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Biz Union Black Ops P05: Bad Boys

Written by Wanda Pasz Thursday, 16 March 2006

To fully appreciate the daring move the Canadian UFCW made when it decided, in the early 1990's, to quietly invade the Hotel Employees Restaurant Employees Union's turf, it helps to understand who was actually running HERE.

Labor racketeering is the infiltration, domination, and use of a union or employee benefit plan for personal benefit by illegal, violent, or fraudulent means. Organized crime is defined as activities carried out by groups with a formalized structure whose primary objective is to obtain money through illegal activities.

Traditional organized crime entities that employ the use of "strong arm" tactics and intimidation as well as "new generation" racketeers who make use of sophisticated financial schemes, also are investigated by the OIG. However, top priority is given to organized crime influence of labor unions and/or employee benefit plans. Our investigations have shown that the vast sums of money in these plans remain vulnerable to corrupt union officials and organized crime influence. Priority is also given to cases in which a position of trust (e.g. plan trustee, third-party administrator, or union official) is used for criminal purposes... Service providers to union pension and benefit plans continue to be a strong focus of the OIG's investigations because the large amounts of money associated with these plans make them vulnerable to fraud and corruption.

Testimony of Stephen J. Cossu, Deputy Inspector General, Office of Labor Racketeering and Fraud Investigations, Office of Inspector General, U.S. Department of Labor, September 10, 2002

The infiltration of North American unions by organized crime has a long and well-documented history. Beginning in good earnest in the 1930's when the repeal of prohibition left criminal entrepreneurs hungry for other sources of illicit income, labor racketeering quickly became a lucrative criminal enterprise for major crime families intent on getting a piece of the action.

The Hotel Employees Restaurant Employees International Union (HEREIU) got mobbed-up early.

Criminal infiltration has been an ongoing problem with the union. During the 1930's, a Special Commission on Crime headed by Thomas Dewey of New York revealed massive racketeering in the restaurant business in New York, including criminal influence in local labor unions. In 1958, the Select Committee on Improper Activities in the Labor or Management Field, chaired by United States Senator John L. McClellan, established that organized crime figures in Chicago, Illinois and, elsewhere, had assumed control of some local unions. Again in 1983, the Permanent Subcommittee on Investigations of the United States Senate conducted lengthy hearings that, again, indicated the influence of criminal elements in union affairs.

Report of Kurt W. Muellenberg, Court-Appointed Monitor, August 26, 1998, Excerpt from www.heretics.net, a HEREIU members' web site

But they weren't the only union that fell prey to underworld interests.

Gaining control of unions was relatively easy. Union officials could be corrupted through intimidation or inducements. Alternatively, mob-friendly officials could be installed through rigged elections. Unions could be infiltrated at the local level or from the top down. All that was needed were strong leaders, unlikely to ever be deposed by members, who would be counted on to take care of business. Once in, they were difficult to dislodge.

In his affidavits for the government in the litigation against the IBT general executive board, former IBT General President Roy Williams explained that in the exercise of his previous duties as president of IBT Local 41 in Kansas City, he took directions from organized crime boss, Nick Civella. Williams claimed he did not know Civella was involved in the Mafia until he was taken blindfolded to a warehouse and threatened with harm to himself and his family. Williams went to Jimmy Hoffa for advice, and Hoffa reportedly told him, '"Roy, it's a bad situation ... You can run, but you can't hide. My advice to you is to cooperate or get your family killed. Roy, these are bad people. And they were here a long time before you and me came. And they'll be here a long time after we're gone. They've infiltrated into every big local union, every conference and pension fund - even the AFL-CIO! I'm tied as tight as I can be.'"

The RICO Trusteeships after Twenty Years: A Progress Report

Unions were and continue to be a happy hunting ground for criminal syndicates for a number of reasons.

  1. Access to union pension and other benefit plans enabled crime families to plunder millions of dollars of workers' funds with minimal risk of being caught. Millions more can be made through control of benefit plan administration services through excessive administration fees charged to the unions.
  2. The ability, through threats of strikes and other disruptions, to compel employers to award lucrative contracts for goods and services to mob-controlled companies.
  3. Payoffs by employers in exchange for sweetheart contracts.

Bob Fitch, author of Solidarity for Sale, refers to pension pilfering as the "cannoli" (a rich sweet Italian dessert) of labor racketeering. The availability of millions of dollars that can be siphoned off quietly, with the acquiesce and assistance of pension trustees, makes this an especially rewarding activity.

The fleecing can be done in a number of ways:

  • Pension trustees agree to make loans that will never be repaid to mob-connected companies.
  • Pension trustees help mobsters get rich by buying their properties at inflated prices.
  • Pension trustees agree to over-fund construction and renovation projects where mob-connected contractors make money by overcharging for their services. Sometimes properties are renovated time and again as the mobsters squeeze the pension plan repeatedly.

In his book, which chronicles the influence of organized crime in American labor unions, Fitch describes a classic union pension scam:

Generally, the Mason Tenders real estate swindles were carried out in two phases. First, the trustees would buy a property at inflated value from mob-connected sellers. Then they would renovate the property in order to get kickbacks from the contractors doing the work.

Solidarity for Sale, Bob Fitch, 2005, page 151

Of course there's something in it for the pension trustees, or at least, those who control the flow of money.

Of all the mob-initiated union pension-fleecings - and there were many - one of the best known is the Teamsters Union's Central States Pension Fund which, over a period of more than a decade, was robbed of millions of dollars under the watchful eye of President Jimmy Hoffa. Hoffa lined his own pockets by taking a 10% commission on the funds he loaned to his mafia pals:

The Central States pension fund was created by then-Teamsters vice president Hoffa in 1955 by folding together smaller pension funds from 22 states. On its face, the new pension fund was a move to provide portable pensions for truck drivers who frequently changed jobs. But that was only how it looked on paper. The fund was designed to be a piggy-bank for Hoffa and his friends in the Mafia to dip into. According to James Neff, author of Mobbed Up, the board of trustees of the new pension fund was "simply a rubber stamp. Hoffa dictated whom to loan money to. In return Hoffa demanded a finder's fee of up to ten percent of each loan. The trustees went along with it. The union's trustees were his toadies; the employer trustees, usually trucking company owners, feared strikes and slowdowns if they lifted a finger against Hoffa."

Mob Scene, Matt Potter, San Diego Reader, November 18, 1999

Positions on union executive boards also provided good cover for mobsters who could deflect attention from their underworld connections by packaging themselves as "representatives of the people" - a ruse that allowed them to accuse their critics or those who suspected their other interests of disloyalty and anti-unionism. The respectability that being a union leader provided to the mobster or underworld operative also enabled crime families to develop relationships with politicians and public servants - further insulating themselves from scrutiny and co-opting powerful figures they could lean on for support when the going got tough.

Efforts to clamp down on labor racketeering occurred on and off in the US since the 1930's but it was not until the mid-1970's, following the presumed mob execution of Teamsters President Jimmy Hoffa, that a concerted and prolonged effort to address the problem was undertaken by American law enforcement agencies.

In 1978 a White House report on organized crime and labor unions had this to say about the state of organized crime and organized labor:

This is a preliminary report on the organized crime influence in the labor unions today in the United States. The picture that it presents is thoroughly frightening. At least four international unions are completely dominated by men who either have strong ties to or are members of the organized crime syndicate. A majority of the locals in most major cities of the United States in the International Brotherhood of Teamsters (IBT), Hotel and Restaurant Employees Union (HRE), Laborers International Union of North America (Laborers), and International Longshoreman's Association (ILA) unions are completely dominated by organized crime. The officials of these unions are firmly entrenched; there is little hope of removing them by a free election process. Convictions for misconduct have been sparse and when one corrupt official is removed another soon takes his place. The result has been a complete domination of certain industries by hoodlums.

Organized Crime and Labor Unions, 1978

Identified as one of the four most mobbed up unions in the country, the HEREIU's connections were legion, starting with its International President Edward T. Hanley:

The Hotel and Restaurant Employees Union represents the converse of the International Brotherhood of Teamsters. In the teamsters, the corruption and organized grime influence are a result from the massive infiltration of the local unions. The HRE on the other hand has been infiltrated from the top. This occurred as a result of the power wielded in the Chicago area locals and joint executive board by Joey Aiuppa, the underboss of the Chicago Syndicate. Edward Hanley was elected president of HRE International in 1973 on the power and influence of Aiuppa and the Chicago mob.

This is not to say that none of the locals are hoodlum controlled or that Hanley is the first corrupt president of the Union. Nevertheless, Ed Hanley represents the classic example of an organized crime take-over of a major labor union. Since his election, Hanley has moved to solidify his power, both in terms of the local Union officials and elements of organized crime. Likewise, the HRE, under Hanley's guidance has moved to insure support in the appropriate government circles by carefully selected and generous political campaign contributions.

The following is a summary of the International officers, their organized crime affiliation, and their method of operation.

I. UNION OFFICIALS

EDWARD T. HANLEY (International President) - Hanley was born in Chicago on January 21, 1932. His associates include Joey Aiuppa, organized crime boss of Chicago, and organized crime figures John Delasandro and Rich Conboys. Hanley's brother-in-law is Frank James Calabrese, burglar and loanshark collector. Hanley was hand-picked for his current position by Joey Aiuppa. Hanley started his union career in 1957 as Business Agent for Bartenders Local 450 in Cicero, Illinois, and held a similar post in Local 278 of the Chicago Bartenders union, both of which are tightly controlled by Aiuppa. In 1962 Hanley became president of the Culinary Workers Chicago Joint Executive Board, which is also under the control of organized crime. He became International President in 1973.

JOHN F. GIBSON (International Secretary-Treasurer) - Gibson was the former President and a full-time Business Agent of Local 430, Miscellaneous Hotel Workers, St. Louis, Missouri. As a bartender in St. Louis, Gibson was a protege of Johnny Vitalk of the St. Louis organized crime family. He is also close to Morris Shenker, the powerful teamster lawyer.

HERMAN "BLACKIE" LEAVITT (International Vice President) Leavitt was for years Secretary-Treasurer of Local 284, Bartenders, Los Angeles.

HERBERT D. "PINKY" SCHIFFMAN (International Vice President) is also President of Local 355, HREU in Miami, Florida. In December, 1976, he was convicted of Title 29, United States Code, Section 186(b)(1)(d) for accepting gratuities from hotel owners. Schiffman is an associate of several southern organized crime figures.

J. BELARDI (International Vice President) - is also president of the major local in San Francisco. He is a close associate of Tony Romano, a lieutenant in the Buffalo organized crime family who has recently moved to the San Francisco Bay area.

Hanley has increased the ranks of organizers for the International from 27 to 104 during his tenure as President of the Union. The increase in funds spent for organizing amounted to $4,800,000. In spite of this, the membership rolls of the Union have declined. Many of the persons placed on the payrolls as organizers are organized crime figures or friends of Hanley, mostly from Chicago. A few of the more noteworthy examples are as follows:

JACKIE PRESSER (International Organizer), was put on the International payroll one month after HANLEY assumed office and received $11,000 salary, $4,630 allowances and $301 expenses, for a total of $15,391 for Fiscal Year 1974. Until recently Presser was also President of Local 10, HREU, Cleveland, Ohio. The organized crime affiliation and involvement of Presser through, and independent of the Teamsters Union are well documented.

JOHN LARDINO (International Organizer) - is a major organized crime figure in Chicago. He asserted his Fifth Amendment privilege 73 times in testimony before the McClellan Committee, mostly in response to questions concerning his associations with Joey Aiuppa and other organized crime figures.

PAT BATTISTA (International Organizer) - is also president of the Local 278, Chicago. He recently purchased a home in Palm Springs for $89,500. He is also an associate of Joey Aiuppa. Battista was placed on the payroll shortly after Hanley assumed office.

ANTHONY SPANO International Organizer) - Spano is both a union organizer and the full time head of Cicero Local 450, where Hanley began his union career. The close relationship between Spano and organized crime is exemplified by an incident that occurred in 1968; a free parking permit for Arlington Park racetrack issued to Local 450 ended up on the car of Tony Accardo's wife.

TED HANSEN is a former Chicago fireman with no prior labor experience. He is Hanley's brother-in-law. Likewise, John O'Gara and Joseph McLaughlin are organizers with no prior experience. Both are Hanley's cousins.

The following is a summary of the criminal influence in key HRE locals across the country.

Local 50 - Hayward, California. Secretary Treasurer Joseph Medeiros is closely associated with Abe Chapman and Anthony Romano, Northern California Organized Crime Figures. Medeiros has often been suspected of committing arson against hotels while attempting to organize them. Medeiros is also under investigation for inflicting beatings upon union members during an intra-union power-struggle.

Local 30 - Los Angeles. The Secretary Treasurer, Joe Tinch, was allegedly hand-picked for this position by Los Angeles LCN figure Joseph John LiMandri.

Local 151 - Atlanta. This local is controlled by Hanley supporter Herbert "Pinky" Shiffman. Shiffman who is also the President of a Miami local and an International Vice President, was recently convicted of accepting a discount for a room at an Atlanta hotel where his members are employed. Another Hanley man is President of Local 151, John T. Timperio.

Local 64 - Kansas City. This local was formed as a result of a merger of 4 locals by the International. During the two years it was in receivership, the local was run by Michael Salerno, hand-picked by Hanley. Salerno is under investigation for allegedly embezzling organizing funds disbursed to him by the International. When the local was taken out of receivership in 1976, Baldasaro Palmentere, former bagman for Nick Civella's right hand man, Danny Lawson, appeared as the Secretary Treasurer of the local. Hanley supported Palmentere who according to DOL is trying to gain control over all the locals' funds.

Local 278 - Chicago. The President is Pat Battista, also an International organizer. He was placed on the payroll soon after Hanley assumed the presidency of' the International. He is an associate of Chicago LCN member Joey Aiuppa.

Local 304 - Chicago. Mickey Cogwell was president this local prior to his fraud conviction in the early 1970's.

Local 450 - Chicago. This local was started in the 1930's by organized crime boss Joseph J. Aiuppa. Hanley was a business agent- for the local in 1961.

Local 10 - Cleveland. Jack Presser, Cleveland LCN figure, and Teamster International Vice President, is former president of this local. He resigned when the DOJ began an investigation of the International Union. Jack Lubin, Vice President, is convicted arsonist. He is a principal subject in a Strike Force investigation involving a massive fraud on the Northern Ohio Bank.

Local 66 - Buffalo. Local president, Sam Cariola is an associate or Jimmy LaDuca, Buffalo LCN member, and an attendee of the famous Appalachia organized conference in 1958.

There is a suspected sweetheart contract between this local and the Costintino Hotel chain, which is owed LCN interests. The result of the sweetheart contract is that once employees are hired by the hotel chain, they are transferred to other HRE locals where wages and benefits are lower.

By 1985 federal agencies had armed themselves with extensive powers of enforcement and were tightening the noose around the most-mobbed-up. Their enforcement powers provided them with the ability to commence criminal prosecutions but also to take control of mob-controlled unions with the intention of restoring internal democracy and prohibiting future infiltration by organized crooks.

The following excerpt from the President's Commission on Organized Crime, Interim Report, 1985, describe the extraordinary measures which had been adopted to rid unions of the pernicious mafia presence:

In 1985 the President's Commission on Organized Crime identified four international unions which had been influenced by organized crime. In a 1986 report entitled The Edge: Organized Crime, Business, and Labor Unions the President's Commission recommended that the civil remedies provided by the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. 1961, et seq., be used to eliminate the corrupt influence of organized crime within these unions.

In addition to the criminal prosecution of racketeering activity, the civil provisions of the RICO statute give the Federal Government powerful tools with which to reform organizations that have been influenced by patterns of corruption and other criminal activity covered by the statute. The United States can file civil RICO complaints for injunctive and other equitable relief such as the appointment of court overseers of corrupted organizations and the judicial disgorgement of the property obtained by criminal activity. However, in relation to labor unions, the Department of Justice regards a civil RICO lawsuit as an extraordinary remedy by which the sources of corruption and criminal activity can be removed from an organization thereby permitting union members to freely exercise their rights of democratic participation in labor union affairs as guaranteed by the LMRDA. In other words, our goal is not to operate labor unions, but to promote an atmosphere in which union members are not harmed economically by labor-management corruption and are not physically intimidated by mob members and associates who may use violence and other criminal activity to dominate or corruptly influence particular unions. Once freed of these criminal elements, it is our hope that union members can go on to freely express their opinions on union business, vote for officer candidates of their choice, run for union office, and govern their own union's affairs.

By 1990, the Feds were kicking ass in mobbed-up unions and the HEREIU was taking its fair share of the booting. That year, the first of a number of RICO lawsuits was filed against its International President, Edward T. Hanley, and other high-ranking mobbed-up union officers.

I would like to note that between 1982 and 1995 the Department of Justice commenced 17 civil RICO actions which involved corrupt labor-management relations or corrupted labor unions dominated or controlled by organized crime. In 15 of these 17 cases, court-appointed officers were installed to exercise continuing oversight of the affairs of labor unions or employer associations which had been victimized by the mob. Such oversight has involved 2 employer associations in the New York metropolitan region, 2 international labor organizations, 3 district labor councils, and 15 local labor organizations affiliated with the Teamsters, Laborers, Hotel Workers, Longshoremen, and Carpenters unions. In 1995 the Department of Justice also reached an agreement with the Laborers International Union of North America to settle a proposed civil RICO lawsuit whereby the Laborers Union would undertake its own internal reform with oversight by the Department of Justice.

The Government's first step in using civil RICO to remove mob influence in the HEREIU was taken in December 1990 with the filing of the civil RICO lawsuit in United States v. Edward T. Hanley, et al., No. 90-5017 (GEB)(D. N.J.) involving HEREIU Local 54 in Atlantic City, New Jersey. As part of the settlement of that case in April 1991, a court-appointed monitor was installed to oversee internal union affairs and new officer elections. Judgments were entered against 19 individuals, including LCN members or associates of the Bruno/Scarfo La Cosa Nostra (LCN) family in Philadelphia, union officials, and service providers, permanently enjoining them from providing services, management or control to any labor organization or union-sponsored employee benefit plan. Local 54 saved an estimated $1.5 million in union funds because of the court-appointed monitorship before new officers were elected and the consent decree was dismissed in 1997.

Similarly, in October 1992, the simultaneous filing of a civil RICO complaint and consent decree in United States v. Anthony R. Amodeo, Sr., et al., 92 Civ. 7744 (RPP)(S.D.N.Y.) was followed by the installation of a court-appointed officer with authority to investigate officials of HEREIU Local 100 in New York City, oversee expenditures by that union, and to investigate corruption by restaurant employers. The HEREIU's trustee of Local 100 became a court-appointed trustee and continued to operate the union and negotiate new collective bargaining agreements on behalf of the members. In place of the LCN associates removed from office and permanently enjoined from participating in union affairs, new officers were elected before the Local 100 consent decree ended in 1995.

In each of the two lawsuits the HEREIU cooperated with the court-appointed monitors in the effort to reform the corrupted subordinate organizations. However, the Department of Justice continued to consider a civil RICO action directed at all levels of the HEREIU. In late 1993, the United States Attorney's office and Robert Stewart, the former chief of the Organized Crime and Racketeering Strike Force, in Newark, New Jersey, advised the Criminal Division that counsel for former the HEREIU General Executive Board was willing to negotiate an agreement by which the international union would cooperate in an effort to rid the HEREIU of corruption and outside criminal influence. Following negotiations conducted by representatives of the United States Attorney's office in Newark and the Organized Crime and Racketeering Section in Washington, D.C., a civil RICO complaint and consent decree were filed simultaneously on September 5, 1995, in the District of New Jersey before Judge Garrett E. Brown, Jr., the supervising judge in the Local 54 civil RICO litigation. In the consent decree filed in United States v. Hotel Employees and Restaurant Employees International Union, et al., Civil Action No. 95-4596 (GEB)(D. N.J.), the members of the HEREIU General Executive Board agreed that the union would be placed under court oversight for a period of at least four years. As part of the settlement, the General Executive Board continued to conduct the operations of the union and labor negotiations with employers.

The concerted attack on HEREIU's most powerful officials and the lengthy period of "oversight" to which the union would be subject could not have been good news for the mafiosi who had made the union their home since the 1930's.

Hanley was their guy. The one they counted on to keep their criminal enterprise humming along within the HEREIU. Hanley's decision to allow federal court supervision of the Atlantic City local was a signal he was losing control.

HEREIU Local 54, which is located in the Atlantic City, New Jersey area, came to prominence in 1978 after the opening of Atlantic City casinos and the concomitant rise in the demand for waitresses, waiters, and bartenders. With the increase in potential union members came a struggle for control between factions of the Philadelphia family of La Cosa Nostra. Department of Labor Special Agent Ron Chance testified before the Commission about Local 54 and its influence in Atlantic City:

Local 54, in Atlantic City, is a classic case study in organized crime and labor racketeering. Several of the officers of this union and its predecessor unions boast convictions for murder, arson, extortion, drugs, bribes, kickbacks and racketeering. Next to the ownership of the casino itself, the control of Local 54 is the most important prize in the Atlantic City sweepstakes. . . . In 1978, when the casinos opened, Local 54 began to rise in stature and importance. Prior to the casino gambling, they only had about 2,500 members and most of them were employed in seasonal jobs in the hotel and restaurant industry in the seashore. The opening of each casino, though, brought between 1,500 and 2,000 new members into the local, and they now have about 15,000 members. Indeed, the stakes were high for this "most important prize." Membership increases contributed so substantially to total dues collection that the local's annual income swelled from $269,000 in 1979 to $1,389,000 in 1982, and permitted the local to contribute more than $15 million a year to the international's Health and Welfare Fund.

Excerpt from President's Commission on Organized Crime, www.laborers.org

For Hanley and his mob associates, the timing of the bust couldn't have been worse. In 1990, they were on a roll, lobbying government officials to ... build more casinos.

Increased casino gambling will produce more bettors who will bet on sports. The current volume for illegal sports betting, the main source of Mafia funds, is immense beyond the ability of Justice to even estimate. The casinos will increase that volume. As Gary Shapiro, Chief of Chicago's Strike Force told our panel, "Casinos are cash cows for the mob."

The very union official who presented the proposal to our mayor is an associate of organized crime figures.

Better Government Association, 1992 Gambling Study

It was this mob-dominated casino-hungry union's turf that Cliff Evans and the Canadian UFCW decided to invade, quietly but with great determination, in 1992.

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