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1 2 -----------------------------------X 3 In the Matter of 4 The Trusteeship Proceeding 6 Docket Number 03-21T 7 -----------------------------------X 8 11 December 9, 2003 13 14 15 B e f o r e: 16 PETER F. VAIRA, ESQ. 19 INDEPENDENT HEARING OFFICER. 20 21 22 23 24 25
1 A P P E A R A N C E S: 2 Messrs. THOMAS & ASSOCIATES 6 By: ROBERT M. THOMAS, JR., Esq., of Counsel 7 10 BY: MATTHIAS A. LYDON, Esq., of Counsel 12 Messrs. FARACI & FARACI 15 BY: PETER S. FARACI, Esq., of Counsel 16 17 PRESENT: 18 KATHLEEN M. NAGLE, Esq., Messrs. Vaira & Riley 19 20 21 22 23 24 25
1 THE INDEPENDENT HEARING OFFICER: Ladies and 2 gentlemen, let's go on the record. I think Mr. Lydon-- 3 MR. LYDON: We're ready to proceed. The only 4 thing we would just comment on is the fact that we're 5 starting a bit late, would ask for a little bit of 6 tolerance in the way we proceed this morning. Mr. 7 Faraci, who was with us, had to depart. He was 8 intending to put on and had prepared to put on two 9 witnesses today, both Mr. Lamont and Mr. DeBofsky. And 10 he was called to the hospital. His father was taken by 11 ambulance to the hospital. He can't be here. I assume 12 we're going to be able to move through this somewhat 13 easily. 14 And pursuant to a discussion that we had off 15 the record just a short time ago, Mr. Thomas and you, 16 Mr. Hearing Officer, and me, it's agreed that there's 17 going to be legal briefing on these ERISA issues. And 18 in that vein I'm anticipating Mr. DeBofsky's testimony 19 will be abbreviated. 20 THE INDEPENDENT HEARING OFFICER: We will 21 work around it. You move that issue. I was going to, 22 at the end of the day, say, "Gentlemen, I think there's 23 some legal issues that I'm going to need some guidance 24 on." The last witness yesterday talked about raising 25 some issues in 501(a) and a number of these, which were
1 more than apparent from the beginning of this hearing, 2 but they are not. And in fact if it had not occurred, 3 I would still probably have stopped and asked for some 4 additional guidance. 5 I noticed yesterday, and let me put this on 6 the record, that the Union, the Local 1001, had a large 7 amount of support. A number of at least 125 of its 8 persons -- members came here yesterday. They were here 9 and they were here all day in active support. And 10 because of the crowded situation I talked to the 11 officers this morning and said they cut it down. So 12 it's a little bit more -- a little easier. You 13 mentioned yesterday -- there was a very large number of 14 members here and who spoke out and -- 15 MR. LYDON: In fact I believe many of them 16 had to sign in. Wasn't there a sign-in sheet? 17 THE INDEPENDENT HEARING OFFICER: Yeah. So 18 anyway, I wanted to bring that to your attention. And 19 so we'll move on this morning. 20 All right. Mr. Faraci was here yesterday, 21 the father. 22 MR. LYDON: He was. 23 THE INDEPENDENT HEARING OFFICER: He's been 24 here observing a number of times. He looked okay, but 25 you never know.
1 MR. LYDON: Well, he was taken by ambulance I 2 guess this morning to the hospital. 3 THE INDEPENDENT HEARING OFFICER: Okay. Well 4 let's begin. 5 MR. MENDENHALL: At this time, Mr. Vaira, we 6 will call James Lamont. 7 THE INDEPENDENT HEARING OFFICER: Mr. Lamont, 8 come on up. 9 The young lady will swear you in. 10 (Witness duly sworn.) 11 JAMES LAMONT, 12 called as a witness herein, having first been duly 13 sworn, was examined and testified as follows: 14 EXAMINATION 15 BY 16 MR. MENDENHALL: 17 Q. Good morning, Mr. Lamont. My name is Sam 18 Mendenhall. We met briefly the first time this 19 morning; am I correct? 20 A. Yes. 21 Q. Can you please state your full name and spell 22 your last name for the benefit of the court reporter? 23 A. James Lamont, L-a-m-o-n-t. 24 Q. And Mr. Lamont, how are you currently 25 employed?
1 A. I'm employed with Caliber CPA Group. 2 Q. And are you an accountant by trade? 3 A. Yes. 4 Q. And can you tell us briefly your educational 5 background. 6 A. I have a Bachelor of Science in Business from 7 Eastern Illinois University with a major in Accounting. 8 Q. And Mr. Lamont, how long have you been with 9 Caliber? 10 A. Caliber CPA Group just started in January of 11 this year. 12 Q. And can you just briefly walk us through your 13 employment history. Let's start with Caliber and 14 working backwards, if you could, up until -- what year 15 did you finish at Eastern Illinois? 16 A. 1975. 17 Q. From Caliber back to 1975. 18 A. Well before Caliber I was with Thomas Havey, 19 LLP for 15 years. 20 Q. And what would be the time -- can you give us 21 the dates? 22 A. Would have been 1988 through 2002. Two years 23 prior to that I worked construction, and then for 24 almost nine years I was employed with Allis Chalmers 25 Corporation, A-l-l-i-s, C-h-a-l-m-e-r-s.
1 Q. And Mr. Lamont, can you briefly describe for 2 us the type of work you perform at Caliber? 3 A. Currently I'm a senior manager in charge of 4 their Payroll Audit Department. 5 Q. And can you briefly describe for us the type 6 of work you performed at Thomas Havey. 7 A. It would have been the same function, 8 although when I started at Thomas Havey I actually 9 performed payroll audits and worked my way up to a 10 supervisor and then to manager and then senior manager. 11 Q. And during your time at Thomas Havey, did you 12 have an opportunity to perform work for Local 1001. 13 A. I did not actually perform any work for 1001. 14 All I did was perform payroll audits for Thomas Havey. 15 Q. Can you just explain what you mean by that? 16 It sounds like Thomas Havey was retained by the Local 17 -- strike that. 18 Thomas Havey was retained by some entity that 19 asked you to perform an audit of the Local? 20 A. We were one of three accounting firms 21 employed by the Fund to perform payroll audits. 22 Q. When you say "Fund", what Fund are you in 23 reference to? 24 A. It would have been Health and Welfare, 25 Pension, I believe the dues were audited, and then I
1 think there was a Training Fund audited also. 2 Q. So Thomas Havey was in fact working for the 3 Pension Fund and the Health and Welfare Fund. 4 A. Yes. 5 Q. So Local 1001 has never been your client in 6 that regard. 7 A. Not me personally, no, although they were a 8 client of Thomas Havey. 9 Q. And Mr. Lamont, turning now to the audit that 10 was performed of Local 1001, did that occur in or 11 around 1998 to the best of your recollection? 12 A. I believe it was in the fall of 1998, yes. 13 Q. And can you just walk us through that process 14 briefly. 15 A. Well I did not actually perform the payroll 16 audit itself. That was performed by Jim Kemperas of 17 our firm. 18 Q. What was that name again? 19 A. Jim Kemperas, K-e-m-p-e-r-a-s. 20 Q. And did anyone else at Thomas Havey assist 21 Mr. Kemperas. 22 A. In the actual audit itself he might have 23 talked to the partner in charge or -- which would have 24 been Donna Hubert, and he also might have talked to Joe 25 Thierman who was the manager, I believe, that oversaw
1 that account. 2 Q. What role, if any, did you have in connection 3 with the payroll audit of Local 1001? Any supervisory 4 role or anything? 5 A. The audit would have been reviewed. It would 6 have had a technical review done by Bill Holland who 7 was a partner in the firm, and then I did a quality 8 review after that. 9 Q. And Mr. Lamont, after this audit was 10 completed in the fall of 1998, did there come an 11 occasion where Mr. James Jorgensen from the Fund 12 contacted you regarding this audit? 13 A. I received a call from Jim Jorgensen, the 14 Fund Administrator, and Pete Dowd, the attorney, in 15 regards to requesting some additional information that 16 they wanted in regards to the audits of several of the 17 Local Unions. 18 Q. At this time, Mr. Lamont, I would like to 19 direct your attention to the volume of exhibits to your 20 right and ask that you locate Local 1001 Exhibit 34. 21 A. Okay. 22 Q. Will you please take a moment to review that 23 and let me know when you're done. 24 A. Okay. 25 Q. And Mr. Lamont, have you seen this document
1 before? 2 A. Yes. 3 Q. And is this a document you prepared? 4 A. Yes, it is. 5 Q. And is this the document -- does this 6 document reference the phone conversation you just told 7 us about? 8 A. Yes, it does. 9 Q. Can you please tell us what this document is? 10 A. It's just an internal memo that I prepared 11 after the phone call just to remind myself of what took 12 place during the phone call. 13 Q. And is that your standard custom and practice 14 sometimes -- to sometimes prepare memos to remind 15 yourself? 16 A. I like to think it is, but it doesn't always 17 happen, no. 18 Q. Understandable. 19 And outside of this memo, Exhibit 34, I 20 believe you stated you had an independent recollection 21 of the phone call. 22 A. Briefly, yes. 23 THE INDEPENDENT HEARING OFFICER: You may 24 read this if you want. 25 MR. MENDENHALL: Okay. But I think it's very
1 brief. And thank you, Mr. Vaira, but just can you 2 briefly tell us what you do recall about the phone 3 conversation. Then also as Mr. Vaira stated, if the 4 memo helps to refresh your recollection, please feel 5 free to add in that regard as well. 6 THE WITNESS: I think the memo pretty much 7 states what I recall from the conversation. It wasn't 8 very long. 9 BY MR. MENDENHALL: 10 Q. Did they explain to you why they were 11 requesting you to supply them with information on any 12 employee of the Local Union office that was not 13 contributing into the Funds for all hours worked? 14 A. I don't recall exactly. I think there was 15 some concern that there might have been contributions 16 made below the actual hours that people were working. 17 Q. And Mr. Lamont, what position did Mr. 18 Jorgensen hold with the Fund in 1999? 19 A. I would believe it would be the Fund 20 Administrator at that time. 21 Q. And who was Mr. Peter Dowd? 22 A. My understanding of that was the District 23 Council was put in a Trusteeship and the firm of Robert 24 Bloch and Peter Dowd were the Trustees of the District 25 Council. And that's my recollection of his duties at
1 that time. 2 Q. And was it common for either of them or both 3 of them to call you concerning issues? 4 A. It wasn't uncommon. I mean I did receive -- 5 when there was questions about certain things, they 6 contacted me. 7 Q. And did either -- and did these gentlemen 8 contact you or did you initiate the phone call? 9 A. I'm sure they would have contacted me. 10 Q. Mr. Lamont, I now would like to direct your 11 attention to Exhibit 35. 12 A. Okay. 13 Q. Will you please take a moment to review this 14 document and let me know when you're done. 15 A. Okay. 16 Q. And have you seen this document before? 17 A. Yes, I have. 18 Q. And did you see it on or around April 26th, 19 1999? 20 A. Yes. 21 Q. And can you please tell us what it is. 22 A. Well when I had the conversation with them I 23 requested that they send me something in writing so 24 that we would have a clear definition of exactly what 25 it is that they wanted, and that's what this letter
1 does. It relates to the type of information that they 2 were looking for. 3 Q. So this was essentially a follow-up to the 4 April 23rd, 1999 phone conversation. 5 A. Yes. 6 Q. And at that time did they tell you why they 7 wanted this specific information? 8 A. Not that I recall. Again, no, I think it 9 probably would have been in reference to the fact that 10 there were some concerns that contributions were making 11 under the required levels. 12 Q. Did they request -- by what date did they 13 request this information be sent to them by. 14 A. They had a meeting on May 3rd. 15 Q. So they needed the information prior to that 16 date. 17 A. That's my recollection, yes. 18 Q. And did you ultimately provide them the 19 information responsive to this request made in Exhibit 20 35. 21 A. Yes. A report and a letter was prepared, 22 yes. 23 Q. And Mr. Lamont, I direct your attention to 24 Exhibit 36. Will you please take a minute to review 25 this exhibit and let me know when you're done.
1 A. Okay. 2 Q. And have you seen this document before? 3 A. Yes. 4 Q. And is this a document that you prepared on 5 or around April 30th, 1999. 6 A. Yes. 7 Q. And that would include the attachments to it 8 as well, sir? 9 A. Yes. 10 Q. And can you please tell us what Exhibit 36 11 is. 12 A. The cover letter itself, and then the reports 13 are the -- a listing of the people that worked in the 14 various unions that they requested, and to the best of 15 our ability the hours that they worked based on the 16 wages that we saw. 17 Q. And Mr. Lamont, and you sent this letter out 18 to Mr. Jorgensen at that time; am I correct? 19 A. Yes. 20 Q. And was this letter ever returned to you by 21 the U.S. Postal Service? 22 A. Not to my knowledge, no. 23 Q. Was this letter ever returned to you by any 24 source? 25 A. Again, not to my knowledge, no.
1 Q. Did Mr. Jorgensen ever call you to say that 2 he did not receive a response to his April 26th, 1999 3 letter. 4 A. Not that I recall, no. 5 Q. Did Mr. Jorgensen ever write to you to tell 6 you that he did not receive a response to his April 7 26th, 1999 letter. 8 A. There was a letter that came, but I believe 9 it was in 2002. 10 Q. So in between April 30th, of 1999 and 2002, 11 you had never heard anything from Mr. Jorgensen. 12 A. Not that I recall, no. 13 Q. Okay. 14 Mr. Lamont, I now would like to direct your 15 attention to Exhibit 37. Can you please take a look at 16 that document and let us know when you're done. 17 A. Okay. 18 Q. And have you seen this document before, sir? 19 A. Yes, I have. 20 Q. And is this a document you prepared? 21 A. Yes. 22 Q. And you prepared it on or about May 7th, 23 1999; am I correct? 24 A. Yes. 25 Q. Can you please tell us what this document is.
1 A. Again, it's just a reminder, a memo to myself 2 and the file to recap what Peter Dowd requested in his 3 phone call. 4 Q. Now this is a separate phone call from the 5 April 23rd, 1999 phone call, correct? 6 A. Yes. 7 Q. And he's requesting different information; am 8 I correct? 9 A. Yes. 10 Q. During this phone conversation with Mr. Dowd, 11 did he ever mention to you that the Fund had not 12 received a response to their April 26th, 1999 request 13 for information. 14 A. Not that I recall, no. 15 Q. Directing your attention now, Mr. Lamont, to 16 Exhibit 38. Can you please take a look at that 17 document and let me know when you're done. 18 A. Okay. 19 Q. And have you seen this document before? 20 A. Yes, I have. 21 Q. And is this a document you also prepared? 22 A. Yes. 23 Q. And did you prepare this document on or about 24 May 20th, 1999? 25 A. Yes.
1 Q. Can you please tell us what this document is. 2 A. Well Peter had asked if -- I had explained to 3 Peter previously that when we started the audits at the 4 Local Unions we had requested from Gordon Lund at the 5 Fund office if there were any participation agreements 6 or guidelines specific to contributions for the Local 7 Unions. Mr. Lund had indicated there weren't any. And 8 Peter had asked if I would recap with Gordon for his 9 file, which I did. 10 Q. And for the benefit of everyone in the room, 11 when you say "Peter", you're in reference to Peter 12 Dowd; is that correct? 13 A. Yes. 14 Q. Am I correct? 15 A. Yes. 16 Q. And during your correspondence with Mr. Dowd 17 concerning this May 20th, 1999 letter, did he ever 18 mention to you at that point that the Fund had not 19 received your -- a response to their request for 20 information on April 26th, 1999. 21 A. Not that I recall, no. 22 MR. MENDENHALL: I have nothing further, Mr. 23 Vaira. 24 THE INDEPENDENT HEARING OFFICER: Okay. 25 Thank you.
1 Mr. Mendenhall just asked you a question. 2 When you -- referring to your Exhibit 36, this is just 3 for my sake. The relevant part of that you want me to 4 take a look at is probably the last paragraph of 36? 5 MR. MENDENHALL: Yes, but he sent it as -- my 6 understanding, Mr. Vaira, is he sent it as an entire 7 document. 8 THE INDEPENDENT HEARING OFFICER: I 9 understand that. 10 MR. MENDENHALL: But you're absolutely 11 correct, that is the relevant portion, sir. 12 THE INDEPENDENT HEARING OFFICER: All right. 13 Mr. Thomas. 14 CROSS EXAMINATION 15 BY 16 MR. THOMAS: 17 Q. Good morning, Mr. Lamont. 18 A. Good morning. 19 Q. We have never met or spoken before, have we? 20 A. No, we have not. 21 Q. You mention that you went from Thomas Havey 22 to Caliber. 23 A. Yes. 24 Q. Wasn't there something called Legacy in 25 between there?
1 A. No. Legacy currently exists. There was a 2 firm Thomas Havey that split up, and Legacy is one 3 portion of that and Caliber is another portion of that. 4 Q. Okay. So if we've seen a document with your 5 name on it with the Legacy letterhead, how would that 6 connect with you -- what you described? 7 A. I don't think that would exist to my 8 knowledge because I have never worked for Legacy. 9 Q. Maybe I can -- I guess during the period of 10 transition did you occasionally -- did anyone ever 11 correspond to you addressing it to Legacy as opposed to 12 Caliber? Was there ever any confusion in that 13 splitting? 14 A. Probably just the one time when Mr. Jorgensen 15 sent a letter to my name under the Legacy address. 16 Q. But in fact you were with Caliber. 17 A. Yes. 18 Q. All right. There was part of your testimony 19 I didn't follow the sequence of. You worked from 20 approximately 1988 to 2002 for Thomas Havey, right? 21 A. Yes. 22 Q. And you were working construction two years 23 prior to that? 24 A. Yes. 25 Q. And then Allis-Chalmers.
1 A. Yes. 2 THE INDEPENDENT HEARING OFFICER: 3 Allis-Chalmers. We're talking about a farm -- 4 THE WITNESS: Yes. 5 BY MR. THOMAS: 6 Q. What type of company was that? 7 A. It was a -- Allis-Chalmers, as Peter here 8 recalls, manufactured farm equipment all across the 9 country and the world actually. I worked for a 10 division that manufactured forklifts or lift trucks in 11 Madison, Illinois. 12 Q. And just generally speaking, what was the 13 nature of that work that you did for them? 14 A. I worked in the Cost Accounting Department. 15 Q. And was that the job you took coming out of 16 Eastern Illinois? 17 A. Yes. 18 Q. So from roughly '75 to '86 you worked with 19 them. 20 A. '75 through '84. 21 Q. '84? Okay. And then was it 1984 that you 22 took the construction job? 23 A. I worked construction off and on between '84 24 and '88. 25 Q. Got it.
1 Now I didn't hear you mention, and maybe it 2 just wasn't asked, whether or not you have a CPA 3 license. 4 A. It was not asked, and no, I do not. 5 Q. So other than your BS in Business, do you 6 have any other degrees? 7 A. No, I do not. 8 Q. Any licenses? 9 A. No. 10 Q. So I take it from that answer that no such 11 license is required to do a payroll audit and the type 12 of work you did at Havey. 13 A. No. In fact, many of the people that work in 14 the Payroll Audit Department do not have degrees. 15 Q. When you were at Thomas Havey, you were one 16 of -- Thomas Havey was one of three accounting firms 17 doing the payroll audits for the Funds, correct, Mr. 18 Jorgensen's Funds? 19 A. Yes. 20 Q. Who were the other two? 21 A. Graft Ballard and Bainsley & Keeter was at 22 one point. Before that there were others involved with 23 us also. Grant Thornton, (Phonetic) as I recall, was 24 one, and I'm not sure of the others. 25 Q. And this was done, for lack of a better term,
1 on a rotating basis, right? 2 A. I'm not sure of the question. 3 Q. Well the Funds would dictate which entity you 4 were asked to audit, right? 5 A. That's correct. They provided us with a list 6 of employers to be audited, yes. 7 Q. And sometimes it would be this list and other 8 times it would be a different list, correct? 9 A. That's correct, yes. 10 Q. Am I right that there -- there was no 11 expectation on your part or Thomas Havey's part that 12 you were automatically going to get a particular 13 employer every time. That was up to the Funds, right? 14 A. Yes, that's correct. 15 Q. Now you mentioned that Local 1001 had been a 16 client of Thomas Havey's in the relevant time period, 17 right? 18 A. Yes. 19 Q. And that was to do what type of work for 20 Local 1001? 21 A. Again, I was not involved with that, but I 22 believe it was tax work, probably the LM-2's, things of 23 that nature. I don't know if they did monthly work for 24 them or not to be honest with you. 25 Q. But basic accounting work for an employer.
1 A. I believe that's probably what it was, yes. 2 Q. Now it is the normal practice of Thomas Havey 3 and other accounting firms to disclose to a client like 4 the Funds if they've actually been doing accounting 5 work for the entity to be audited, right? 6 A. That you would have to ask the partners of 7 Thomas Havey. I really wouldn't be involved with that. 8 Q. So you have no familiarity with that issue? 9 A. I do know that our firm -- it was not 10 infrequent to audit clients of ours whether they be 11 Local Unions, commercial clients, or what have you. 12 Q. But you have no experience as to whether or 13 not that was disclosed in any conflict -- 14 A. Again that would have been a function of the 15 partners who oversaw those particular accounts. 16 Q. You were not a partner during these periods? 17 A. No, I was not. 18 Q. So let me make sure I understand the chain of 19 command as it were. The person who's on the ground 20 doing the work for the audit that we've just been 21 talking about, the person whose last name began with a 22 K., Kemperas? 23 A. Yes. 24 Q. So that's the person who actually went to the 25 premises?
1 A. Well the premises -- the books and records 2 were at our office, so the audit was performed in our 3 office. 4 Q. All right. So the Local 1001 records that 5 were audited were actually at Thomas Havey's office. 6 A. That's correct, yes. 7 Q. But to your knowledge it was Kemperas who did 8 the actual physical work. 9 A. Yes. 10 Q. There was no actual visit to 1001 to your 11 knowledge? 12 A. An actual visit, I don't think so. There 13 might have been phone calls. I don't know. 14 Q. Okay. And then there was Donna Hubert and a 15 Joe someone? 16 A. Joe Thierman. 17 Q. Joe Thierman? 18 A. Um-hum. 19 Q. And they were higher in rank to Kemperas? 20 A. Well they were not in the same department, 21 but yes, they were also higher in rank. 22 Q. And did they have some reviewing function? 23 A. Not of the payroll audits themselves, no. 24 Q. Did they have -- I just didn't understand the 25 context in which you mentioned their names.
1 A. Well, because they were involved with the 2 actual accounting work for the Local Union, and when 3 Jim Kemperas needed the information, it would have been 4 those two that he would have seeked out to get the 5 information. 6 Q. Okay. So your assumption then, if I'm 7 understanding you correctly, is that Kemperas would 8 have presumably talked to Donna and Joe at Thomas Havey 9 to get the relevant record? 10 A. That's correct. 11 Q. But Donna and Joe were not involved in the 12 audit of those records. 13 A. Not per se. 14 Q. Maybe to answer any questions Kemperas had. 15 A. Yes. 16 Q. Then there was a Mr. Holland who was above 17 you; is that right? 18 A. Yeah. At that particular time he was the 19 partner in charge of the Payroll Audit Department, yes. 20 Q. Okay. So in terms of the reviewing function, 21 the work went from Kemperas to -- Kemperas to you to 22 Holland. 23 A. No. Kemperas to Holland to me. 24 Q. All right. So Kemperas directly to a 25 partner, right?
1 A. Yes. 2 Q. And then what would your role be after the 3 partner's review? 4 A. Again what I did -- we had two reviews. One 5 was a technical review, which is a pretty thorough 6 review, of all of the information in there. Once -- if 7 there's corrections that have to be made it's given 8 back to the auditor. Once it has passed the technical 9 review, then it's just a final what we call a quality 10 review just to make sure all the papers are in there 11 and there's no typos or clerical errors. 12 Q. And so your role was the latter? 13 A. That's correct. 14 Q. So Mr. Holland reviewed it for the, I think 15 you used the term, technical review, the overall 16 technical substance of it. 17 A. Yes. 18 Q. And then you reviewed it to make sure that it 19 looked right and the math added up and the pages 20 were -- 21 A. No, not even so much the math adding up. 22 That would be done in the technical review. 23 Q. So what was Mr. Holland's first name? 24 A. Bill. 25 Q. And where is he now?
1 A. Unfortunately he passed away from Lou 2 Gehrig's disease back in August. 3 Q. Of this year? 4 A. Yes. 5 Q. Sorry to hear that. 6 So I guess he was ill when this split of 7 Thomas Havey happened. 8 A. Yes. He had retired already, yes. 9 Q. So your role, if I'm understanding this, was 10 not necessarily to check the substantive accuracy of 11 these representations to the Funds; is that right? 12 A. That's correct, yes. 13 Q. Whose role was that? 14 A. It would have been Bill Holland. 15 Q. And ultimately Thomas Havey. 16 A. Ultimately Thomas Havey, yes. 17 Q. So -- to your right there's a stack of 18 exhibit books. If you could take a look at Volume 19 Four. 20 THE INDEPENDENT HEARING OFFICER: GEB Volume 21 Four. 22 BY MR. THOMAS: 23 Q. I want to start with Number 26. Do you have 24 Number 26 in front of you? 25 A. Yes, I do.
1 Q. And this is a Thomas Havey document dated 2 November 20, 1998, correct? 3 A. Yes, it is. 4 Q. Okay. And this is what appears to be a 5 routine audit of an employer known as Local 1001, 6 right? 7 A. Yes. 8 Q. Were you involved in this? 9 A. No, I was not. 10 Q. It appears that Mr. Kemperas did this work, 11 correct? 12 A. Yes. 13 Q. In this one you played no role at all? 14 A. In the actual audit itself -- wait a minute. 15 This is the audit itself. 16 Q. This is November, 1998. 17 A. Right. But again, my involvement was the 18 quality review if that's what your question is. 19 Q. Did you do a quality review of this one? 20 A. There's only one that I know of. 21 Q. Did you do a quality review of this one. 22 A. Yes. 23 Q. So that was -- this relates essentially to 24 what you've just been describing, Mr. Kemperas did the 25 work, Mr. Holland reviewed it, and then you reviewed it
1 secondarily. 2 A. Yes. 3 Q. So this document, Exhibit 26, is the work 4 that Thomas Havey did in the fall of 1998 with respect 5 to Local 1001, and at least three representatives of 6 Thomas Havey had input in this final product going to 7 the client. 8 A. Yes. 9 Q. Now in the cover letter it talks about the 10 procedures that were employed. Do you see that in the 11 first record? 12 A. Yes. 13 Q. And it says that payroll records were looked 14 at. Do you see that? 15 A. Yes. 16 Q. Do you know whether that was actually done? 17 A. I believe so. 18 Q. Why do you believe so? 19 A. Because during the normal course of a payroll 20 audit they would look at the payroll records. 21 Q. So you would expect -- 22 A. I would expect, yes. 23 Q. But you didn't actually see him do it. 24 A. No, I did not. 25 Q. And it goes on to say, "The purpose of our
1 review was to assist you in determining whether 2 contributions to the Trust Funds are being made in 3 accordance with the collective bargaining agreements in 4 effect and with the Trust Agreements of the Funds." Do 5 you see that, end of the first paragraph? 6 A. Yes. 7 Q. Do you know whether that work was actually 8 done? 9 A. I'm not exactly sure of the question. When 10 you say -- I mean when the payroll auditor does a 11 payroll audit, I don't know that he's actually looking 12 at this letter. There's common steps in a payroll 13 audit program that is performed. 14 Q. Fair enough. Let me rephrase it. 15 Do you know whether or not anyone actually 16 looked at -- anyone from Thomas Havey actually looked 17 at the Trust Agreements as part of this audit? 18 A. I would say they did not, no. 19 Q. Do you have any understanding why they did 20 not? 21 A. Again, normally during the course of a 22 payroll audit they would not look at the Trust 23 Agreement. 24 Q. Unless there was some reason to. 25 A. Yes.
1 Q. First sentence of the second paragraph. "Our 2 procedures included a review of the pertinent 3 provisions of the collective bargaining agreements and 4 compared underlying employer payroll records to Fund 5 contribution records." Do you know whether or not that 6 was an accurate statement? 7 A. No, it would not be an accurate statement 8 because there were no collective bargaining agreements 9 or participation agreements to follow. 10 Q. Quite right. And so that's sort of -- I'm 11 assuming that that must be something like boilerplate 12 that's in these letters generally speaking. 13 A. That would be a very fair assessment, yes, 14 sir. 15 Q. Let's take out the collective bargaining 16 agreement phrase there, okay? 17 A. Um-hum. 18 Q. Because for the reasons we've just discussed. 19 And the sentence would then read, "Our procedures 20 included a review of the pertinent provisions -- sorry. 21 "A review of -- our procedures included a comparison of 22 underlying employer payroll records to Fund 23 contribution records." Fair enough? 24 A. Yes. 25 Q. Do you know whether that happened?
1 A. They would have looked at the Fund's 2 contribution records, yes, and they would have compared 3 those to some type of payroll source, yes. 4 Q. All right. So -- and the point of that, as 5 you understand it, is to see that if someone worked 40 6 hours, that the payroll record says 40 hours, then if 7 the contribution report would also reflect 40 hours, 8 right? 9 A. That is correct, yes. 10 Q. Did you know when this letter went out that 11 there were -- in November of 1998 that there were a 12 number of people whose compensation was listed as zero 13 on LM-2's and whose compensation on payroll records was 14 listed as zero but who nonetheless were being reported 15 to the Funds as 160 hours a month? 16 MR. MENDENHALL: I'm going to enter an 17 objection to this question and any line of questioning. 18 The witness established his only involvement was 19 reviewing for typos and at the quality level, and he 20 did no review of the technical information and the 21 underlying documents. That was Bill Holland and Mr. 22 Kemperas. But subject to my objection, I'll defer to 23 your ruling. 24 THE INDEPENDENT HEARING OFFICER: Okay. I 25 think he said he did a quality review though.
1 MR. MENDENHALL: For typos. 2 MR. THOMAS: If Mr. Mendenhall is offering 3 this witness as a typographical witness -- 4 THE INDEPENDENT HEARING OFFICER: No, I don't 5 think he is. You can proceed on to that. I take it 6 into consideration what he said. He said he did a 7 quality review, and I don't know exactly where are we 8 going here, but -- 9 MR. THOMAS: Well if this is the only witness 10 that they're calling from Thomas Havey, that's not 11 meant as any disrespect for Mr. Lamont, and they can 12 call if they want. I'm simply trying to figure out who 13 did what in this audit. 14 BY MR. THOMAS: 15 Q. Mr. Lamont, the question was whether you have 16 any understanding -- 17 THE INDEPENDENT HEARING OFFICER: And I'm 18 going to overrule his objection. Proceed on, but just 19 tell me where you're going after a certain points and 20 we'll see where you're going with this witness. 21 BY MR. THOMAS: 22 Q. Mr. Lamont, do you know whether or not Mr. 23 Kemperas or anyone else at Thomas Havey actually 24 compared the payroll records to the contribution 25 report.
1 A. Yes. 2 Q. You know that for a fact. 3 A. That Mr. Kemperas would have done that, yes. 4 Q. Would have done that or did it? 5 A. Did it. 6 Q. How do you actually know that as a fact? 7 A. Because the review of the file, if he hadn't 8 done it, would have been given back to him to do that. 9 So I guess if your question is do I? No. Based upon 10 circumstances that I saw, yes. 11 Q. So it was your expectation and the standard 12 procedure that that work would be done. 13 A. That's correct, yes. 14 Q. Are you aware today that there are a number 15 of people at Local 1001 whose compensation was listed 16 as zero but whose contribution reports to the Funds 17 indicated 160 hours actually worked. 18 A. Am I aware today? Yes. 19 Q. You're aware of that today. 20 A. Yes. 21 Q. Were you aware of that back in November of 22 1998? 23 A. In November of 1998, no, I would not have 24 been. 25 Q. So was anyone at Thomas Havey who did that
1 comparison aware of that discrepancy? 2 A. I believe Mr. Kemperas was, yes. 3 Q. Why do you believe Mr. Kemperas was aware of 4 that? 5 A. Because I believe he had that in his work 6 papers. 7 Q. In his work papers. 8 A. Correct. 9 Q. Did you see the work papers? 10 A. I believe I saw them when the file came 11 through probably, yes. 12 Q. And what did the work papers say on that 13 issue? 14 A. That there were individuals in lieu of 15 compensation -- in lieu of compensation received 16 contributions to the Funds. 17 Q. So the work papers say that there are 18 people-- 19 A. I believe they do. Again, I have not seen 20 the file for awhile. 21 Q. That's your best recollection. 22 A. That's my best recollection. 23 Q. So your best recollection is that the work 24 papers that you reviewed prior to this letter going out 25 said there were people receiving compensation in lieu
1 of salary, or words to that effect, or contributions in 2 lieu of compensation. 3 A. Yes. 4 Q. Does that fact or that statement show up 5 anywhere in this November, 1998 -- 6 A. Not to my knowledge it does not, no. 7 Q. And in fact you indicated -- or your firm 8 indicated at the bottom, "There were no exceptions 9 found in the contributions reported to the Funds during 10 our payroll audit period," right? 11 A. Yes. 12 Q. So in your judgment it was not an exception 13 that someone who had a full-time job elsewhere and gets 14 zero compensation from the Local would have 160 hours 15 reported to the Funds. 16 A. Well again, when you say zero compensation, I 17 believe the people that oversaw that account explained 18 to Mr. Kemperas that in lieu of compensation they were 19 receiving contributions to the Funds, so I believe he 20 took that as compensation. 21 Q. All right. Let's hold that thought for a 22 moment. 23 The people you're referring to, are they 24 Thomas Havey people or Local 1001 people? 25 A. Those would have been the Thomas Havey
1 people. 2 Q. So Donna and Joe, you're assuming, talked to 3 Kemperas. 4 A. Again, you would have to ask Mr. Kemperas and 5 Donna and Joe Thierman, but I believe that was what Mr. 6 Kemperas explained to me, yes. 7 Q. So he explained this to you. 8 A. After a period of time yes. 9 Q. Later when things started to be questioned? 10 A. Well, when I put together the April 30th 11 report, I asked Mr. Kemperas at that time, because I 12 knew it was not on the original report, and I said, 13 "These individuals, what is their status?" And at that 14 time he explained that in talking with the people at 15 Thomas Havey that it was explained to him that these 16 individuals in lieu of compensation were receiving 17 contributions to the Funds. 18 MR. LYDON: If I can interject just for the 19 record. That letter to which you referred is Exhibit 20 35-- 21 MR. THOMAS: We'll get to that. 22 MR. LYDON: -- of the Local 1001 exhibits. 23 MR. THOMAS: It's in the record on both 24 parties' exhibits and we'll get there. 25 MR. LYDON: That's fine.
1 BY MR. THOMAS: 2 Q. Mr. Lamont, in the November, 1998 time frame, 3 those issues were not noted, were they? 4 A. Not to my knowledge, no. 5 Q. Do you want to look at the document? Have 6 you looked at it recently? 7 A. Yeah. 8 Q. It's not in there, is it? 9 A. No. 10 Q. So from the Funds' standpoint, at least by 11 November of 1998, there is no indication here that 12 there are people that have zero hours reflected and 13 zero compensation reflected on the payroll records, but 14 160 hours of actual work reflected on the contribution 15 reports, correct? 16 A. You're asking me if the Funds' records 17 reflect that or you're asking me if Thomas Havey's 18 report reflected that. 19 Q. If Thomas Havey's report -- 20 A. Thomas Havey's report did not reflect that in 21 November, no. 22 THE INDEPENDENT HEARING OFFICER: I don't 23 think there is a dispute as to this. 24 MR. MENDENHALL: Exactly. 25 THE INDEPENDENT HEARING OFFICER: And I
1 realize that there's maybe an issue of -- where are we 2 going with this? I know -- is there any dispute in the 3 record that this practice occurred and there was no -- 4 MR. THOMAS: Yes, there is. I mean this is 5 the first step in a series of events that Mr. Jorgensen 6 and Mr. Lamont have a disagreement as to what happened. 7 Specifically the April of 1999 correspondence, we have 8 different versions of that. 9 THE INDEPENDENT HEARING OFFICER: I 10 understand that. But the difference in the -- as to 11 what happened to that correspondence. But in the 12 overall effect, where are we going here? 13 MR. THOMAS: Well, the letter represents that 14 certain work took place. 15 THE INDEPENDENT HEARING OFFICER: Um-hum. 16 MR. THOMAS: And there is no indication in 17 the Thomas Havey records that that is anywhere 18 communicated to the client until at least April, 1999 19 if you accept the version of events that the letter was 20 actually mailed in the time frame. And our position 21 clearly is that the Funds, who requested and paid for 22 this work, were in a position to -- were entitled to 23 know of this issue and that it was material discrepancy 24 that's not disclosed here. 25 THE INDEPENDENT HEARING OFFICER: Okay.
1 MR. THOMAS: So -- 2 THE INDEPENDENT HEARING OFFICER: I think you 3 pretty much established that. Where is the dispute? 4 I'm looking to the dispute as to what was -- 5 MR. LYDON: In this hearing with respect to 6 these charges, I agree. I don't understand -- 7 THE INDEPENDENT HEARING OFFICER: I 8 understand that there is a discrepancy and that the 9 Funds didn't know for awhile until this was discovered, 10 and Havey came in and there was some question about how 11 much they -- 12 MR. THOMAS: Well, Mr. Vaira, he is a fact 13 witness who was involved in the process -- he and other 14 members of his firm were involved in a certain process. 15 The fact that these practices were allowed, did in fact 16 go on for a period of time, is highly relevant to the 17 Trusteeship charges. And this witness is the only 18 person who we've heard from Thomas Havey who can 19 shed any light on how that happened and how it was 20 reviewed by that firm, who was in the business of 21 reviewing it. 22 THE INDEPENDENT HEARING OFFICER: Tell me 23 where the relevance is. We know that it occurred and 24 didn't come to light as soon as one would expect in a 25 professional review or accounting system. How is it
1 relevant here? We know it occurred. We know what 2 happened. Now how about -- what's the further 3 relevance of the line of questioning? 4 MR. THOMAS: The relevance is trying to 5 determine the facts as to whether certain work actually 6 happened or not. It's represented that it happened. 7 We have an involved witness here who was at the firm 8 when it happened, and he is in a unique position, 9 rather than the rest of us reading documents, to say 10 what actually happened and whether payroll records were 11 looked at, whether LM-2's were looked at and the like. 12 THE INDEPENDENT HEARING OFFICER: Assume he 13 did look at them. What does that do to the issues here 14 before us? Assuming he did. 15 MR. THOMAS: I assume they did not look at 16 the records but represented that they did. 17 THE INDEPENDENT HEARING OFFICER: Um-hum. 18 MR. THOMAS: Well, it certainly casts light 19 on the entire chain of events that follows from that, 20 because the Funds have been accepting -- part of the 21 basis for the Trusteeship here is that the Funds have 22 been accepting money not realizing that these people 23 were ineligible. 24 THE INDEPENDENT HEARING OFFICER: I 25 understand that.
1 MR. THOMAS: And the story of how that 2 happens is relevant to these proceedings because Local 3 1001 is a very critical player in the chain of events 4 of how that happens. And what they communicate to 5 Thomas Havey and what Thomas Havey communicates to the 6 Funds is all part of that story. 7 Now I'm prepared to move on to the April 8 sequence because I've gone as far as I want to go with 9 this. 10 THE INDEPENDENT HEARING OFFICER: Move on to 11 the April sequence. There is no dispute that these 12 payments occurred. And whether they were proper or not 13 is a legal dispute that we're looking at. But what 14 Thomas Havey did here, I mean, we're -- there's not a 15 suit against Thomas Havey for malpractice, but -- and 16 in what they did may or may not have been -- have some 17 relevance, but I think we may have exhausted that. 18 Okay. 19 BY MR. THOMAS: 20 Q. All right. Mr. Lamont, moving on to the 21 April -- April, 1999 time frame. That was most of 22 where Mr. Mendenhall's questions came from. 23 There was a request that came from Mr. 24 Jorgensen to take a look at several different Locals, 25 right?
1 A. Yes. 2 Q. Just put in your own words, if you would, 3 what the underlying nature of that request was. 4 A. They wanted to know as best -- again, what we 5 could give them as far as information as to the actual 6 number of hours worked by these individuals that 7 contributions were being made on. 8 Q. Was there any particular event that caused 9 that request to happen? 10 A. Other than the conversation and the phone 11 call from Dowd and Mr. Jorgensen, I don't recall, no. 12 Q. Did this just come out of the blue? 13 A. Pretty much as I recall, yes. 14 Q. And were there any District Council policies 15 that were coming into effect that were clarifying the 16 fact that these contributions had to be based on actual 17 hours worked? 18 MR. MENDENHALL: Objection. Beyond the scope 19 of this witness' knowledge as to District Council 20 policies. No foundation that he has any such 21 knowledge. 22 THE INDEPENDENT HEARING OFFICER: He may 23 answer that question. If you're doing some sort of an 24 audit, there's got to be some reference. Overrule the 25 objection.
1 THE WITNESS: Again, the only -- as far as 2 guidelines or policies, we made that request to Gordon 3 Lund and did not receive any. 4 BY MR. THOMAS: 5 Q. I wanted to ask you about that. Who was 6 Gordon Lund? 7 A. Gordon Lund, I believe his title was the head 8 of the field reps at the Fund office. 9 Q. Okay. And he was the person that you got 10 some input about policies; is that right? 11 A. Well, most of the information as far as the 12 list of employers to be audited and our main contact at 13 that office at that time was Gordon Lund. 14 Q. What was the issue that you asked Lund about? 15 What was the input you sought from him? 16 A. Well anytime you're auditing, let's say, a 17 non-collective bargaining agreement unit such as a 18 Local Union, the request is always made to find out 19 from the Fund office if there are any particular 20 written guidelines or policies that relate strictly to 21 those entities and their contributions to those Funds, 22 and that's what we requested. 23 Q. In your conversations with Mr. Dowd did he 24 say anything to you about the Trust Agreements being 25 based on the actual hours worked?
1 A. I believe he did reference something in the 2 Trust Agreement, yes. 3 Q. That was back in this '98, '99 time frame? 4 A. It would have been in the '99 time frame, 5 yes. 6 Q. So at the time that you were engaged in this 7 correspondence with Mr. Dowd in April of '99, you 8 understood that the context was, "We actually have to 9 understand actual hours worked," right? 10 A. That's the point that he was making, yes. 11 Q. Okay. And did you understand, therefore, 12 that -- at least as of that moment it required a 13 certain level of scrutiny on Thomas Havey's part of the 14 records to determine actual hours. 15 A. At that particular time, yes. 16 Q. Okay. Now you've since learned that Mr. 17 Jorgensen says he never got your letter, right? 18 A. That's correct, yes. 19 Q. But your position is you sent it and the 20 document is what it purports to be. 21 A. I have no reason to believe otherwise, no. 22 Q. Now that -- both sides have this document in 23 their exhibit books, the one in front of you, it's 24 going to be Exhibit Number 29 or Defense 35. 25 Disregarding the July, 2002 cover letter for
1 the moment and just going back to the pages that are 2 attached, this is the same exhibit that we looked at 3 just a moment ago, right? 4 A. Yes. 5 Q. Okay. It's got your cover letter and April 6 30, 1999 to Mr. Jorgensen and then some work sheets 7 that follow, right? 8 A. Yes. 9 Q. Now this document -- 10 THE INDEPENDENT HEARING OFFICER: What's your 11 GEB exhibit again? 12 MR. THOMAS: This is 29. 13 BY MR. THOMAS: 14 Q. So the underlying work that's attached to 15 this, the charts, for example, specifically those two 16 spread sheets? 17 A. Yes. 18 Q. Do you have those? 19 A. Yes. 20 Q. Who actually did the work on that? Was that 21 Mr. Kemperas again? 22 A. No. I believe I did that. 23 Q. So you did this work. 24 A. That's correct, yes. 25 Q. Tell us what you actually did to compile
1 these two spread sheets. 2 A. We would have went back --excuse me. Not we. 3 I would have went back and looked at the wages that 4 these individuals were receiving, and based upon those 5 wages, as best I could, determine whether they were 6 full-time employees or not. 7 Q. Okay. And did you see any changes from the 8 -- in the clerical staff with respect to 160 hours 9 shifting to 120 at any point? 10 A. If I did, it would be in here. 11 Q. So you didn't notice that. 12 A. No. 13 Q. But you do notice -- you did notice that 14 there are seven people, according to your notes, who 15 did not receive wages, but in lieu of wages 16 contributions were made on their behalf to the Funds, 17 correct? 18 A. Yes. 19 Q. Now did you talk to anyone about that 20 finding? 21 A. Yes. 22 Q. Who did you talk to? 23 A. The partner in charge, Donna Hubert. 24 Q. So she was now a partner or always had been? 25 A. Well, not always, but at that particular
1 time, yes. 2 Q. Okay. What did you tell Miss Hubert? 3 A. What did I tell Miss Hubert. 4 Q. Yeah. You said you talked to her about it. 5 A. Well I asked her, I said, "In this particular 6 situation I just want to clarify this. These 7 individuals are listed on the LM-2 with a job title, 8 but they do not receive wages. What is the status?" 9 And she informed me that that -- these particular 10 individuals in lieu of compensation received 11 contributions to the Funds made on their behalf. 12 Q. So Donna who does the audit -- or CPA work 13 for the Local and wearing that hat, informed you that 14 this is how this is being handled. 15 A. That's correct, yes. 16 Q. Where is Donna today? Is she around? 17 A. She works for Legacy. 18 Q. All right. Here in Chicago? 19 A. Yes. 20 Q. And so that was the end of the matter as far 21 as you were concerned? 22 A. Yes. 23 Q. Now did you talk to anyone at the Funds about 24 this issue or any representative of the Funds. 25 A. Not that I recall, no.
1 Q. Did you talk to Mr. Dowd? 2 A. I don't believe so, no. 3 Q. Did you talk to Mr. Jorgensen? 4 A. No. 5 Q. Did you talk to anyone at the Funds to ask 6 them whether this practice was okay. 7 A. Not that I recall, no. 8 Q. What documents did you physically look at to 9 make this finding that this practice had gone on? 10 A. I believe it would have been the LM-2 -- or 11 let me back up. Your question is -- 12 Q. What documents did you physically look at to 13 make this -- 14 A. To make these spread sheets. 15 Q. No. To make this last paragraph. 16 A. It would have been a combination of looking 17 at the LM-2 and also talking with Donna Hubert. 18 Q. Anything else? 19 A. Not that I recall. 20 Q. So if I'm understanding your answer 21 correctly, you spotted names on an LM-2 -- 22 A. You know I -- 23 Q. Hold on. Wait for the question. 24 You spotted names on an LM-2 and noticed that 25 there were a certain list of names there that didn't
1 necessarily match up exactly with the payroll records; 2 is that right? 3 A. I don't know that in forming this document I 4 would have actually looked at the payroll records. I 5 might have looked at some quarterly wages. I might 6 have looked at just the LM-2. I don't recall. 7 Q. What do you recall seeing on the LM-2's that 8 caught your eye? 9 A. The fact that these individuals had job 10 titles and classifications but no wages. 11 Q. So in other words, there was a zero under 12 "Compensation" for them, right? 13 A. That's correct, yes. 14 Q. Now the -- your note here indicates that 15 these people received contributions in lieu of wages, 16 right? 17 A. Yes. 18 Q. As an accountant do you view that as a form 19 of compensation? 20 MR. MENDENHALL: Mr. Vaira, this is way 21 beyond the scope of my direct testimony. I know you're 22 giving Mr. Thomas great latitude, but this issue of 23 whether or not this is reportable to the IRS and all of 24 that is way beyond the scope of this witness' 25 testimony.
1 THE INDEPENDENT HEARING OFFICER: Let me put 2 it this way. I think Mr. Thomas finally got to the 3 place -- you put this in. I was waiting for him to get 4 there. He may have asked a lot of other things. I 5 think he can explore this. We've pretty much 6 established the facts here. You can proceed on a 7 little further. I'll overrule the objection right now, 8 but I'm -- I want to know where we're going with this 9 because we've pretty much established the LM-2's. 10 MR. THOMAS: I'm asking his opinion on 11 whether this was compensation. 12 THE INDEPENDENT HEARING OFFICER: You may ask 13 him that. 14 THE WITNESS: Well let me answer that by 15 saying that in any public accounting firm you have 16 various departments that have expertise in certain 17 fields, and we would have had a Tax Department, an 18 Audit Department. I worked strictly in the Payroll 19 Audit, Compliance Audit. So if your question is in 20 regards to compensation and taxes, I really would not 21 have knowledge enough in that area. 22 BY MR. THOMAS: 23 Q. So you don't know. 24 A. No. 25 Q. Just as an intuitive matter --
1 MR. LYDON: Objection. 2 BY MR. THOMAS: 3 Q. -- do you view this as compensation. 4 THE INDEPENDENT HEARING OFFICER: We've 5 plotted this ground before and we've asked several 6 other persons on the stand whether it was or not, and 7 that may be a question for me to decide, but -- 8 BY MR. THOMAS: 9 Q. Mr. Lamont, did you ever look at the 10 contribution reports. 11 A. Yes. 12 Q. In the same time frame that you generated 13 this report? 14 A. Absolutely, yes. 15 Q. So for the people that you saw zero 16 compensation on the LM-2's, what did you see in terms 17 of actual hours worked on the contribution reports. 18 A. Probably it would have been in the same 19 category as the others, 160 hours. 20 Q. Did that strike you as odd in any way? 21 A. Again, based upon the information that I 22 received from the partner and her understanding of it, 23 no. 24 Q. So from -- understanding that there's a 25 partner who ultimately had arguably more authority on
1 this or more control over this, did you have any 2 understanding that the contribution reports that went 3 to the Funds had to report actual hours worked. 4 A. Under a normal circumstance, yes. 5 Q. Okay. So for example -- and the reason for 6 that is that the Funds may have documents that control 7 whether participants are eligible or not eligible, 8 right? 9 A. It would be my understanding of it, yes. 10 MR. MENDENHALL: Objection, Mr. Vaira. 11 THE INDEPENDENT HEARING OFFICER: All right. 12 I think we've exhausted this particular line of 13 questioning here. 14 MR. THOMAS: Very well. One moment. 15 BY MR. THOMAS: 16 Q. Mr. Lamont, for how many other clients that 17 you've done payroll audits have you seen this pattern 18 where people who were not employed at the Local in a 19 full-time capacity received Pension and Welfare 20 contributions as if they were full-time employees. 21 A. I would have no recollection of knowing all 22 the audits that we've done for different Local Unions. 23 Q. What's your best recollection of how many 24 times you've seen this elsewhere. Do you have any 25 recollection of ever having seen this before?
1 A. No, I do not. 2 Q. Mr. Dowd, you indicated that he was part of 3 Dowd, Bloch & Bennett, right? 4 A. That's my understanding, right. 5 Q. And you indicated that you thought the call 6 from Mr. Dowd was coming as Trustee of the District 7 Council? 8 A. I don't know that he referenced his position 9 at that particular time. I just earlier expressed that 10 was my understanding, that Dowd and Bloch were the 11 individual law firm that was the Trustees of the 12 District Council at that time. Now his exact capacity, 13 Mr. Dowd's, at that time I don't know. 14 Q. The question really is a simple one. Did you 15 have no understanding that when Mr. Dowd was calling 16 you he was counsel to the Funds? 17 A. I don't recall. 18 Q. You didn't know in what -- 19 A. I went to a lot of meetings where there were 20 -- where Jorgensen was there, where three or four other 21 attorneys were there, Dowd was there. They never 22 really explained to me exactly what their position or-- 23 Q. So even today you're saying you don't know in 24 what capacity Dowd was calling you? 25 A. Again, no.
1 Q. Okay. The part of the audit that you 2 reviewed talks about dues -- checking dues and so 3 forth. Do you remember that? 4 A. Yes. 5 Q. What physically is done to check-off on dues? 6 How do you determine that dues have been paid? 7 A. Well, the only way -- 8 Q. Withheld. I'm sorry. 9 A. As far as if they're withholding dues? 10 Q. Yes. When your firm does this audit and 11 sends a letter saying, "Among other things we've 12 determined whether people have had dues withheld and 13 dues have been paid," and so forth, what physically 14 happens? 15 A. When we receive information from the Funds' 16 computer, it only details the hours that were used for 17 contribution purposes. It does not have a breakdown of 18 the particular Funds. So if we see 160 hours, we have 19 -- the only thing to go on is that's representing all 20 the Funds and entities involved. If 160 hours for the 21 Health and Welfare Fund and no other contributions were 22 made to the other Funds, we would have no knowledge of 23 that. 24 Q. What about dues though? Your firm does, 25 among other things, say, "We check to see whether dues
1 have been paid." 2 A. They look at individual's payroll to see if 3 dues are being withheld from the payroll. 4 Q. And what's the document that would actually 5 show that? 6 A. Normally it would be some type of a payroll 7 journal where it would show all the deductions from the 8 individual's check. 9 Q. Take a look at Exhibit 26 again. 10 A. Okay. 11 Q. And the third page in there's a chart that 12 starts at the top "Laborers' District Council." 13 A. Yes. 14 Q. And then in the text there it says, "No 15 discrepencies were noted." Do you see that? 16 A. Yes. 17 Q. And then down at the bottom there's a line 18 entry for Mr. James Capasso. Do you see that? 19 A. Yes. 20 Q. It says, "Dues were deducted." 21 A. Yes. 22 Q. Understanding that Mr. Kemperas may have 23 actually done this work, what's your operating 24 assumption of what he actually looked at to determine 25 that Mr. Capasso's dues were deducted.
1 A. I don't know. I can't answer that. You 2 would have to ask Mr. Kemperas that. 3 Q. Some payroll record presumably, right? 4 A. Presumably, yes. 5 MR. THOMAS: Thank you. Nothing further, Mr. 6 Vaira. 7 MR. MENDENHALL: No redirect. 8 THE INDEPENDENT HEARING OFFICER: Thank you, 9 sir. You're all set. Thank you. 10 (Witness excused.) 11 MR. LYDON: We call Mr. DeBofsky. 12 (Witness duly sworn.) 13 MARK DEBOFSKY, 14 called as a witness herein, having first been duly 15 sworn, was examined and testified as follows: 16 EXAMINATION 17 BY 18 MR. LYDON: 19 Q. Would you state your name please spelling 20 your last name. 21 A. Mark DeBofsky, D-e-B-o-f-s-k-y. 22 Q. Mr. DeBofsky, what is your occupation? 23 A. I'm an attorney. 24 Q. For how long have you been an attorney? 25 A. More than 23 years.
1 Q. Where are you licensed? 2 A. State of Illinois and various federal courts. 3 Q. Just briefly what's your educational 4 background? 5 A. I received a BA from the University of 6 Michigan in 1977, and my JD from the University of 7 Illinois College of Law in 1980. 8 Q. Do you specialize in any particular area of 9 law? 10 A. I concentrate my practice in the 11 representation of individuals and employee benefit 12 claims, individual disability insurance claims, Social 13 Security disability, and a little bit of employment 14 discrimination. 15 Q. Are you a member of any professional 16 organizations that are related to your specialized 17 practice. 18 A. I belong to several professional 19 organizations. The one that's most closely related is 20 the American Bar Association and in particular the 21 Employee Benefits Committee which is part of the 22 section on Labor and Employment Law. 23 Q. With respect to your legal career, have you 24 taught any legal courses? 25 A. I taught a class in Employee Benefits
1 Litigation at the John Marshal Law School for the last 2 four years as part of an LLM program offered there in 3 Employee Benefits Law. I've also lectured at Loyola 4 Law School and at the University of Michigan Law 5 School. 6 Q. Have you written any legal articles or 7 publication in legal journals or periodicals in the 8 area of your specialization. 9 A. I've written numerous articles. I've 10 contributed book chapters and various publications. 11 Q. And do any of these deal with the subject of 12 ERISA? 13 A. Absolutely. 14 Q. ERISA being E-R-I-S-A. 15 And do any of the articles or publications 16 that you've written deal with the subject or 17 interpretation of plan documents? 18 A. Yes, they do. 19 Q. Have you ever lectured or taught on the 20 subject of ERISA? 21 A. Probably given maybe 30 or 40 seminar 22 presentations on topics relating to the ERISA law. 23 Q. As a side matter, did you relate -- were you 24 just yesterday in -- a participant or at some location 25 where the subject of ERISA was discussed?
1 A. Yes, I was. I testified yesterday before a 2 subcommittee of the National Association of Insurance 3 Commissioners. They're considering a model law 4 relating to whether certain clauses should be excluded 5 from disability insurance policies that are offered as 6 part of employee benefit plans. 7 Q. Just as a matter of -- and I don't intend to 8 explore legal opinions here, but might you just give us 9 an opinion about the complexity of ERISA. 10 A. Certainly. I can relate the way that I 11 started my testimony yesterday before the National 12 Association of Insurance Commissioners. There's a 13 federal judge by the name of Acker in Alabama who 14 started an opinion called Florence Nightingale Nursing 15 Services versus Blue Cross and Blue Shield by 16 describing ERISA as an acronym standing for "Everything 17 Ridiculous Imagined Since Adam." 18 And the fact of the matter is that ERISA is 19 exceedingly complex. The Courts have changed their 20 philosophy regarding ERISA claims frequently. It's an 21 impossible field to keep track of because there are so 22 many different nuances that every new Court decision 23 just changes the entire landscape. 24 For instance, the Supreme Court has taken 25 every year for the last I'd say ten years a different
1 case involving issues relating to ERISA preemption and 2 they still can't get it right. 3 THE INDEPENDENT HEARING OFFICER: You're 4 saying that ERISA would not be a good bar exam subject? 5 THE WITNESS: It would be an excellent bar 6 exam subject, but you would have to change the answer 7 every year because the law changes every year. 8 BY MR. LYDON: 9 Q. In any event, Mr. DeBofsky, were you ever 10 retained by Local 1001? 11 A. Yes, I was. 12 Q. And when was that? 13 A. My recollection is mid 2002. 14 Q. And who did you meet with? 15 A. I initially met with Peter Faraci and Nick 16 Gironda. 17 Q. And for what purpose were you brought in to 18 meet with Local 1001? 19 A. The reason that I was brought in related to 20 the circumstances relating to Jim Capasso's request to 21 retire and obtain a pension from the Laborers' Pension 22 Fund where his request to obtain the pension had been 23 refused. And the officers of the Local 1001 were very 24 surprised by the Funds' actions in that case because 25 they had been making these contributions, they
1 believed, in accordance with accepted policy. And 2 because of their surprise they were looking for 3 interpretation and help in trying to figure out whether 4 their conduct was appropriate or inappropriate and what 5 they needed to do about it. 6 Q. And so what did you look at or ask to see? 7 A. Well I was interested primarily -- or at 8 least initially in looking at the Declaration of Trust 9 and going back at the Declaration of Trust Agreements 10 from the inception of the plan through the present 11 date. I was also interested in trying to obtain 12 information from the Funds with respect to their 13 acceptance or non-acceptance of the practice of 14 receiving contributions on behalf of officers of Local 15 1001 which would qualify them to receive coverage under 16 the Pension Fund and under the Health and Welfare Fund. 17 Q. Did you have any understanding for how long 18 contributions were being made by Local 1001. 19 A. My initial understanding was that the 20 practice had existed for approximately 20 years. I've 21 since learned that the practice has existed for more 22 than 40 years. And the way that I learned that was by 23 examining documentation, particularly minutes 24 maintained by Local 1001, with respect to them 25 recording in the minutes that they had made these
1 contributions or recording in the minutes that there 2 had been -- there was one place I believe from 1982 3 where there was a discussion in the minutes indicating 4 that the officers of Local 1001 had discussed this 5 practice with the Administrator of the Fund, and that 6 the Administrator of the Fund was aware of and had 7 accepted the fact that contributions were being made on 8 behalf of officers of 1001. 9 Q. And were there other documents that you 10 examined at the Local beyond those minutes? 11 A. Other than the Declaration of Trust documents 12 and the minutes there are none that immediately come to 13 mind. 14 Q. Did you ask to see documents from anyone 15 else? 16 A. We wanted to see documentation from the 17 Funds. And I had directed several letters both to the 18 Funds and to their counsel trying to obtain those. 19 THE INDEPENDENT HEARING OFFICER: We're going 20 to shut the door behind you. 21 THE WITNESS: I directed correspondence to 22 the Funds and to their counsel trying to obtain 23 documentation with respect to the historic practice in 24 making contributions on behalf of officers of Local 25 1001, or in the alternative to see if there was any
1 documentation prohibiting that practice. 2 BY MR. LYDON: 3 Q. Was there any particular definition that was 4 causing you concern? 5 A. Well there was nothing that was causing me 6 concern, but the definition of "employee" in all of the 7 different restatements of the Declaration of Trust was 8 a circular definition and indicated to me that it was 9 at least an open issue as far as whether an officer of 10 Local 1001 could qualify as an employee because the 11 definition was circular. It defined an employee as 12 someone on behalf of whom contributions were being made 13 to the Funds. 14 Q. Okay. Now if you would look at Exhibit 56, I 15 believe it is, which this would be Local 1001 exhibits. 16 Take a moment, if you would, and look through those. 17 Those are a collection of letters. And while some bear 18 your signature, some do not, but they all appear to be 19 on the letterhead of your law firm; is that correct? 20 A. That's correct. The ones that don't bear my 21 signature are merely unsigned file copies. 22 Q. All right. Is your practice sometimes to 23 copy after you sign? Is that it? 24 A. Correct. 25 Q. Now the last letter of June 25, 2002 appears
1 to be written or addressed to Peter Faraci. But these 2 other letters directed to the Laborers' Pension Fund, 3 July 3, 2002, July 11th, 2002, August 8th of 2002. The 4 next one you can skip, the August 22 to Mr. Gironda. 5 But then August 22 to J. Peter Dowd, and September 18 6 of 2002 to Howard Levinson. Were all of those 7 addressed to representatives of the Fund? 8 A. Yes. 9 Q. And what were -- what was it that you were 10 seeking to accomplish with the correspondence directed 11 to the Fund? 12 A. The purpose of the correspondence was to 13 obtain instruction and guidance from the Funds in light 14 of what position the Funds were taking with respect to 15 Mr. Capasso and subsequently with several other retired 16 officers of Local 1001 who were being advised that 17 their pensions were being terminated. 18 Q. And what is it that you wanted from the 19 Pension Fund? 20 A. I wanted to see documentation that supported 21 their position that these individuals were no longer 22 qualified to receive Pension and or Health and Welfare 23 contributions. And I was also trying to see if there 24 was any other documentation that might show that 25 individuals were treated similarly or dissimilarly in
1 that respect relating to other Locals. 2 Q. Did you receive any response to this 3 correspondence? 4 A. None whatsoever. 5 Q. Not getting any response to that 6 correspondence, what if any action did you take or 7 advise Local 1001 to take? 8 A. We were very frustrated by the fact that we 9 weren't getting any response from the Funds, and at 10 that point we decided that because we were getting 11 pressure from Mr. Capasso and from the other 12 individuals who are officers of Local 1001, as far as 13 their situation, Local 1001 was sort of caught in the 14 middle between their officers and their members and the 15 Funds. So we decided that the most prudent course at 16 that point would be to seek a declaration from the 17 Court. We prepared and filed a lawsuit in that regard. 18 Q. And this was -- and the lawsuit was filed, 19 was it not? 20 A. Yes, it was. 21 Q. It was filed on your advice, correct? 22 A. Yes. 23 Q. And I believe we've already heard what 24 happened. I believe there are documents in here. But 25 basically on jurisdictional grounds that case was
1 dismissed; is that right? 2 A. Correct. The merits were never addressed. 3 MR. LYDON: If I may take a moment. We 4 previously agreed that the legal arguments of Mr. 5 DeBofsky are going to be addressed in writing post 6 testimony. But let me just take a moment. 7 MR. THOMAS: I assume that what Mr. Lydon is 8 saying, at least my understanding of the stipulation 9 is, is that it's going to be in our post-hearing 10 briefs. Whether Mr. DeBofsky helps or not is fine. I 11 just don't want a separate -- 12 THE INDEPENDENT HEARING OFFICER: No. You 13 need a couple minutes? We're coming up time for a 14 short break. 15 MR. LYDON: Why don't we do that. 16 THE INDEPENDENT HEARING OFFICER: Let's take 17 a ten minute break. 18 (Whereupon a break was taken in 19 the proceedings after which the 20 following proceedings were had:) 21 THE INDEPENDENT HEARING OFFICER: Okay. 22 MR. LYDON: We have no further questions of 23 this witness. 24 THE INDEPENDENT HEARING OFFICER: No further 25 questions? Okay. Mr. Thomas? Now -- and that means
1 that -- our agreement was that now you're going to then 2 submit using his materials to you on various issues on 3 ERISA, correct? 4 MR. LYDON: That's correct. In other words, 5 our legal briefs at the conclusion of the case will 6 include -- 7 THE INDEPENDENT HEARING OFFICER: Include 8 some of his opinions. 9 MR. LYDON: His opinions and the cases that 10 he would cite to and whatever other authority he has. 11 THE INDEPENDENT HEARING OFFICER: That's 12 fine. Okay. 13 MR. THOMAS: Six against one instead of just 14 five against one. 15 THE INDEPENDENT HEARING OFFICER: What are we 16 doing? 17 MR. THOMAS: Cross examine. Finding my 18 notes. 19 CROSS EXAMINATION 20 BY 21 MR. THOMAS: 22 Q. Good morning, sir. 23 A. Good morning. 24 Q. The lawsuit that was filed, I believe that's 25 filed in October of 2002. Does that sound right?
1 A. I don't really recollect the date, but there 2 should be a stamp on the complaint. 3 Q. What's your recollection? 4 A. Somewhere in that time frame. 5 Q. The lawsuit that was filed, that was 6 dismissed based on standing grounds, right? 7 A. Correct. 8 Q. The Court holding that Local 1001 did not 9 have standing to speak for the individual claimants at 10 issue, correct? 11 A. The reason that I'm hesitating is that we 12 were -- the lawsuit was never intending to speak for 13 individual claimants. The lawsuit was intending to 14 speak to Local 1001's rights and obligations. But in 15 essence I believe that's what Judge Shadur held. 16 Q. So you may not have intended it to be 17 received that way, but that's how the Court received 18 it. 19 A. I think that that's probably a fair recap of 20 Judge Shadur's holding. 21 Q. Okay. Was there any reason that you didn't 22 file this on behalf of the individual claimants who had 23 been denied? 24 A. Absolutely. 25 Q. And what was that?
1 A. The reason is because we felt that we had a 2 conflict with the individual claimants, that they -- 3 Q. "We" being the Union? 4 A. "We" being Local 1001. In that the claimants 5 would have wanted us to assert that they were entitled 6 to the Pension and the Health and Welfare benefits. 7 The Fund was telling us that we never should have been 8 making contributions. We were asking the Fund for 9 guidance and instruction, which we didn't get, so we 10 were trying to get it from the Court. 11 Q. But what's the conflict? 12 A. The conflict is that since Local 1001 was the 13 conduit to the Funds, and we were obligated to act in 14 accordance with the Funds' documents as far as making 15 the contributions, we believed that we were acting in 16 accordance with those documents. 17 Q. "We" being the Union? 18 A. "We" being Local 1001. But the Fund was 19 taking a different position starting with Mr. Capasso's 20 attempted retirement. And Local 1001 felt that there 21 was a conflict with respect to whether it could 22 represent the individual members of Local 1001 because 23 Local 1001 is separate from its members, but as a labor 24 organization it owes a fiduciary obligation to its 25 members, and because we could see no means of resolving
1 that conflict, Local 1001 was looking for its own 2 guidance from the Court. 3 Q. So if I'm understanding you correctly, you're 4 saying that declaratory judgment action was intended to 5 clarify Local 1001's rights and not clarify the 6 individual participants' rights; is that right? 7 A. Well, that was the intention, but the Court 8 could very well have ruled that the individual 9 participants were entitled to the benefits, and it 10 would have clarified their rights. 11 Q. Let's leave aside what the Court would have 12 or could have done. My question is: When you filed 13 it, your view was that Local 1001 -- the purpose of 14 this was to declare 1001's rights. 15 A. Rights and obligations, correct. 16 Q. As distinct from Mr. Capasso, et al, of 17 asking for relief from the Court that the Funds 18 continue to accept this money. 19 A. Exactly. 20 Q. So that's why it was the Local that paid your 21 fees, right, and not the individual claimants. 22 A. Correct. 23 Q. And had this been successful -- had the 24 lawsuit been successful and you had gotten the 25 declaratory judgment from the Court saying these are
1 lawful contributions, who would have succeeded 2 financially as a result of that court victory? 3 A. Mr. Capasso, et al. 4 Q. But the fees expended in that lawsuit would 5 have been paid for by the Local, correct? 6 A. No, because -- 7 Q. No? 8 A. -- because ERISA has a fee shifting provision 9 and we would have sought the fees from the Funds 10 pursuant to 29 U.S.C. Section 1132(g). 11 Q. But the front paying of the Funds came from 12 the Local, right? 13 A. Correct. 14 Q. So you're saying if you had won the lawsuit 15 you would have gotten an award of fees, and then what 16 you would have done is repaid that to the Local? 17 A. Correct. 18 Q. Not kept that as your own fee for the matter? 19 A. Well obviously I was entitled to compensation 20 for the services that I performed. 21 Q. Right. 22 A. But if there was a Court awarded fee, then 23 Local 1001 would have been reimbursed for the fee 24 payments that it had made to me. 25 Q. All right.
1 MR. LYDON: I hope we've exhausted this. 2 This seems afield from -- 3 MR. THOMAS: The whole lawsuit is part of the 4 direct, and the terms of the lawsuit and who he 5 represents and why it got dismissed is all included. 6 MR. LYDON: Now we're into fee shifting. 7 THE INDEPENDENT HEARING OFFICER: I think 8 we've established that. Okay. 9 MR. THOMAS: I love the objections that come 10 after I'm finished with the topic. 11 MR. LYDON: That will be wonderful. That's 12 just great. Move on. 13 THE INDEPENDENT HEARING OFFICER: Go ahead. 14 BY MR. THOMAS: 15 Q. So no Court has ever held that this practice 16 was legal, correct? 17 A. With respect to this particular situation, 18 correct. 19 Q. Now you talked about the plan documents that 20 you looked at and how the term "employee" is defined. 21 I think your term was "in a circular way." 22 A. Yes. 23 Q. And there's actually -- in addition to the 24 plan documents talking about that term, there's also 25 quite a lot of law on that issue, isn't there, under
1 ERISA? 2 A. All the law under ERISA says is that you 3 follow what the plan documents state. 4 Q. Fine. But there's also in the ERISA case law 5 quite a lot of airing out of what that term "employee" 6 means under whatever the applicable plan documents are 7 at issue, right? 8 A. I don't think you can draw any particular 9 conclusion from any of that case law. There is case 10 law correct, but I don't think you can draw any 11 conclusion one way or the other from that case law. 12 Q. Because the Trust documents are different 13 from the Trust documents here? 14 A. Exactly. 15 Q. So you agree then that the Trust documents 16 here would be controlling, right? 17 A. Yes. 18 Q. Whatever a Court ultimately interprets them 19 to mean, right? 20 A. Yes. 21 Q. Now before you get to court, who is -- let me 22 rephrase that. 23 The final arbiter, prior to going to court, 24 of what the documents mean are the Trustees of the 25 Funds themselves, right?
1 A. Yes. 2 Q. So if the Trustees say, "This means X," then 3 that's what you have to go on, and if you want to 4 challenge that in court that's what you go on. But you 5 get that first, right? 6 A. Yes. 7 Q. There was no -- did your correspondence that 8 you referred to earlier specifically ask that question 9 of the Trust Funds? 10 A. We specifically asked for instruction and 11 guidance. 12 Q. Did you ask for instruction and guidance on 13 that issue? 14 A. Yes. 15 Q. And is that in the documents that Mr. Lydon 16 was showing you? 17 A. I believe it is. 18 Q. Is there anything in those letters that 19 specifically says, "We don't understand what the term 20 "employee" means."? Could you please educate us on 21 that? 22 A. Well if you look at Tab 56 on the letter of 23 July 3rd of 2002, the middle paragraph on the first 24 page there -- 25 Q. Right.
1 A. Specifically asks for instruction and 2 guidance from the Fund. 3 Q. Right. 4 A. And then goes on to say, "If Local 1001 in 5 making contributions on behalf of any individual the 6 Fund deems non-qualified, please identify any such 7 individual, cite any applicable plan, provision, or 8 rule upon which the Fund is relying, and refund said 9 contributions." 10 Q. Right, that's what it says. But the letter 11 does not say anywhere, does it, that, "We don't think 12 that these people can be construed as employees. We 13 don't understand how you're using that term." That 14 issue was not flagged for the Funds, was it? 15 A. I don't think I can answer that question. 16 Q. Does this -- this letter does not say, does 17 it, "We don't understand what the term "employee" 18 means."? 19 A. Not specifically, no, but it does state that 20 we didn't understand what our duties and obligations 21 were. 22 Q. Okay. But the specific points you raised in 23 your direct was you didn't understand because of the 24 circular nature of the Trust documents what the term: 25 "Employee" meant, right?
1 A. The Trust document was somewhat confusing 2 because it defined employee in the circular fashion 3 which would have implied or which would have stated 4 explicitly that these employees were qualified to 5 receive these contribution -- these individuals were 6 qualified to receive these contributions. 7 Q. So the confusion you had was over the term 8 "employee" in the Trust documents, right? 9 A. Not necessarily, because what I was asking 10 the Fund for was that there was something else they 11 were relying on. 12 Q. And ultimately each of the individual 13 claimants who had a financial interest in the outcome 14 of this question had the right to appeal these denials 15 to get that determination from the Funds, right? 16 A. Yes. 17 Q. And ultimately, quite independent of your 18 lawsuit, they all did that, right? 19 A. I don't know. 20 Q. You don't know that? 21 A. I don't know that. 22 Q. You have not seen their claims in the 23 appeals. 24 A. I have seen some correspondence. I do not 25 know what the final outcome was of any of those
1 appeals. 2 Q. You have not read the Trust Funds' appeals 3 opinion on that? 4 A. I did read one at one point. 5 Q. You did? 6 A. Yes. 7 Q. And what did it say about the definition of 8 "employee"? 9 A. The Trust Funds' letter indicated that it 10 defined the term to exclude these individuals. 11 Q. Because it was based on actual hours worked, 12 right? 13 A. I would have to see the opinion again to 14 refresh my recollection. 15 Q. Okay. Please take a look at Exhibit 21 which 16 is Volume 4 of the GEB Attorney exhibits. 17 A. Okay. 18 Q. Take a look at that. There's a cover letter 19 going to one of the claimants, and then behind that 20 there is an opinion. Is this the -- take as much time 21 as you need. But does this look like the opinion that 22 you read? 23 A. No, it doesn't. 24 Q. So you have not seen this before. 25 A. I don't believe I have.
1 Q. Okay. And in your investigation -- let me 2 back up. 3 The Local paid you on an hourly basis for 4 that lawsuit, right? 5 A. Yes. 6 Q. In your investigation, prior to filing the 7 lawsuit, did you do any determination of whether the 8 Funds -- did you do any determination of the criteria 9 used by the Funds in determining eligibility. 10 A. Other than reading the plan documents, no. 11 Q. Did you see the term "Actual hours worked" 12 anywhere? 13 A. I don't recall seeing that term. 14 Q. Did you review any of the remittance reports 15 from the Local to the Funds prior to the filing of the 16 lawsuit? 17 A. I can't tell you -- I've seen remittance 18 reports, but I can't tell you when. 19 Q. Did you see signed certifications on those 20 remittance reports? 21 A. I remember seeing the reports. I can't 22 recall specifically if there were certifications or 23 what the certifications stated. 24 Q. As a Labor lawyer are you familiar with the 25 fact that there are certifications on those forms?
1 A. I would assume there to be, yes. 2 Q. And that's because the Funds needed to be 3 able to rely upon the accuracy of the information 4 contained therein, right? 5 A. Yes. 6 Q. In fact there are felony provisions that 7 govern false statements in remittance reports, correct? 8 A. I believe there to be. 9 Q. That's Section 1027 of Title 18? Does that 10 sound right? 11 A. That sounds correct. 12 Q. And the -- it's your understanding, is it 13 not, that the point of that criminal provision is that 14 the Funds can be compromised in a number of ways if the 15 information they're receiving from the employer is 16 inaccurate and is materially inaccurate, right? 17 A. I'm not sure I can answer that question 18 because it really requires a legal opinion that -- on 19 an aspect of criminal law that I don't feel that I have 20 expertise in. 21 Q. Do you ever have occasion to advise people on 22 the importance of making remittance report information 23 accurate? 24 A. In my practice I have never had that come up. 25 Q. Okay.
1 Now there is a lot of law apart from the 2 Trust documents defining an employee as, "When employed 3 by another one who works for wages or salary in the 4 service of an employer." You're familiar with that, 5 are you not? 6 MR. LYDON: I object. I thought we were 7 going to address all of this -- 8 THE INDEPENDENT HEARING OFFICER: Give me 9 that question again. I was distracted. 10 (Record read.) 11 MR. LYDON: I'm going to object. I thought 12 we were going to address all of this -- 13 THE INDEPENDENT HEARING OFFICER: Here's my 14 question. Obviously the witness has a different 15 opinion as to whether or not these particular items are 16 proper. And the procedure -- we've established pretty 17 much the factual procedure where the benefits -- the 18 persons are, where they are employed, and how much they 19 worked or didn't work. Getting his opinion now and 20 going through it would be something I would do in 21 questioning him. So I don't think it's necessary to 22 rehash a legal argument. 23 MR. THOMAS: That's fine. 24 THE INDEPENDENT HEARING OFFICER: Okay? 25 Rehash, but I mean put the legal questions to him and
1 we were agreed we were going to do -- in fact, even had 2 we not agreed to do, I would probably stop it because 3 it doesn't do me any good at this stage to hear, you 4 know, bits and pieces. 5 MR. THOMAS: Okay. 6 BY MR. THOMAS: 7 Q. Prior to filing the lawsuit, had you done any 8 investigation to determine whether these individual 9 claimants, who you weren't representing but who were 10 obviously part of the overall picture, had actually 11 done any work for the Local. 12 A. I certainly inquired of the officers as to 13 what services these individuals performed. 14 Q. The officers meaning Mr. Gironda? 15 A. And the other members of the Executive Board, 16 correct. 17 Q. Mr. DeChristopher? 18 A. I spoke to a number of them. 19 Q. But how about the people who -- whose claims 20 were being denied by the Funds, did you speak to them. 21 A. I did have occasion to speak with Mr. Capasso 22 at one point, and I believe I spoke to some of the 23 others at a meeting. 24 Q. Did you know what Mr. Capasso's employment 25 was at the time?
1 A. Mr. Capasso described his employment as being 2 that of an Auditor, which he explained required him to 3 attend meetings, work with membership, and he indicated 4 that he had spent a significant amount of time 5 performing those services. 6 Q. Okay. Do you understand what his full-time 7 job was? 8 A. Yes. 9 Q. And that was what? 10 A. I understood that he was the Executive 11 Director of one of the Retirement Funds for the City of 12 Chicago. 13 Q. And that that's a full-time, at least 40 hour 14 a week job, correct? 15 A. Yes. 16 Q. And he had had that job for many years, 17 approximately 15, 18 years, correct? 18 A. Yes. 19 Q. So when he said to you that he did some work 20 as an Auditor, did you do any investigation to 21 determine how many hours he had actually worked. 22 A. Other than verifying what he -- what Mr. 23 Capasso had told me with the members of the Executive 24 Board, no. 25 Q. Did you know that based on the remittance
1 reports from the Funds -- from the Local to the Funds, 2 that the Funds' records had indicated that during the 3 time period that he had been Director of the Pension 4 Fund for the City of Chicago, he had allegedly worked 5 25,000 hours at Local 1001? Did you know that? 6 A. I have no idea. 7 MR. THOMAS: Nothing further, Mr. Vaira. 8 MR. LYDON: Nothing further. 9 THE INDEPENDENT HEARING OFFICER: Thank you, 10 sir. 11 MR. THOMAS: I'm sorry. I do have one more. 12 THE INDEPENDENT HEARING OFFICER: You get one 13 more. 14 MR. THOMAS: Thank you. 15 BY MR. THOMAS: 16 Q. Mr. DeBofsky, there was -- later after the 17 lawsuit there was an issue concerning underreporting of 18 certain staff, employee contributions to the Funds, 19 correct? 20 A. Yes. 21 MR. LYDON: Object. Beyond the scope. 22 THE INDEPENDENT HEARING OFFICER: I think it 23 is beyond the scope. Good enough. Sustained. All 24 right. 25 MR. THOMAS: Well I abide by the Court's
1 ruling. May I make an offer of proof of what I 2 intended to ask just so you have it? 3 THE INDEPENDENT HEARING OFFICER: It's pretty 4 much in the record. 5 MR. THOMAS: There is a document that Mr. 6 DeBofsky was involved in the receipt or payment of the 7 Funds to the Local to the Funds making up a shortfall, 8 or at least half of the shortfall, of the underreported 9 money for the clerical staff. And the point I was 10 going to make is no one ever contested those findings. 11 That's all. 12 THE INDEPENDENT HEARING OFFICER: That's in 13 the record. 14 MR. LYDON: We agree. 15 THE INDEPENDENT HEARING OFFICER: That's 16 pretty -- 17 MR. THOMAS: There is no indication on the 18 paper. 19 THE INDEPENDENT HEARING OFFICER: There's 20 nothing in the record to indicate -- the money went in. 21 MR. THOMAS: Right. 22 THE INDEPENDENT HEARING OFFICER: Okay. 23 Thank you. 24 (Witness excused.) 25 All right.
1 MR. LYDON: We'll call Mr. Chianelli. 2 THE INDEPENDENT HEARING OFFICER: Mr. 3 Chianelli, you were a witness here last month, and you 4 were sworn in and you're still under oath. 5 THE WITNESS: Yes. 7 called as a witness herein, having previously been duly 8 sworn, was examined and testified as follows: 9 DIRECT EXAMINATION 10 BY 11 MR. LYDON: 12 Q. Mr. Chianelli, you've been here throughout 13 the proceedings; isn't that correct? 14 A. That's correct. 15 Q. And you've heard all of the testimony 16 including the testimony of John O'Rourke. 17 A. Yes. 18 Q. And of course you've read a copy of the 19 complaint; is that correct? 20 A. Yes. 21 Q. For Trusteeship in this case? 22 A. Yes. 23 Q. Let me ask you some -- I'm going to ask you 24 specifically some questions about the allegations of a 25 connection to organized crime. And first I'll ask you
1 about the complaint itself. 2 Have you ever at any time been involved with 3 organized crime bookmaking activities. 4 A. Absolutely not. 5 Q. Have you ever placed a bet with a bookmaker? 6 A. Absolutely not. 7 Q. And you've never been a bookmaker yourself; 8 is that correct? 9 A. No, sir. 10 Q. It's alleged that you're associated with LCN 11 bookmaker, and I guess that's an acronym for organized 12 crime, bookmaker Bobby Garippo. Did you see that? 13 A. Yes, I did. 14 Q. Do you know anyone named Bobby Garippo? 15 A. No, sir, I do not. 16 Q. Have you ever heard the name before you got 17 this complaint? 18 A. Absolutely not. 19 Q. It's also alleged in this complaint that 20 you're known to have associated with LCN figures at 21 Dappers Restaurant on Belmont and Cumberland Avenue in 22 Chicago. Have you ever associated with organized crime 23 figures at Dappers Restaurant on Belmont and Cumberland 24 Avenue in Chicago? 25 A. Absolutely not.
1 Q. Have you been to that restaurant -- Dappers 2 restaurant on Belmont and Cumberland Avenue in Chicago? 3 A. Maybe three times in my entire life. 4 Q. And what kinds of -- do you remember who you 5 were with on those occasions? 6 A. The last time I was there was approximately 7 two years ago with my wife, my uncle, my aunt, and my 8 niece and nephew on a Sunday morning for breakfast. 9 And the reason I remember it is that every year we meet 10 because our birthdays are all in June, and we would go 11 someplace different for breakfast every year. So that 12 was the last time that we went there. 13 Q. It's also alleged in this complaint that 14 you've been identified as an associate of the Elmwood 15 Park Crew. Do you know anything about something known 16 as the Elmwood Park Crew? 17 A. No. 18 Q. When Mr. O'Rourke was asked for specifics 19 about that yesterday, you were present, weren't you? 20 A. Yes. 21 Q. He mentioned the name Rudy Fratto. Do you 22 recall the name Rudy Fratto? 23 A. Yesterday, yes. 24 Q. Have you ever met or known or heard of a guy 25 named Rudy Fratto before?
1 A. No. No. I guess he must have been the 2 flavor of the day yesterday. 3 Q. Well wait. Just -- 4 MR. THOMAS: Objection. Move to strike that 5 answer. 6 THE INDEPENDENT HEARING OFFICER: Go ahead. 7 MR. LYDON: Let me -- just answer my 8 question. 9 THE INDEPENDENT HEARING OFFICER: Just answer 10 his questions. 11 BY MR. LYDON: 12 Q. My question is: Have you ever heard the name 13 Rudy Fratto before yesterday. 14 A. No. 15 Q. And Mr. Fratto was identified as being 16 involved in bookmaking and loan sharking. Have you 17 ever associated with anybody involved in loan sharking? 18 A. No. 19 Q. Now a few weeks ago Mr. O'Rourke also 20 testified regarding you. And he said that there was 21 one informant, and yesterday he said there was another 22 one that he talked to since that time, who referred to 23 you as "Bobby Chi". Have you ever heard anyone ever 24 refer to you as "Bobby Chi"? 25 A. No.
1 Q. Before -- 2 A. Before this, no, no. 3 Q. Is that true for your entire life you've just 4 never been known as "Bobby Chi" by anybody? 5 A. No, no, never. I've been called some names, 6 but not that, no. 7 Q. Why don't we move to some things that I don't 8 think were covered last time around. And I want to 9 talk in particular about -- how long have you been a 10 member of Local 1001? 11 A. Since 1978, approximately July. 12 Q. And what did you do at that time? 13 A. I worked on the -- Department of Streets 14 asphalt helper, City of Chicago. 15 Q. And that was beginning in 1978? 16 A. Yes. 17 Q. For how long did you work as an asphalt 18 helper? 19 A. Until approximately spring of '93. 20 Q. What happened in the spring of '93? 21 A. I had been on and was successfully promoted 22 to a foreman of an asphalt crew, same department. 23 Q. How long did you continue as a foreman in an 24 asphalt crew? 25 A. Approximately 18 months. And then I was
1 promoted to supervisor of paving crews, which is the 2 same department. 3 Q. How long did you continue as a supervisor in 4 the Paving Department? 5 A. Until I became a full-time Business Agent 6 with Local 1001 in September, October, 2001. 7 Q. Now regarding your membership in Local 1001, 8 what positions have you held in Local 1001, beginning 9 when? 10 A. The first position would be a Delegate to the 11 International Convention in 1996 I was elected. Then 12 1999 I was elected an Auditor. In roughly August of 13 2000, I want to say when Shirley became ill and 14 retired, I was appointed Executive Board member. And 15 -- I'm sorry. In 1999 I was elected Auditor and 16 Delegate to the District Council. Then in 2000 when 17 Shirley got sick I became an Executive Board member. 18 And on Bruno Caruso's expulsion I assumed the position 19 of Recording Secretary. 20 Q. And as an Auditor what duties did you 21 perform? 22 A. As an Auditor, since I was elected in May of 23 '99, really did not assist the accountants in that 24 audit for which would have been the year '99, but in 25 early 2000 when they did their audit, I did assist them
1 in supplying them with records and reports that they 2 needed from the computer system since I have some 3 knowledge of pulling those reports, and it's a little 4 bit complicated process. 5 Q. You mentioned computer systems. Have you 6 done any work for 1001 in connection with computers? 7 A. Yes. Prior to my becoming a full-time 8 officer as an Auditor and before becoming full-time I 9 designed the database system and the computer system 10 that's now functioning at the Local. 11 Q. All right. Anything else that you performed 12 in the way of services for the Local? 13 A. I do a lot of -- I did and I still do a lot 14 of the graphic work, layout work for adds, political 15 adds, the contract books, the website -- the Local's 16 website I designed and maintain. 17 Q. Let's go to -- as Recording Secretary what 18 are your duties there with Recording Secretary. 19 A. As Recording Secretary my duties are pretty 20 much what it says in the Constitution. I review and 21 type out the minutes of the meetings. I submit the 22 records to the Secretary-Treasurer, and basically 23 whatever the Constitution outlines as far as me keeping 24 records, assisting -- turning the records over to the 25 auditors, since we have a professional auditing firm in
1 the spring, usually, to do the audits. 2 Q. You mentioned -- you were here yesterday when 3 Mr. Capasso testified, right? 4 A. Yes. 5 Q. You heard him say something about the 6 minutes. Any dispute with what he has to say? Or how 7 do you and he work with respect to the minutes? 8 A. Well Jimmy is the fastest writer I've ever 9 seen. He usually handwrites them out. I'll sit next 10 to him. If there's something, I mentally catch that, I 11 think I need to put it down, I'll put it down. If not, 12 usually the process is I'll take his notes home and 13 either that afternoon or the next morning take them 14 into the office, if I don't do them at home, I'll take 15 them, sit down and read his notes. I personally type 16 out the minutes, check them for accuracy, of course, 17 and all that other -- and attach any documents we need 18 to attach, and then I attach Jimmy's handwritten notes 19 to the minutes that are in our office. So in case I 20 ever have to refresh my memory I can always go back to 21 Jimmy's notes. 22 Q. So the official minutes of Local 1001 have 23 your -- as they're maintained at 1001, have your 24 typewritten -- 25 A. Yes.
1 Q. -- minutes. And attached to the typewritten 2 minutes are handwritten notes that Mr. Capasso has 3 prepared. 4 A. That's correct. And I also try to attach a 5 meeting notice that we send out to all the minutes, if 6 I hopefully always remember to, but most of the time I 7 remember to attach one of the notices also. 8 Q. While we're on the subject of Mr. Capasso. 9 Is it your understanding that he's employed by a 10 government in a capacity directly related to Local 1001 11 and that directly benefits Local 1001? 12 MR. THOMAS: Objection to the leading. 13 That's a speech, not a question. 14 THE INDEPENDENT HEARING OFFICER: That's a 15 definition coming out of the Constitution. 16 MR. LYDON: Yes. 17 THE INDEPENDENT HEARING OFFICER: And it's 18 right out of the Constitution. 19 MR. LYDON: It is. 20 THE INDEPENDENT HEARING OFFICER: And that's 21 -- let me stop to think about it. 22 MR. THOMAS: It's still a completely leading 23 question. It suggests the answer, and all the witness 24 has to do is -- 25 MR. LYDON: I can rephrase it for him.
1 BY MR. LYDON: 2 Q. I'll ask you: Does Mr. Capasso in his 3 capacity working for the City or the Pension Fund 4 provide anything that directly benefits Local 1001 and 5 its members -- 6 A. Yes. 7 Q. -- in his work capacity for that Pension 8 Fund. 9 A. Yes. 10 Q. Explain. 11 A. Jimmy is a great asset there because if 12 there's any legislation, anything that Jimmy thinks 13 that we need to either become involved in in lobbying 14 in Springfield or here in Chicago, or if there's any 15 questions we have regarding the benefits for the 16 members, whether it be current retirees, health 17 insurance, which is constantly changing, or what the 18 benefits will or may be in five years from now, because 19 the City's agreement varies from year to year, Jimmy 20 assists us in either getting the information or putting 21 him -- a member in touch with Jimmy to help the member 22 get through it to make a decision if he should or 23 shouldn't. 24 Like take the insurance plan, because it is 25 expensive and some people are covered by Social
1 Security and they don't take the pension -- the Health 2 and Welfare, so -- 3 Q. But his job as Director of that Fund, how 4 does that Fund affect or involve your members? 5 A. It's one hundred -- all of our members, since 6 they don't work for a contractor, all of our members 7 are municipal workers, belong to that Fund. So your 8 Pension Fund is in a Fund that Jimmy Capasso 9 administers. So it's 100 per cent of our members. 10 Q. All right. 11 You've mentioned Bruno Caruso's expulsion. 12 What action, if any, did the Board take upon the 13 expulsion -- 14 A. Well -- 15 Q. -- or beforehand when charges were filed 16 against him. 17 A. When -- I don't believe any action was taken 18 when charges were filed, but upon the initial decision, 19 I believe by Mr. Vaira, we put Mr. Caruso on 20 administrative leave. 21 Q. And did you do any -- take any other action? 22 A. Not that I recall. 23 Q. You heard Mr. Rea testify. Were you involved 24 in a decision -- 25 A. No. That was prior to me coming on the
1 Board. 2 MR. THOMAS: What was that in reference to? 3 MR. LYDON: Mr. Rea who testified. He said 4 that took place before -- 5 MR. THOMAS: The hiring of the private 6 investigator. 7 MR. LYDON: Before he was on the Board. 8 BY MR. LYDON: 9 Q. Now there's also been testimony that, I 10 believe it was -- came up with Mr. Gittler that 11 collective bargaining with the City is currently being 12 negotiated? 13 A. Yes. 14 Q. Who at Local 1001 is involved in that? 15 A. Every one of the Business Agents, under the 16 instruction from our Business Manager, attends the 17 Coalition meetings where the General Coalition meets. 18 So we all go to the meetings. 19 Q. How many people attend these Coalition 20 meetings? 21 A. Approximately -- on both sides, counting the 22 City side and the Union side, in the neighborhood of 23 maybe 75, 80 people. 24 Q. And how long has this been ongoing? 25 A. It started -- we tried to start early this
1 time, but obviously we haven't gotten any resolution to 2 it. I want to say April of 2003. 3 Q. Do any of the officers of Local 1001 have any 4 leadership roles with respect to the Coalition? 5 A. Nick Gironda is a Co-Chair. 6 Q. Explain briefly, if you can, the interaction 7 between Local 1001 and the City. In other words, who 8 do you report to within the City? How does this all 9 work, the supervision within the City of Chicago, from 10 the City side versus the Employee/Union side? 11 A. Well the City has got, anyone who knows the 12 City of Chicago structure, multiple layers of 13 supervision. We represent obviously the Laborers', 14 which are on the bottom end of the supervision level, 15 since we do represent foremen and supervisors. But 16 there are Assistant Superintendent, Deputy Assistant 17 General. They've got more titles than you can count. 18 So -- 19 Q. But in terms of interaction, there is -- let 20 me back up. 21 Do you report to people on a City-wide level 22 and at some subdivision level of the City? 23 A. What do you mean report? 24 Q. Do your people report? 25 A. Our people all report to an immediate
1 supervisor, whether it be a foreman or a supervisor or 2 a Board Superintendent or -- 3 Q. Work up the chain, if you can, for me. Who 4 reports to whom? 5 A. Take Sanitation. Sanitation would report to 6 a Refuse Collection Coordinator who would report to a 7 Ward Superintendent, who would report to a Division 8 Superintendent, who would report to an Assistant Deputy 9 Superintendent General and then another -- you know 10 what? I get lost once I get into City Hall. 11 THE INDEPENDENT HEARING OFFICER: There's a 12 certain point that Laborers' stops and management takes 13 over. Which one of those individuals, as you pointed 14 out, are management and not your union? 15 THE WITNESS: I think -- you mean members of 16 our union or members of a union? 17 THE INDEPENDENT HEARING OFFICER: No. 18 There's a difference between management and labor. 19 Understand the guys are working and supervising. Where 20 does your cutoff go? Where do you stop representing 21 persons in that hierarchy? 22 THE WITNESS: We stop -- in Sanitation we 23 stop at Refuse Collection Coordinators. 24 THE INDEPENDENT HEARING OFFICER: And they 25 are --
1 THE WITNESS: They were directly over the 2 Sanitation laborers. 3 THE INDEPENDENT HEARING OFFICER: They're not 4 your members? 5 THE WITNESS: They're ours. They're the last 6 ones. They are the last ones. So it would be 7 Sanitation Labor then Refuse Collection Coordinator, 8 and then they're out. 9 BY MR. LYDON: 10 Q. Now, above that level within the City do you 11 report -- do your people report to both Ward people as 12 well as City-wide people? 13 A. Our people report directly to the Wards and 14 then those people report to the divisions and the 15 division reports to downtown. 16 Q. When we get within the Ward organization, 17 you're reporting -- what connection, if any, do the 50 18 aldermen of the City of Chicago have to your work? 19 A. I would -- and I am -- this is just a guess, 20 but I would guess that probably 50 per cent if not more 21 of our members are sponsored by a Ward, either 22 alderman, committeeman, someone related in politics to 23 the Ward. 24 Q. That's currently. 25 A. Yes.
1 Q. And explain why. 2 A. Well, as you know, the patronage system in 3 Chicago is still alive. It's just evolved a little 4 more. Normally what happens is that an alderman 5 committeeman, whoever, might be a State Rep, if they're 6 looking to do a favor for one of their -- one of the 7 people that work the Ward, Precinct Captain, or 8 whatever, they'll get them a job on the City. And 99 9 out of a hundred times they're going to get him a job 10 in the lower level, which we represent, and gladly 11 represent. 12 Q. And in terms of -- and how are they impacted 13 by the actions of the City? For example, in what 14 you're currently negotiating with the City. 15 A. Well these people now have not gotten a 16 raise, which historically we always get them a raise, 17 their health benefits are frozen. In fact they're 18 being cut. And Marvin Gittler, who was here yesterday, 19 has filed an Unfair Labor Practice Force against the 20 City because the City is trying to cut out an HMO in 21 the middle of contract negotiations. 22 They're people that are directly affected by 23 us not having a contract or not being able to negotiate 24 anymore benefits for them at this time. So what -- the 25 aldermen are directly affected by this because now
1 their people are saying, and we get this call, "What 2 happened to our raise?" So I'm sure if they're calling 3 us, they're calling the guy that got him the job. 4 Q. Who has the job of interacting with these 5 aldermen? 6 A. All of us do. All of us do. 7 Q. On what kind of basis? Daily, weekly? 8 A. Nick is the shmoozer. Nick is always at City 9 Hall. I don't want to get in trouble for saying that. 10 Nick is always at City Hall, Nick Gironda. Nick's 11 always shaking somebody's hand, giving somebody a hug. 12 He's always over there, and Sam is with him. They're 13 always -- even Bobby hug. He's also pressing the 14 flesh, letting them know what's going on, and then 15 getting feedback from them because naturally all the 16 aldermen are on committees and stuff. Sometimes they 17 give us a heads up on, "This Commissioner's thinking 18 about doing this. This Commissioner is thinking about 19 doing that." Or Nick might be able to tell them, "You 20 know, we're having a problem in transportation, so some 21 of your people might be affected." 22 Q. Now in addition to having to negotiate and 23 deal with the local City level or Municipal 24 politicians, what kind of interaction or negotiation 25 goes on with State politicians down in Springfield?
1 A. As Mr. Capasso said yesterday, the State 2 regulates our retirement. So unless we go down there 3 -- usually Nick and Sam go down there. I'm a home boy. 4 My wife doesn't let me out of the house. Unless you go 5 down there and actually lobby for some of these things 6 to get passed and some of these improvements to be 7 passed, it wouldn't get done because the State has to 8 pass them. Unlike the other Pension Funds we can't 9 say, "We're going to increase it from a 2.2 multiplier 10 to a 2.4," which was done last year. Unless you go 11 down and lobby the State and get this legislation 12 passed, we don't get it. 13 Q. Is lobbying a part of the function performed 14 by officers of Local 1001? 15 A. Yes. 16 Q. And you lobby the aldermen, you lobby 17 Springfield. Anyone else that you have to lobby? 18 A. Well we do whatever we're asked when there's 19 stuff going on. Even the presidential thing. 20 Q. Well I'm talking about in terms of directly 21 involving the jobs. What about, for example, the 22 central City Hall? 23 A. The City Hall, the Commissioners, Deputy 24 Commissioners, people that make policy, all of us talk 25 to them. That's very clear. We all have an open door
1 policy with them. Like I said, Nick is the person and 2 Sam are always -- those two guys, Sam DeChristopher and 3 Nick Gironda, are always there, always at the Hall 4 talking to them, but we -- I pick up the phone 5 constantly and we'll call a Commissioner. 6 Q. How about you? What function do you perform 7 for Local 1001 in the course of lobbying or responding 8 to the City politicians? 9 A. I have the -- I guess you would call it title 10 of inside being. I'm always in the office. I'm always 11 on the phone. I'm always either talking to either a 12 Commissioner of Personnel to try to get somebody's 13 start dates for seniority straightened out so they 14 don't get laid off in error, which we're going through 15 right now. I'm talking to the Deputy Commissioner of 16 Benefits to make sure someone's benefits are intact. A 17 lot of times there are errors that are made that 18 sometimes aren't caught until somebody actually has a 19 problem and has to go to the hospital. I'm on the 20 phone with people from the departments trying to get 21 items straightened out or problems straightened out 22 before we have to go through a grievance procedure and 23 arbitration because the City is famous for dragging 24 their feet and taking six to nine months to get an 25 arbitration. So I try to expedite these problems. And
1 if it's something that I think needs a little flesh 2 pressing, I give it to Sam or Nick and they walk it 3 over to the Hall. 4 And Nate Gibson, who is the President, is my 5 -- what I call my south side guy. If there's -- Nate 6 has got such a reputation with the aldermen on the 7 south side because he's been an officer here with the 8 Local for, I want to say, 30 something odd years. If I 9 have a problem with one of the south side Wards or 10 divisions, I know Nate knows the aldermen on a personal 11 basis. I can give Nate a call and say, "Hey, why don't 12 you take a run over to the 18th Ward, talk to the 13 alderman, and find out what's going on with this Board 14 Sup -- there's a problem there. I just give that as a 15 reference. The lady in the 18th Ward is a nice person. 16 I don't want to -- but that's basically what I do is to 17 try and expedite some of these problems so we don't 18 have to constantly file grievances or file ULP's 19 against the City because if we would do that, honestly 20 everything would be at a standstill. 21 MR. LYDON: Let me take a moment if I can. 22 I don't have any other questions at this 23 time. 24 CROSS EXAMINATION 25 BY
1 MR. THOMAS: 2 Q. Hello again, Mr. Chianelli. 3 A. Mr. Thomas. 4 Q. The negotiations that you've just been 5 describing, those are ongoing at the moment; is that 6 right? 7 A. Yes. If you want to call them ongoing, yes. 8 Q. When do you expect that process to wrap up? 9 A. Historically -- the last one took 18 months. 10 The one prior to that took, I want to say, 14 months. 11 So I don't see it ending anytime soon. 12 Q. So where are you in that? 13 A. Right now we started -- the contract expired 14 June 30th, so we're approximately six months past the 15 expiration date of the contract. So the way that it's 16 going right now I would estimate at least a year, if 17 not longer than that, before we can come to some kind 18 of settlement. 19 THE INDEPENDENT HEARING OFFICER: You go that 20 long without a contract? 21 THE WITNESS: The last one was 18 months and 22 the one prior to that was 14 months. 23 BY MR. THOMAS: 24 Q. How does that work in terms of what governs? 25 In other words, you just go on whatever the old
1 agreement was? 2 A. I think Mr. Gittler every thirty days signs 3 an extension of agreement, or whatever you call it. I 4 don't know what the legal term is. 5 Q. You were asked a couple of questions about 6 Mr. Caruso's expulsion. When he was found, at least 7 initially, to be an associate of organized crime, you 8 indicated he was put on administrative leave. Was that 9 with pay or without pay? 10 A. With pay. 11 Q. And how long was he on administrative leave 12 with pay before he was finally let go? 13 A. I believe the initial findings were in, I 14 want to say, February, and the appeal process was 15 exhausted in September. 16 Q. So seven, eight months? 17 A. Seven, eight months. 18 Q. Other than removing Mr. Caruso, did the 19 Executive Board of Local 1001 conduct any kind of other 20 steps to determine whether anything else was needed at 21 Local 1001 to eliminate organized crime influence? 22 A. Not that I know of. 23 Q. You spoke at some length about Jimmy Capasso, 24 and you talked about the various things he does for 25 Local 1001 members, right?
1 A. Yes. 2 Q. That's his job as Administrator of the 3 Pension Fund, right? 4 A. I don't know what his job encompasses, but I 5 would imagine some of it falls under that, yes. 6 Q. Because the Fund that he runs is the Fund 7 that governs pension contributions for Municipal 8 employees, right? 9 A. For the Laborers' yes. 10 Q. So by definition the members of Local 1001 11 have their pension contributions going to his Fund, 12 right? 13 A. Yes. 14 Q. So it's a normal thing that there would be 15 some conversation between Capasso and the members of 16 Local 1001 and the Local itself because these are two 17 entities that have to interact with each other, right? 18 A. Yes. 19 Q. He's paid full-time to work full-time for 20 that Fund and represent its interest, right? 21 A. I would hope he is, yes. 22 MR. THOMAS: Nothing further, Mr. Vaira. 23 THE INDEPENDENT HEARING OFFICER: Thank you, 24 sir. 25 You're a full-time rep?
1 THE WITNESS: Yes, sir. 2 (Witness excused.) 3 MR. LYDON: We have one more witness. We 4 have one question and we're done. 5 THE INDEPENDENT HEARING OFFICER: One 6 question. I would love to see that. That's great. 7 MR. LYDON: Mr. Gironda. 8 THE INDEPENDENT HEARING OFFICER: Mr. 9 Gironda, come on down. 10 Okay. And you testified earlier and you are 11 still under oath. 12 THE WITNESS: Yes, sir. 13 NICHOLAS GIRONDA, 14 called as a witness herein, having previously been duly 15 sworn, was examined and testified as follows: 16 DIRECT EXAMINATION 17 BY 18 MR. LYDON: 19 Q. I really have only have one question for you, 20 Mr. Gironda, and that is this: Directing your 21 attention to June 16th of 1997, on the occasion when 22 John O'Rourke served Bruno Caruso, I think it was in 23 your presence, with a complaint for Trusteeship on 24 LIUNA's Chicago District Council, on that day did you 25 ever go to Barbara Trucking?
1 A. No, sir. 2 MR. LYDON: I have no other questions. 3 CROSS EXAMINATION 4 BY 5 MR. THOMAS: 6 Q. Have you ever heard of Barbara Trucking? 7 A. Yes, sir. 8 Q. What have you heard of it? 9 A. It's a trucking company. 10 Q. Have you ever been there? 11 A. Been where? 12 Q. To Barbara Trucking. 13 A. Yes, I have been there. 14 Q. What were the circumstances of your being 15 there? 16 MR. LYDON: Object. Beyond the scope. 17 THE INDEPENDENT HEARING OFFICER: You may ask 18 him what is Barbara Trucking and who is there and then 19 we'll go on. 20 BY MR. THOMAS: 21 Q. Who owns Barbara Trucking? 22 A. Fred Barbara. 23 Q. Do you know Fred Barbara? 24 A. Yes. 25 Q. How do you know Fred Barbara?
1 A. Fred Barbara is my cousin. 2 Q. And so have your contacts -- 3 MR. LYDON: Beyond the scope. 4 THE INDEPENDENT HEARING OFFICER: This is 5 your last question. 6 MR. LYDON: The question was June 16th of 7 1997. It was directly prompted by the testimony 8 yesterday of Mr. O'Rourke, and that's all there is to 9 it. 10 MR. THOMAS: You know, Mr. Vaira, that's like 11 someone saying, you know, did you kill Jimmy Hoffa and 12 then -- 13 (Voices from audience.) 14 MR. LYDON: No. 15 MR. THOMAS: Pick any example. 16 MR. LYDON: The question was purely in 17 rebuttal of something that Mr. O'Rourke said for the 18 first time yesterday. That's the only thing he's 19 called for. 20 MR. THOMAS: I beg to differ. 21 THE INDEPENDENT HEARING OFFICER: For the 22 sake of brevity, what's the question you were going to 23 ask? 24 MR. THOMAS: The question, depending on what 25 the witness does with it, is what are his contacts with
1 Barbara. In other words, if the denial -- 2 MR. LYDON: I only -- 3 MR. THOMAS: I'm sorry. Mr. Lydon, please. 4 If the denial is meant to be believed as, "I 5 have no association with them" -- 6 MR. LYDON: Just a minute. 7 MR. THOMAS: -- that's not credible -- 8 MR. THOMAS: Please, Mr. Lydon, let me make 9 the point and then you can respond. 10 THE INDEPENDENT HEARING OFFICER: Give your 11 offer of proof. 12 MR. THOMAS: If the point of the question and 13 answer is to have the Hearing Officer make a finding 14 that that testimony of Mr. O'Rourke is not credible 15 because it couldn't have happened, didn't happen, et 16 cetera, I'm entitled some leeway to determine whether 17 this gentleman has contacts with that entity as to 18 whether the denial is credible or not. 19 MR. LYDON: And in response to that, what 20 specifically was stated in Mr. O'Rourke's testimony is 21 that there was a surveillance done on June 16th of 22 1997. Mr. O'Rourke said, despite the fact that there's 23 never been any testimony previous to this hearing about 24 either Bruno Caruso or Nick Gironda stopping at Barbara 25 Trucking, and there was testimony heard in other
1 proceedings by you, Mr. Vaira, on the subject, we hear 2 that supposedly before they proceed to the address on 3 25th Place, next door to Bruno's' mother and Roti's next 4 door, that there was a stop at Barbara Trucking. He is 5 denying, and that's all he's up there to do is to say, 6 "I didn't go to Barbara Trucking on June 16th, 1997." 7 That's all he said. I asked him one question, and 8 that's the only question I asked him. 9 THE INDEPENDENT HEARING OFFICER: If I 10 remember, having heard that original case, there was an 11 awful lot of testimony about whether Bruno Caruso and 12 whether he went to see Fred Roti on the same pathway, 13 walkway of Bruno's mother. And there was conflicting 14 testimony whether they went in or not. 15 And I guess the inference would apply that 16 the Union is under control of these -- of Roti and 17 others and that's why they went down there and so 18 forth. And then in the scheme of things didn't -- it 19 wasn't all that much, spent a lot of time on it. Now 20 in this particular hearing we are kind of revisiting it 21 for the same inference. 22 The fact that they stopped off at Roti's 23 place -- not Roti's, but Barbara's place and whatever 24 inference one may draw from that, that doesn't mean too 25 much at this point.
1 MR. THOMAS: Well I agree, and -- but Mr. 2 Lydon is choosing to amplify that aspect of Mr. 3 O'Rourke's testimony and to take dispute with it, and 4 that's his judgment call to make as a lawyer. He can 5 certainly argue all the points that he has made to you 6 in this proffer in his brief, but he has elected to put 7 the witness on the stand specifically to make a denial. 8 If he makes that election, he's basically putting the 9 issue in play at least to the extent for me to assess 10 the witness' credibility on that. 11 THE INDEPENDENT HEARING OFFICER: That may 12 be. I will tell you, gentlemen, that's an old hat. 13 It's an old saw about going down to see Fred Roti and 14 so forth. That's already passed. We're talking about 15 this particular Union right now, and whether he went to 16 Barbara's place or not it really doesn't mean too much 17 to me. 18 MR. THOMAS: I agree. But my only point is 19 if Mr. Lydon is going to put it in play, it shouldn't 20 be the rule that I'm not able to respond to it. If 21 he's going to put the witness on to say it didn't 22 happen, I'm entitled some leeway to say, "Wait a 23 minute." 24 THE INDEPENDENT HEARING OFFICER: The Hearing 25 Officer said it doesn't really matter, you know,
1 whether he went there or not. I'm not concerned about 2 it. 3 MR. LYDON: Let me add that I don't know 4 where we're going to go with arguments, but the point 5 is -- and when I cross examined Mr. O'Rourke and I 6 asked him about this, he's telling me about a sheriff 7 telling him this, no written report. All of the things 8 that we've looked at in the past in terms of the Dignan 9 testimony suggests nothing of the sort. Now if I don't 10 put Mr. Gironda on to deny it, I can hear him arguing, 11 "Well he could have put Gironda on to deny that this 12 happened." He's denied that it happened. 13 MR. THOMAS: I'm not saying that he can't do 14 it. I'm simply saying if he does it, it should be 15 equal. 16 THE INDEPENDENT HEARING OFFICER: Let's deal 17 with where this Union is right now and what the issues 18 are. That happened a long time ago. That happened a 19 long time ago. To tell you the truth, guys, I'm not 20 really concerned whether he went there or not. 21 THE WITNESS: Thank you, sir. 22 THE INDEPENDENT HEARING OFFICER: That's it. 23 And he put it on. He denied it. You said there's an 24 inference that he was. It doesn't mean too much to me 25 either way. It's not going to tip to either side.
1 MR. LYDON: All right. 2 THE INDEPENDENT HEARING OFFICER: I'm 3 interested in what the Union's doing now and what the 4 problem with the Union is now and what this Executive 5 Board is doing and where we are. We're in 2003. All 6 right. 7 MR. LYDON: You know following up on that, 8 and I don't want to drag this on. 9 REDIRECT EXAMINATION 10 BY 11 MR. LYDON: 12 Q. You heard Mr. Chianelli's testimony. Is 13 there anything that he had to describe to you about -- 14 that he described for this hearing about the 15 negotiations that are ongoing with the City, or about 16 what your role is or his role is that you have any 17 debate with or -- 18 A. No. It's an ongoing thing. In fact today at 19 2:30 we have a meeting with the Mayor's staff to try to 20 save 300 jobs. So if you expedite this, I can get to 21 my meeting. 22 MR. LYDON: Nothing further. 23 THE INDEPENDENT HEARING OFFICER: Thank you 24 very much. 25 Where are we -- you're done. You're done.
1 THE WITNESS: Oh, am I? Well thank you, 2 sir. 3 (Witness excused.) 4 MR. LYDON: Now we're -- I assume we're going 5 to brief this. 6 THE INDEPENDENT HEARING OFFICER: Yeah, I 7 assume. Let's go off the record. Let's go off the 8 record. 9 (Which were all the proceedings 10 had in the above-entitled cause 11 on this date.) 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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