Bureau of National Affairs
Daily Labor Report
Friday October 10, 1997
Crime Commission Reports Organized Crime
Continues to Influence Some Labor Unions
CHICAGO--Despite internal reform efforts by several unions and external pressure from federal law enforcement agencies, organized crime bosses still exert substantial influence over some unions, a new report released by the Chicago Crime Commission contends.
In a report entitled ''The New Faces of Organized Crime,'' the commission describes what it says is mob influence within locals of the International Brotherhood of Teamsters, the Laborers' International Union of North America, the Hotel Employees and Restaurant Employees International Union, and the Service Employees International Union. While much of the report deals with mob activities within Chicago-based locals of these international unions, the report broadly discusses organized crime's continued interest in and interaction with labor unions.
''Labor unions have traditionally been a tremendous source of power for organized crime and they still are,'' the report states. ''Although the degree of organized crime influence or control over a union or its leaders varies widely from union to union, the opportunities for criminal misconduct are abundant.''
The Chicago Crime Commission is an 88-year-old nongovernment organization that researches criminal trends and educates policymakers, the public and the law enforcement community about criminal activity. The commission released its report Oct. 2.
Wayne Johnson, chief investigator for the Crime Commission and one of the authors of the report, said a number of important reforms have sought to remove the mob's influence from various unions. He noted, however, that such campaigns have not always been successful based on the long history of linkages between unions and criminal elements. In many cases, factions within organized crime and various union locals are run like family businesses, with leadership passed from one generation to the next, he said.
Unions Attractive Targets
Johnson also contended that unions continue to be attractive targets for the mob, based on their ability to control and influence large numbers of people, huge corporations and funds totalling billions of dollars. Corrupt practices typically witnessed in mob-influenced unions, according to the report, include:
corrupt union officials making ''loans'' to themselves or organized crime figures from union pension, strike and health and welfare funds, which are never repaid;
mob-controlled unions funneling lucrative contracts to mob-owned businesses;
corrupt union leaders accepting money from employers to resolve disputes, call off strikes, or avoid signing collective bargaining agreements;
corrupt union officials extorting money from employers through threats of work stoppages or slowdowns;
corrupt union officials steering positions to family or mob members and creating so-called ''ghost payroll'' jobs, which give individuals salaries even though they perform no duties;
mob-controlled unions using worksites to promote illegal activities such as gambling and loan sharking; and
mob-controlled unions using their human and financial resources to influence elections and gain control over politicians.
LIUNA Undergoing Reform
Johnson charged that Chicago's organized crime operation, locally known as the ''Outfit,'' has not only controlled many union locals, but has also wielded considerable control over international unions. In this regard, he pointed to LIUNA, which is undergoing an internal reform process through a unique agreement with the U.S. Department of Justice.
The report specifically points to Justice Department documents that allege that many of the highest positions in the international union have historically been controlled by Chicago Outfit crime bosses. An organizational chart of the Outfit contained in the report lists several senior LIUNA officials as known associates of the Outfit, including Bruno Caruso, president of Local 1001 and a contender in last year's election for international president, and John Serpico, a former international vice president. The report also states that over the past 23 years, 80 LIUNA officials have been convicted for crimes including labor bribery, ghost payrolling and receiving kickbacks.
The international union is attempting to impose a trusteeship on the Chicago District Council of LIUNA. The union's independent hearing officer is currently conducting a hearing to determine whether such measures are necessary. Dwight Bostwick, the LIUNA general executive board attorney trying the case, said the hearing is scheduled to conclude Oct. 24 and a ruling on the trusteeship is expected in December.
The Crime Commission, which provided testimony and evidence of corruption within the Chicago District Council, expressed the need for reform within the union.
''The testimony was overwhelming and should rid the named locals of mob influence and allow for the honest hard-working membership to elect officials that will have their interests in mind and not the interests of Chicago organized crime,'' the report notes.
History of Corruption
The Crime Commission also points to a history of corrupt practices at HERE. Working from Justice Department documents, the report contended that the union's current international president, Edward Hanley, was elected to that post 24 years ago at the direction of Joey Aiuppa, who was the Chicago Outfit's underboss at the time.
HERE entered into a consent decree with the Justice Department in 1995. Among other things, the agreement appointed a special monitor and gave him authority to root out corruption in the union and take disciplinary actions against union officials for unethical practices.
The report also discusses the consent decree reached in 1989 between the Teamsters and the Justice Department, which paved the way for open elections of international officers by rank-and-file members and disciplinary activities through the Independent Review Board. Over the last eight years, 66 locals have been investigated and recommended for trusteeship by the IRB.
The commission points to a history of corrupt practices and mob associations within a number of Teamsters locals in Chicago. It specifically alleges ''historic and long-standing ties'' between Local 714 and upper echelon figures within the Outfit. Local 714 was placed in trusteeship in 1996.
The commission also applauds efforts to remove corrupt influences from SEIU Local 25. The international union ousted local President Eugene Moats in 1996, accusing him of misappropriation of funds and nepotism.
The crime commission's report suggests that responsibility for cleansing unions of mob control and corrupt practices belongs, in large part, to law enforcement authorities and policy-makers. But the report concludes union members must take broader responsibility for the honest operation of their unions.
''The rank-and-file membership bears the ultimate responsibility for ensuring that the union serves its interests, for they have the most to lose,'' the report states.
By Michael J. Bologna
Copyright © 1997 by The Bureau of National Affairs, Inc., Washington D.C.