Top Ten Union Corruption Stories of the Year

If the year 2014 had a main theme, it was, as in 2013, the unions’ pursuit of legal advantage. The results were mixed. Unions scored victories at the National Labor Relations Board, but they tasted defeat in the courts, most notably in their effort to unionize private home care providers in Illinois and overturn a Wisconsin law reining in public-sector costs. In another bitter pill, the United Auto Workers last February lost a representation election at the Volkswagen plant in Chattanooga. As for dipping their hands in tills, national union leaders generally behaved themselves, but many local bosses, office employees and business agents did not. A suit by dissidents against a Los Angeles-area Operating Engineers local revealed first-term Obama Labor Secretary Hilda Solis, and its bosses and associates, to have ethically-challenged pasts. Whether successful or not, then, unions once again provided much to write about.

The National Labor Relations Board, arguably even more than the Department of Labor, proved to be the unions’ de facto ally within the federal government. After several years of operating short-handed, often with a revolving door of recess appointees of questionable legality, the board, back up to five members, was ready to roll. During the course of 2014, its 3-2 Democrat (i.e., pro-union) majority handed unions a victory in Purple Communications Inc., concluding that a Northern California company could not prevent its employees from using its e-mail system for off-hours organizing on behalf of a Communications Workers affiliate. In another Northern California case, the NLRB agreed to review a complaint filed by a Teamsters local seeking to force collective bargaining upon a parent company if one or more franchises had a contract in force. A board regional office also granted standing to a group of current and ex-football players at Northwestern University seeking collective bargaining status. The university administration appealed to NLRB headquarters, which in turn agreed to review the case. If the players win, the United Steelworkers, seeking to represent NCAA players, would be better off, but the same could not be said about amateur sports generally or the mission of higher education.

Organized labor didn’t fare as well in the courts. In a major defeat for public-sector unions, the Wisconsin Supreme Court ruled 5-2 in July that restrictions on state and local employee collective bargaining, enacted by the legislature in 2011 at the urging of Republican Governor Scott Walker, were constitutional and did not violate union freedom of speech. Three months earlier, a federal appeals court had concluded the same thing in response to a suit filed by the City of Madison and surrounding Dane County. In the courts’ view, unions had the right to organize, but state and local governments were not obligated to negotiate with them. At the U.S. Supreme Court, the Service Employees and AFSCME failed in a bid to represent private-sector home care providers via the State of Illinois changing their job status to public-sector. Former Democratic Governors Rod Blagojevich and Patrick Quinn, each tight with public-sector unions, earlier had signed executive orders declaring private providers compensated by state Medicaid programs to be public employees. Pamela Harris, one such caregiver, sued. After repeated frustration, she appealed her case to the Supreme Court (Harris v. Quinn), which on June 30 ruled 5-4 on her behalf.

Unions long have used or justified violence to achieve goals, but here, too, they ran into a brick wall. Leaders and certain enthusiastic followers at Iron Workers Local 401 for years had practiced the dark arts of property destruction and physical assault at nonunion construction sites in and around Philadelphia until they were caught in an expose a couple years ago. Arrests and indictments followed last year. A holy terror of the Buffalo area, Operating Engineers Local 17, likewise had been running roughshod over nonunion rivals until a wave of indictments came down more than a half-dozen years ago. After considerable delay, a federal jury last March convicted former local president Mark Kirsch; five other members already had pleaded guilty. Four other defendants who took their case to trial managed to walk, but it’s unlikely they will play a role in future union decision-making.

The biggest disappointment of all for labor officials may have been on the automobile industry front. Since the late-Eighties, the United Auto Workers, still a formidable entity at roughly 400,000 members, has eyed foreign-owned assembly plants in fast-growing Right to Work Southern states as the next big organizing frontier. Victories here, the union believed, could decisively reverse the long-run decline in its own numbers and in the unionized share of the U.S. work force. In 2014, the main event occurred at the Volkswagen assembly plant in Chattanooga, where more than 250,000 Passat sedans had rolled off its assembly lines since the grand opening in 2011. UAW organizers conducted a card check and secured the backing of VW headquarters, the latter of which was focused on creating a European-style works council at the plant. Yet despite forcing a neutrality agreement on VW, the union lost a worker representation vote in February by 712-626. Union chieftains shortly thereafter filed a complaint with the NLRB, charging devious forces in Tennessee politics had interfered with the campaign process. Several weeks later, however, they withdrew their complaint. Meanwhile, near Tuscaloosa, Alabama, at the Mercedes-Benz assembly plant, an Auto Workers organizing campaign appears terminally stalled – even pro-union workers are tiring of the union’s presence. The union’s Southern strategy remains very much active, but it has yet to deliver results at foreign-owned sites.

It wouldn’t have been a year in union corruption without at least some fraud and embezzlement. And there were plenty such stories, at least at the district and local levels. Among the most prominent: Los Angeles-area employers skipped out on $4 million or more in scheduled payments to benefit funds sponsored by a local of the Cement Masons; the Fusella brothers were sentenced for a $1 million-plus Teamsters local benefits theft in New York; Westchester County, N.Y. educator Frank Gluberman pleaded guilty to stealing nearly $800,000 from an affiliate of the American Federation of Teachers; New York City-area school bus drivers boss Warren Annunziata, having been banned from union activity for 13 years following his extortion conviction in 2010, pleaded guilty to violating the ban – during and after his prison time he received around $800,000 in “consulting” fees; Angela Heninger, an office manager at Kansas City, Kan. home base of the International Brotherhood of Boilermakers, was sentenced for stealing $400,000 from the union training fund; and five persons pleaded guilty to ripping off $400,000 in benefits from an Orlando, Fla. Iron Workers local.

On the whole, unions lost more key battles than they won, even with the National Labor Relations Board in their corner. This may be the first such outcome since Union Corruption Update began publishing annual summaries. And it is reason to cheer. For the policies, programs and rulings sought by organized labor, in every case, would wind up diminishing liberty for workers and for society as a whole.

Ranking union stories in importance inevitably involves a certain degree of subjective judgment. Yet some stood out from the rest, if one were to apply criteria such as timeliness, impact and evidence of collusion with the criminal underworld. The following, in reverse order, were the 10 most significant union stories of 2014:

10) Philadelphia Iron Workers goons indicted. Unions, by their nature, view nonunion workers, typically willing to do similar work for less compensation, as rivals. They also are not averse to wreaking havoc upon employers who hire them. In the Philadelphia area, Iron Workers Local 401, and several other construction unions, for several years used vandalism, arson, assault and terror threats as tools of persuasion at area sites to ensure contractors hired union members only. Last February, the reign of terror appeared at last to be over. Ten local bosses and members were arrested and indicted on federal racketeering charges; in July, five participants in these goon squads were slapped with additional charges. Nonunion contractors can sleep a little easier knowing that sledgehammers won’t be taken to their projects.

9) Solis on hot seat in Southern California lawsuit. First-term Obama Secretary of Labor Hilda Solis might not be corrupt, but evidence suggests that she won her job through the assistance of a Southern California affiliate of the International Union Operating Engineers that was. Last January, several dissenting members of Operating Engineers Local 12 filed a civil racketeering suit against some two dozen officials, members and associates of the powerful Pasadena-based union, charging that leadership for years had engaged in embezzlement, graft and other illegal activity. Part of the suit alleges that Solis accepted free travel on the union private jet to and from Senate confirmation hearings back in late 2008 when she was still a member of Congress. Local boss William Waggoner apparently wanted the best labor secretary money could buy. By laws governing congressional ethics, Solis had to report these and related gratuities, but apparently didn’t. The revelations didn’t hurt her political career; in June, she was elected to the Los Angeles County Board of Supervisors.

8) NLRB ruling gives unions advantage in e-mail organizing. Labor leaders by inclination seek to expand their range of organizing venues. They got a boost from the National Labor Relations Board in December when the board, by 3-2, ruled in Purple Communications Inc. that employees with access to an employer e-mail system may use that system for organizing drives during nonworking hours. The board held that a company ban on e-mail use for non-business purposes constituted an unfair labor practice. The Newspaper Guild-Communications Workers of America sought to represent workers. The employer, Purple Communications, based in the Sacramento area, is likely to appeal to the Supreme Court. If the court lets stand or affirms the ruling, unions everywhere in the U.S. would have an enormous opportunity to expand their ranks – at the expense of property rights.

7) Buffalo jury convicts Operating Engineers Local 17 boss of racketeering; acquits four others. Local 12 hasn’t been the only IUOE affiliate with an impulse to intimidate and destroy. During the last decade, a federal-state joint probe of International Union of Operating Engineers Local 17 in Buffalo, N.Y. revealed a pattern of vandalism, beatings and extortion of nonunion contractors and workers. Five or more defendants already had pleaded guilty by the time 2013 ended. And last March, a federal jury, following a six-week trial, convicted former IUOE Local 17 president Mark Kirsch of orchestrating the racket, though it also declared four other defendants not guilty. The lucky ones and their lawyers celebrated, but the old days aren’t likely to make a comeback.

6) Labor Department sues officers of Los Angeles-area Cement Mason union trust funds. Union benefit plans long have been ripe pickings for thieves. The Operative Plasterers & Cement Masons International Union appears to be no exception. Last May, the U.S. Department of Labor filed a civil suit against various officers of trust funds sponsored by OP & CMIA Local 600. Local business manager Scott Brain allegedly looked the other way while employers averted scheduled payments to health, pension and other benefit funds. Two contractors alone accounted for a $4 million shortfall. Brain also reportedly diverted union funds to a union-retained female lawyer with whom he had been having an affair. A former benefit fund auditor appears willing to tell all.

5) Teamsters file suit to create dual employer coverage. Once again, the five-member National Labor Relations Board gave union officials reason to celebrate. The board agreed to review a case that could expand union organizing and representation capacity by declaring a parent company and its franchises a “dual employer.” The case, BFI of California Inc./Newby Island Recyclery/Leadpoint Business Services, originated in an action filed by a Northern California Teamsters local. If the board rules in favor of the union, deep-pocketed parent companies across a wide range of industries could be forced to the bargaining table. Adding to the weight of this suit was a subsequent opinion announced in July by NLRB General Counsel Richard Griffin that McDonald’s management and its franchisees constitute a joint employer. The action was a response to demands by union activists, especially the SEIU’s Fast Food Forward work center, that headquarters should be forced to negotiate alongside franchisees – and almost all of McDonald’s restaurants are franchise operations.

4) Supreme Court protects Illinois home care providers from public-sector union shakedown. That the public sector has been the basis of almost all recent union growth is no secret. Driving this trend is their legal authority to coerce non-joining workers into joining or contributing fees in lieu of joining. The U.S. Supreme Court believes this practice needs some restraint. Last June, in the Chicago-area case of Harris v. Quinn, the Court ruled 5-4 that the State of Illinois could not reclassify private caregivers as “state employees” just because their wages partly or fully come out of a state Medicaid program. The Service Employees and AFSCME, who are aggressive welfare state advocates, had been counting on a sudden windfall of dues and fees. While the High Court did not go so far as to overturn its Abood decision (1977), still ground zero for forced public-sector unionism, it did deny government employee unions new opportunities to escalate politically-driven revenue grabs.

3) Wisconsin Supreme Court upholds public-sector collective bargaining restrictions. The Battle of Wisconsin has been raging continuously since 2011, when new Republican Governor Scott Walker proposed, and the state legislature eventually passed, a measure to rein in rising state and local wage and benefit costs. Public-sector unions and their allies have tried a variety of approaches to block the law from taking effect, including occupying the State Capitol in Madison and conducting recalls campaigns against Walker and several lawmakers. Nothing seemed to work. And by now the unions are almost out of options. In a July ruling, the Wisconsin State Supreme Court, by a 5-2 margin, upheld the constitutionality of the law. While public employee unions may organize, the court concluded, their employers are not obligated to negotiate. In a separate and less geographically applicable suit filed by the City of Madison and surrounding Dane County, a three-judge federal circuit court panel, by 2-1, had ruled similarly in April. The ruling in both cases sent a message: The ultimate employers of state and local government workers are taxpaying residents.

2) Unions step up $15 an hour minimum wage campaign; win in Seattle and San Francisco. Labor unions, along with “worker center” front groups, intensified a nationwide effort to institute a $15 an hour minimum wage for fast food restaurant employees, and even more to the point, for employees generally. The campaign seems oblivious to the possibility that its prime achievement may be driving businesses out of existence – and their entry-level employees out of work. Recent research by the Congressional Budget Office, for example, concluded that raising the minimum wage to a “living” level raises unemployment levels. Pro-union activists in Seattle plowed ahead anyway. Seattle’s law, passed unanimously by its city council in June, phased in a $15 an hour standard upon all employees. San Francisco voters in November followed suit, approving a referendum to phase in a citywide $15/hr. wage. Labor Day street demonstrations in cities across the U.S. may well lead to more such laws, though there are natural limits here.

1) United Auto Workers organizing drive stalls in Tennessee and Alabama. The auto industry in Southern states for years has been prime territory for union organizing. As regards foreign-owned assembly plants, it remains virgin territory. UAW organizers lost a bitterly contested election in February to represent workers at the Volkswagen assembly plant in Chattanooga by a 712-626 margin. Down the road at the Mercedes plant near Tuscaloosa, Alabama, the union’s organizing campaign has yet to materialize in the scheduling of an NLRB-supervised election. The union is determined to win despite the fact that most workers are satisfied with compensation and conditions, with or without onsite German-style joint employer-employee ‘works councils.’ In the case of the VW vote, the UAW filed a complaint a week later with the NLRB, alleging undue interference with the election process by Tennessee public officials. The union, however, dropped its case in April. UAW President Dennis Williams, who took office in June, has a heavy workload ahead.

(Dis)honorable mention. Convicted Long Island, N.Y.-based public school bus drivers boss Warren Annunziata pleads guilty to violating federal ban on union participation after pocketing $800,000 in “consulting” fees; five persons plead guilty to stealing $400,000 in benefits from an Orlando, Fla. Iron Workers local; Boilermakers office manager Angela Heninger was sentenced for embezzling more than $400,000 from her union’s job training fund; brothers Jerry and Vincent Fusella, plus a shop steward, found guilty and sentenced for skimming more than $1 million in project wages and benefits owed to members of Teamsters Local 282; Reda Overton charged, pleads guilty, sentenced for stealing over $200,000 from Tennessee office of Locomotive Engineers; Northwestern University football players gain standing from NLRB regional office in bid to gain collective bargaining status; Teamsters Local 82 four-man racket convicted for shaking down Boston trade show exhibitors; former officials of Mafia-connected Longshoremen Local 1235 in New Jersey plead guilty to racketeering; Kansas City, Mo. AFSCME boss Jesse Morgan charged with stealing $185,000; details emerge before congressional committee on Solis-era Department of Labor $700,000 expenditures on employee political motivation posters; California farm labor board forces United Farm Workers membership on unwilling workers; Washington, D.C. security union boss J.C. Stamps pleads guilty, sentenced for nearly $200,000 in thefts; United Auto Workers, other unions draw up scab lists; Westchester County, N.Y. teacher-principal Frank Gluberman pleads guilty to stealing nearly $800,000 from an American Federation of Teachers local; San Bernardino County, Calif. public-sector employee union sues former boss Robert Blough for mismanaging $700,000; Aussie labor boss Michael Williamson sentenced for stealing $1 million from health care union.


Top Ten Union Corruption Stories of the Year (2013)

Top Ten Union Corruption Stories of the Year (2012)

Top Ten Union Corruption Stories of the Year (2011)

Top Ten Union Corruption Stories of the Year (2010)

Top Ten Union Corruption Stories of the Year (2009)