Reader's Digest July 1986 Time To Put Labor Racketeers Out of Business Gangsters dominate four major U. S. unions-and use them to pick the pockets of all Americans. We have to declare total war on their corrupt empire by eugene h. Methvin

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Reader's Digest

July 1986

Time To Put Labor Racketeers

Out of Business

Gangsters dominate four major U.S. unions-and use them to pick the pockets of all Americans. We have to declare total war on their corrupt empire

READER'S DIGEST Senior Editor EUGENE H. METHVIN was a member of the President's Commission On Organized Crime and supervised its investigation into union corruption. 

Joe Teitelbaum, owner of a Miami stevedoring company, became so fed up in 1975 with shakedowns by the International Longshoremen's Association (ILA) that he turned to the FBI. The G-men were ecstatic to have an industry insider bold enough to wear secret tape recorders and introduce undercover agents to his business.

A federal probe lasting five years uncovered a massive, Mafia managed cartel stretching from Boston to Houston. The racketeers sold labor peace on the docks where delays can cost shipowners $35,000 a day, rigged bids on ship repairs, orchestrated fraudulent workmen's compensation claims, shook down employers for payoffs and fingered cargoes for truck hijackers. Dockworkers even had to pay a daily kickback to get work.

The FBI's biggest catch was the ILA's No. 3 officer, Anthony Scotto, boss of Brooklyn Local 1814. FBI electronic surveillance captured irrefutable evidence that Scotto was a capo in the Gambino gang, one of New York's top crime families. The Gambino organization controlled the docks as far south as Norfolk, Va., while the Genovese gang-another major New York crime family-ran the ILA locals farther south.

By 1981 Justice Department prosecutors had convicted 52 union officers and 58 company executives and corporations. Despite the convictions, little changed. The FBI subsequently recorded Gambino boss Paul Castellano boasting, "It's our International." Last January the President's Commission on Organized Crime reported, "Life on the docks today remains much as it was."

Bad Four

The frustrating result of this, the most successful labor-racketeering probe the FBI ever mounted, underlines a national scandal: four major American labor unions, with a total of nearly three million workers, are dominated by La Cosa Nostra, the crime syndicate, and its allies. The "Bad Four" are:

The International Brotherhood of Teamsters (IBT), whose l.9 million members range from airline pilots to truck drivers. The IBT has been under the mob's thumb for three decades. Former president Roy Williams, imprisoned for conspiring with Mafia leaders to bribe a U.S. Senator, acknowledged under oath that every major Teamster local "had some connection with organized crime" and his successor, Jackie Presser, is as controlled "as I was."*

The ILA, representing 116,000 dockworkers on the East Coast, the Gulf Coast and the Great Lakes. Through this union, reports FBI Director William Webster, the mob imposes a "racket tariff" on all goods shipped through U.S. ports. Syndicate-managed thefts at Miami docks alone total $2 billion a year-costs that are passed directly to shippers and consumers.

The Hotel Employees and Restaurant Employees International (HERE), whose 400,000 members are "owned" by the Chicago Mafia, according to Congressional testimony and the FBI. In nine years the union's assets have dropped from $21.4 million to less than $14 million. Millions have been siphoned away in "loans" to gangsters and associates.

The Laborers' International (LIUNA), whose 509,000 members are concentrated in heavy construction and the building trades. In addition to extorting kickbacks and payoffs, LIUNA leaders rig bids, fix prices and order contractors to buy supplies from mob-controlled firms. By one authoritative estimate, the Mafia monopoly adds 20 percent to construction costs in New York City.

The presidents of all four of 11 these unions have invoked the Fifth Amendment in refusing to answer official inquiries about criminal activities. Though AFL-CIO policy prohibits officials who take the Fifth from holding union office, the presidents of the three AFL-CIO unions continue to sit on the parent body's executive board. (The Teamsters were expelled from the AFL-CIO for corruption in 1957.)

Neglected Weapons.

Federal law-enforcement authorities, for their part, have ample legal power to clean up these unions, particularly with two weapons Congress gave the Justice Department in the 1970 Racketeer Influenced & Corrupt Organizations statute (RICO).

Legislators provided in RICO both criminal and civil sanctions for those engaged in a "pattern of racketeering." To imprison them, prosecutors must produce "proof beyond a reasonable doubt." But in a civil proceeding, government prosecutors or private parties need only supply a "preponderance of evidence." Then a jury or judge can impose triple damages. A judge can dissolve or seize racketeers' companies, oust them from their union posts or welfare-fund trusteeships, and ban them for life from specified business or union activity.

The late Sen. John L. McClellan (D- Ark.), the legislation's author, predicted the civil RICO law would assure the "wholesale removal of organized crime from our organizations and forfeiture of their ill-gotten gains."

But in 15 years, the Justice Department's organized-crime strike forces have brought just 68 criminal RICO prosecutions, with a distinct minority of those against union racketeers. These cases yielded only $1.1 million in fines and $3.2 million in forfeited assets. The neglect of the civil RICO weapon has been even worse: a mere six cases in 15 years, only one against a union racket.

By contrast, states that have adopted their own RICO statutes have put Washington's record to shame. Florida has had its statute only nine years, yet its attorney general has won $8.3 million in 39 civil RICO cases against racketeering enterprises as diverse as pornography, prostitution, theft, fraud and drug smuggling. In six years Arizona has brought 75 RICO prosecutions and chalked up judgments exceeding $16 million.

Rare Victory. Clearly, there is a great deal more to do on the federal level. Indeed, one of the few outstanding federal civil attacks on labor racketeering shows what can be accomplished by an all-out offensive.

In New Jersey, Mafia capo Tony Provenzano and his family ruled a Teamster empire, embracing 35 locals and 90,000 members, by sheer terror. In his own Local 560, two members who dared oppose Tony Pro were murdered-one gunned down as he left home the morning after speaking out at a union meeting.

The Provenzano group bilked Teamster welfare funds and oversaw Mafia loan-shark activities. They also infiltrated legitimate trucking companies to perpetrate a series of frauds and inside thefts, bleed the firms white and force them into bankruptcy. To avoid labor troubles, employers were compelled to make wholesale payoffs and hire ghost employees.

Justice Department prosecutors sent Tony Pro to prison for extortion. Yet he continued to run the union from his prison cell, his brothers assuming his official posts in Local 560. When Provenzano was finally put away for life for murdering a Teamster worker, his successor was none other than his 23-year-old daughter.

Then on March 9, 1982, Newark Strike Force chief Robert C. Stewart filed the first-ever civil RICO suit against a union. After a four month trial, he won a resounding victory. Federal Judge Harold Ackerman declared that the evidence revealed "how evil men engaged in a multifaceted orgy of criminal activity," and he ordered the removal of the entire Local 560 executive board and the appointment of his own trustees to run the union. An appeal of his order is pending.

Rich Potential

Stewart's New Jersey triumph had strong reverberations in Washington. Assistant Attorney General Stephen S. Trott told Congress, "The Local 560 case has opened our eyes to the potential of civil RICO. Future cases along the lines of Local 560 will be instituted."

Months passed, and nothing happened. Last March, the President's Commission on Organized Crime scored Justice Department inaction and called for a nationwide strategy "to bankrupt individual mobsters and to discourage union officers, employers and public officials from accommodating organized crime." But an effective federal assault will have to overcome these longstanding obstacles:

1. Lack of political will. Busting union rackets has never been popular work in Washington. Explains one former Labor Department investigator: "The rank-and-file union members are powerless, while their leaders can make campaign contributions, provide telephone banks and move voter blocks--muscles that win elections."

Thus, ILA vice president Scotto marched Brooklyn dockworkers to cheer candidate Jimmy Carter, and President Carter invited him to lunch-even after FBI agents had recorded incontrovertible proof of his Mafia membership and union piracy.

President Reagan has entertained Teamster leaders Williams and Presser at the White House. In 1980 top LIUNA officers trooped to the White House to have their picture taken with Vice President Walter Mondale and present him with a campaign contribution. In the last two Congressional campaigns, the Bad Four collected $4.7 million to aid favored candidates.

Declares the President's Commission: "When corrupt union leaders are seen joining hands with politicians it conveys a message that political leaders are beholden to the union. Such contacts can erode public confidence and dampen the desire to end racketeering. Organized crime is aware of this and purposefully seeks to cultivate and benefit from political influence."

2. Anemic enforcement. Congress has never provided enough personnel and funds to enforce the laws it has passed to safeguard union members' rights. "I have fewer than two hundred people to oversee fifteen thousand federally protected union pension and welfare funds containing billions of dollars in trust for millions of workers," complained Deputy Assistant Secretary of Labor John J. Walsh before he quit in 1984. (The union funds are in addition to the 700,000 other private pension plans that the Department oversees.) The DOL has only 89 investigators to help the Justice Department combat labor racketeering. A veteran prosecutor told me, "I could use more than that in Manhattan alone."

The racket-busters' principal antagonist is Robert J. Connerton, a lobbyist and LlUNA's longtime general counsel. Lawyers in Connerton's firm wrote a law-journal article denouncing DOL corruption fighters as "a national police force with little accountability"-without noting that one of their firm's major clients is the racket-ridden LIUNA. Connerton spearheaded an AFL-CIO lobbying drive that sank a Reagan Administration effort to persuade Congress to provide I50 more DOL investigators.

3. Bureaucratic bumbling and bickering. For decades, lethargy and rivalry have dogged federal anti-racketeering efforts. When the Justice Department indicted Florida LIUNA official Bernard G. Rubin for embezzling $400,000, for instance, prosecutors moved to place union funds under trusteeship. After DOL declined to assist, pleading "lack of manpower," the Justice Department abandoned the effort. Rubin was convicted (he is appealing), but Senate investigators found he embezzled an additional $2 million before he went to jail.

DOL's 89 crime investigators do not have the authority to carry guns, execute search warrants or make arrests. When a DOL agent wants to bust a racketeer, he has to hunt up an FBI agent to accompany him. Sen. Sam Nunn (D., Ga.) has introduced remedial legislation, but a turf-jealous Justice Department has stalled it for almost three years.

4. Inadequate planning, analysis and pursuit. The FBI, its agent strength cut by nearly ten percent between 1976 and 1980 has lacked the manpower to mine its vast lode of surveillance tapes of top mobsters. The G-men in Chicago, for example, recorded thousands of hours of criminal conversations between Teamster president Roy Williams and his cohorts, but harvested only a single case.

"I know what those tapes contained, and it's a shame only a single prosecution came out of it," one FBI agent told me.

Proper planning and analysis could pyramid such intelligence bonanzas into seizures of racketeers' property, expelling them from office and placing their unions under court supervision. Scores of FBI veterans are retired at age 55, when they're considered too old to "work the streets." Why not use them as intelligence analysts to pore through the files and plan strategic long-range strikes?

5. Neglect of corporate racketeers. While businessmen are often unwilling victims, they may also be eager customers for the mob's chief product: muscle to terrorize workers and keep them quiet while corrupt union and corporate executives strike sweetheart deals.

The Commission on Organized Crime heard from one self-styled mob "leg breaker" who described how corrupt Teamster leaders conspired with Fortune 500 company executives to cut wages and welfare benefits, and jettison safety rules.

The Justice Department prosecuted only seven defendants - not one of them a Fortune 500 executive.

EVERY AMERICAN, whether union member or consumer, has a direct stake in ending the mobster empire of labor racketeering. When your Congressman and Senators ask for your vote this autumn, ask them these questions: What have you done to root out racketeers and get the Justice Department moving to break the Mafia stranglehold on key unions? Are you accepting campaign contributions or endorsements from the "Bad Four" unions?

Meanwhile, write Chairman Don Nickles (R., Okla.), Senate Labor Subcommittee, 428 Senate Dirksen Office Bldg., Washington, D.C. 20510; Chairman William L. Clay (D., Mo.), House Labor-Management Relations Subcommittee, 2451 House Rayburn Office Bldg., Washington, D.C. 20515; or Attorney General Edwin Meese 111, U.S. Justice Department, Washington, D.C. 20530. Tell them it's time to put labor racketeers out of business, now.


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