And so another year of greed, deceit, treachery and redemption has ended. The year 2006 provided a great many stories on labor union corruption. Picking the top ten most important was far from easy. In one sense, the worst is behind us. The Mafia and other crime syndicates no longer dominate international union leadership in ways that they used to. And the system can be said to be working in the sense that many corrupt union officials, business agents, trustees and office employees have been caught and punished. Unfortunately, in another sense, the system isn’t working. It often takes years, never mind months before a pattern of theft is discovered either from within or outside the union. The past year witnessed no falloff in the incidence of thefts and other scams.
Not every story described here involved outright theft. It’s important to remember that the masthead of each issue describes UCU as providing “information on America’s most corrupt & aggressive unions.” Unions often engage in aggressive behavior without necessarily stealing money from members, contractors, taxpayers or other sources. Such tactics, whether or not illegal, are about intimidating people. And that can be highly significant, given that intimidation can translate into legislation, court decisions, and regulatory enforcement that diminishes individual worker freedom.
In developing the list, Union Corruption Update relied on the same criteria as a year ago. And while they involve a measure of subjective judgment, when taken together, they are a good indication of a story’s newsworthiness. First is the amount of missing or stolen funds. A union that fleeces its treasury out 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 by officials as opposed to 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 does it. Third is 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 internal or external dissenters 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-life” 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. Seventh and finally is a story’s potential for redefining policy and practices on a national, even international scale.
Here, then, is the list in reverse order:
10) New York City Labor Council President Arrested. Brian McLaughlin for years was a powerful figure in New York politics and labor, serving both as New York State Assemblyman from Queens and president of the New York City Central Labor Council. Somewhere along the line he abused the power to which he had been entrusted. Early last year federal agents raided McLaughlin’s offices, and then in October arrested him on various racketeering charges. All told, feds say, he lined his pockets to the tune of $2.2 million through embezzlement, bribery and kickbacks. He was forced out of his labor council position in September.
9) Roofers Union in New York Comes Clean. The State of New York had an “enterprise corruption” law on the books, but still had waited for a conviction of a union. Now they have one – Local 8 of the United Roofers, Waterproofers and Allied Workers. In September the union admitted before the State Supreme Court, through its lawyer, having ties to the Genovese crime family. Family capo John Barbato led a shakedown crew to make sure contractors hired Local 8 labor. The mob then shifted to a different kind of “labor peace” strategy, allowing contractors to hire nonunion labor so long as the mob got to pocket the difference between union and non-union wages.
8) Michigan Auto Workers Officials Convicted. While there is nothing new about union leaders pressuring employers to hire family, relatives and friends, doing so in order to prolong a strike carries extra weight, especially when it’s against the nation’s largest automaker. Nearly 10 years ago, General Motors pickup truck assembly workers in Pontiac, Michigan went on strike. It was a costly walkout for company and workers alike. A few years later, members of United Auto Workers Local 594, sensing they’d been sold out by their own leadership, filed a class action suit against three union officials. After a prolonged investigation and various court rulings, a federal jury this June returned a guilty verdict against the two surviving defendants on charges of extortion and conducting a scheme to generate around $200,000 in bogus overtime payments.
7) Child “Longshoremen” Scam in Boston. Finding work on Boston’s shipping docks traditionally has occurred by word of mouth, a product of union insularity and ethnic Irish extended family loyalty. That enabled International Longshoremen’s Association locals to pull off a scam, putting children, some as young as toddlers, on the payroll to qualify them for “seniority” once they become adults. Massachusetts Attorney General Tom Reilly launched an investigation in 2005, yielding indictments against 20 persons this past summer. Reilly, a Democrat, ran for governor last year, but lost in the primary to eventual new governor Deval Patrick. The ILA international leadership in New York, meanwhile, remains under civil RICO indictment.
6) New York City Minority Contracting Shakedown. Affirmative-action contracting has brought about many baneful side effects, one of which has been the emergence of shakedown rackets masquerading as construction minority-hiring programs. The City of New York, at least, effectively admitted that good intentions carry a high price. In September the Manhattan District Attorney’s Office announced the arraignment of four men who nominally headed minority-hiring consulting organizations, using their positions to extort payments from contractors and workers as part of “labor peace” agreements. Often, they vandalized or shut down ongoing projects to make their point. Two of the defendants, Derrick Walker and Frederick Rasberry, belonged to Local 731 of the Laborers International Union of North America, a union that is no stranger to violence.
5) Three new books. If knowledge is power, then a powerful antidote to union corruption is a full-length treatment of the subject. Last year readers got a triple dosage. Robert Fitch’s Solidarity for Sale (Public Affairs) and James Jacobs’ Mobsters, Unions and Feds (NYU Press) approach the issue from different angles, but both tell gripping tales of how organized labor and organized crime over the decades often have been barely distinguishable from one another. Each provides practical recommendations for reform. As a bonus, National Legal and Policy Center published a lengthy monograph, Union Corruption and the Law, authored by Phillip Wilson, general counsel for the Oklahoma-based Labor Relations Institute, Inc. Wilson untangles the maze of often conflicting labor laws and provides a streamlined model code for reform, one that encourages union members, in the spirit of the Landrum-Griffin Act of 1959, to become whistleblowers without living in fear of reprisal. All three works are indispensable.
4) Grand Theft in Puerto Rico. When labor corruption happens in Puerto Rico, it happens on a grand scale. The year 2006 witnessed the sentencing of union officials and business associates of UTM 1740, an affiliate of the International Longshoremen’s Association, who had conspired to steal as much as $10 million and underreport another $1.5 million. And that was the smaller of two scandals. The leaders of Union Independiente Autentica, a water and sewer workers’ union, were convicted and sentenced for embezzling, laundering and covering up nearly $15.3 million.
3) New York Teachers Pension Settlement. For years, financial managers and teachers union bosses, at least in New York State, enjoyed an unusually close relationship. The quid pro quo was this: Firms paid unions lavish promotional fees, and the unions in turn steered member pension funds toward the firms’ investment plans. The arrangement amounted to legalized graft, and with excessive management fees tacked onto rank-and-file member accounts. New York State Attorney General Eliot Spitzer, now governor, decided to put a stop to this. After threatening a lawsuit, Spitzer this past October announced his office and financial-services giant ING had settled out of court for $30 million, a sum to be paid to 66,000 New York teachers plus another 5,000 out-of-state workers. While teacher union affiliates should be kept more honest as a result, one has to wonder why legal action was necessary at all. Even young teachers aren’t so financially illiterate that they need their unions to serve as surrogate parents.
2) Union-Sponsored Corporate Campaigns. The corporate campaign is massive warfare mounted against a specific corporate target so as to blacken its public reputation, barring certain changes in business practices. And unions since the Seventies have been the prime mover behind campaigns, which may include, simultaneously, strikes, negative publicity, blackmail, demonstrations, shareholder resolutions, and boycotts. Unions are more adamant than ever about using this tactic to win concessions from companies they believe are engaging in anti-union practices, most of all Wal-Mart. This past summer, UNITE HERE conducted an aggressive campaign against the San Francisco hotel industry and spread false information about California health care provider Sutter Health, for which a court forced the union to pay the company more than $17 million in damages. The Service Employees International Union (SEIU), meanwhile, tried to make life as difficult as possible for security firm Wackenhut. Corporate campaigns may be acts of desperation, but they can put employers in desperate straits unless they fight back. Fortunately, a number of them are doing just that.
1) Mexican Amnesty Standoff. For roughly a decade, organized labor has been explicit in its support for granting amnesty for millions of illegal Mexican immigrants living in the U.S. They’re getting more open about it each year, too, especially against the backdrop of now-passed and signed border security legislation. To protest the bill, Mexican ethnic propagandists turned out large demonstrations in cities across America demanding legalization of “undocumented” immigrants. SEIU Local 1877 provided security for the massive April 10 rally in Los Angeles. Unions believe amnesty or at least a guest-worker program will radically boost their membership. What really will be boosted, however, are public service dependency, crime, disease and linguistic separatism. What will diminish are rule of law, identity, and sovereignty. Most Americans seem to be alarmed by these prospects. What seems to be standing in the way of tougher restrictions on immigration, legal or not? A National Legal and Policy Center Special Report released this spring shows how unions, together with big business and ethnic politicians, have been thwarting reform for a good two decades. Labor corruption is a major problem in Mexico as well as here, one reason why the exodus from that country to America continues unabated. It’s hard to remember, but until the middle of the Eighties, unions actually had been on the right side of this issue.
(Dis)honorable mention: James P. Hoffa re-elected Teamsters international president, but corruption still remains in the union, says former in-house cleanup supervisor Ed Stier; Houston Teamsters chieftain Charles Crawley convicted in kickback scheme; New York’s Service Employees Local 1199 throws lavish parties with member dues; Rutledge labor empire in Hawaii bows out; Food and Commercial Workers boss in Massachusetts sentenced for receiving more than $1.5 million in bribes from local supermarket chain; Los Angeles political scandal results in guilty pleas from ex-City Councilman Martin Ludlow and SEIU ally Janett Humphries; San Francisco Plumbers union trust fund still tied to troubled real estate ventures despite Labor Department suit; San Jose mayor, top aide embroiled in union contracting scandal; ex-manager, two family members plead guilty to siphoning $1.25 million from Songwriters Guild of America; New Jersey postal workers arrested for embezzling $400,000 from union; ex-officials of LIUNA Local 91 in Niagara Falls, N.Y. plead guilty; officials of Amalgamated Transit Union Local 1181 in Queens, N.Y. do bidding of Genovese crime family; NYC drywall contractors, Genovese crime soldier pleads guilty to embezzlement through Plasterers and Carpenters unions; Freightliner employees in North Carolina file civil racketeering suit against company and United Auto Workers; unions work behind scenes to water down federal port security bill before it becomes law; former CFO of New York nurses’ union charged with ripping off more than $1.2 million.