| Manuel J. Reyes
Carol Corrigan Justin J. Dintino William J. Guste Judith R. Hope
Justin J. Dintino
William J. Guste
Judith R. Hope
* Commissioner Rodino, in view of his position
as Chairman of the Committee on the Judiciary of the United States
House of Representatives, takes no position concerning the recommendations
included in Section Eleven of this Report.
| Summary of Recommendations
o Section One Section Two Section Three Section Four Section Five Section Six Section Seven Section Eight Section Nine
Someone else owns the international.
-Paul Castellano, former boss
of the Gambino crime family. 1
Aiuppa and Accardo [underboss and boss of
the Chicago Outfit, respectively]
continue to exert great influence over the
union and its president
The Hotel Employees and Restaurant Employees
International Union (HEREIU) was founded in 1891 as the Waiters
and Bartenders Union. It quickly became the union of choice for
bartenders, waiters, maids, cooks, porters, busboys, and related
service workers in the United States and Canada.3 Almost 100 years
later, HEREIU has a documented relationship with the Chicago "Outfit"
of La Cosa Nostra at the international level and subject
to the influence of the Gambino, Colombo, and Philadelphia La
Cosa Nostra families at the local level.
During the union's early years internal conflicts
developed between a Chicago faction, headed by W.C.
Pomeroy, and the rest of the union, led by Jere Sullivan. At the
1896 convention Sullivan charged Pomeroy with misuse of funds;
when Sullivan was elected general secretary-treasurer in 1899
he ousted Pomeroy from control in 1900 and embarked upon a program
of reorganization with the support of Samuel Gompers and the AFL.
Although the luxury hotel business boomed during the first two
decades of the 1900's, opening numerous jobs
for service employees, HEREIU was not a force in the trade because
Sullivan refused to organize the unskilled and foreign born. Moreover,
HEREIU lost about one-third of its membership almost immediately
following the enactment of Prohibition in 1920.
With Sullivan's death in 1928 and the ascent
of the new president Edward Flore, HEREIU fully responded to the
demands for organizing the unskilled. By the early 1950's union
membership was near its present day figure of 400,000, and key
steps had been taken to centralize internal power - primarily
by allowing international officers to intervene directly in the
affairs of HEREIU locals.
Criminal infiltration, which has consistently
plagued HEREIU, was exposed at the union's 1936 national convention,
where Harry Koenig of Local 16 in New York City was murdered.
Subsequent investigation by the Special Commission on Crime, headed
by Thomas Dewey, revealed a flourishing restaurant racketeering
business in New York City. In 1937 three officials of the national
were convicted of crimes, Local 16 was suspended, and those members
associated at the time with criminal activities were expelled.4
In 1958 the McClellan Committee revealed
that organized crime had infiltrated the Chicago restaurant industry
through its control of three union locals. Business agent John
was believed to be one of the chief lieutenants
to Tony Accardo, the long-time boss of the Chicago Outfit, controlled
Local 593. Both Accardo and Lardino appeared before the McClellan
Committee and invoked their privilege against self-incrimination.
Chicago Outfit representative Louis Romano then controlled Local
278. In 1935 the Outfit extended its power to Chicago's suburbs
by obtaining the charter of Local 450. Those who influenced Local
450 were believed to be Frank "The Enforcer" Nitti,
Murray "The Camel" Humphreys, and Louis Romano. Joseph
Aiuppa, at that time a gunman for Al Capone, was listed as the
secretary of Local 450 on the application filed with the international
For 40 years Joseph Aiuppa, now the underboss
of the Chicago Outfit, and boss Tony Accardo wielded power in
the Chicago area locals and the HEREIU joint executive board.
Their actions took on national proportions when Edward Hanley,
who began his career in Local 450 as a business agent in 1957,
was elected to the HEREIU presidency in 1973.6
Joseph Hauser, a convicted defrauder of union
benefit funds, appeared before the Senate Permanent Subcommittee
on Investigations in April 1983 and testified that Chicago crime
boss Tony Accardo hand-picked Edward Hanley for the HEREIU presidency.7
Hauser noted, "Aiuppa and Accardo continue to exert great
influence over the union and its president, Ed
Hanley." According to the Senate Report,
the reign of Hanley has been surrounded by allegations of organized
crime's influence in the choice of international union organizers,
operation of benefit funds, and conduct of union affairs.8
Since Hanley took office in 1973, union assets
dropped from $21.4 million to less than $14 million in 1982. Nearly
$6 million of this money went into three loans executed with private
developers, one of whom was Morris Shenker, an associate of the
late Kansas City organized crime leader Nicholas Civella. Shenker
received the largest single loan from the Teamsters Central States
Pension Fund, a portion of which has never been repaid.9
The Subcommittee found that the union's assets
have been used to enrich the top officers of HEREIU's hierarchy.
Base salaries augmented by expense accounts and "allowances,"
lifetime employment contracts, and increased expenditures of tangible
items have resulted in expenditures for HEREIU officers skyrocketing
from $229,051 in fiscal year 1973 to $1,689,370 in fiscal year
1983.10 Former HEREIU general secretary-treasurer John Gibson
was found guilty in May 1980 of misusing the union's airplane
and of conspiring to embezzle union funds. Gibson received concurrent
four-month sentences, which he served in 1983, while receiving
his lifetime contract checks from the union. 11 The list of employees
and organizers hired after Hanley became HEREIU president includes
associates and numerous patronage jobs.12
In addition, one of Hanley's early moves was to hire the current
Teamsters president, Jackie Presser, as an international organizer
in 1973; Presser was already an officer of a HEREIU Local in Cleveland.
He resigned the HEREIU post in September 1976, when he became
an IBT international union vice-president.
Most troubling to the Subcommittee was the
unprecedented degree to which Hanley has been able to centralize
authority within HEREIU and to control local chapters through
the use of mergers, trusteeships, and personnel transfers, an
action which mocks the goals of local autonomy and members' rights
as embodied in the Landrum-Griffin Act. HEREIU's president has
almost absolute authority to effect mergers and has done so more
than 136 times since 1973. Hanley has also consolidated 16 separate
pension funds with total assets of approximately $75 million and
35 separate health and welfare funds into single funds under the
control of the international union in Naperville, Illinois.
Hanley's Assertion of the Fifth Amendment
The Permanent Subcommittee on Investigations
sought Hanley's perspective on his union's increasing identification
with organized crime. He refused to testify.l3 Hanley's refusal
to respond to questioning and his assertion of his Fifth Amendment
privilege before the Subcommittee deprived the Senate of the opportunity
to explore this steady movement of HEREIU money and
power to Chicago. Hanley declined to answer
a series of questions which focused on his understanding of the
obligation of trust imposed on union officials. He rejected the
opportunity to explain HEREIU's merger policy. Finally, Hanley
found no purpose to be served by responding to questions about
his relationship with the leadership of the Chicago outfit, murdered
racketeer Allen Dorfman, or attorney Sidney Korshak.
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.l4
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.
On December 15, 1980, John McCullough, the
president of Philadelphia Roofers Union Local 30, was shot to
death at his home by Willard E. Moran, allegedly due to his attempts
to organize the Bartenders in Atlantic City away from HEREIU Local
54.15 After his conviction, Moran decided to cooperate with prosecutors
and testified that he was recruited, employed, and trained to
kill McCullough, an associate of Philadelphia LCN boss Angelo
Bruno by former HEREIU Local 54 vice-president Albert Diadone
and Raymond "Long John" Martorano, an associate of Atlantic
City LCN boss Nicodemo Scarfo. Moran testified that these two
actually escorted him to McCullough's home and drove him home
after the murder. Both Diadone and Martorano have been convicted
and sentenced to life imprisonment.
In 1979 Frank Gerace was appointed president
of Local 54 after the previous president, Ralph Natale (another
Bruno associate) was convicted and sentenced to 30 years' imprisonment
for a variety of offenses, including narcotics trafficking.
Local 54, under the presidency of Frank Gerace,
has been the focus of several investigations by law enforcement
agencies, as well as the U.S. Congress. Gerace has been named
in Senate testimony as a significant criminal associate of the
Scarfo crime family. The investigations have focused on Local
54's benefit funds, mob ties, and corruption of public officials.
In 1980 the New Jersey Commission of Investigation reported that
Larry Smith, head of Rittenhouse Consulting Enterprises, Inc.
in Cherry Hill, New Jersey, profited handsomely from Rittenhouse's
consulting work to arrange dental care services for HEREIU Local
33. Ultimately, HEREIU Local 33 was absorbed into Local 54 of
Atlantic City. In tracing Rittenhouse's and Local 54's disbursements,
New Jersey commission investigators determined that $153,000 in
cash from the Local's fund could not be accounted for.
After a three-year inquiry, the Senate Permanent
Subcommittee on Investigations said that Smith had controlled
Local 54's dental plan almost since its inception, for the benefit
of Philadelphia organized crime interests, and that the nature
of "consulting" services rendered by Rittenhouse for
substantial fees could not be determined.16 Subsequently Larry
Smith was one of 41 individuals or entities named in a Department
of Labor civil suit. It charges that past and present Local 54
trustees and the corporations formed to administer the $1.2 million
dental plan violated the Employee Retirement Income Security Act
(ERISA) by failing to solicit bids for a dental plan
contract in 1980.17 Neither Local 54 itself
nor its current officers are named in the suit, which asks that
the defendants pay all losses resulting from their alleged actions
and that new arrangements be made to provide Local 54 employees
with dental care.
Local 54 and Corruption of Public Officials
Frank Lentino, a former business agent for
Local 54, recently pled guilty to one count of Hobbs Act conspiracy
and one count of obstruction of justice. During that investigation
Lentino bragged that he controlled labor for Nicodemo Scarfo,
the current head of the LCN faction in Atlantic City and Philadelphia.
Lentino also claimed that Local 54 officials helped the Scarfo
group exercise a corrupt influence over former Atlantic City Mayor
Michael Matthews. Before his election as mayor of Atlantic City,
Matthews solicited an illegal campaign contribution of $125,000
cash from Local 54's Frank Gerace, Albert Diadone, and Frank Lentino.
Matthews received the cash in several installments with at least
one payment being picked up at the union hall. Matthews was ultimately
convicted of receiving bribes from a federal undercover agent.
When he was questioned about the $125,000
cash contribution, Matthews admitted that he approached the Local
54 officers to obtain money from the Scarfo La Cosa Nostra
group. In return Matthews agreed to assist the Scarfo family obtain
a tract of land partially owned by the city, where the Scarfo's
build a casino. Lentino described the meetings
and the purchasing of the election in conversations intercepted
by the FBI and DEA. Lentino stated:
[[W]e had Mike Matthews in here, the last time I ate here with Gerace and Al Daidone . . . He [Matthews] had his eyes on that uh, mayor's, mayor's job
If he wins it uh, you get favors. Some guys put up a lot of money. . .[a] hundred and twenty five [thousand]... That's a lot of money for an election down here. 18
The Efforts of the Casino Control Commission
In 1981 the New Jersey Casino Control Commission
and the Division of Gaming Enforcement, state agencies charged
with regulating persons and entities began an investigation of
Local 54 to determine if the local was fit, under state statute,
to represent persons employed by the casinos. A central focus
of the state investigation was the allegation that the Scarfo
LCN group controlled the union. Based on its finding in 1982 that
this control existed, the Casino Control Commission ordered that,
in the event Gerace and the two others were not removed from their
union posts, Local 54 would be prohibited from collecting dues
from any casino employee.
Following this order Local 54 sought a Federal
court injunction barring enforcement of the Commission's order.
After losing in the District Court, the union successfully argued
New Jersey Superior Court that federal labor
law, specifically the National Labor Relations Act and ERISA,
preempted the field of labor relations. The state, however, obtained
a reversal in the U.S. Supreme Court, which held that the state
had the authority with some limitations to regulate in the area.l9
The Supreme Court noted in its decision that:
...Congress apparently has concluded that, at least where the States are confronted with the public evils of crime, corruption, and racketeering, more stringent state regulations of the qualifications of union officials is not incompatible with the national labor policy as embodied in §7 (of the National Labor Relations Act).20
Following the Supreme Court's decision, the
Casino Control Commission issued a new order, which directed Gerace
and the other officials to resign. After Gerace refused to do
so, the state sought enforcement of the order and a contempt citation
from the state courts. Gerace and the others then resigned their
posts. Rather than divorcing himself completely from the union,
however, Gerace now holds the post of consultant in non-casino
affairs, at an unknown salary.
The Supreme Court found that the casino industry
employees' freedom to select Local 54 to represent them in collective
bargaining was not affected by the qualification criteria of New
Jersey's Act. However, the Court left undecided the issue of whether
the dues collection sanction, imposed by New Jersey's Act, will
so incapacitate the union as to prevent it from performing its
functions as the employees' chosen bargaining
agent, thus abridging members' rights under
the National Labor Relations Act. As a result, the decision does
not definitively resolve how to reconcile Federal efforts to define
labor rights with state efforts to regulate industries in which
labor racketeers flourish.
New York City
The New York HEREIU locals are also influenced
by organized crime. New locals have been chartered with due consideration
to La Cosa Nostra territorial needs. Until January 1983
(when Local 100 was chartered), the main HEREIU local under LCN
control was Local 6. Local 6 retained jurisdiction over those
restaurants located in hotels and clubs, while Local 100 has a
wide-ranging jurisdiction. Recent indictments have focused on
the leaders of HEREIU Locals 6 and 100: international vice president
and HEREIU Local 6 officer Vito Pitta, an associate of the Colombo
family, and John J. DeRoss, officer of HEREIU Local 6, officer
of HEREIU Local 100, and a member of the Colombo family. 21 In
a conversation intercepted by the FBI at Paul Castellano's home,
Anthony Amodeo and John DeRoss complained to Paul Castellano about
the failure of Local 6, and Vito Pitta, to abide by the agreed-upon
jurisdictional allocation with Local 100:
Amodeo: He's not supposed to go into another. . . In fact, that's a part of their agreement. When they made the merger, from what I understand, they stay in whatever they've been in. They
have the hotels and restaurants and so forth. Now, 2 months ago, we sat down, Vito [Pitta], me, and Charlie, right? Sat down. He says, How about if I go organize on Long Island? . ; . You stay with yours. Long Island is ours. Hotels, restaurants, whatever.
Castellano: They're supposed to stay.
DeRoss: Right. I know.22
In the same conversation, Castellano subsequently
described the limits of his influence over HEREIU. Because the
international was controlled by other organized crime groups,
Castellano's ability to remedy an apparent encroachment by the
Colombo family was not a simple matter:
Castellano: . . . You had the locals and somebody else had the international. . . This is what I was trying to tell Vito of. I said, Vito [Pitta], take it easy. You know, I gotta, I gotta watch, like someone else owns the international. See, I don't like these doing. . . something that they have a right to do. In the meantime, the only reason why they're doing it, because Vito is setting up something in my. . . I don" do that.
. I was happy with the [international union] elections, you know? They were happy about it, but Pitta wasn't . . . I tell you what, what brought them over here. This is with my local, and I don't want anybody to touch it. . . .23
HEREIU Locals 6 and 100 were used to dictate
the way in which restaurants could do business in New York. In
return for payoffs, restaurant owners could pay reduced wages
and pension and welfare fund contributions, or buy a lease on
shut down because it owed money to the union,
or hire and fire without regard to grievance procedures, or operate
without regard to union work rules. What appeared to be a jurisdictional
split between two HEREIU locals was, in fact, a market allocation
of New York's entire restaurant business between the Colombo and
Gambino crime families.
The IPSSEU Merger: Building A Larger
HEREIU used means other than forced merger
and the issuance of charters to the Gambino and Colombo crime
families to consolidate and expand the existing power of La
Cosa Nostra. In one instance HEREIU absorbed an independent
union, the International Production Service and Sales Employees
Union (IPSSEU), an organization influenced by organized crime.
In the mid-1950's IPSSEU was created by the
merger of several independent local unions. By 1978 IPSSEU had
organized some 25,000 members in eight locals employed in seasonal
work, usually in toy, plastic and candy factories. As Robert Rao,
IPSSEU's general president, once explained, the union organizes
anyone except the "building trades." At one point Rao
testified in court proceedings that between 25 and 40 percent
of IPSSEU's members were paid only the minimum wage. During its
history IPSSEU turned down merger overtures from several AFL-CIO
unions, the United Mine Workers, and the Teamsters Union.
At present IPSSEU's former secretary-treasurer,
Benjamin Ladmer, and Teamster official Anthony Di Lapi are serving
ten-year prison sentences for using bribery and threats to obstruct
an attempt by nonunion truck drivers in a garment center trucking
company to form their own union. Di Lapi explained the conspiracy
in these words:
. . . There's a million truck drivers, a million warehouses. They'll get all new guys, new identity completely, new corporation, new everything. . . Well this is economics. . . There's no violence, there's no nothing. . . but it's like a Family. . .24
IPSSEU, with its ties to the Luchese family,
was a prime candidate for merger with HEREIU. The merger occurred
with the creation of HEREIU Local 21S in 1983, and Robert Rao's
appointment as an international vice president of HEREIU. merger
has not harmed Rao. Rao received combined salary, allowances and
expenses amounting to $142,380 in 1984 from HEREIU.
Government Action Awaited
During the Commission's investigation it
became clear that legitimate trade unionists are aware of the
mob ties to HEREIU and await government action to oust the mob
from the union.
1Court authorized electronic surveillance,
June 3, 1983.
2Hotel Employees and Restaurant Emoloyees
International Union: Hearings before the Permanent Subcommittee
on Investigations of the Senate Comm. on Governmental Affairs,
97th Cong., 2nd Sess., Part III, at 34 (1982).
3The union has changed its name several times
since its creation, most recently in 1981 at the 39th general
convention. For more details on the history of HEREIU, and for
a comprehensive analysis of the union and its infiltration by
organized crime today, see Hotel Employees and Restaurant Employees
International Union, a report by the Permanent Subcommittee
on Investigations of the Committee on Governmental Affairs of
the U.S. Senate, August 1984 [hereinafter referred to as HEREIU
Report.] This section of PCOC's report relies heavily on the
excellent work recently completed by that Subcommittee.
supra note 3, at 13.
5Id.. at 14-15.
6See Hotel Employees and Restaurant Employees
International Union: Hearings be fore the Permanent Subcommittee
on Investigations of the Senate Comm. on Governmental Affairs,
97th Cong., 2nd Sess., Part I, at 6 (1982) [hereinafter cited
as HEREIU Hearings].
7Id., Part III, at 34.
supra note 3, at 17.
9Id. at 25-32.
l0Id at 41.
llId. at 44.
12Id. at 33.
13These are some of the questions, posed
mainly by Senator Roth, which Hanley refused to answer, some in
apparent violation of AFL-CIO ethical practices policy:
Q: Are you president of the International Union of Hotel Workers & Restaurant Employees?
Q: What is your occupation?
Q: Could you explain the international union's basic policy concerning mergers of local unions?
Q: What sort of policy and criteria are used by the International union in hiring?
Q: What do you believe are your fiduciary responsibilities as president of the Hotel Employees & Restaurant Employees International Union, both to the union and its members?
Q: Have you ever told Jeff McColl, the Las Vegas local union leader, you would "pull" the Local 226 charter if he capitulated to demands that the health and welfare funds return to Vegas for local control? [In 1977, the health and welfare funds of Local 226 were returned to Chicago only after the murder of union officer Al Bramlett in Las Vegas. Bramlett was said to oppose moving the fund to Illinois.]
Q: Mr. Hanley, did you, in fact, have a conversation with Sidney Korshak about merging hotel workers locals? [This question was based upon an electronically intercepted conversation between Korshak and Dorfman in which Korshak claims to have discussed with Hanley the merger of two West Coast HEREIU locals.]
Q: Did you know Allen Dorfman before he was murdered?
Q: As you know, Mr. Hanley, we have heard evidence relating to a possible association between yourself and Mr. Anthony Accardo and also Joseph Aiuppa of Chicago. Let me ask you, do you know either of those gentlemen?
supra note 6, at 23.
14See Organized Crime and Gambling: Hearings before the
President's Commission on Organized Crime,
June 1985, at 243-244.
supra note 3, at 65.
110, 111, and 113.
17 See Brock v. Frank Gerace et al.,
U.S. District Court, District of New Jersey, Civil Action No.
18 Court authorized electronic surveillances,
19 Brown v. Hotel and Restaurant Employees
and Bartenders International Union Local 54, 52 U.S.L.W. 5042
(July 2, 1984).
21 See U.S. v. Persico,
84 Cr. 809 (S.D.N.Y. 1984).
22 Court authorized electronic surveillance,
June 3, 1983.
24 Court authorized electronic surveillance,
April 24, 1978.