Feds Acting on Report of Teamster Corruption in Chicago

The FBI is investigating whether hundreds of thousands of dollars were siphoned from a Teamsters benefit plan that provides dental care to Chicago-area undertakers and valets, report Todd Lightly and Stephen Franklin of the Chicago Tribune.  The criminal investigation is the first indication that law enforcement authorities are acting on an internal Teamsters union report alleging that money may have been diverted from Local 727’s dental plan from 1993 to early 2000.  The 303-page report was prepared by investigators under the supervision of former internal ethics watchdog Edwin Stier, who resigned last April charging that Teamsters officials in Washington, DC, were stifling his investigation.


The investigators charged that 30 percent of all the money companies paid to provide dental and vision care for their unionized workers actually went for “grossly excessive” administrative costs and fees.  The report also raised concerns about payments from the plan to “persons and entities…having had ties to organized crime figures, been implicated in racketeering schemes or both.”  If true, rank-and-file Teamsters probably received less in hourly wages because employers unknowingly overfunded a dental plan so that money could be diverted into the pockets of others, according to investigators who worked on the Teamsters report.


Local 727 boss John Coli is the 2nd-highest paid Teamster in the nation.


Stier’s investigators began their examination of Local 727’s benefits plan after a former union employee tipped them off to a possible kickback scheme involving dental and vision care set up for Teamsters.  From 1995 into early 2000, Florida-based Dental Consultants and Management held the contract for Local 727’s dental plan and received more than $4 million, according to the report.  Each month, Dental Consultants distributed checks to the dentists who provided care to Teamsters.  But Dental Consultants retained nearly 30 percent of the plan’s revenue from employer contributions simply for administering the plan, according to the report.  “A 30 percent retention rate … is excessive by any standard and would be especially so given the little that was required to administer the plan,” according to the report.


In addition, money that should have gone to dentists was allegedly diverted to others, according to the report.  Dentist Marshall Olech, former co-owner of Midwest Illinois Dental Associates, said he has done dental work for other unions and they have routinely provided him with a list of eligible members–but not Local 727.  Olech said he and the other dentists met resistance from Local 727 officials when they asked for a list of members.  Olech said dentists had to either call Local 727’s offices or fax to union officials the names of patients seeking care. [Chicago Tribune, 1/2/05]