 3/15/01]

Iowa Boss Guilty of $4,000 Embezzlement
Randy Kamp, ex-president of the Paper, Allied-Indus., Chem. & Energy Workers Int'l Union local in Waterloo, Iowa, pled guilty to a $4,773 union embezzlement. Kamp was accused in Feb. 2001 of stealing union funds between June-Nov. 1999. He faces up to five years in prison and a $250,000 fine. Sentencing is scheduled for June 11. He is free until sentencing. [Des Moines Reg. 3/24/01]

Jesse Jackson Staffers on Union's Payroll

For decades Rev. Jesse Jackson has picketed, prayed and negotiated on behalf of unions, and now the Chicago Tribune has uncovered what the unions do for Jackson. Some give money to Jackson's groups, and a few pick up costs for salary and benefits' packages for Jackson's staffers. Among those benefiting from the arrangement with the Hotel Employees & Restaurant Employees Int'l Union was Karin Stanford, Jackson's ex-mistress and ex-employee. In 1999, Stanford received a salary rate of $35,000 from HERE plus health-care and other benefits, according to HERE.

Jackson's solicitations to unions are blunt according to Gary Massoni of Rainbow/PUSH Coalition: "When Rev. Jackson meets with union leaders, he says, I've been involved in labor rights. I've got three things I want you to do," and asks the bosses to put "someone on the staff payroll," take part in his events, and make a "cash contribution." HERE boss John W. Wilhelm praised Jackson: "He's been with us on strikes all over the country." Other unions which have reportedly given are NEA, IATSE, USWA and locals of UFCW and SElU.

Chicago Members Sue Wilhelm, International

On Mar. 16, the final day of a hearing on the Hotel Employees & Restaurant Employees Int'l Union's trusteeship over Chicago-based Local 1, members of the scandal-scarred local went to federal court seeking an order to compel the HERE to dissolve the trusteeship. The suit responded to statements by HERE president John W. Wilhelm and Local 1 trustee Henry Tamarin during the hearing, indicating that they would seek to extend the trusteeship for at least another 17 months. At the same time, the trusteeship terminated the three top bosses of Local 1. The suit was filed by Local 1 members Linda Brush and Sigrid Alexandersen. In addition to HERE, Wilhelm, Tamarin, and James Dupont, assistant trustee of Local 1, were named as defendants in the suit.

New York Boss Named Unindicted Co-Conspirator in Mob Investment Case

Thomas J. Scotto, the president of the N.Y.C. police detectives union has been named as an unindicted co-conspirator in what federal prosecutors say was an organized-crime scheme to use kickbacks to union leaders and mob threats and violence to tap pension funds, inflate stock values and defraud thousands of investors.  Scotto, who has led the Detectives Endowment Ass'n since 1986, was named by prosecutors in papers filed in U.S. Dist. Court in Manhattan recently to supplement information in 16 indictments that brought charges against 120 people in Jun. 2000 in a wide conspiracy.

Utah Governor Signs Paycheck Protection into Law

President Bush's efforts to enact legislation protecting the first amendment rights of America's worker were given a boost Mar. 19, according to Am. for Tax Reform, as Utah Governor Michael O. Leavitt (R) signed a paycheck protection bill into law.  Utah becomes the sixth state to enact such a statute; the others are Idaho, Michigan, Ohio, Washington and Wyoming.

Under the "Voluntary Contributions Act," no Utah worker may have monies deducted from his or her paycheck by an employer or union for political purposes unless the worker has first given written permission.  The measure also gets taxpayers out of the business of subsidizing political fundraising by prohibiting the use of public employer resources to collect political contributions.

Pittsburgh Local Placed in Trusteeship

Service Employees Int'l Union Local 585 in Pittsburgh was placed in trusteeship Mar. 5 because of allegations that democratic procedures were ignored by its newly elected president, James Neville. The trusteeship was imposed after a hearing in late Feb. by int'l vice-president Thomas Balanoff. Deborah Schneider, regional director of SEIU District 925 in Cincinnati, was appointed trustee. Thomas Hoffman, a longtime SEIU staffer in Pittsburgh, was named deputy trustee.

The action takes control of the union away from Neville, an ex-Allegheny County assessor and former Air Force officer, who last December defeated Rosemary Trump, the 27-year president, by a vote of 1,505 to 1,403. Roughly 20% of the local's membership voted. Trump, an outspoken leftist, was recently the subject defamation suit brought by an employer, Beverly Enterprises.

LIUNA Affirms Tainted Illinois Election

Peter Vaira, the "in-house judge" of the Laborers' Int'l Union of N. Am., denied a members petition Mar. 20 to overturn the Sept. 2000 election of officers at LIUNA Local 703 in Urbana, Ill.  However, a petition to review the election filed is pending at the Dep't of Labor. Further, Local 703 secretary-treasurer Randy Perring admitted that DOL had met with the local's leadership, suggesting that a federal investigation in ongoing.

The election followed a 27-month trusteeship which was imposed by LIUNA for alleged financial malpractices. The election was challenged by four defeated candidates, who claimed current Local 703 business manager Marc Manuel was improperly in the polling area on the day of the election and that the ballots were left unattended at an election site. The protesters complain that their opponents ran as a slate that was designated on the ballot as the "Honest Choice" and that those candidates were listed next to even numbers and the others next to odd numbers. [News-Gaz. (Champaign, Ill.) 3/21/01]

Bush Nominee Tied to Boston's Local 25 Scandal

President Bush's nominee for ambassador to Canada has ties to a union boss who is under investigation for shaking down Hollywood production crews shooting in New England. Mass. Gov. Paul Cellucci's nomination comes as a federal grand jury and the Dep't of Labor probe possible illegal actions by Int'l Bhd. of Teamsters Local 25. Indictments in the case reportedly could come down anytime. Cellucci has repeatedly denied any knowledge of IBT misconduct, and a spokesman said the labor controversy will not harm his confirmation. Hearings on his confirmation before the Senate Foreign Affairs Committee are expected in a couple of weeks.

Local 25 president George Cashman and local transportation coordinator Larry Flynn are reportedly among the targets of the federal investigations. Cashman was reappointed by Cellucci to the union seat on the powerful Mass. Port Auth.board. The union boss also was among those who accompanied the governor on a 1997 "trade mission" to L.A. to woo the studios.

Pennsylvania Local Looses Dues Suit

The U.S. Court of Appeals for the Third Circuit ruled Mar. 27 that it was an unfair labor practice for the Graphic Communications Int'l Union Local No. 735-S in Hazelton, Pa., to try to coerce a former member into paying union dues and to sue him to collect the dues because the union security clause in a collective bargaining agreement (CBA) did not require employees to continue paying dues after resigning from the union.

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."

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