Change to Win, LM-2 Ruling, Longshoremen Led Pack in 2005

Compiling a list of the previous year’s Top Ten Whatever – news stories, TV shows or movies – is one of life’s guiltier pleasures for the scribbling class, providing an opportunity for the compiler to exhibit a briefly heightened sense of importance.  Yet despite inviting a certain level of self-indulgence, it also serves a needed function:  putting events in perspective.  There’s no reason why labor corruption stories can’t be ranked as such.


The Top 10 stories for 2005 are not the product of any weighted formula, but they do reflect the application of several criteria.  First is the amount of funds stolen or missing.  A union that fleeces its treasury of $2 million, all other things held equal, is making a far bigger dent in its members’ livelihoods than if it had stolen $200,000.  Second is evidence of involvement, if any, by officials rather than office employees.  When a union president commits or encourages others to commit embezzlement, it’s a more serious offense than when a renegade treasurer-secretary embezzler does it.  Third is the presence of involvement at the (inter)national level.  A national president who extorts or embezzles funds is a far greater threat to public integrity than a local president who does the same thing.  Fourth is the documented use of violence to achieve financial gain.  Union officials who terrorize or hire outside help to terrorize whistle-blowers, dissenters or contractors are a public menace in a way that a nonviolent thief is not.  Fifth is the involvement of organized crime.  A union president who is beholden to an underworld chieftain is far more dangerous than if he simply runs the union in a “Mafia-like” way.  Sixth is the bombshell factor.  A corruption story that blows the lid off a union’s wrongdoing is more interesting the first time around than when it’s merely the latest installment in a long-running saga, no matter how many convictions a prosecutor has secured.  Seventh, and finally, is a story’s potential for redefining the nation’s economic and political life.  A story of the magnitude of the AFL-CIO split is not about corruption per se, but it does have major long-run implications for corruption.


Put these elements together, and one comes up with what seems to be a good representation of the ten labor corruption issues that mattered most.  Here’s the list in reverse order:


10) Puerto Rican Longshoremen.  The Justice Department this past July filed a complaint against UTM Local 1740, an affiliate of the International Longshoremen’s Association, alleging its leaders and associates had conspired to steal as much as $10 million and underreport another $1.5 million.  Four union officials, along with six businessmen and three companies, were indicted for embezzlement, money-laundering and false record-keeping.  Though the case hasn’t gotten too much attention here on the mainland, it should – that’s quite a haul.  


9) Washington Teachers Union.  Granted, the bombshell phase of this Washington, D.C. scandal occurred three years ago.  But the reverberations, with around $5 million looted during 1995-2002, are ceaseless.  Deposed President Barbara Bullock managed to pull herself out of federal prison to testify against two former co-conspirators, Gwendolyn Hemphill and James O. Baxter II.  The two were convicted this August on each of nearly two dozen offenses – as if there were any doubt.  A fall settlement between the WTU and its parent union, the American Federation of Teachers, approved by a federal judge, got the ball rolling on squaring away IOUs.  Given all the money squandered by the guilty parties on luxury goods, full restitution may be years away, if at all.


8) Illinois Teachers Retirement System.   Here is another teachers’ union scandal, this one pension fund management.  Two Chicago lawyers, Joseph Cari and Steven Loren, pleaded guilty in September in federal court to charges related to a massive kickback scheme.  Free on bail, they’re helping the Justice Department nab a former retirement system board member and unofficial boss of the pair, Stuart Levine.  Levine was indicted in August on more than a dozen counts.  In one instance, he allegedly steered $50 million in teachers’ funds to an investment firm in return for a generous “fee.”  The Illinois teachers’ pension system has more than $30 billion in assets – favoritism can have a high cost.


7) California Teachers Association.  The CTA was one of the major reasons for the defeat of several November initiatives for fiscal responsibility in California, particularly Proposition 75, supported by Governor Schwarzenegger.  The 335,000-member state affiliate of the National Education Association pulled out all the stops, announcing it would impose a special $60-a-year, three-year assessment on each member and fee payer.  Union officials claim they are earmarking the revenues for debt retirement.  A Kansas City, Mo.-based nonprofit legal group, the Landmark Legal Foundation, counters that the real destination is the CTA war chest, in violation of federal and state law.  During the campaign Landmark requested that the California Public Employment Relations Board investigate the legality of the assessment.  The future of union political activism everywhere, not to mention union dissenters’ Beck rights, may be on the line.


6) Teamsters’ Continuing Federal Supervision.  The International Brotherhood of Teamsters long has been itching to be released from control by the Independent Review Board, the court-appointed entity created in the wake of the union’s 1989 civil RICO settlement with the Justice Department.  This July the union took what it believed to be a decisive step toward independence, releasing a report prepared under the supervision of New York lawyer and former federal prosecutor Ed McDonald.  McDonald concluded Teamster corruption is well in the past.  His predecessor, Ed Stier, isn’t buying it.  Stier, a Washington lawyer and former federal prosecutor in his own right, had led the union’s internal cleanup effort from 1999 until the spring of 2004, when he resigned, very publicly, in protest of what he believed was International President James P. Hoffa’s flagging commitment to fighting corruption.  Rank-and-file union members will issue the final verdict, what with Hoffa facing re-election this November. 


5) Pending Release of Mobsters from Prison.  The U.S. Bureau of Prisons is set to undergo some serious depopulation – and unions may be more dangerous places as a result.  In an interagency memo, the bureau alerted the FBI to the fact that around 80 mobsters and associates are set for release from prison by January 2007.  The list, compiled in July, is further confirmation (as if it were needed) that the Mafia is down, but far from out.  Among those awaiting their walking papers are Gambino family heir Richard G. Gotti and Lucchese family underboss Steven Crea, both with longstanding ties to organized labor.


4) New York Construction Mob Tax.  The New York Daily News last September ran a three-part series on the high cost of buying labor peace in New York City.  A network of contractors, unions and Mafia families, with the possible tacit approval of state and local officials, for years has hammered out sweetheart deals on school, stadium, highway and other public-works contracts to inflate project costs and hand the bill to taxpayers.  Builders bribe mob-friendly union officials to hire nonunion help, with unions pocketing the difference between the (union) wages and benefits they promise to pay and the (nonunion) wages and benefits they actually pay.  Under such arrangements, corner-cutting on materials, workmanship and workplace safety are frequent.  The results have included high cost overruns, and hundreds of thousands of frazzled motorists stuck in rush-hour traffic coping with union-staged “detours.”


3) International Longshoremen’s Association.  There’s nothing new about corruption in the Longshoremen’s union.  That union was mob-dominated well before On the Waterfront came out more than 50 years ago.  But the ILA’s day of reckoning finally may be at hand.  This July the Department of Justice filed a massive civil RICO suit against the union’s top leaders, including President John Bowers, alleging a pattern of extortion, fraud and other offenses.  The eventual result could be a Teamsters-style federal receivership plan.  The suit is separate from a recently-concluded criminal trial centering on allegations of benefit fraud.  New Jersey ILA boss Albert Cernadas pleaded guilty before the trial.  Remaining defendants, including one who’d been missing for weeks before turning up dead inside the trunk of an abandoned car, beat the rap.  Someone out there isn’t too eager to see reform happen.        


2) Court Rulings on Labor Department Reporting Forms.  Until 2003, the Department of Labor’s standard reporting form for major unions, LM-2, had been virtually unchanged for 40 years.  Current Labor Secretary Elaine Chao, determined to shake things up, issued new accounting regulations, unveiling a more detailed LM-2 form to make disguising or falsifying revenues and expenses more difficult.  Organized labor, understanding what was at stake, fired back.  The AFL-CIO sued to overturn the regulations, but lost in district court.  This past May the U.S. Court of Appeals, District of Columbia Circuit, voted 3-0 to uphold the ruling.  The day wasn’t a complete loss for the unions, however.  The appeals court prevented DOL from putting into use its new T-1 form for union pension and other trust-fund reports until the department makes necessary revisions. 


1) Change to Win.  Organized labor’s Great Schism, for years a looming threat, finally happened; an AFL-CIO rump faction formed in June, the Change to Win Coalition, decided to go it alone.  The Service Employees and the Teamsters were the first to bolt, in July on the eve of the AFL-CIO’s 50th anniversary convention in Chicago.  They were joined in short order by five other unions:  the United Food and Commercial Workers, the Laborers, UNITE HERE, the United Farm Workers, and the Carpenters (the latter already having left in 2001).  Total combined membership of active workers in the new federation is around 6 million.  At its kickoff convention in St. Louis in September, Change to Win President Anna Burger, hand-picked choice of Service Employees chieftain Andrew Stern, made clear she and other CTW leaders want to ramp up that number far higher through aggressive organizing.  An enormous pot of actual and potential revenues is on the line, and with it the potential for its misuse – and CTW member unions have a demonstrated blind spot for corruption.  Federation Secretary-Treasurer Edgar Romney has deep ties to notorious UNITE garment worker locals in New York.  In the late 90s he managed to avoid a federal indictment.  Under greater scrutiny, his luck might not hold out.  


(Dis)Honorable Mention.  Genovese capo Louis Moscatiello and Gambino soldier Mario Garofola are separately sentenced for roles in New York City construction union schemes; enforcers for Niagara Falls Laborers Local 91 go down, one by one; Feds sue Laborers Local 734 in New Jersey for ghost-worker scheme; troubles of Northwest Indiana Carpenters District Council continue; Boston Longshoremen put kids on dock payrolls in union-seniority scam; Tunnel Workers Local 88 boss in Boston arrested for racketeering; more than 30 Gambino crime family members and associates, including Food and Commercial Workers Local 305 boss, arrested on RICO charges; Gambino crime family has new godfather in John D’Amico; Rutledge labor fiefdom in Hawaii takes a fall; New Jersey Laborers benefit fund manager Carmelo Sita pleads guilty to embezzling more than $1 million; Songwriters Guild cooperates with federal investigation of $1.25 million royalties ripoff; Maryland couple steals more than $900,000 from Plasterers union apprenticeship fund and pays the price.