Labor unions have been no more immune to reckless investing in the stock market than any other institution. The recent takeover by the American Federation of State, County and Municipal Employees (AFSCME) of a major New York City public employees union brought that reality home. On September 4, AFSCME headquarters in Washington, D.C. placed Local 2054 in receivership following revelations that its president, Colleen Carew-Rogers, had lost more than $1 million worth of member dues on bad investments. The action came three days after the local executive board removed Ms. Carew-Rogers from office. Apparently, money management skills weren’t the only issue. She also allegedly pilfered union funds to buy her since-deceased predecessor an expensive new car and otherwise usurped the authority of her office. With Carew-Rogers gone, the new leadership on September 8 filed suit in federal court against New York City’s AFSCME District Council 37, the parent union and several other parties to halt the takeover. But it may be too late.
Local 2054 has become a major powerhouse within the District Council 37 pantheon of labor organizations. Under longtime President Joan Reed, who died early last year, the union, which represents employees at City University of New York (CUNY) campuses, grew from 300 to 5,000 members. The brief misrule of her successor, Colleen Carew-Rogers, made the current pitched battle virtually inevitable. On June 22, AFSCME ordered an audit of Local 2054’s financial practices following complaints from members of the local board that Carew-Rogers misspent funds and otherwise flouted basic rules. Finances appeared to be in disarray. Several executive board members, led by Vice President Linda Bowman, contacted AFSCME national offices to request a full audit. Their suspicions would be confirmed.
Union finances, as it turned out, were indeed a disaster, more than anything else due to Colleen Carew-Rogers’s less than savvy investment skills. She invested member dues in a stock fund which had fallen in value from $1,801,286 on December 31, 2007 to $743,418 on February 27, 2009. That’s a drop of around 60 percent in just 14 months. Spending by top brass likewise was reckless. President Carew-Rogers, apparently without prior authorization, had bought her predecessor, Joan Reed, a $41,000 Cadillac as a retirement gift nearly two years ago and threw a $30,000 going-away party for her. Were that not enough, three local officials had racked up $38,804 in unauthorized charges on their union credit cards during 2007 and 2008. The audit explicitly criticized the local for its lack of procedures governing credit card usage or reporting.
The lead dissenter, Linda Bowman, is incensed. The local’s problems, she maintains, run deeper than money. “For the past couple years she (Mrs. Carew-Rogers) has been violating the constitution on a consistent basis,” said Bowman. “She doesn’t consult with the executive board on any expenditures. She basically dictates things.” She charged Carew-Rogers had overruled board decisions without adequate explanation and failed to hold mandatory meetings. AFSCME national headquarters also noted that under Carew-Rogers local financial reports were habitually late and that the union had no plans to prevent the loss of assets.
Larry Cary, Ms. Carew-Rogers’ lawyer, claims his client’s dismissal was based on a “mishmash” of inaccuracies, some of which a union investigator already had rejected. Cary specifically noted that the executive board had approved her purchase of the Cadillac. Ms. Bowman counters that the board, though notified of the planned purchase, was still debating it after Ms. Reed retired in 2007. Carew-Rogers loyalists gained an unexpected ally in AFSCME National President Gerald McEntee, who stated that the Local 2054 executive board knew all along of the financial mismanagement and did nothing to remove her until the consequences became dire.
Local 2054 may well be as corrupt as AFSCME District Council 37, one of whose vice presidents in Carew-Rogers. That’s no mean accomplishment. DC 37, a federation of 56 local unions with a combined 121,000 members, lay at the center of a massive scandal during the Nineties. More than 20 of its officials eventually were convicted of embezzlement, extortion, assault, vote-rigging and other crimes. One DC 37 boss, Charles Hughes, the recently-deceased president of Local 372, was indicted and convicted for ripping off $2 million from the school employees’ union, a sum including $700,000 in padded overtime. The full illegal take by Hughes and his cronies was more likely $10 million. Things have changed very little, noted local executive board lawyer Arthur Schwartz. “The culture that led to the problems of the 1990s has not been dissipated and continues to fester,” he remarked.
Meanwhile, life goes on at Local 2054. Its replacement president, Carlton Berkley, a retired police detective-turned-administrative assistant at John Jay College now running for New York City Council, explains his ambitions this way: “I plan to root out the corruption in the local and then go after any more corruption in DC 37.” Good luck.