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.

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.

Patient Broker Admits to Kickback

Douglas A. Miller, an executive involved in illegally brokering patients into treatment centers in Largo and Tarpon Springs, Fla., pled guilty Dec. 15 to making a kickback to a union boss and agreed to pay $500,000 in restitution and fines. Miller admitted to making a $3,000 payment through a firm called Management III to Lindsey Huddleston. Huddleston was the “community services director” for the Detroit Air Transport Workers Union Local 141, and responsible for intervening with union members suffering from addiction or psychiatric problems.

Huddleston originally was charged with bribery and racketeering, then pled guilty in Jan. 1999 to reduced charges of taking an illegal kickback. He was sentenced to five years' probation and ordered to pay a fine of $1,000 and restitution of $12,882. Reportedly, Huddleston also brokered a dozen patients into Colonial Hosp. in Va. in 1992 for $22,268. The facility was found guilty of violating Medicare laws and was stripped of its certification and went into bankruptcy. [St. Pete. Times 12/16/00]

Buffalo Local Fined $250,000 for Illegal Strike

The Buffalo Teachers Fed'n was fined $250,000 Dec, 5 for conducting an illegal strike after the sentencing judge said he is convinced the union would strike again if it felt a walkout would benefit its negotiating position.

"At no time has the union ever apologized for its conduct," said N.Y. State Supreme Court Justice Kevin M. Dillon. Dillon added that the BTF gave no indications that it would refrain from striking again if it felt a job action would work to its benefit. Instead, he said, he is convinced the BTF would walk out again under similar circumstances. After a lengthy explanation, Dillon said his decision to impose a stiff fine was heavily influenced by the lack of apology or pledge to shun strikes.

The Buffalo Bd. of Educ. earlier had asked for a fine of $400,000 or more. The union said that amount would be "unduly harsh and potentially ruinous," but did not suggest a figure of its own. [Buff. News 12/5/00]

New Jersey Boss Accused of Bribery

Ex-president of United Food & Commercial Workers Local 1262 in New Jersey, Joseph P. Rizzo, Jr., was arrested by federal agents Nov. 29 and charged with soliciting bribes from supermarkets seeking to prevent labor disruptions during the holidays. Reportedly, Rizzo solicited payments from unnamed employees for Foodtown and ShopRite supermarkets over nearly 20 years. In exchange, he allegedly vowed to ensure labor peace and offered one chain favorable treatment when the union was on strike. Rizzo was charged with four counts of conspiracy related to bribery, in a sealed grand jury indictment handed up Nov. 15.

New Hampshire Boss Guilty of $124,000 Theft

A "longtime labor activist" pled guilty in U.S. Dist. Court in New Hampshire Nov. 27 to stealing funds from the N.H. AFL-CIO while he was secretary-treasurer. Daniel P. Courchesne pled guilty to one count of mail and wire fraud. Federal investigators accused Courchesne of taking about $124,597 from the N.H. AFL-CIO between 1995 and 2000. Some of those funds were repaid, but remainder was used to pay his personal expenses.

Courchesne, who also is an ex- agent of the N. New Eng. Council of Carpenters, admitted to depositing into his account checks payable to the N.H. AFL-CIO. He also admitted to using a signature stamp without authorization to draw checks against the union's account for his personal benefit.

Kansas City Boss Pleads Guilty to Cover Up

Max E. Biggerstaff, ex-secretary-treasurer of Int'l Ass'n of Fire Fighters Local I-34 in Kansas City, pled guilty Nov. 29 to falsifying union records to conceal embezzlements by him and the local's ex-president. In Aug. 2000, Roger L. Mathisen pled guilty to embezzling $18,404 while president from 1996-98. The embezzlement was uncovered after the local inquired into his financial dealings.

Biggerstaff acknowledged that he had prepared a document in Apr. 1998 that falsely showed that Mathisen had received a $2,159 loan from the local. Mathisen had, in fact, embezzled the funds. Biggerstaff also admitted that he embezzled $2,478 when he was reimbursed for unauthorized mileage, travel and meeting expenses. Biggerstaff was secretary-treasurer from 1995 to 1998. [K.C. Star 11/30/00]

Ohio Boss Sentenced for $1,900 Theft

Painesville (Ohio) Mun. Judge Michael Cicconetti  sentenced James R. English, a former corrections officer in the Lake County Jail, Nov. 30 to jail time and a diversion program for stealing from a police union. English pled guilty to misuse of property, which is a misdemeanor. He admitted he took $1,900 to pay his rent from the Am. Fed'n of State, County & Mun. Employees in Feb. 2000. He was president of the union at the time. Reportedly, English cashed several checks without proper authorization from a small fund.

English was suspended from his corrections job in Sept. 2000 when the Lake County Sheriff's Dep't was alerted to the missing money by union officers. He resigned after he was told he would be fired. The AFSCME local has since disbanded, and jailers are now members of the Ohio Patrolmen's Benevolent Ass'n.

English, who said he took the money to offset his financial problems, has since repaid the money. Cicconetti ordered English to serve 32 days in jail but suspended 10 days. He also ordered English to complete a diversion program, placed him on probation for three months and fined him $50. [Plain Dealer (Cleveland) 12/1/00]

New York Dissent Loses LMRDA Suit

U.S. Dist. Judge Robert W. Sweet, S. Dist. of N.Y., ruled Nov. 13 that the Am. Fed'n of State, County & Mun. Employees did not infringe on a dissident officer's rights under the Labor-Management Reporting & Disclosure Act, popularly known as the Landrum-Griffin Act, when the union removed him from office and barred him from seeking another position for two years as punishment for making unauthorized mailings. Ray Commer, ex-president of AFSCME Local 375  failed to show that the discipline imposed by an AFSCME judicial panel was directed at suppressing his free speech rights under the LMRDA.

Commer asked the court to issue a preliminary injunction reinstating him as president of the N.Y.C. local and lifting the ban barring him from running for office for two years. Commer contended that the discipline imposed by the AFSCME judicial panel was a retaliatory move aimed at ending his ongoing criticism of union officials.

The punishment was imposed after Commer was found on two occasions to have violated Local 375's constitution by distributing literature regarding an upcoming local election in the name of the union, but without proper authorization.

Union Loses Dues Case

U.S. Dist. Judge T.S. Ellis, E. Dist. of Va., ruled Nov. 22 that the Int'l Ass'n of Machinists may not require nonmembers who object to agency fees being used for nonrepresentational purposes to file objections every year.  The case was a class action covering IAM-represented airline and railroad workers nationwide.

Granting summary judgment to the class of approximately 1,039 nonmembers, Ellis decided that the union's annual objection requirement, and its refusal to accept continuing objections, imposed an undue burden on nonmembers' First Amendment rights and was unjustified. Under union security clauses in IAM collective bargaining agreements with airline and railway carriers, each nonmember must pay the union agency fees equal to the dues paid by members to cover the nonmember's pro rata share of collective bargaining costs. However, nonmembers may object to paying for nonrepresentational expenditures such as political activities.

Chicago Boss Charged with $473,100 Embezzlement

A federal grand jury indicted ex-president and business manager  of Laborers’ Int’l Union of N. Am. Local 5, Frank B. Zeuberis, Nov. 9 for embezzling $473,106 in union funds. Asst. U.S. Atty. Mark J. Vogel said Zeuberis was arrested Nov. 9 at his home in St. John, Ind. He was released on a $20,000 recognizance bond after an appearance before a federal magistrate in Hammond, Ind. The Chicago Hts., Ill., based local has had a long history of corruption and mob influence.

The indictment includes one count of racketeering, 11 counts of embezzling union funds, and 16 counts of keeping false union records. Reportedly, Zeuberis illegally enriched himself, his wife Joann Zeuberis, who was a clerk at Local 5, and James A. DiForti, secretary-treasurer of the local during the mid-1990s. Allegedly, on 30 occasions, he illegally granted salary increases, paid vacations and bonuses, benefiting himself, his wife, and DiForti.

Florida Boss Charged with Extortion & Drug Crimes

A federal grand jury in Ft. Lauderdale indicted ex-president of Int’l Bhd. of Teamsters Local 390, Clarence Lark, as well as his brother-in-law, and seven other individuals on drug smuggling, extortion, racketeering, conspiracy, and other charges. The 43-count indictment, unsealed Oct. 31, included charges that Lark and brother-in-law Larry Crenshaw were involved in a racketeering and smuggling operation that since 1985 imported more than 3,500 kilograms of cocaine and 39,000 kilograms of marijuana through Miami’s Port Everglades, where Local 390 operates. The indictment also seeks the forfeiture of about $11 million, real estate, vehicles, and other property.

Additionally, Lark and Crenshaw allegedly extorted money from union members who were forced to pay kickbacks to get work with Star’s Choice, a company the men allegedly founded using drug profits, which provided transportation and other services to the movie and TV production industry in South Florida. Further, the two were charged with "abusing their union responsibilities.”

Two More Oregon Pension Suits

Members of plumbers and electrical workers unions filed class-action lawsuits in late-Oct. against the trustees of their union retirement and benefit plans in connection with the collapse of the troubled Portland, Or., investment adviser Capital Consultants.

Mark K. Eidem and Marvin A. Malcom, members of the Plumbers Union Local 290 in Portland accused the 9 trustees of the union’s pension trust of breaching their fiduciary responsibility by handing over union members’ retirement money to Capital Consultants. The suit, filed in U.S. Dist. Court in Portland, alleges that the trustees negligently entrusted about $39 million to Capital Consultants.

The investment advisory firm was taken over by the government last month. Federal regulators accused Capital Consultants and its two top managers, Jeffrey Grayson and son Barclay Grayson of making a series of bad investments and concealing losses that could cost its clients more than $243 million.

Kentucky Indictments Reinstated

The Kentucky Court of Appeals yesterday reinstated the indictment of Gov. Paul Patton's (D) top aide and labor liaison and two prominent Teamsters on charges of circumventing campaign laws to get Patton elected in 1995. The 2-1 decision, which is likely to be appealed, was released almost exactly five years after Patton narrowly defeated Republican Larry Forgy - who then accused the Democrats of fraud, prompting the investigation that produced the indictment.

The indictment, by a special Franklin County grand jury in September 1998, alleged a conspiracy among:

Court Says Free Trip Wrongfully Influenced Unionization Vote

The Communications Workers of America's offer of a free trip to Chicago so employees of Comcast Cablevision could attend a union meeting on cable industry issues unduly influenced the outcome of a representation election among the 50 eligible workers, the Sixth Circuit Court of Appeals court ruled Nov. 14, reversing the Nat’l Labor Relations Bd. Refusing to enforce an NLRB order certifying CWA Local 4100 as the bargaining agent of Comcast's employees in Taylor, Mich., the court held that CWA's offer of $50 worth of transportation and one night's lodging so employees could attend a two-hour union meeting on cable industry issues unduly influenced the 31-17 vote in favor of union representation.

“Providing transportation and one night's lodging so that the employees could have a free weekend in Chicago in conjunction with the two-hour union meeting was sufficiently valuable to influence the vote without relation to the merits of the election," wrote Judge Ronald Lee Gilman.

Gore, Unions Hit With FEC Complaint Over Ad

The Nat'l Legal & Pol'y Ctr., a union corruption watchdog group, filed a complaint with the Fed. Election Comm'n Oct. 30 against Gore/Lieberman, Inc., AFL-CIO and Am. Fed'n of State, County & Mun. Employees for an apparent violation of federal election law. The complaint concerns a full page advertisement that appeared in the Washington Post on Oct. 11, which attacked Tex. Gov. George W. Bush's tax cut plan and listed 300 economists.

The ad stated: "Paid for by the working men and women of [AFSCME] and the AFL-CIO." It also said: "We, the undersigned, oppose the large-scale tax cuts that are the centerpiece of presidential candidate George W. Bush's economic proposals." It states: "Targeting the surplus to these families as proposed by Vice President Gore makes more sense." It said: "To waste that opportunity with this tax  scheme would be economically and socially irresponsible."

The ad could be considered express advocacy or a coordinated "issue ad." Either interpretation of the ad results in a violation of the Fed. Election Campaign Act.

Fitch: Bosses' Protection Money Invested in Gore

Below are excerpts of an op-ed written by Village Voice writer Robert Fitch that appear in Newsday on Nov. 2
"...So what do the rank and file get for their estimated $54 million in contributions to the Democrats? Not much, but, given the way so many of their leaders have been investigated by the Clinton administration's Justice Department, it seems to be protection money.

...Probably a bigger worry for [AFSCME boss] Gerald McEntee than whether public jobs will be contracted out is avoiding indictment. A federal official, former Judge Kenneth Conboy, accused McEntee of illegally contributing $50,000 to the campaign of Teamster President Ron Carey. McEntee admitted that he got $20,000 of the money by shaking down a union vendor. U.S. Attorney Mary Jo White said she was investigating McEntee. But so far she hasn't brought down the hammer.

New York Local Probed For "No-Show" Jobs

The FBI is preparing to hit boss of N.Y.'s Int'l Union of Elevator Constructors Local 1 with racketeering charges for allegedly shaking down construction firms and giving no-show jobs to mobsters' kin, according to the N.Y. Post. A federal grand jury reportedly hearing evidence against and an indictment is expected by year's end.

The small but powerful local allegedly shook down construction firms by threatening work stoppages unless firms paid for an inflated number of operators. Extra positions allegedly became phantom jobs for union cronies and the kin of Gambino and Genovese crime-family members. A number of mob relatives, according to the Post, are on the union roster, including Joseph Gotti, a nephew of jailed-for-life Gambino boss John Gotti. Union members told the Post Joseph Gotti has worked as an elevator operator at numerous sites.

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