UNION CORRUPTION:
WHY IT HAPPENS, HOW TO COMBAT IT
Carl F. Horowitz
Copyright 1999, The National Institute for Labor Relations Research
INTRODUCTION
CHAPTER ONE — UNION CORRUPTION: A LICENSE TO STEAL
CHAPTER TWO –- CORRUPTION: HOW IT’S DONE AND WHO DOES IT
Overview
Tactics
Extortion
Embezzlement
Bid-Rigging/Collusion
Benefit Plan Theft
Extortion and Bribery to Secure Jobs
No-Show Workers
Fishy Business Fronts
The Big Four
CHAPTER THREE -- THE PECULIAR CASE OF THE TEAMSTERS
Overview
The Roots of Corruption
Married to the Mob: The Golden Age
The Carey "Reform" Years
Hoffa II: The Sequel
CHAPTER FOUR – STRATEGIES FOR FIGHTING CORRUPTION
Overview
What Can Be Done
Improve Anti-Corruption Investigation and Law Enforcement
Continue Industry Deregulation
Enforce the Beck Decision
Promote State Paycheck Protection Laws
Promote Union Democracy
Enact a National Right-to-Work Law
Repeal the Exclusive Representation Clause
Limit Union Non-Dues Revenue
Restore the Original Intent of the Hobbs Act
Conclusion
BIOGRAPHY
NOTES
INTRODUCTION
Call it the mystery of the missing $8 million.
In New York City in 1995 federal investigators discovered that around $8 million had vanished from the pension fund of Teamsters Local 875. 1 The truck drivers, garage mechanics, assembly-line workers and other employees who make up the union had counted on the money for retirement. Yet behind their backs, union officials for several years had not been making their promised pension contributions. The culprits eventually were arrested and convicted, and ordered to pay restitution. 2 But aside from the bad guys getting their comeuppance, there’s another way to look at the theft.
Local 875 had a long history of corruption; in the previous 25 years five of its officers and financial advisers were convicted of embezzlement or accepting payoffs to keep labor peace. Suppose workers during that time had an opportunity to join what they believed was a less corrupt union—or not join a union at all. It’s a fair bet the white-collar crooks wouldn’t have been quite so attracted to the pension fund in the first place.
The problem is that federal law for decades has given unions the privilege of requiring new employees to join. In that sense, the law has been an unwitting accomplice to corruption in labor unions, whether the pile of money lay in operating revenues or member benefit plans.
While there are many reasons for corruption, public policy has been a major contributing factor explaining why the term "union corruption" in the public mind seems a redundancy. Labor unions, ostensibly established to promote the interests of their members, too often embody the abuse of trust in the service of greed and power.
Some unions are cleaner than others, but too much evidence suggests even "good" unions remain that way out of expediency rather than principle. The seemingly clean hands owe mainly to the lack of opportunities at hand for embezzlement, bribery or extortion—and threats or acts of violence to protect the guilty. But to the vast opportunities for crime that exist, there is an irony: Unions have as an unwitting accomplice the very federal government that investigates, arrests, prosecutes, and convicts corruption.
Federal law enforcement agencies rightly point with pride to their efforts to rid unions of their looters. The Department of Labor’s Office of Inspector General, for example, reported last spring that over the previous five years it helped secure 21 indictments and 20 convictions of persons who looted union employee benefit plans. 3 In certain instances, most notably the Teamsters, federal officials have taken the drastic step of taking control of corruption-ridden unions or their locals. Yet on the other hand, it has promoted this criminality through laws and court decisions that effectively grant unions a license to steal and intimidate anyone who complains about it.
Put simply, unions are susceptible to ripoffs in large part because there is so much money to be ripped off in the first place. And longstanding federal policy has helped to swell the pot of money. The National Labor Relations Act of 1935 and the National Railway Act of 1951 each contain clauses sanctioning unions to condition a person’s employment upon joining the union and paying requisite dues. As exclusive bargaining agent for workers, a union can prevent a worker from showing up on the job if he or she fails to pay tribute.
Right-to-work laws in 21 states effectively veto this federally-granted authority; it is little coincidence that corruption in these states, though real, is not widespread, and involves relatively small sums of money. In the other 29 states, however, where the heart of the nation’s industrial activity is located, unions inflate their coffers with a unique base of captive income. With the stakes greater, the temptation to steal is greater. Yes, unions enjoy lucrative and growing sources of income beyond dues, especially real estate and affinity credit cards. Yet even here, the forced nature of dues collection helped make even these investments possible.
Strictly speaking, unions may not bar from employment any worker who does not wish to join. In 1963 the U.S. Supreme Court ruled in NLRB v. General Motors Corp. 4 that an employee has the right not to become a member. Yet in invalidating the union shop, the court did not address the fact that unwilling workers must still pay dues if the union requires it. And because fees in lieu of membership, known as "agency fees," are usually nearly as steep as regular dues (if not as steep), even reluctant workers outside right-to-work states have the incentive to join.
Another contributing reason for corruption is that unions have what amounts to a license to hire muscle, often courtesy of the Mafia and other crime syndicates, to extort and terrorize. And who, however unwittingly, granted this license? The U.S. Supreme Court did, in its 1973 Enmons ruling. The court ruled a union could be exempt from federal extortion statutes if seemingly illegal acts were related to "legitimate" union objectives like wage and benefit increases. 5 Admittedly, organized labor was an old hand at extortion long before 1973. Yet the decision has had the effect of blunting anti-corruption efforts by federal prosecutors, armed with the Racketeer Influenced and Corrupt Organizations Act (RICO) that Congress had passed just three years earlier. Given that intimidating, even killing, "scab" workers may qualify, under certain circumstances, as a legitimate activity, unions have proceeded boldly in the last 25 years. 6
Ending the federal sanction of forced dues through a national right-to-work law and undoing Enmons, are two needed actions. Unfortunately, Big Labor ally Bill Clinton stands in their way. In the meantime, it is a necessary task to understand how corruption happens, and what obstacles stand in the way of combating it more effectively.
Corruption, loosely speaking, refers to any activity that involves the enrichment of members of an organization through illegal means. In a union, as in other contexts, that can assume different forms. Corruption can consist of a one-time event or a repeated pattern of behavior over years, even decades. It can be a small renegade operation conducted without the knowledge of ranking union officials or it can be an elaborate racket involving the national leadership, local presidents, and a network of shady criminal underworld figures.
The worst unions, such as the Laborers International Union of North America and the International Brotherhood of Teamsters, have been branches of crime syndicates all but in name. Some mob enforcers have admitted as much. For example, a segment of the September 20, 1998 edition of CBS’s "60 Minutes" profiled Anthony Casso, a top member of the Lucchese crime family in New York, now doing multiple life sentences for some three dozen murders. Casso came clean about the Mob’s domination of Manhattan’s garment district through control of labor unions:
You can’t move a garment…unless we tell you what trucker to use, who to deal with and what you have to pay, because we control the unions….(T)he organized crime’s putting their people in there to be the union representatives. 7
This monograph uses television transcripts, government audits, books, and above all, newspaper archives at the National Institute for Labor Relations Research, to detail a problem far more pervasive than many realize.
That there are many known corrupt present and former union officials in this country is indisputable. Yet equally plausible is that there are many who aren’t known, or if they are, they have yet to receive their just deserts. A mob-connected union official’s acquittal isn’t necessarily so much a sign of innocence as it is a mark of the ability of his lawyers to convince a judge or jury that evidence, however compelling, fails to meet the "beyond a reasonable doubt" required for a criminal conviction. For example, in Southern California a jury in 1986 acquitted three men, one a former Teamsters official and the other a two with mob connections, of plotting to sell more than $2.8 million in stolen stocks. Despite extensive evidence, there was not enough certainty for a guilty verdict. 8
Cases like these are the precisely reason why federal prosecutors prefer to use civil rather than criminal RICO statutes to snare union criminals. Another reason for union corruption going unpunished is that many witnesses whose testimony could put crooks away are intimidated, and on due occasion, killed. This monograph has made every effort to follow through on newspaper accounts of union corruption that provided only preliminary facts in relation to a probe and/or indictments.
The main, though not exclusive, focus is on unions serving private-sector industry. Public employees’ unions have not been immune to corruption, New York City’s District Council 37 of the American Federation of State, County and Municipal Employees (AFSCME) being an extreme example. 9 Yet such unions by definition are beholden to government. Of primary interest here is how government policy may be encouraging corruption in the private sector, where presumably the spirit of unionism as voluntary cooperation ought to prevail. For it is there where unions have benefited most from an implicit federal license to steal, and hence where the need for reform is greatest.
The need to nail crooks cannot be underestimated. Yet the reader should not lose sight of the larger tragedy of corruption. When union officials steal from operating expenses or pension funds, they undermine the trust workers place in unions and indeed their very liberty. It is, after all, workers who have entrusted their unions to handle their money honestly, and for legally authorized purposes. Each dollar embezzled or extorted from a union’s coffers, in a sense, is a dollar taken from some the mortgage down payment, health care or retirement of some worker and his family. Law enforcement officials, prosecutors and courts should remain vigilant in protecting their interests. The money that union officials and their bagmen illegally obtain belongs to the workers, and it is to the workers that this monograph is dedicated.
Chapter One: UNION CORRUPTION: A LICENSE TO STEAL
Corruption in American labor unions is hardly a new phenomenon. As early as the 1920s, for example, government reports documented a widespread pattern of corruption and racketeering among construction trade unions in New York City. 1 Corrupt labor practices in construction have been far more than New York’s problem. In 1938 historian Harold Seidman observed, "For almost fifty years corruption has been the most striking feature of the American building industry. (T)he first labor czars were born of the building trades, and not a year has passed since their day in which this industry has failed to produce its full quotas of racketeers." 2
It was a little over 40 years ago when corruption among unions as a whole became an issue of the first rank. The American Federation of Labor and the Congress of Industrial Organizations had merged in 1955 to form the AFL-CIO. Top federation officials sought to convey the impression that they, like business, were good partners in the American economy.
For good measure the AFL-CIO in 1957 expelled the Teamsters for corrupt practices, in the light of widely-publicized hearings in the Senate Government Operations Committee, headed by John McClellan, Arkansas Democrat. The hearings produced over 50 volumes of testimony, and a host of supplementary reports. Robert F. Kennedy served as chief counsel to the McClellan Committee. Not long after, he wrote a book, The Enemy Within, 3 detailing many of the findings. The book, like his pungent questions during hearings, made him a special nemesis of Teamster boss Jimmy Hoffa.
The McClellan hearings were remarkable for their abundance of detail, a performance Congress regrettably since has not duplicated. But full-scale investigations have come from other sources. In 1986, for example, a White House Task force, the President’s Commission on Organized Crime, detailed how organized crime and labor unions collude to control seemingly legitimate businesses. 4 And various state commissions over the years have released reports on union corruption. 5
There is always the danger that treading lightly on unions will reinforce a longstanding and misleading view that corruption is merely a small blot on an otherwise honest labor movement. "Probably only a tiny fraction of all union officials in America would stoop to serious abuse, " wrote Derek Bok and John T. Dunlop in 1970, the latter who would serve as President Ford’s Secretary of Labor. 6 Likewise, Clark Kerr argued, "Corruption exists, and it is bad; but right and wrong are quite evident and hardly open to debate. Few unions are involved, and other institutions in society have known and do know it too." 7 Even Bobby Kennedy, in The Enemy Within, was moved to conclude, "(W)ith few exceptions, the men who run our great labor unions in this country are honest, dedicated men." 8 In 1980, the Labor Department, after an extensive review of federal prosecutions, concluded, "(I)n the overwhelming number of cases prosecuted there is no evidence available to this study of systematic corruption within unions or of their domination by organized crime." 9
Yet corruption may be more deeply imbedded than such statements would indicate. In the view of this monograph, corruption, far from an aberration, is endemic to an enormous portion of American trade unionism, and worse, is accompanied by a culture of intimidation. For as Texas A & M economist Morgan Reynolds wrote some 15 years ago:
It is difficult to tell racketeer-controlled unions from other unions, because both types depend on violence and the threat of violence…The plain truth is that our labor laws have arranged incentives so that honest, noncoercive union officials find it difficult to survive in competition with the muscleman types." 10
Such words would aptly apply today. "Muscleman types," now as ever, are drawn to unions because they can flex their muscle with relative immunity. Labor investigator Michael Moroney, who has served as a consultant to the federal Organized Crime Strike Force, goes further even than Reynolds. He argues mobsters back in the 1930s didn’t simply "infiltrate" unions; they established them. "The five crime families of New York are the foundation of American trade unions," he said. "Without the support of the Mafia, and government officials who have winked at them, most unions simply would not exist." 11
To understand why organized labor is so intertwined with crime, it is necessary to grasp that the fundamental purpose of labor unions is to restrict the supply of labor. However much one hears of "labor-management tensions," what a union fears most is competition from workers who, for whatever reasons, choose not to join that union, or worse, any union at all. A union foremost opposes non-member workers, not an employer or an industry. British economist and lawyer Arthur Shenfield elaborates: 12
(Unionism) presents itself as the protector of the worker in conflict with the employer. In fact it is, always has been, and must be, the agent of oppression by some workers of other workers. The conflict is only in a minor degree worker versus employer or capitalist. It is mainly and above all worker against worker.
Reynolds recognizes that unions stand against competition not just from non-union workers, but from any source undermining membership size or influence.
Unions compete with those who sell substitutes for their members’ services, which means other forms of labor—members of rival unions, foreign workers, strikebreakers, nonunion workers—as well as machinery and other nonlabor commodities that can substitute for direct labor, or in effect, the labor of those who produce and service machinery that can substitute for the services of organized workers. 13
But even the best-organized union cannot completely control the supply of labor, locally let alone nationally. That means they have an incentive to discourage employers from hiring workers who might accept less than what the union wins at the bargaining table. Toward this end, unions have an ally in the National Labor Relations Act of 1935 and the National Railway Act of 1951. These laws contain language that grants a union the right of exclusive representation or "monopoly bargaining." If a group of workers votes for a union to represent them, that union reserves the right to represent all workers covered by a contract, regardless of how they voted.
What’s more, federal law authorizes unions (except in right-to-work states) to bar from employment those workers who withhold dues (or equivalent "agency fees") to a union covered by a contract. Surveys over time have shown that about 80 percent of all private-sector union contracts contain some requirement that employees pay union dues to keep their jobs. 14 A 1977 Supreme Court decision, Abood v. Detroit Board of Education, 15 placed workers in public-employees unions under the same constraint.
Union officials therefore enjoy what amounts to a monopoly, though they obviously wouldn’t use that term. And like business monopolies, union monopolies, shielded from competition, have a tendency to be lax in accountability toward the people they serve. Unlike business monopolies, however, there is an element of intimidation.
While workers can choose between one monopoly firm versus another, they can’t switch unions so easily. And in non-right-to-work states, faced with the choice between leaving a union or becoming nearly unemployable in their chosen trade, employees would prefer not to acquire a reputation as a dissenter.
They may see it as more attractive to remain silent or even get a piece of the action. After all, if stemming corruption is futile, and paying dues is mandatory, why not at least get one’s share, especially at the top of the union hierarchy? Corruption begets more corruption, and if rank and file are crooked, it is certain that their hostility toward whistle-blowers will burn especially hot.
A culture of intimidation pervades much of America’s unions. And that culture explains much of why so much corruption is hard to detect and fight. Corruption, by definition, involves illegal activity for personal gain. And in a large organization such as a labor union, no participant, acting alone or in concert with others, will admit to misdeeds. Instead, when under suspicion, they will issue a defiant, "Prove it! " In absence of vigilant prosecution and witness protection, the lone dissenting worker is not likely to risk his job, let alone his physical safety, to play the hero.
Fear and silence enlarge the pie for corruption. Not only are workers "encouraged" to pay dues or equivalent agency fees, but they have little ability, left to their own devices, to track where their money has gone. Federal reporting requirements, enacted as the Landrum-Griffin Act of 1959 in the wake of the McClellan Committee hearings, have helped fitfully. But even here, unions can hide or falsify the money they take from members, and intimidate those who complain. And it takes a lot of patience and a good lawyer for the workers to track their money down.
In Syracuse, for example, dissident members of Local 214 of the Laborers International Union of North America (LIUNA) in 1987 charged local officials hid union money to frustrate them from winning any money in a suit they had filed in federal court four years earlier. 16 The case was brought on by 32 LIUNA members who claimed they were blocked out of work in the construction of the cost overrun-plagued Nine Mile Point 2 nuclear power plant. What’s more, they were spied on, beaten up, and blackmailed by bosses of the Oswego, N.Y.-based local. At the beginning of 1986 the local had a cash balance of about $1.6 million. Sometime during that year about $1.4 million had been withdrawn and invested in "marketable securities" through a "B & K Employees Fund." The workers in November 1988 won $1.3 million in an out-of-court settlement, but not without incurring substantial legal bills and further intimidation along the way.
The point is that an individual worker, or a group of workers, may be risking their jobs or safety by demanding accountability from their union. Most workers as a result see it in their interest either to play along or get in on the gravy train. Yet without recourse to leave the union (unless, of course, they don’t mind losing their job), they will subsidize, reluctantly or not, union corruption. To remove many of the incentives for corruption, Congress and the courts must remove the unions’ monopoly status over workers. This they have been reluctant to do.
Unions and their allies in Congress are a formidable political force, and relentlessly fight to maximize their authority to raise and spend money. The Federal Election Commission recently reported that "soft" donations by labor unions to national political parties during the 1997-98 election cycle totaled some $8 million, nearly all of it to the Democratic Party; AFSCME and the Communications Workers of America, respectively, ranked number two and three among all donors. 17 This is actually a small fraction of the true total, when taking into account "in-kind" expenditures such as get-out-the-vote drives and issue-advocacy "voter education" projects.
But absent the political will to challenge them, union monopoly privileges are not going to disappear anytime soon. And neither is corruption on the scale seen for the past several decades. Still, corruption is illegal and can result in a prison sentence. In response, union leaders have become increasingly adept in keeping corruption out of view. Intimidation and bribery, while effective, are not enough. The next two chapters chronicle how union officials have enriched their coffers, often with deadly force. Chapter Two breaks down union corruption into several methods, giving illustrations for each, while Chapter Three applies this to the Teamsters, a union whose corruption has more widespread and inescapable, than that practiced by any other union.
Let it be said here, as in subsequent chapters, that union corruption occurs most frequently, and involves greater sums of money, in states without a right-to-work law. It is safe to say that if New York or New Jersey each had a right-to-work law, neither would offer such a rich lode of case material. In encountering these synopses of cases, which ranges from disturbing to horrifying (much of it unintentionally hilarious, one might add), the reader should not lose sight of the reality that federally-granted labor monopoly privileges made many of these sagas possible.
Chapter Two: CORRUPTION: HOW IT’S DONE AND WHO DOES IT
Overview
When it comes to rooting out union corruption, it seems no matter how much progress is made, nothing really changes. At least that’s the way it has seemed with the International Longshoreman’s Association.
Two generations ago author Budd Schulberg investigated working conditions on the Brooklyn shipping docks. 1 Appalled by the Longshoreman union’s rampant exploitation and intimidation, he was moved to write the novel, On the Waterfront, which became the basis for the 1954 Oscar-winning film of the same name.
Less known was that in 1963 Schulberg revisited the waterfront for an article for the Saturday Evening Post, and found conditions had barely changed, if at all. Nearly a decade later, in 1971, a commission, the Bi-State Waterfront Commission of New York Harbor, concluded that the Brooklyn docks were heavily infiltrated by the Gambino crime family, the New Jersey docks by the Genovese crime family, and the Manhattan docks by a Florida-based crime syndicate. Extortion, it found, hadn’t disappeared, but had grown more sophisticated, with the help of lawyers and accountants. In 1979 Anthony Scotto, a Gambino captain, was convicted of extorting $225,000 in bribes from waterfront businessmen. A Labor Department official at the time said the ILA was "virtually synonymous for corruption in the labor movement." 2
Corruption continued to flourish in the 80s, so much so that the Justice Department in February 1990 filed a civil RICO suit, asking the immediate appointment of a temporary court officer to oversee the day-to-day activities of six locals, and the appointment of trustees to run new union elections. The suit named some pretty big names: ILA President, John Bowers, who also served as president of three of the locals; Gambino crime family boss John Gotti; and jailed Genovese family boss Anthony "Fat Tony" Salerno. The FBI’s top official in New York remarked, "When we began this case three years ago, we were shocked at the extent to which the ILA was controlled by organized crime." 3 A mobster-turned-government witness, Francis "Mickey" Featherstone, testified mob hits were business as usual on the West Side piers of Manhattan. 4 Within four years, five ILA officers were forced to quit, and the government won the right to oversee two of the 17 ports in Port of New York and New Jersey.
Yet a declaration of victory would be premature. Of the 117 ILA officers and workers were jailed or fined as a result of a 70s-era RICO suit, at least 34 by the close of 1993 had returned to work for firms that did business with the port. 5 Organized crime has managed to make unions and employers part of the same project. So long as the Longshoremen rule by intimidation, from within or without, corruption can be expected.
Violence—and the constant fear of it—is the thread that ties together virtually all corruption, among the Longshoremen and any other union. This is true not only of extortion, which by definition involves a threat of violence, but many well-concealed scams as well. Nobody wants to be caught. The ability to conceal goes hand in hand with the ability to intimidate those who might blow the whistle. It’s a fair bet that unions learned many of the tricks of their trade from organized crime enforcers. In the end, it is the honest who suffer most. As Randolph Boehm argues, "It matters little to the bashed and beaten whether they have been victimized directly by organized crime acting through a union or whether their homegrown assailants have merely learned their tactics of attack (from organized crime)." 6
Yet intimidation is not enough. Unions and their underworld benefactors know that crimes, including the issuing of retaliatory threats, might result in prison sentences and plenty of bad publicity. Federal and state investigators have stepped up probes of union corruption in the Nineties. Newspapers and magazines regularly cover labor corruption, and expose many officials to the glare of public opinion. Corruption, to thrive in a contemporary context, has had to grow in sophistication to avoid detection. From the cases where union criminals have been caught, the evidence reveals a far-reaching inventory of corruption methods. Often, in a single instance of corruption, a union practices more than one type. Indeed, the degree of overlap is so enormous, especially in the context of a racket, that distinctions between types of crimes are almost meaningless. Yet its is essential to know just what corrupt labor leaders do to reinforce their power over members. This chapter should give the reader a thorough summary of their diverse bag of tricks.
TACTICS OF CORRUPTION
Extortion
To extort something, whether in the form of money, services or other items of value, is to obtain it through the threat of violent retaliation, directly or indirectly. By instilling in the unwilling donor a fear of retaliation, unions can keep employers and employees alike silent. The mere reputation of a union for heavy-handedness can induce payments to assure things "run smoothly." Thus, what often seems to be bribery, is in reality, in a climate of intimidation, extortion by any other name. "Keeping labor peace" could be a phrase out of Orwell’s 1984; it is a peace unions achieve by instilling fear of predatory violence in rival workers and the employers who hire them.
Here’s an example of how labor "peace" has been bought in a non-right-to-work state. A few years ago in Paterson, New Jersey two brothers, Joseph and Raymond LaBarck, headed a 1,200-member local of the Amalgamated Clothing and Textile Workers. They were arrested and charged with operating a seven-year racketeering scheme based on threats and violence, and accepting more than $400,000 in illegal payments from employers to ensure labor peace. They’d also embezzled from the general operating account and a separate welfare fund. They began serving 44-month sentences for racketeering convictions in 1995. 7
In Philadelphia several years ago Joseph Fiorelli, founder and former boss of Local 1955 of the Drywall Finishers Union was sentenced to more than 10 years in prison on extortion payoffs from contractors, theft of union funds, and racketeering charges. Fiorelli had extorted payments from 25 contractors from 1967 to 1991. Contractors testified that in exchange for their payments, Fiorelli gave them labor peace and allowed them to sometimes use nonunion workers, and to delay or avoid payments to the union's health and welfare fund. 8
Other unions have promoted this kind of brotherly love in Philadelphia. In 1984 a federal grand jury indicted the president and secretary-treasurer of the United Independent Union Local No. 1, Francis "Chip" Chiappardi and Dominick Michael Cosentino, on charges they extorted money for nearly 20 years from local furniture, toymaking, aluminum-fabricating and meat-distributing businesses. 9 The payments, ranging from $200 to $10,000 apiece, were demanded "in exchange for labor peace and collective bargaining agreements favorable to the employers," the indictment read. If employers were late, or worse, uncooperative, Cosentino threatened them with bodily harm and economic disaster. All told, the racket netted at least $207,000. Cosentino pleaded guilty, but Chiappardi was acquitted. 10
Construction trade unions are notorious for extortion from contractors by threatening labor problems such as work slowdowns, disruption, sabotage or assault. In New York unions long have elevated the practice to an art form. In the 1980s a civil suit against Local 6A of the Cement and Concrete Workers of the Laborers International Union of North America (LIUNA) alleged that the local, its district council, their officers and certain organized crime figures extorted one percent of the contract price from ready mix contractors by threatening "labor problems." 11 For a while, that bought labor peace. FBI investigation of building trades practices in Long Island led to the indictment of the president of the District Council of Carpenters and five other union officials connected to organized crime families for extorting more than $100,000 from a drywall contractor. 12
Two concrete contractors testified in 1985, for instance, that they had been forced to pay thousands of dollars to Ralph Scopo, who for seven years had been president of the Cement and Concrete Workers District Council. The contractors already had pleaded guilty to making illegal payments to a union official, had appeared in court for the trial of Colombo crime boss Carmine Persico (later convicted) and nine other Colombo family members. The contractors said they had to kick back one percent of the contract cost to Scopo, especailly on publicly-financed projects such as library in the Parkchester section of the Bronx and a swimming pool in the Red Hook section of Brooklyn. 13 Eventually, in 1987 the District Council of Cement and Concrete Workers (Locals 18A, 20 and 1175) and Local 6A agreed, under a government civil RICO suit, to replace many of their leaders and undergo supervision by a court-appointed trustee. 14
The Jacob K. Javits Convention Center, on midtown Manhattan’s West Side, and opened in 1986, stands as a monument, literally and figuratively, to how organized labor and organized crime work in tandem to extort from contractors. Less directly, it has been a supreme ripoff of taxpayers.
For one thing, the center was built with mob-run cement contractors. Then-U.S. Attorney Rudolph Giuliani in 1987 charged Genovese family 15 boss Tony Salerno and nine associates with rigging the award of a $30.4 million contract for cement work to a Bronx company, S&A Concrete Co., that Salerno secretly controlled. 16 Salerno wasn’t in a chipper mood, having been sentenced a couple days before to 100 years in prison on racketeering charges. Testimony showed four of the city’s five Cosa Nostra families ran a "club" of captive concrete contractors who were allotted every contract in Manhattan in excess of $2 million. But only one of the "club" firms, S&A, could receive contracts in excess of $15 million. Edward Halloran, who held a lock on the supply of concrete, and Ralph Scopo also were convicted with Salerno. They threatened concrete firms with financial ruin if they strayed from the club’s orders.
The local carpenters’ union also got into the act. Before his ouster by a federal judge in 1996, Frederick Devine, head of the New York City District Council of Carpenters, gave hiring preference to persons connected with the Genovese crime family at the expense of rank and file. He’d also appointed as District Council Representative Anthony Fiorino, brother-in-law of Liborio "Barney" Bellomo, a ranking Genovese family member. Testimony also linked Devine to the Colombo crime family. 17 He eventually was convicted and sentenced up to four years in prison on separate charges of ripping off the union’s health and benefit fund.
Once the center opened, it was a haven for shakedown artists. In 1990 federal prosecutors described the convention center as "a hiring hall" for mobsters and former convicts, who often made more than $60 an hour for services of dubious value. The government filed a civil racketeering suit against the Carpenters and Joiners Union and its District Council, hoping it would limit the power of union officials to assign members to jobs.
But not much changed after that. In 1992 federal, state and city law enforcement officials arrested about two dozen people following complaints by convention center exhibitors of shakedowns and thefts by union employees. 18 Among the defendants were members and officers of the Teamsters, the International Alliance of Theatrical Stage Employees, the United Brotherhood of Carpenters and Joiners, and Exposition Workers Local 829. Frank Primavera, a representative of the stage hands union, for instance, took about $27,000 in payments in 1989 and 1990 from an event promoter for a nonexistent contract with the union. Other charges against the defendants included assaults against a security guard with a pipe. The shakedown racket, noted New York District Attorney Robert Morgenthau, was costing the city millions in revenue, as exhibitors went elsewhere to display their goods.
In the fall of 1994 a federal court-appointed investigator, former U.S. District Judge Kenneth Conboy, charged that about hundred carpenters who put up and took down displays were employed by union officials with mob connections. 19 Day-to-day hiring decisions were made by two union stewards. One, Anthony Fiorino, was the brother-in-law of Barney Bellomo, widely believed to be acting boss of the Genovese crime family. The other was Leonard Simon, brother-in-law of Ralph Coppola, a convicted arsonist with mob ties. Simon, originally an unemployed taxi driver, had joined the union at Coppola’s urging. "An alarming number" of the carpenters themselves, the Conboy report added, also had Genovese connections. About a third of them had been arrested or convicted of crimes ranging from arson to drug trafficking to murder.
Some action was taken at the behest of the federal government. The following March the Teamsters’ national hierarchy seized control over Local 807, which represents drivers, forklift operators, warehousemen and other helpers at the center. Their jobs sometimes paid double what similar jobs paid elsewhere, and often were reserved to union members with ties to organized crime. 20 The local has connections in high places; its lawyer at one point was Harold Ickes, Jr. who late in President Clinton’s first term became White House Deputy Chief of Staff. By various counts he would have been Chief of Staff from the very start were it not for suspicions raised over his representation of Local 807.
The convention-center shakedown racket hasn’t been limited to New York. In 1981 Emeric Martin, former director of the Cervantes Convention Center in St. Louis, revealed he feared for his life after he’d received several death threats from local union employees affiliated with the center over the previous two years. 21 That same year an Indiana businessman overseeing the setup of an exhibition revealed he’d beaten by workers at the St. Louis center, just days after he refused to pay on-site "gratuities" demanded by workers. Chicago-based promoters had chosen an Iron Workers local to set up and take down exhibits. The president of the victim’s employer, the Fort Wayne-based States Engineering Corp., said a man identified himself as a "union supervisor" before administering the beating. 22
Missouri, like all other industrialized states of the Midwest, does not have a right-to-work law.
Embezzlement
Embezzlement is a crime of bookkeeping, not coercion, and for this reason has the reputation as being the province of accountants and secretaries. Yet pulling off this type of crime can be complicated. Thus, what seems to be a case of a single union employee padding his or her lifestyle can be a group effort, with top officials providing the needed cover. Sometimes union heads embezzle; on other occasions secretaries or other auxiliary employees, act on their own. It can be a lucrative racket either way, but sometimes the culprits get caught.
Bernard Rubin, president of South Florida’s Laborer’s District Council, was convicted in 1975 on 103 counts of embezzlement, racketeering and tax evasion. The charges involved duplicate billing of unions he represented for travel, entertainment and other expenses. In all, he misappropriated more than $350,000 in union funds. 23 Rubin was no small-fry crook; in fact, he had extensive ties to the mobsters who fleeced the Laborers’ benefit plans in the Chicago and South Florida areas (see discussion below). 24
In April 1998 a federal court convicted Eileen Cibellis, former longtime office manager and fund administrator for the Bloomfield, New Jersey-based District Council 10 of the International Brotherhood of Painters and Allied Trades, for embezzling more than $400,000 from union funds, then trying to burn the records to cover her tracks. She carried out the embezzlement scheme by diverting funds from a variety of accounts into a little-used Employer Bond Account, originally used to hold employer deposits of various benefits while operating on union jobs. 25
Other examples: Carol Sue Fisher, a former bookkeeper for the local Painters’ union in Evansville, Indiana, in 1992 pleaded guilty to embezzling some $135,000 from the union. She admitted she embezzled the money by pocketing health and life insurance premiums that were being paid by retired and unemployed union members. 26 And in the Denver area a decade ago John Ducey, the former financial secretary and business manager of the Carpet, Linoleum and Resilient Tile Layers Union received a prison sentence for embezzling more than $51,000. The Department of Labor had conducted an audit and discovered he’d written checks to himself, and made fabricated bank statements. 27
Neither Indiana nor Colorado is a right-to-work state.
Embezzlement may be accompanied by coercion. In Nevada George Osley Jr., secretary-treasurer of Laborers Local 872 in Las Vegas was found guilty by a federal jury of embezzling union funds to build his house and cover the expenses of his 1981 union re-election campaign. Osley told the judge that an early morning caller threatened to kill his daughter and stepdaughter if he refused to testify. He said the threats were made in the hopes that he would convict himself on the stand, ensuring his ouster as overseer of a $35 million pension fund; that way, it would be vulnerable to a takeover by mobsters. 28
Robert Hickerson, former business manager of Local 919 in Quincy, Illinois, in 1982 was sentenced to three years in prison for embezzling union funds, and hiring vandals to smash more than $250,000 worth of equipment owned by non-union contractors. 29 In Lancaster, N.H., Paul Wilson, former treasurer of United Paperworkers Local 61, in 1993 was sentenced for theft of more than $67,000 in union funds. He forged signatures to more than 200 checks over a three-year period. 30 This year Robert Kellas, a former official of an amalgamated Transit Union local in Bellingham, Washington, pleaded guilty to embezzlement of up to $120,000 from the union over a four-year period. He had access to investment and bank accounts of two ATU organizations. 31 And former Troy, N.Y. Laborers Union business manager Frank Archina in 1995 was sentenced to 40 months in prison for embezzling more than $500,000 from, and effectively bankrupting, Local 452. Several associates of Archina already had pleaded guilty to helping him steal the funds. 32
Each of these cases occurred in non-right-to-work states.
The National Maritime Union, which represents some 2,000 unlicensed seafarers working on U.S.-flag commercial ships, deserves special mention. Over the years it has served as a private bank for its leaders. In January 1997 NMU President Louis Parise, Sr. had to resign and sever all connections to the union following his conviction in federal court on racketeering and embezzlement to the tune of more than $700,000. His son was convicted on similar charges. "The evidence showed that this man (Parise, Sr.) used the union treasury as his family piggy bank," said Assistant U.S. Attorney Timothy Rice. 33 Nearly two decades before a federal judge had ruled that founder and then-President Joseph Curran, and nine other present or former officers of the union had to pay as much as $1 million in funds they embezzled. They had taken the money through unauthorized perquisites on income taxes, excessive pension and severance payments and unearned pay in lieu of vacation. 34
Another maritime union, the Marine Engineers Beneficial Association, also has a history of embezzlement. Former President E. Eugene DeFries and two other ex-union officials in 1996 were convicted of racketeering charges that included embezzlement of $2 million from the union under the guise of severance payments. 35
On occasion, the conviction of a union embezzler involves a sum of money far less than that indicated in the original indictment; the crook can get off lucky. In the late 70s, for example, former United Paperworkers International Union boss Joseph Tonelli, and four other union officials, pleaded guilty in federal court to a scheme to embezzle $33,000. But the original suit was for $360,000. Prosecutors had dropped 34 other counts involving another $327,000. 36
The Longshoremen may be notorious for mob-style executions, but they’ve had their hands in the benefit cookie jar, too. In Jacksonville, Florida, Ronnie Bell and James E. Cushion, two former pension fund administrators, pleaded guilty in 1992 to seven counts of a 36-count indictment concerning the embezzlement of about $586,000 in ILA benefit funds. 37
More recently, Joseph C. Talarico, former secretary-treasurer of the United Food and Commercial Workers Union, was convicted on embezzlement. He’d received a salary of more than $1 million a year. Apparently, his lifestyle required more, so he stole more than $925,000 in union funds. Last July he was sentenced to 30 months in federal prison. 38
Bid Rigging/Collusion
In theory, the awarding of contracts for construction is competitive, with the contract going to the lowest responsible bidder. Unfortunately, in practice, that can cause even more problems than a negotiated contract. Public construction especially tends to be vulnerable to bid-rigging because state and local governments are required to award contracts through competitive bidding with no opportunity for negotiation. 39 The "competing" contractors easily can collude to predetermine who the successful bidder will be. And they play hardball with potential competitors who use non-approved (i.e., non-union) labor.
As discussed above, the mob-controlled contractors’ "club" rigged bids and allocated territory throughout New York City. 40 If a contractor didn’t belong to the club, and decided anyway to submit bids of more than $2 million, the local concrete workers union promised "labor problems," supply difficulties and even physical harm.
The club was policed by Colombo member Scopo and three other organized crime families. The four families equally divided about two percent of every contract. After Scopo stepped down in the wake of labor racketeering charges, his successor, Louis Gaeta, soon was indicted for extortion. Gaeta, a first cousin of former Staten Island Borough President Anthony Gaeta, allegedly got a cash kickback from a company renovating the Sunset Park pool in Brooklyn. 41
The Genovese crime family was involved in concrete contracting. Genovese chieftain Tony Salerno, captains Vincent "Fish" Cafaro and John "Peanuts" Tronolone, and a dozen other associates in 1986 were charged in a 29-count indictment that included labor racketeering and bid-rigging in Manhattan’s construction industry (other offenses included conspiracy to commit two murders). The mobsters controlled delivery of ready-mix concrete "to nearly all construction projects in Manhattan." The District Council of Cement and Concrete Workers and Teamsters Local 282 threatened the developers with work stoppages if demands were not met. Sixteen projects were listed in the indictment, including Trump Plaza and Memorial Sloan-Kettering Residence.
According to the indictment: "Only a certain select few concrete construction companies would be permitted to bid for concrete superstructure construction subcontracts valued at more than $2 million….Other companies were directed to submit inflated bids or to refrain from bidding entirely." 42 Salerno, two other Mafia bosses, Carmine Persico (Colombo) and Anthony "Ducks" Corallo (Lucchese), and five associates were convicted in 1986 on extortion, conspiracy and labor payoffs in this and other cases. 43
In 1988 the Justice Department indicted four New York union leaders in construction payoffs. One indictment accused Robert Waller Jr., president of Local 531 of the United Brotherhood of Carpenters and Joiners and Edward Annino, a foreman for Teamsters Local 282 of extorting, under threat of economic harm, money from a nonunion contractor. Three others, affiliated with the International Union of Bricklayers and Allied Craftsmen, were charged with a pattern of racketeering. 44
The city’s painting contractors also have practiced this tactic. 45 At one point contractors agreed on a bid-rigging conspiracy in which they agreed on who would submit the lowest bid on New York City Housing Authority contracts. They paid an official of the local painters union to harass any member of the cartel who violated member rules and any non-members. If a non-member did obtain a contract, union shop stewards assured low worker productivity. The union official got two percent of each contract.
Actually, the union’s take was higher on most other types of projects. In June 1990 a grand jury indicted 12 men, including eight top painters’ union leaders, for participating in a Mafia-led conspiracy that rigged bids for almost every major public and private painting contract in New York City for a dozen years. Through threats and control of the union, the Lucchese family mob ordered contractors to kick back 10 percent of their gross payments on contracts for subway painting, bridges, schools and highways. Law enforcement official long had maintained contractors feared for their own safety. It was no wonder. Among the dozen people indicted was Anthony Casso, the author or co-author of three dozen murders (see Introduction). 46 The following March New York City Painters Union boss Paul Kamen, among four men, pleaded guilty in the bid-rigging conspiracy. 47
Also in New York, law enforcement officials said two politically active developers who are major builders and renovators of low- and middle-income housing in Queens and Long Island were involved in bid rigging and cash payoffs of hundreds of thousands of dollars to Basil "Bobby" Cervone, leader of Local 13 of the Mason Tenders Union (part of LIUNA) and a reputed associate of the Genovese and Gambino families. Louis Giardina, an official of another city local, already had been convicted for racketeering, obstruction of justice and receiving payoffs for labor peace in connection with the 1981-83 renovation of a deepwater pipeline system. He’d been identified by the government as a Gambino "soldier." 48 Besides Local 13, officials of four other construction workers’ unions were targets of the Justice department probe into the low-rise construction industry. Giardina later was convicted of racketeering, obstruction of justice and receiving payoffs to keep labor peace. Two other defendants pleaded guilty, too. 49 The federal government, having seen enough examples like these, in 1994 ordered trustees to replace the leadership of the Mason Tenders District Council of Greater New York.
Cervone had a shady history. In 1965 he and his wife were indicted on tax evasion charges. Both were acquitted the following year—and three months after Cervone’s brother George, a union rival, was shot to death in his sleep. FBI-bugged conversations caught Bobby Cervone demanding cash payments to keep labor peace from the Benjamin Contracting Corp. The union, sources said, also gave bribes concealed as salaries to fictitious persons, paid salaries to no-show employees, and sham payments to the pension and welfare fund. 50
By 1994 the federal government, having seen enough cases like these, put the Mason Tenders District Council of Greater New York under trusteeship. During that period, the union recovered $12 million of the $15 million stolen or lost by former officers.
Racketeering also has plagued the awarding of window replacement contracts at the New York City Housing Authority. In May 1990 the Justice Department indicted 15 men in four crime families on charges they skimmed "tens of millions" of dollars. For more than 12 years four of the families selected contractors for the manufacture and installation more than one million windows. Contractors made sure they hired workers from Local 580 of the Architectural and Ornamental Ironworkers Union. 51
What tipped investigators off was the discovery of two persons murdered and buried in a window-manufacturing plant in Brooklyn owned by Peter Savino, a Genovese family associate. After Savino was picked up, for 18 months he worked undercover for the FBI. He was lucky to live. John Morrissey, an official of Local 580 and a reputed Lucchese mob associate wasn’t so lucky; he turned up dead in rural Morris County, N.J., shot dead several times. 52 Peter Chiodo, a captain in the Lucchese family, was shot 12 times in an assassination attempt, but somehow did live to testify about how he’d participated in four murders. He also said he carried cash payments from Local 580 to top Lucchese bosses. 53
Benefit Plan Theft
If Willie Sutton, the bank robber, were around today, he surely would say of union pension, health and welfare funds, "That’s where the money is." And if the robust stock market performance of recent years continues, that pot of money should climb higher, even as union membership stagnates. Unions typically require members to donate, in addition to standard dues, small amounts for pension and other benefit plans. It adds up to opportunity for unscrupulous labor chieftains, and certainly attracts the attention of mobsters.
As an example, a Miami jury in 1987 convicted four Chicago men on a racketeering conspiracy to skim more than $2 million from the Laborers International Union of North America (LIUNA) dental and eye care plans in Chicago and South Florida. Paul DiFranco, Paul Fosco, James Norton and James Pinckard, each associates of the late Miami mobster Santo Trafficante, Jr., funneled the money to the mob. In a trial five years earlier eight defendants were convicted and three-—including Laborers' General President Angelo Fosco, the father of Paul Fosco—were acquitted. 54 The total take among all concerned was around $12 million.
The Fosco connection was not likely a coincidence. Paul Fosco was a vice president of Consultants and Administrators (C&A), the firm administering the union’s various benefit plans (even after the convictions). Soon after the Miami convictions, the Labor Department filed a civil suit against C&A, key officers of the company, and 19 current or former trustees of LIUNA’s health and welfare plan. Among the trustees were Alfred Pilotto, a former top Laborers official and onetime south suburban rackets boss, and the already-convicted Pinckard, who was Pilotto’s son-in-law and head of a company that worked with C&A. Pilotto, one five "street bosses" under Chicago mob kingpin Joey Aiuppa, was among the eight persons convicted in 1982. The elder Fosco had been acquitted, along with former union official Terrence O’Sullivan, and Anthony "Big Tuna" Accardo, reputed boss of the Chicago underworld. 55
Were the acquittals for want of evidence or something else? Two persons with close ties to LIUNA told the FBI that a male juror had been paid $200,000 to vote for acquittal of the three. 56
Jury bribery or not, there was all the reason to suspect their guilt, given the Laborers’ connections to a series of murders in Broward County, Florida a few years before. In April 1984 Daniel Forgione, Jr., business manager of LIUNA Local 938, was found dead in his car outside a Margate lounge. Police said the killer had pumped six shots into Forgione’s head and chest at close range. Forgione had been the target of a federal probe into a Florida-Georgia narcotics and racketeering network. He also was implicated to the pension looting. "Forgione was involved but we never had enough evidence to charge him," said an agent who worked on that case. "Naturally, his union activities have been closely watched ever since." 57
There had been much to watch before, too. In 1976 Forgione, then a rank-and-file Laborers member, and Salvatore Mazzaglia, secretary-treasurer of the local, were acquitted on charges of embezzlement, conspiracy and extortion under the Taft-Hartley Act, which forbids unions from accepting or requesting gifts from people with whom they do business. Two years later Forgione was a suspect in a shootout with police in which reputed organized crime figure Tony Anthony was shot to death by police at a shopping mall. Anthony had tried to run over police with his car during an extortion plot. Police reported shots fired at them from a second car, registered in Forgione’s name, that fled the mall. 58
Agents also were watching bodies pile up. Another target of the federal drug probe, Joey Cam, was found murdered in May 1983, as were three persons identified as involved in the drug-smuggling operation, Lincoln Linton, Joseph Olivetti and Joseph Kilrain.
This wasn’t the only instance that LIUNA benefits proved ripe for looting. In 1986 Wendell Cage, a former Detroit Labor official, was convicted of embezzling union benefit funds and income tax evasion, though he had disappeared shortly before the verdict—he’d told his attorney he had to go the bathroom and would be back in 20 minutes. It was a nature call of a guilty man. The government presented six witnesses who testified that Cage, an assistant administrator of the Laborers’ Metropolitan Detroit Health and Welfare Fund, had issued fraudulent checks totaling more than $500,000 to them between 1979 and 1981. They told the jury they had cashed the checks and kicked back up to 80 percent of the money to Cage. 59
The Laborers aren’t the only union to have robbed from the benefit cookie jar. In 1995 a federal grand jury handed down a 22-count indictment against Paul Glover, a former vice president of an independent truckers union, the Chicago Truck Drivers, Helpers and Warehouse Workers Union. Glover allegedly committed a range of fraudulent acts, including receiving more than $330,000 in kickbacks related to pension and health and welfare fund investments. Later that year he was convicted; a U.S. District Court also sentenced ousted union President John Johnson for splitting the proceeds with Glover. 60
In Oklahoma City a decade ago Floyd Donwerth pleaded guilty in federal court to embezzling more than $150,000 from two accounts of the Plumbers and Pipefitters Local 344 over an 18-month period. A U.A. Attorney said the real take, over four to five years, was as much as $500,000. Donwerth had made illegal withdrawals from the union’s vacation and health-welfare funds. Apparently, Donwerth didn’t get to enjoy his money for too long, having gambled it away in Las Vegas. 61
Oklahoma, unlike neighboring Texas, is not a right-to-work state; the opportunities Donwerth saw might not have existed had his state did have such legislation.
Sometimes outsiders, rather than union officials themselves, pilfer benefits. In 1995 Barbara Nolan, a former investment adviser to Roofers Local 12 in New Haven, Connecticut, admitted her role in the theft of more than $1.5 million in funds from the union’s pension fund. The embezzlement drained the fund of more than half its assets, said an assistant U.S. Attorney. She and an associate August Mezzetta worked through various companies, paid themselves bogus fees for investment advisory services, and used the pension money to finance the purchase of a Manhattan brownstone. 62
In Boston Arthur Grodd, owner of a local roofing company, in 1997 was charged with embezzling more than $1 million from the pension funds of two Roofers locals. He defrauded workers by failing to make scheduled contributions, underreporting work hours, and filing false statements. 63 Grodd pleaded guilty in federal court that September, though he got a relatively mild one-year prison sentence plus two years of community service.
In New York City Frank Russo, ousted president of the 30,000 member Local 144 of the Hotel, Hospitals, Nursing Home and Allied Services, managed to nearly bankrupt his local, an independent audit by the Services Employees International Union revealed in 1997. His mismanagement, which included failing for two years to pay any money into the union staff’s 401(k) retirement account, resulted in about $2 million in unpaid debts. Meanwhile, Russo helped himself to a slice of the good life, spending $257,530 on shop-delegates dinner-dance; $91,219 on another union dance, and $58,790 on a kiddie circus party. Among his money-losing rental properties was a $2,500 monthly lease to the Rev. Al Sharpton for his mayoral campaign office. 64 Since it was an SEIU audit that turned up these revelations, if anything, the extent of the pilferage was even deeper.
Extortion and Bribery to Secure Jobs
Unions, as discussed in the previous chapter, protect their members from competition by non-union members. But suppose a contractor or employer decides they want to hire non-union labor. Unscrupulous unions have one of two options: 1) make life uncomfortable for contractors until they hire union labor; or 2) allow the contractor to hire nonunion labor--if the price is right. On due occasion, organized labor has employed both methods.
In 1981 Louis Sanzo, president of Local 29 of the Blasters, Drill Runners and Mines Union in Queens, N.Y., affiliated with LIUNA, his wife, several mob figures and a lawyer were indicted on racketeering charges. Sanzo and the others took a combined $400,000 in payoffs from construction firms to buy labor peace. 65 The owner of a Florida-based construction firm said he tried to get out of the deal, but Sanzo’s men threatened to kill him, his wife and three children. The hustle, according to one source, worked like this: 66
The contractor would say in his bid that he needed 30 men and he would be paid for 30 men by the people who hired him to do the job. But then Local 29 would send over only 15 men. They could keep the rest of the money.
Sanzo, labeled by New York prosecutors as a willing front for the Lucchese family, was found guilty on tax evasion, but not racketeering; his wife, and former Local 29 president Joseph Matranga were found innocent.
Likewise, a New York City strike force called "Operation Flush" resulted in the indictment of 10 present and former Plumbers Union officials, some with Lucchese and Genovese family organized crime links, plus four contractors on racketeering and bribery charges. A Manhattan grand jury in 1993 accused officials of Local 2, the nation’s largest plumbing union local, of using the union for a decade to extort bribes and kickbacks from building contractors to the tune of about $1 million in exchange for sweetheart contracts to buy labor peace, use nonunion employees, and ignore wasteful work rules. 67 They also had engaged in bid-rigging. In 1996 four union officials pleaded guilty to extorting payoffs. 68
It wasn’t the first time the Plumbers have used this kind of shakedown. In 1990 a local contractor sued the Northern California Plumbers Union, claiming the union was guilty of racketeering. PetroChem Insulation Inc. demanded $2 million in damages in federal court in San Francisco, arguing that the union extorted money from developers and contractors on energy projects by threatening to delay the permit process unless builders used union labor. 69 California is not a right-to-work state.
In West Virginia, also resistant to enacting a right-to-work law, a retired labor official was convicted in 1980 for extorting approximately $300,000 from workers applying for membership in a Huntington union. Another union member had pleaded guilty to conspiracy. A Department of Labor probe revealed that the victims of the extortion racket were more than 100 laborers who wanted membership. In exchange for the money, the defendants gave the applicants applications and affidavits of experience that often contained false information. 70
In fact, the Plumbers can get downright ornery about this issue. In April 1990 a Queens Plumbers Union official, Don Scalfani, business agent for Local No. 1, was accused in a federal complaint of inciting 300 demonstrators to march on the grounds of Dayton Manor, a Navy apartment complex undergoing reconstruction in Brooklyn. An unidentified witness said Scalfani ordered all nonunion workers at the project be fired and replaced by union workers. Rioters, using sticks, bricks and hammers, did an estimated $40,000 in damage. 71
The Roofers have practiced their own brand of intimidation to ensure hiring of union members. They certainly made their presence known in Local 30 –30B in Philadelphia.
In 1992 Stephen Traitz Jr., Local 30-30B’s former business manager, sons Stephen J. Traitz III and Joseph Traitz, and several other union officials, pleaded guilty to state charges of conspiracy, theft by extortion and making terroristic threats in the course of organizing non-union workers and contractors in southeastern Pennsylvania and southern New Jersey. The senior Traitz also pleaded guilty to intimidating witnesses. Since 1968, prosecutors had charged, Roofers local officials used threats to coerce contractors to use union labor only. Roofers officials also forced residential roofing contractors to report to the union at least 100 hours of work a month, whether or not they did that much business. The contractors were legally obligated to pay 60 cents into the union health and welfare fund every month for each hour worked. 72
No-Show Workers
Using union funds to pay nonexistent "employees" is a common way of rewarding friends at the expense of dues-paying rank and file. Joseph DiMaio, business manager of District 10 of the Painters Union District 10 in New Jersey, and Edward Dolan, a former official of the merged welfare funds for Districts 10 and 19, learned that sometimes this crime doesn’t pay. A federal jury in Newark in 1995 convicted the two for conspiring to create a no-show job of "benefits coordinator" for Dolan, and embezzling more than $40,000 paid to Dolan in that capacity. Dolan signed checks to himself, even though there was not a single other document with Dolan’s name on it at the welfare fund. 73
If ticket prices for rock n’ roll concerts in Philadelphia seemed inflated for a while, chances are a local of the International Alliance of Theatrical and Stage Employees had something to do with it. In 1991 Francis O’Shea, president of the union’s Local 8, pleaded guilty to bilking rock groups out of thousands of dollars by hiring family members and other union members on payroll sheets for concerts they did not work, and then cashing the checks himself. The promoter, Electric Factory Concerts, may also have participated in the scam. The affadavit cited a 1989 Grateful Dead concert in which EFC allegedly charged the band $84,000 beyond actual expenses. 74
Longshoremen officials also practice the art of ghost employment. In California several years ago Levin-Richmond Terminals filed suit against the ILA for racketeering to induce the company to make regular payments to the union for work its members never performed. The union had mobilized 600 members from around the San Francisco Bay Area to picket the terminal, shutting down its operations. The pickets, which ignored a prior restraining order, forced Levin to sign an agreement to pay a regular salary to four Longshoremen ghost workers. The company had paid more than $1.2 million to the union. It added that it had been losing about $1 million a year in profits from contracts lost because of the need to factor in the ghost workers salaries into bids. 75
Fishy Business Fronts
Often, labor rackets operate under cover of a legitimate business. For example, the mobsters who control New York City’s building trade unions typically own, work for, or have a direct interest in numerous construction contractors and suppliers. 76 Sometimes they hide through nominal businessmen who "front" for them on public records; in other instances, they have the temerity to be openly owners. The late Genovese crime boss Tony Salerno controlled S&A Concrete, a contractor, and Certified Concrete, a producer. Vincent DiNapoli, a captain in the family, controlled Cambridge Drywall Company and Inner City Drywall. Gambino underboss-turned-informant Sammy "the Bull" Gravano, was president of JJS Construction Company. And Gravano’s boss, John Gotti, served as salesman with ARC Plumbing Company.
New York City’s five major wholesale food markets might well take first prize for how union leaders, officials, and mobsters work seemingly legitimate businesses.
These markets—the Hunts Point Produce Market, the Brooklyn Terminal Market, Brooklyn Wholesale Meat Market, the Gansevoort Meat Market, and the Fulton Fish Market—are important cogs in the city’s economy. They handle most of the fresh fish and unpackaged fruit, vegetables and meat shipped into the New York region and sold to retail stores and restaurants. More than 200 businesses, mainly wholesale dealers, each year generate more than $3 billion in sales, employing some 8,000 people.
They’ve also been controlled by a Mafia alliance with local from the Teamsters and the United Food and Commercial Workers. 77 The Mafia handpicks union officials, extorts money from merchants in return for labor peace, demands no-show jobs for mobsters and their relatives, and wins sweetheart contracts for mob-run companies. Not only that, it has used the markets for gambling loan sharking, money-laundering and narcotics trafficking.
In October 1996 Mayor Rudolph Giuliani requested that the City Council give him the authority to investigate and ban officials of unions who represent market employees and are suspected of having ties to the mob. Though the measure would be modeled after laws in New Jersey and Nevada that regulated casinos to exclude union officials for Mafia links or misconduct, Anthony Cirillo, president of the United Food and Commercial Workers Local 359, which serves Fulton Fish Market, vowed to challenge the law all the way to the Supreme Court.
Cirillo has an interest in this, having beaten the rap by a hair’s breadth in 1989. A federal prosecution established, if not to a court’s satisfaction, then to a lot of suspicious minds, that Local 359 was a tool of the Genovese crime family. The Fulton Fish Market scam was a full-scale operation honed to a science, and enforced by mob muscle. Yet a federal court in Manhattan had ruled prosecutors had not sufficiently proved that the two top leaders of Local 359, Cirillo and Secretary-Treasurer Dennis Faicco, were controlled by the Genovese mob. But the ruling left in place orders signed by Judge Thomas Griesa that appointed an administrator to monitor the market. The civil action filed in October 1987, Judge Griesa admitted then, "gave promise of a full-fledged case against the union defendants, including evidence of threatened labor disturbances. Regular payoffs from businesses in the market and the channeling of extortion proceeds into the hands of the Genovese family." 78
But the investigation had gotten some results. The federal probe had begun in June 1979, and after three years had resulted in the convictions of 11 fish market firms and 11 individuals. Local 359 unloading operations enforcers Carmine and Peter Romano were convicted on charges of racketeering and manipulation of union pension funds. The two men were big fish indeed. "All the fish coming into Fulton Fish market is unloaded by a half-dozen unloading companies that have been granted monopolies by the mob," said one Assistant U.S. Attorney, adding millions of dollars worth of fish were being stolen each year during unloading. 79 By 1989 Rudolph Giuliani, then U.S. Attorney, proclaimed, "The government has already achieved most of its objectives with regard to the Fulton Fish Market." 80 As mayor, Giuliani succeeded in persuading the City Council to pass his measure to more tightly regulate the food markets. Still, so long as New York remains a non-right-to-work state, a large pool of union funds will serve as a lure to gangsters.
The Big Four
The examples thus far uncovered, by definition, represents a portion of known cases; that is, which involved a conviction or, failing that, at least offered enough evidence to reasonably warrant one. Many scams likely have never been uncovered. Moreover, over time a union may become less or more corrupt depending on the ruthlessness of its leaders, and the degree of government surveillance. To gauge the extent of corruption is to examine how much progress, if any, the most egregious unions have made.
The 1986 report of the President’s Commission on Organized Crime concluded that the Longshoremen, the Hotel Employees and Restaurant Employees, the Laborers and the Teamsters by far were the four unions most saturated with racketeering. It recommended a government takeover, barring an absence of a cleanup. The Longshoremen’s sordid history was briefly outlined at the explained at the beginning of this chapter. But the Hotel Employees and Restaurant Employees (HERE) also has been notorious.
The 350,000-member union long has provided the labor force for mob-controlled hotels and casinos. In 1984 the Senate Permanent Subcommittee on Investigations issued a 144-page report concluding the union was under "substantial influence" of organized criminals. "Numerous officers and employees have documented ties to organized crime figures," and there is little doubt that Local 54 (Atlantic City) is now controlled, and Locals 226 (Las Vegas) and 30 (San Diego) have been influenced in the past, by organized crime interests," the report noted. Union officials had made shady loans, defrauded employee benefit plans, hired enormous numbers of workers with criminal records, and terrorized anyone who complained about it. A Senate senior staff member noted that Chicago-based mobsters in particular were behind the operation. Almost three dozen witnesses, including HERE President Edward Hanley, refused to cooperate and took the Fifth Amendment. 81
The Justice Department did take action against some of the most corrupt locals. In December 1990, the department filed a racketeering suit against Atlantic City’s Local 54, alleging that the union was in the hands of mobster Nicky Scarfo. "Never worry about the unions. We own the unions," Scarfo said to a former associate, Joseph Salerno. 82 Scarfo, boss of the Angelo Bruno crime family in Philadelphia, in 1981 had taken over the reins from Philip Testa, who’d been killed by a bomb blast. Testa had taken control of the syndicate from Bruno himself, who in 1980 was killed by a shotgun blast in front of his home.
The Justice Department seized the local in 1991, and later filed a civil RICO suit against the union’s national leadership. The department coaxed officials into accepting a consent decree in September 1995. A court appointee would oversee the group, and for at least 18 months have the power to remove corrupt local heads. Federal receivership has borne some positive results. By early 1997 Justice officials already were recommending that Local 54, having been cleaned up, was ready to be lifted from federal supervision.
LIUNA has proven a tougher nut to crack. With an estimated 750,000 members, the Laborers have a huge pot of dues and fees from which to collect—and abuse. The Laborers, more than other unions, consist of unskilled workers; that is, workers whose trades do not require prior special training or education. Also, the unions does a lot of its recruiting in the hiring hall. This gives hand-picked union "enforcers" the power to personally intimidate job applicants—and at the same time protect the corruption of higher-ups in the local. Dissenters face some unusual risks... |
