Three NYC Union Bosses Charged in 1M+ Kickback and Embezzlement Scheme

Benefit plans arguably have become the most lucrative source of illegal income in the world of organized labor. Federal prosecutors in Manhattan don’t need to be reminded of that. On July 1, New York City union officials Rocco Miranti, Johnnie Miranti and Louis Smith were arrested and indicted in U.S. District Court for the Southern District of New York for their roles in obtaining more than $1 million through kickbacks and theft from allied health plans. The three defendants, respectively, are business manager of Allied Novelty and Production Workers Local 223, secretary-treasurer of Local 223, and ex-president of International Brotherhood of Teamsters Local 810. The actions follow a joint probe by the FBI, the Labor Department’s Office of Labor-Management Standards and Office of Inspector General, and the NYPD’s Organized Crime Investigation Division.

Allied Novelty and Production Workers Local 223 is based in Manhattan, and represents toy factory workers; Teamsters Local 810 is based in Long Island City (Queens), N.Y., and represents a wide range of workers including freight drivers and warehouse employees. Prosecutors allege that the defendants were engaged in more than standard union business. Starting around 2004 and lasting for a decade, the defendants, each a trustee of their respective health plan, drove a hard bargain with a third-party administrator known as Business-1. It also was an illegal bargain. According to the president of Business-1, listed as a cooperating witness, Rocco Miranti, Johnnie Miranti and Louis Smith demanded monthly kickback payments in exchange for setting up union accounts. At first, Local 223 business manager Rocco Miranti, 70, a resident of Howard Beach (Queens), N.Y., was the sole beneficiary of the shakedown. That would change soon enough. In or about 2005, Miranti arranged for Business-1 to become the third-party administrator for Teamsters Local 810 in exchange for kickbacks to Louis Smith, 73, a resident of Pearl River (Rockland County), N.Y.  Up to this point, the “toll” was approximately 5 percent of payable fees. That, too, would change. In or about 2006, Miranti and Smith, the latter serving as Teamsters Local 810 president during 2000-13, upped the ante to around 10 percent. Eventually, Miranti’s son, Johnnie Miranti, 39, a resident of Rockville Centre (Long Island), N.Y., also participated in the scheme, which included embezzlement as well as kickbacks.

All of this proved lucrative for the defendants. Prosecutors say that the combined extracted payments from the Novelty Workers Local 223 and Teamsters Local 810 health plans each exceeded $500,000. It wasn’t as if the defendants needed the money. An analysis by the New York Daily News of Department of Labor records back in 2010 revealed that Local 223, with more than 1,000 members, was highly lucrative for the Mirantis. In 2009, at which time the scheme was well underway, Miranti family members raked in $411,649.  Rocco made $185,694, averaging eight hours a week on the job; son Johnnie was paid $133,551; and a nephew of Rocco, business agent Anthony Miranti (who was not indicted), pulled in $92,404. Rank and file members, by contrast, didn’t make out so well. By the close of 2009, Local 223 was $477,900 in the red. And for the years 2007-09, the union pension plan was listed by the DOL as in “critical” status; i.e., assets were less than 65 percent of liabilities. “Largesse like that concentrated among close family members seems to reflect a kind of nepotism that harkens back to an earlier, darker period of trade unionism,” noted Robert Bruno, professor of labor studies at the University of Illinois at Chicago.

The scheme belatedly unraveled beginning last October. Federal authorities, acting on information from the CEO of Business-1, began secretly recording conversations among the Mirantis and Smith. At some of the meetings, the witness provided money to keep the contracts in force. They included a $10,000 payment to the Mirantis and a $12,000 payment to Smith. The U.S. Justice Department now had the evidence to build a case. A grand jury eventually handed down indictments, which the Manhattan federal court unsealed on July 1. Rocco Miranti, Johnnie Miranti and Louis Smith each were charged with one count of conspiring to solicit and receive kickbacks to influence the operation of an employee benefit plan, conspiring to embezzle from an employee benefit plan, and conspiring to commit theft or embezzlement of at least $1 million. Each offense carries a sentence of up to five years in prison.

Federal officials are confident that they have their culprits. Manhattan U.S. Attorney Preet Bharara remarked: “Rocco Miranti, Johnnie Miranti and Louis Smith, by allegedly accepting more than a million dollars in bribes and embezzling union funds, put their self-interest above the interests of the union members they were supposed to represent. Rank-and-file union members are entitled to leadership that is supportive, not criminally exploitive, as alleged here.” Cheryl Garcia, Acting Special Agent-in-Charge for the Labor Department, added: “The Office of Inspector General will continue to work cooperatively with our law enforcement partners to investigate these types of allegations.” The indictment also seeks forfeiture of the proceeds from the crimes, a fact that should comfort union members who expect full health plan coverage.