Top Ten Union Corruption Stories of the Year

Perhaps more than usual, corruption stories in 2019 involved the overlapping worlds of unions and politics. In Chicago, former Teamster boss John T. Coli Sr., whose ability to cut deals with City Hall and the Illinois legislature for years went virtually unchallenged, pleaded guilty in July to shaking down a television studio owner. One of his allies, State Senator Tom Cullerton, was hit with multiple embezzlement charges. In Boston, two city officials were convicted of putting the squeeze on a concert promoter on behalf of a Theatrical Employees local. In Philadelphia, an Electrical Workers business manager and seven other persons, including a city councilman, were indicted in January for embezzlement, wire fraud and bribery; a contractor and a fundraiser subsequently pleaded guilty.

The overlap of union and government interests was especially marked in the public sector. Unions, still smarting from the Supreme Court’s Janus ruling in 2018, stepped up their partnerships with elected officials to protect their monopoly representation of state and local government employees. In Oregon, a pro-union lawmaker a year ago introduced a bill requiring state and local agencies to subsidize member dues. The measure, which has yet to be acted upon, also would bar reluctant workers from opting out. This proposal amplified the recent practice by a number of states to authorize unions to deduct dues from paychecks of home care providers whose incomes are partly or wholly derived from state Medicaid programs. Fortunately for the providers, the U.S. Department of Health and Human Services issued a final rule banning this practice, often called dues-skimming, which enriches union coffers by an estimated $200 million a year.

The most disturbing case of union-government overlapping could be found at a federal employees union, American Federation of Government Employees Local 1924, which represents hundreds of asylum claims officers employed by the Department of Homeland Security’s Citizenship and Immigration Services. The union in June filed an amicus brief in federal circuit court to block a reasonable protocol ordered several months earlier by President Trump that would require an asylum applicant to be remanded to Mexico until that person’s claim is processed. There was nothing immoral or unconstitutional about this initiative. Most asylum claims, in fact, are suspect or outright fraudulent. Apparently, AFGE Local 1924 doesn’t agree. And if it prevails, the union may wind up putting U.S. border security in grave danger.

Financial scams and efforts by authorities to stop them, as usual, abounded. Among the more noteworthy, a business manager for a Hawaii local of the International Brotherhood of Electrical Workers, along with two family members, were indicted in August for conspiracy, wire fraud, embezzlement and money laundering totaling $1.4 million. A New Jersey-based Carpenters regional benefits manager was indicted for diverting more than $1.5 million from health and retirement plans – and likely with protection from union headquarters in Washington, D.C. A former president of a United Auto Workers local in New Jersey was sentenced for pulling a $6.6 million health benefits scam, enabled by an insurance broker. And just as prosecutors were clearing the backlog of cases related to the misuse of $4.5 million in funds from the UAW-Chrysler joint training center, they discovered a new multimillion-dollar nest of corruption at the union’s General Motors Department. One hardly could blame workers at Volkswagen’s nonunion assembly plant in Chattanooga this past June for rejecting the UAW representation campaign, albeit by a close margin, as they had back in 2014.

Here are the 10 corruption stories in 2019 that mattered most. The rankings are largely subjective, but take into account the sum of money misappropriated, the “bombshell” news factor, the possible involvement of organized crime, and the importance of the story relative to organized labor as a whole.

10) Auto Workers local boss in New Jersey sentenced in $6.6 million health benefit scam. Sergio Acosta, former president of the Edison, N.J.-based United Auto Workers Local 2326 and a trustee of its health plan, worked in tandem with insurance broker Lawrence Ackerman to fleece Horizon Blue Cross Blue Shield of New Jersey out of $5.6 million and a union-sponsored welfare fund out of another $1 million. In January 2019, Acosta was sentenced to three years of home confinement and ordered to pay $32,000 in restitution. Given what he stole, that was a virtual tap on the wrist. Ackerman, who pleaded guilty to reduced charges in December 2018, would be sentenced to six months of home confinement and ordered to pay $1 million in restitution to the welfare fund.

9) Business manager, family members of Hawaii IBEW local indicted in $1.4 million theft. Along with his wife and sister-in-law, Brian Ahakuelo had a nice racket going at International Brotherhood of Electrical Workers Local 1260 in Honolulu. Then it all came crashing down. Last August 22, a federal grand jury handed down a 70-count indictment against the trio for conspiracy, money laundering, wire fraud and embezzlement. One day later, a grand jury indicted four union members for a vote-rigging scheme that led to a doubling of dues. An audit by IBEW headquarters revealed financial discrepancies, which led to a joint federal-state investigation. With a new leadership team in place, the defendants aren’t likely to get much sympathy from dues-paying members.

8) Carpenters benefits manager in New Jersey indicted for ripping off $1.5 million. George Laufenberg, benefits manager for the Northeast Regional Council of the Carpenters and Joiners, was well-connected to union top brass. That likely emboldened him to divert over $1.5 million from health and retirement plans to his own use, an offense that got him indicted by a Newark federal grand jury in September. Regional Council Secretary-Treasurer John Ballantyne, after reviewing the evidence, fired him. In apparent retaliation, International President Douglas McCarron disbanded the council. That act of vindictiveness seems to have backfired. In October 2018, Ballantyne and two former union employees filed a whistle-blower suit in New Jersey Superior Court against the union, citing a long history of “self-dealing and corruption.” And this past September, Laufenberg was indicted by a Newark federal grand jury.

7) Chicago Teamster boss pleads guilty to shakedowns. In the world of Chicago-area Teamsters, John T. Coli Sr. called the shots. But in July 2017 he suddenly resigned from his various posts following an initial indictment. According to a superseding indictment filed two months later, Coli, who was close to city and state political leaders, extorted the president of a television production studio for cash payments totaling $325,000 so that the latter could remain in business, and also engaged in tax fraud. Facing the music, he pleaded guilty in federal court in July 2019. He faces up to eight years in prison. Caught in the dragnet the following month was Illinois Democratic State Senator Tom Cullerton, who for three years during Coli’s tenure held what federal prosecutors allege was a well-paying no-show job as a Teamster organizer.

6) Chattanooga Volkswagen workers reject UAW representation for a second time. With a new production line planned, the United Auto Workers believed the time was ripe for another representation vote at the Volkswagen assembly plant in Chattanooga. Having lost a previous gambit in February 2014 by a close 712-626 margin, organizers vowed to do things right this time. But once more, though by an even closer 833-776 vote, workers at the nonunion plant, which opened in 2011, said no to unionism. Once more, UAW officials are blaming outside “right-wing” influences. And once more, VW management seems nonplussed. The vote should serve as further evidence that worker freedom is driven mainly not by outside provocateurs, but by a recognition of common interests among workers themselves.

5) ILWU local in Oregon sued for conspiracy to inflate time sheets. Back in December 2018, Columbia Export Terminal in Portland, Oregon sued the International Longshore and Warehouse Union and more than 150 members of ILWU Locals 8 and 92 for engaging in a conspiracy to falsify time sheets by more than $5.3 million. The suit remains active, but that might be the least of the West Coast dockworker union’s problems right now. In November 2019, a federal jury awarded ICTSI Oregon Inc., former operator of the Port of Portland, a whopping $93.6 million in civil damages incurred by Local 8 during August 2013-March 2017, an award delayed by a federal judge who is reviewing the possibility that the award is grossly excessive and possibly ruinous. The San Francisco-based ILWU, which does not have that kind of money, wants a new trial. The award might be on the high side, but that does not negate the fact of corruption.

4) NLRB rulings restore certain rights for dissenting workers. During the Obama administration, the National Labor Relations Board often acted as an advocate for organized labor rather than as an impartial adjudicator between labor and management. The idea of giving individual workers the right to decide whether to pay dues to a union seemed almost an afterthought. The Trump-era NLRB, by contrast, does take this idea seriously. In July, the board’s Office of the General Counsel ruled on behalf of two workers, one in Missouri and the other in West Virginia, who had refused to sign “fair share” dues authorization forms as a condition of remaining employed. And in December, the board voted to reestablish an employer’s right to restrict employee use of its email and other information technology during nonworking hours.

3) Federal employee union supports lawsuit to block temporary removal of asylum seekers; undermines border enforcement. American Federation of Government Employees Local 1924, which represents asylum officers at the Department of Homeland Security’s Citizenship and Immigration Services (CIS), seems to believe that our country has a moral duty to admit all migrants from Mexico or Central America if their stories sound remotely convincing. Toward that end, the union last June filed an amicus brief in San Francisco federal appeals court in support of a lawsuit to block enforcement of the Trump administration’s new Migrant Protection Protocols (“Remain in Mexico”), which would keep applicants out of the U.S. until their claim is processed. Many claims in the recent past have been completely fraudulent. CIS Acting Director Ken Cuccinelli should tell these employees that if they don’t feel like doing their jobs, they will be replaced.

2) The Department of Health and Human Services bans lucrative dues-skimming by public-sector unions. With the help of an Obama-era rule change in January 2014, state governments such as Illinois and Minnesota have authorized public-sector unions to automatically deduct dues from the paychecks of home care providers who receive some or all of their income from state Medicaid programs. This scam has come to generate an extra $200 million a year in union revenues, not to mention reciprocation in the form of union political campaign contributions. Last May, HHS issued a replacement rule barring this practice, frequently known as “dues-skimming.” The regulation represents a victory for home care providers and patients alike, and indeed may be the most welcome consequence of the Supreme Court’s Janus decision in June 2018.

1) Federal UAW probe uncovers den of corruption in the union’s General Motors Department. These haven’t been the best of times for the United Auto Workers. Two and a half years ago, the union’s Chrysler Department and some officials of the automaker were charged with looting an estimated $4.5 million from the automaker-funded training and education center. That probe has yielded eight guilty pleas, including one last April from Norwood Jewell, a former UAW vice president. Just as the curtain on that scandal was coming down, federal investigators last year uncovered evidence of extensive bribery, fraud and money laundering within the union’s GM Department in various ways related to nearly $16 million worth of existing vendor contracts. The Justice Department probe has yielded three guilty pleas and may yet claim former union President Gary Jones, who resigned last November, and his predecessor, Dennis Williams. The FBI had raided their homes and other sites in August. A government takeover of the UAW may loom.

Dishonorable mention: Former officers of two Brooklyn-based United Food & Commercial Workers locals and Genovese mob pals convicted and sentenced for racketeering-related offenses; members and employees of Electrical Workers local in Philadelphia indicted on numerous corruption charges; Boston city officials Kenneth Brissette and Timothy Sullivan were convicted of extortion of a concert promoter in demanding the promoter hire members of the Theatrical Stage Employees union as a prerequisite for holding an outdoor event; Glenn Blicht, former president of a New Jersey-based Longshoremen local, pleads guilty for extracting about $150,000 in bribes from an employer representative in exchange for a promise to back away from filing arbitration complaints; a District of Columbia federal appeals court rejects an employer challenge to the National Labor Relations Board’s “ambush election” rule in a case involving a Teamster local and UPS; Democratic Party radicals in House and Senate introduce the PRO Act, a comprehensive gift of monopoly privileges for organized labor; Mervin Hawk, an AFSCME leader in Detroit, sentenced for embezzling more than $330,000 although the actual theft was in excess of $600,000; Terry Doan, former secretary-treasurer of Heat & Frost Insulators local in Ohio, sentenced for stealing almost $200,000; Danny Woodcock, former president of Communications Workers local in Mississippi, sentenced for stealing more than $300,000; Kansas City, Mo.-based Boilermakers local business manager Scot Albertson arrested for stabbing and wounding two persons; Rocco Fazzolari, former president of a New York City-area Industrial and Service Workers local, sentenced for role in the theft of $1.3 million in union funds; Irene Seager sues United Teachers of Los Angeles over union limitation of annual dues opt-out period to a mere 30 days; John Matassa, Amalgamated Workers secretary-treasurer and reputed Chicago mobster, sentenced for embezzlement and giving wife no-show union job; Rodney Capello, business manager of Laborers local in Hawaii, charged with embezzling nearly $200,000.