The year 2018 saw the indictment, conviction and sentences of plenty of organized labor scams. New York City played host to some of the largest. For sheer magnitude, nothing anywhere could match the network of union fraud surrounding the construction of Hudson Yards, a large-scale, mixed-use development on Manhattan’s West Side. Set for completion in 2024, the project from the start has been a source of easy money for labor organizations affiliated with the Building and Construction Trades Council of Greater New York. The general contractor, Related Companies, having reached the limits of frustration, filed suit last March with the State Supreme Court against the council and its president for promoting or allowing illegal practices that allegedly have added over $100 million to the total project cost.
In other cases from the Big Apple, the president of a United Industrial and Service Employees local, Rocco Fazzolari, pleaded guilty in September to embezzling $1.3 million from the union. Norman Seabrook, the former boss of the Correction Officers Benevolent Association, whose members keep order inside Rikers Island jail, was found guilty in August of accepting bribes from a Manhattan-based hedge fund manager, Murray Huberfeld, in exchange for having transferred $20 million in union pension assets to the now-collapsed fund. Huberfeld already pleaded guilty in May. Two union officials, each a secretary-treasurer of a Brooklyn affiliate of the United Food and Commercial Workers, were indicted in Manhattan federal court for racketeering offenses, part of a larger crackdown on the Genovese crime family. And in a brazen show of contempt for our law, identity and sovereignty, the New York City-area joint council of the International Brotherhood of Teamsters held a series of seminars on how union workers illegally living in the U.S. can avoid deportation.
There was no shortage of corruption elsewhere. Union benefit plans in particular provided a lucrative feeding range. A New Jersey businessman, Lawrence Ackerman, pleaded guilty along with a United Auto Workers local president in New Jersey, Sergio Acosta, for ripping off the union and an affiliate of Blue Cross Blue Shield to the tune of $6.6 million. In a case of truly staggering proportions, a Houston pharmacist and a Dallas union lawyer/business executive, respectively, Nermin Awad El-Hadik and Tshombe Anderson, were sentenced for their roles in a highly sophisticated worker’s compensation scam, much of which involved union-sponsored health plans. The scheme defrauded the U.S. Department of Labor out of tens of millions of dollars. Culprits behind less ostentatious thefts included a business manager of a Plasterers local in Rhode Island, members of various Indiana locals of the Brotherhood of Carpenters and Joiners, and a third-party administrator of an Operating Engineers benefit plan in Oklahoma.
Apart from the thefts, scams and occasional violence, there was a piece of highly encouraging news in the form of the Supreme Court decision in Janus v. AFSCME. Mark Janus, a nonunion civil servant for the State of Illinois reluctantly represented by an affiliate of the American Federation of State, County and Municipal Employees, challenged the union’s authority to deduct “fair share” dues from his paychecks. And by a 5-4 margin, the Court this past June ruled in his favor. A government employee union, ruled the court, must acquire the affirmative consent of non-members before levying dues on them. As public-sector employees, percentage-wise, are far more unionized than their counterparts in the private sector, the ruling likely will limit union bargaining power in many state and local governments, especially those saddled with expensive employee benefit commitments.
All that said, here are the union corruption stories that mattered most in 2018.
10) Indiana Ironworkers terrorize nonunion workers at construction site. Thomas Williamson, a member of northwest Indiana’s Ironworkers Local 395, described his union as “old school” to a nonunion worker at an area job site back in January 2016 just before he, son Thomas Williamson Jr., local President Jeffrey Veach and about 10 other members physically attacked nonunion workers, punching them, hitting them with scrap wood, and kicking them with steel-toe boots. The misplaced enthusiasm would backfire. This past August, the elder Williamson and Veach were charged in federal court with extortion under the Hobbs Act. Shortly afterward, the contractor and five of its workers filed a civil suit against the union.
9) New York City Industrial Employees president pleads guilty to thefts. Rocco Fazzolari a decade ago had bit parts in low-budget New York City crime movies. As president of United Industrial and Service Employees Local 122, he played a starring role in his own real-life movie. This past September, he pleaded guilty to three counts of embezzlement related to his diversion of more than $1.3 million from the union and a related benefit plan.
8) Two Food and Commercial Workers officials indicted in NYC racketeering bust. The Genovese crime family, like other Mafia outfits, is down but far from out. This past January, five Genovese mobsters and associates were indicted in Manhattan federal court for racketeering offenses dating back to 2000. Two of the defendants in the FBI takedown were Frank Cognetta and Vincent D’Acunto Jr., each a secretary-treasurer for a Brooklyn-based United Food and Commercial Workers local representing liquor and wine wholesalers. Cognetta allegedly ripped off a union health plan by nearly $500,000, while D’Acunto allegedly participated in an extortion conspiracy.
7) Boilermakers boss in Pittsburgh sentenced for embezzlement, tax fraud. Ray Ventrone, former business manager for International Brotherhood of Boilermakers Local 154, for years took money from the coffers of the Pittsburgh union for his personal use, claiming the diversions were business expenses. Federal prosecutors disagreed. He was charged in 2017, and pleaded guilty months later to embezzling about $1.5 million from the union and defrauding the IRS out of more than $250,000. This past February, he was sentenced to 41 months in prison and ordered to pay restitution.
6) Rikers Island jail guard boss, business partner found guilty of fraud and conspiracy. Norman Seabrook for two decades headed the union, the Correction Officers benevolent Association (COBA), that represents guards at New York City’s notorious Rikers Island jail complex. Then he got greedy. He and Manhattan hedge fund CEO Murray Huberfeld cut a deal in which Seabrook transferred management of $20 million in COBA pension funds from union trustees to the troubled hedge fund, in the process bypassing safety and soundness considerations. In return, Huberfeld promised to slip him $100,000 to $150,000 a year in cash. This illegal quid pro quo ended badly for both. Huberfeld lost most of the $20 million, while union officials grew suspicions about a shortfall of pension assets and reported the problem to federal investigators. Indictments would come down in 2016. After a mistrial for each in November 2017, Huberfeld pleaded guilty this past May, and Seabrook was convicted by a jury in August.
5) Several persons convicted and sentenced in UAW-Chrysler play-for-pay scandal. The fallout from indictments of several officials of the United Auto Workers and Fiat Chrysler Automobiles was heavy last year. Back in 2015, Chrysler executives had offered money from the company-funded National Training Center to UAW negotiators in return for the union dropping certain demands during collective bargaining sessions. Such arrangements long have been illegal under the Taft-Hartley Act. An investigation by the FBI, IRS and Labor Department exposed this scheme. At least a half-dozen persons were convicted and sentenced last year in the scandal, which involved some $4.5 million of bribery, fraud, embezzlement and tax evasion.
4) New Jersey businessman and local UAW boss plead guilty to ripping off union benefit plan, insurer. Health plans are one of the richest sources of theft from union workers, something underscored by the guilty pleas last year of Sergio Acosta, former president of United Auto Workers Local 2326 in central New Jersey, and Lawrence Ackerman, a northern New Jersey businessman. The duo for years had engaged in a scheme to sign up ineligible persons for the union’s health plan through a pair of fake insurance brokerages set up by Ackerman. The pair skimmed assets from the plan, while union “members” filed false claims to a Blue Cross Blue Shield affiliate. Total losses reached $6.6 million.
3) Union lawyer, Texas pharmacist sentenced for roles in massive worker’s compensation claims scam. Benefit fraud reached the tens of millions of dollars in this case. And the primary victims were taxpayers. A probe by the FBI, the Army and the Department of Labor produced sentences of two prime participants last year, Nermin Awad El-Hadik and Tshombe Anderson, respectively, a Houston-based pharmacist and a Dallas-based union lawyer/medical supply company executive. El-Hadik had paid more than $5 million in kickbacks to a medical service provider in return for referrals of worker’s compensation patients, many of them covered by union health plans, who then could be overcharged for prescriptions. The unsuspecting Labor Department reimbursed the claims. Eventually, the department caught on, triggering a wide-ranging probe. Anderson and certain family members did things in grand style, enriching themselves by more than $26 million.
2) Contractor sues AFL-CIO Building and Construction Trades Council for inflating Hudson Yards project in NYC by over $100 million. That many New York City construction unions have been corrupt is hardly a secret. They’ve apparently been on their bad behavior during the 28-acre Hudson Yards development on Manhattan’s West Side, set for completion in 2024. The Greater New York affiliate of the Building and Construction Trades Council, AFL-CIO, had pressured general contractor Related Companies into a signing a Project Labor Agreement to ensure hiring of unionized workers for the primarily high-rise project. Related Companies, tired of being at the mercy of dishonest and at times dangerous union practices, filed suit in the New York State Supreme Court against the council and its leader, Gary LaBarbera, in March for adding more than $100 million to the project cost.
1) U.S. Supreme Court overturns public employee union monopoly in its Janus ruling. By a 5-4 margin, the Court concluded in Janus v. AFSCME Council 31 that public-sector unions do not have the authority to deduct partial dues (“agency fees”) from the paychecks of reluctant nonmember workers. The decision, which overturned more than 40 years of union dues coercion, requires that public employee unions must secure affirmative consent from dissenters before deducting agency fees. At stake for the unions are billions of dollars in revenues over the long run and accompanying political clout. The decision already has triggered lawsuits that have gone one step further by challenging organized labor’s exclusive representation authority in the teaching profession. As union contracts are jeopardizing state and local government fiscal solvency, Janus should be seen as a necessary restraint.
(Dis)honorable Mention: Roland Bedwell, leader of New York City-area Production Workers extortion racket, sentenced for terrorizing nonunion contractors and workers; New York City-area Teamsters Joint Council 16, after declaring itself a “sanctuary” union in September 2017 on behalf of workers living in the U.S. illegally, holds seminars on how unauthorized workers can break immigration law; Gregory Normand, secretary-treasurer of Washington State SMART local, sentenced for embezzling more than $400,000 from union; Richard D’Antuono, Plasterers business manager in Rhode Island, pleads guilty and is sentenced for stealing more than $300,000 from union apprenticeship plan; Mervin Hawk, president of AFSCME local in Detroit, charged with embezzling more than $600,000; Charles Smith, owner of a Boston-area demolition and asbestos abatement company under Laborers union contract, sentenced for double-breasting and overtime scams totaling nearly $800,000; Paul Moe, International Longshoremen’s Association member in New Jersey, sentenced for ghost-employee scam totaling almost $500,000; nearly 30 members of a Carpenters regional affiliate, all of them Indiana residents, sentenced for fleecing council health care plan out of more than $500,000; John Hamilton, politically-connected Operating Engineers boss in Detroit, sentenced for extortion and embezzlement, part of a wide-ranging scandal with roots in the administration of convicted ex-Mayor Kwame Kilpatrick; Stephanie DeBoer, Electrical Workers ex-bookkeeper in Michigan, sentenced for embezzling more than $300,000; Glenn Robert Smith, former comptroller of Carpenters local in Michigan, sentenced for ripping off regional council by $500,000; Matt Smith, former secretary-treasurer for Dallas-Ft. Worth-area local, sentenced for stealing $400,000; Jeni Hughes, Plumbers local office manager in Arkansas, sentenced for embezzling more than $400,000; Susan Tyson, former bookkeeper for benefits management firm, sentenced for stealing more than $450,000 from benefit plan of Operating Engineers local in Oklahoma City; Ryan Jones, former secretary-treasurer of Machinists local in Maine, sentenced for embezzling nearly $300,000.