Detroit Operating Engineers Boss Pleads Guilty to Extortion

Several years ago, John Hamilton was one of the reasons why large sums of Detroit public employee pension funds were finding their way into the pockets of that city’s public officials, including now-imprisoned former Mayor Kwame Kilpatrick. But he’s currently facing some serious time of his own. On August 18, Hamilton, former business manager and general vice president of International Union of Operating Engineers Local 324, pleaded guilty in U.S. District Court for the Eastern District of Michigan to one count of conspiracy to commit extortion. He had been indicted in December 2015 on nine counts for numerous offenses. The actions follow an investigation by the FBI, the IRS and the U.S. Labor Department’s Office of Inspector General and Employee Benefits Security Administration.

Union Corruption Update back in February 2016 summarized the unfortunate series of events leading up to the indictment. John Hamilton, a resident of Florida these past several years, was a Detroit-area union leader known by the company he kept. And he, like the company, was mired in corruption. He had received multiple illegal kickbacks from convicted free-spending equity fund manager John Orecchio in return for investing $65 million in Local 324 pension funds with Orecchio’s Chicago-based firm, AA Capital Partners. Orecchio, for his part, donated $10,000 to a charity controlled by Mayor Kilpatrick in exchange for the mayor steering $20 million in Detroit city employee pension money to AA Capital. Were that not enough, Hamilton exacted political contributions from the local’s 18,000 active members, threatening those who complained with termination. He also embezzled from some of those political contributions and, on top of that, embezzled from the union general fund to give himself a raise in lieu of board approval.

The result of all this was a nine-count federal indictment charging John Hamilton with extortion, structuring, money-laundering, embezzlement and honest services fraud. Given the weight of evidence, a guilty plea was inevitable. And given that the plea was only for extortion, he could have wound up in a far worse position by taking his case to trial. James Vanderberg, Special Agent-in-Charge for the Labor Department’s Office of Inspector General, summed things up this way: “Hamilton conspired to extort fellow union officers and members of $250,000, under the threat of being fired, and used much of the money to personally enrich himself. We will continue to work with our law enforcement partners to stop extortion plots that victimize American workers.”