RICO Trusteeships After Twenty Years: A Progress Report (James Jacobs)

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The RICO Trusteeships after Twenty Years: A Progress Report

James B. Jacobs, Eileen M. Cunningham, and Kimberly Friday*

The use of federal civil RICO¹ suits to purge organized crime from international, regional, and local unions is one of the most ambitious efforts at directing sociolegal change in U.S. history.²Since the first case, United States v. Local 560, International Brotherhood of Teamsters³in 1982, the U.S. Department of Justice (DOJ) has ﬁled twenty such suits against unions that typically have been dominated, sometimes for decades, by La Cosa Nostra (LCN) organized crime

*Mr. Jacobs is Chief Justice Warren E. Burger professor of Constitutional Law and the Courts and Director, Center for Research in Crime and Justice, New York University School of Law. Ms. Cunningham and Ms. Friday are third year law students at New York University School of Law. The authors wish to thank Robert Stewart, the co-teacher of our fall 2002 seminar on Labor Racketeering and Union Democracy. He shared his vast knowledge and experience but cannot be held responsible for our errors.

1. Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961–68 (2000).

2. The Attorney General has authority to sue for equitable relief to prevent violation of RICO under 18 U.S.C. § 1964(a), which provides:

The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provisions for the rights of innocent persons.

The government’s attack on labor racketeering has a long history, going back to Thomas Dewey and even earlier. However, the modern attack on labor racketeering dates to the mid1970s and is inextricably connected to the general attack on organized crime. See JAMES B. JACOBS ET AL., BUSTING THE MOB: UNITED STATES V COSA NOSTRA (1994).In the early 1970s, the FBI and DOJ attacks on organized crime focused on organized crime’s role in gambling. But that effort faltered, perhaps because judges and the public could not get excited about exposing gamblers. After the assassination of Jimmy Hoffa in 1975 (immediately labeled a “mob hit”), the organized crime control effort started to focus intensely on organized crime’s role in labor racketeering. That focus was reinforced by the Senate Permanent Subcommittee’s hearings on the matter. See PRESIDENT'S COMMISSION ON ORGANIZED CRIME, THE EDGE: ORGANIZED CRIME, BUSINESS, AND LABOR UNIONS (1985) [hereinafter THE EDGE]; James B. Jacobs & Elizabeth Mullin, Congress’ Role in the Defeat of Organized Crime, 39 CRIM.L. BULL. 269 (2003).

3. 581 F. Supp. 279, 115 L.R.R.M. (BNA) 2829 (D.N.J. 1984), aff ’d, 780 F.2d 267, 121 L.R.R.M. (BNA) 2121 (3d Cir. 1985).

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families.⁴Every one of these suits⁵has resulted in a court-ordered or negotiated trusteeship;⁶most of the suits and/or trusteeships have purged at least some mob connected union officials and restored at least some elements of union democracy.

There is a vast literature on the capacity of courts to successfully reform public institutions.⁷However, unlike efforts to reform jails, mental hospitals, prisons, and schools through federal court litigation, the extraordinary legal effort to reform “mobbedup” local, regional, and (inter)national unions has gone practically unnoticed by legal commentators.⁸Three of these DOJ civil RICO union lawsuits involve international unions that for decades have been dogged by charges of organized crime racketeering.⁹From the famous U.S. Senate McClellan Committee hearings in the late 1950s, to the President’s Commission

4. See infra Table I. The most recent such suit was ﬁled in April 2002 against Hotel Employees and Restaurant Employees International Union (HEREIU) Local 69 (N.D.N.Y.). Any enumeration inevitably involves some subjective judgments. For example, in 1990 the federal government brought one omnibus civil RICO suit against half a dozen International Longshoremen Association NYC area locals, the settlement of which involved three separate trusteeships. More significantly, we do not place on our list the many “derivative trusteeships” that were generated from the RICO trusteeships imposed on the three international unions. See infra Table II.

5. Only two trusteeships were imposed after trial. The first was the path-breaking case against IBT Local 560. See James B. Jacobs & David Santore, Liberation of IBT Local 560, 37 CRIM.L.BULL. 125 (2001). The second was the Philadelphia Roofers case. United States v. Local 30, United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, 686 F. Supp. 1139, 128 L.R.R.M. (BNA) 2580 (E.D. Pa. 1988).

6. We are using the term “trusteeship” generically. Sometimes the trustee is called a “monitor,” “liaison officer,” “special master,” or “ombudsman.” Some trustees have a specialized title to reflect their function, such as “investigations officer” or “elections officer.” In fact, each RICO union trusteeship has been individually created with its unique package of powers, duties, and resources.

7. See, e.g., LINO A. GRAGLIA, DISASTER BY DECREE: THE SUPREME COURT DECISIONS ON RACE AND THE SCHOOLS (1976); GERALD N. ROSENBERG, THE HOLLOW HOPE: CAN COURTS BRING ABOUT SOCIAL CHANGE? (1991); Donald L. Horowitz, Decreeing Organizational Change: Judicial Supervision of Public Institutions, 1983 DUKE L.J. 1265 (1983); James B. Jacobs & Kristin Stohner, Ten Years of Court Supervised Reform: A Chronicle and Assessment, 6CAL.CRIM.L. REV. 3 (2004); Susan Sturm, Resolving the Remedial Dilemma: Strategies of Judicial Intervention in Prisons, 138 U. PA. L. REV. 805 (1990).

8. But see Michael J. Goldberg, Derailing Union Democracy: Why Deregulation Would Be a Mistake, 23 BERKELEY J. EMP.& LAB. L. 137 (2002); Michael J. Goldberg, An Overview and Assessment of the Law Regulating Internal Union Affairs, 21 J. LAB.RES. 15 (2000); Michael J. Goldberg, Cleaning Labor’s House: Institutional Reform Litigation in the Labor Movement, 1989 DUKE L. J. 903 (1989); Clyde W. Summers, Union Trusteeships and Union Democracy, 24 U. MICH. J.L. REFORM 689 (1991); Kenneth R. Wallentine, A Leash Upon Labor: RICO Trusteeships on Labor Unions, 7HOFSTRA LAB. L.J. 341 (1990).

9. See United States v. Int’l Bhd. of Teamsters, No. 88 Civ. 4486 (DNE) (S.D.N.Y. 1988) [hereinafter IBT Int’l]; United States v. Edward T. Hanley, Hotel Employees and Rest. Employees Int’l Union, and Hotel Employees and Rest. Employees Int’l Union Gen. Executive Bd., Civ. No. 95–4596 (D.N.J. 1995) [hereinafter HEREIU Local 54]; United States v. Laborers’ Int’l Union of N. Am. (consent decree reached before ﬁled) [hereinafter LIUNA Int’l]. In addition, an omnibus 1990 civil RICO suit was ﬁled against some half dozen New York/New Jersey–area locals of the International Longshoremen’s Association (ILA), an international union. See United States v. Local 295, Int’l Longshoremen’s Ass’n, No. 90 Civ. 0963. See also THE EDGE, supra note 2.

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on Organized Crime (PCOC) in 1986, to the Senate Permanent Subcommittee on Investigations’ many hearings in the 1970s, 1980s, and 1990s, corruption and racketeering have been constantly exposed in the International Brotherhood of Teamsters (IBT), Hotel Employees and Restaurant Employees International Union (HEREIU), and Laborers International Union of North America (LIUNA).¹⁰The 1988 RICO suit against the IBT general executive board resulted in a trusteeship that, in modified form (an “independent review board”), is still in effect.¹¹The DOJ drafted a RICO complaint against the LIUNA general executive board that it threatened to ﬁle; to avert this, LIUNA agreed to sign a consent decree in February 1995 that called for the implementation of a remedial plan orchestrated by a former federal prosecutor, and the government retained the option to ﬁle the consent decree in the future if the union’s compliance with the terms of the agreement faltered.¹²A RICO complaint against the HEREIU general executive board was ﬁled in September 1995;¹³on the same day, HEREIU and DOJ entered into a consent decree providing for a government sponsored trusteeship.¹⁴

Each of the three civil RICO suits against an international union has produced a trusteeship (or its functional equivalent) that, in turn,

10. See THE EDGE, supra note 2; James B. Jacobs & Ellen Peters, Labor Racketeering: The Maﬁa and the Unions, 30 CRIME & JUSTICE: A REVIEW OF RESEARCH 229 (Michael Tonry, ed. 2003). See also Jacobs & Mullin, supra note 2.

11. On March 14, 1989, U. S. District Judge David N. Edelstein entered a consent decree in IBT Int’l that provided for the creation of an independent review board (IRB) that would begin operation after the 1991 general election for IBT officers. The IRB, which began in October 1992, succeeded the independent administrator and the investigations officer. Id. Pursuant to the Consent Order, the IRB has three members: one the Attorney General appoints; one the union appoints; and the third member is selected by the other two. Id.

12. LIUNA Int’l. (never ﬁled). Although the complaint was not ﬁled, we still include the LIUNA International case in our list of twenty since LIUNA unconditionally consented to the government ﬁling a signed consent agreement, which included a trusteeship, if it was not satisfied with the union’s internal reform effort. Id. Former DOJ prosecutor Robert Luskin has served as the general executive board (GEB) attorney for the internal reform effort. Correspondence from Robert Luskin (Nov. 2003) (on ﬁle with author). In this position, Luskin acts as an in-house prosecutor responsible for investigating and removing corrupt individuals from LIUNA. Id. Luskin hired three other officers: an inspector general to work on investigations with the GEB attorney and monitor compliance with LIUNA’s “Ethical Practices Code”; a hearing officer to act as an internal judge hearing disciplinary cases brought by the GEB Attorney; and an appellate officer hearing any appeals of the hearing officer’s decisions. Id. LIUNA also hired an Election Officer to monitor the 1996 and 2001 elections. Id.

The appointment of Douglas Gow as inspector general went a long way towards erasing the difference between this “inhouse” DOJ monitored trusteeship and a court imposed trusteeship. Before retirement, Gow had been a high-ranking FBI agent and his FBI and other law enforcement contacts assured that the LIUNA reform team would have excellent intelligence information about organized crime influence in the union.

13. HEREIU Int’l., Civ. No. 95–4596.

14. Similar allegations have been made against the International Longshoremen’s Association, but to date the DOJ has not brought a civil RICO suit against that international union. In 1990 the government brought an omnibus RICO case against a slew of the ILA’s locals with jurisdiction over the New York/New Jersey port. See United States

v. Local 1804–1, Int’l Longshoremen’s Ass’n, AFL-CIO, 732 F. Supp. 434 (S.D.N.Y. 1990).

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has uncovered corruption and racketeering in some affiliated locals that the international has placed in trusteeship.¹⁵ Arguably these “derivative trusteeships” could be counted as RICO trusteeships since they resulted, albeit indirectly, from a DOJ civil RICO suit. Nevertheless, we have decided not to include them in Table I, infra, on the ground that “a trustee appointed solely by the union lacks the authority conferred by court appointment, does not possess subpoena power, and can be subject to charges of recrimination and political vendetta. Federal law enforcement agencies are statutorily prohibited from disclosing certain information to a union trustee or to the union’s own internal disciplinary process that is essential to any reform effort. Furthermore, the period of the trusteeship [imposed by an international union] is presumed valid only for a period of 18 months.”¹⁶

Except in two instances, all of the RICO-generated trusteeships of mob-dominated union locals involve affiliates of the IBT, ILA, LIUNA, and HEREIU;¹⁷ the two exceptions are Local 30 of the United Slate, Tile & Composition Roofers Union in Philadelphia, and the Carpenters District Council in New York City.¹⁸Moreover, almost all of the RICO cases deal with union locals in the New York City metropolitan area;¹⁹some exceptions are the United Union of Roofers, Waterproofers and Allied Workers, Roofers Local 30 in Philadelphia; HEREIU Local 54 in Atlantic City; HEREIU Local 69 in Buffalo, New York; LIUNA Chicago Laborers’ District Council (CLDC); and LIUNA Local 210 in Buffalo, New York.²⁰Still, this pattern does not warrant the conclusion that

15. See infra Table II. IBT Int’l, No. 88 Civ. 4486; HEREIU Int’l, Civ. No. 95–4596; LIUNA Int’l, (consent decree reached before ﬁled).

16. United States of America and Laborers’ Int’l Union of N. Am. by and through Robert Luskin, in his official capacity as Gen. Executive Bd. Att’y v. Constr. & Gen. Laborers’ Dist. Council of Chicago and Vicinity, an affiliated entity of the Laborers’ Int’l Union of N. Am., 99 C 5229 (N.D. Ill. 1999) (Compl. at 105–06). The Labor Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. §§ 401–531 (2000), popularly known as the Landrum-Griffin Act, provides relief against internal trusteeships imposed for improper purposes. Under this section, a labor organization’s trusteeship over a subordinate local union is presumed valid for a period of eighteen months from the date of its establishment. See id. § 464(c). After the expiration of eighteen months, however, the trusteeship will be presumed invalid unless the labor organization can show by clear and convincing proof that the continuation of the trusteeship is necessary. See id.

17. See infra Tables I & II.

18. United States v. Local 30, United Slate Tile and Composition Roofers, No. 87– 7718 (E.D. Pa. 1987); United States v. Dist. Council of NYC and Vicinity of the United Bhd. of Carpenters and Joiners of Am., No. 90 Civ. 5722 (S.D.N.Y. 1990). Racketeering has been documented in other unions, such as the Union of Painters and Allied Trades, International. See, e.g., Riga v. American Painting Co., Inc., 1986 WL 9248 (E.D. Pa Aug. 25, 1986); see also Local 46 Laundry Workers (Chicago, IL), Local 110 Motion Picture Operators Union (Chicago, IL), Local 136 Machinery Movers (Chicago, IL), Local 18 Operating Engineers (Cleveland, OH), Ironworkers Local 17 (Cleveland, OH). See also PETER F. VAIRA &DOUGLAS P. ROLLER, ORGANIZED CRIME AND THE LABOR UNIONS (1978).

19. See infra Table II.

20. Local 30, United Slate Tile and Composition Roofers, No. 87–7718; United States v. Edward T. Hanley, No. 90–5017 (D.N.J. 1990); Constr. & Gen. Laborers’ Dist. Council, 99 C 5229; United States v. LIUNA Local 210, No. 99 CV0915A (W.D.N.Y. 1999).

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labor racketeering is limited, for the most part, to the New York City area. A great deal of labor racketeering has been documented in Boston, Buffalo, Chicago, Cleveland, Detroit, Kansas City, Milwaukee, Philadelphia, and San Diego.²¹Racketeering has been exposed in other major unions as well, including the Laundry Workers, the Motion Picture Operators Union, the Machinery Movers, the Operating Engineers, and the Ironworkers.²²

Evaluating the impact of these RICO suits and trusteeships is no easy matter. A few trusteeships clearly have successfully purged the influence of organized crime and have transformed unions that had been run like dictatorships rooted in intimidation, violence, and exploitation into properly functioning organizations with competitive elections and accountability to the rank-and-file.²³ Other trusteeships have failed to break the hold of the organized-crime-dominated regime.²⁴In the majority of cases, it is too soon to reach a definitive conclusion on success or failure.²⁵

There is very limited systematic documentation or evaluation of the governmental and judicial effort to reform corrupted unions through civil RICO suits. For the U.S. Attorney considering what relief to ask for, for the judge contemplating what relief to grant, and for the newly appointed trustee charged with formulating a reform strategy,

21. In his affidavits for the government in the litigation against the IBT general executive board, former IBT General President Roy Williams explained that in the exercise of his previous duties as president of IBT Local 41 in Kansas City, he took directions from organized crime boss, Nick Civella. JACOBS, supra note 2, at 169. Williams claimed he did not know Civella was involved in the Maﬁa until he was taken blindfolded to a warehouse and threatened with harm to himself and his family. Id. at 189–90. Williams went to Jimmy Hoffa for advice, and Hoffa reportedly told him, “‘Roy, it’s a bad situation . . . You can run, but you can’t hide. My advice to you is to cooperate or get your family killed. Roy, these are bad people. And they were here a long time before you and me came. And they’ll be here a long time after we’re gone. They’ve infiltrated into every big local union, every conference and pension fund—even the AFL-CIO! I’m tied as tight as I can be.’” Id. at 190–91. See also JAMES NEFF, MOBBED UP: JACKIE PRESSER’S HIGH-WIRE LIFE IN THE TEAMSTERS, THE MAFIA, AND THE FBI (1989) (providing extensive information about organized-crime-sponsored labor racketeering in Cleveland, Detroit, and Kansas City); 132 CONG.REC. S. 10909 (daily ed. Aug. 8, 1986).

22. VAIRA &ROLLER, supra note 18.

23. The clearest cases of success are the trusteeships of HEREIU Local 54 (Atlantic City) and the Mason Tenders District Council of Greater New York. Telephone interview with James Flanagan ( July 2002) (notes on ﬁle with author); telephone interview with Lawrence Pedowitz (Nov. 2002) (notes on ﬁle with author). Another clear case of success was IBT Local 560, where, after a long struggle, the union made an absolutely clean break from the old regime. See James B. Jacobs & David Santore, Liberation of IBT Local 560, 37 CRIM.L. BULL. 125 (2001).

24. Remedial trusteeships have failed most clearly in the Philadelphia Roofers case, ILA Locals cases, including Local 1588 and Local 1814, and LIUNA Local 6A case. For information about the Bruno/Scarfo family in Philadelphia and Atlantic City, see THE EDGE, supra note 2, at 76–81; JOHN GUINTHER &FRANCIS FRIEL, BREAKING THE MOB (1990); JOSEPH SALERNO JR.& STEPHEN J. RIVELE, THE PLUMBER (1990).

25. Some progress has been made in the trusteeships over the Carpenters Union, LIUNA International, and the Chicago Laborers District Council, but we would not conclude that success has been achieved. See Jacobs & Stohner, supra note 7.

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there is no best practices manual, no compendium of past judicial orders and consent decrees, and no explanation, much less critique, of the varied strategies that have been tried in the past. There is no academic scholarship or government report on how to define and measure success in reforming a mob-dominated union.

This article seeks to begin the arduous process of assessing the extraordinary and ongoing twenty-year history of civil RICO litigation aimed at reforming mobbed-up unions. First, it seeks to identify all the RICO cases and trusteeships. Second, it begins to collect information on key variables that may determine success or failure. Third, it attempts to initiate discussion on evaluating RICO-generated union trusteeships.

I. The Trustees

In the majority of cases, formal selection of the trustee has been left up to the presiding judge, with both the government and the union making recommendations. In almost all cases, one of the government’s nominees has been chosen;²⁶no trustee has been appointed over the government’s objection.²⁷Often the trustee is appointed after the consent agreement has been ﬁled with the court; however, in some cases the trustee has been explicitly named in the consent agreement itself. For example, the NYC District Council of Carpenters’ consent decree named both the investigations and review officer (IRO) and the members of the Independent Hearing Committee.²⁸

One of the most arresting facts about the government’s twenty-year legal attack on labor racketeering is that the trustees, chosen to reform mob-controlled unions, are almost all former federal prosecutors, usually with experience investigating and prosecuting organized crime.²⁹For example, Ed Stier, trustee for ten years in the first civil RICO labor racketeering case, had previously been both a state and

26. In the Chicago Laborers’ District Council case, for example, Robert Bloch, formally nominated by LIUNA International, had the DOJ’s strong support and approval. See NAT’L LEGAL AND POL’Y CTR., UNION CORRUPTION UPDATE (Sept. 10, 2001). Similarly, in the LIUNA Local 210 case, the international union appointed Gabriel Rosetti to be the trustee; the DOJ then consented to have Rosetti serve as RICO trustee as well. Stephanie Mencimer, Ex-FBI official Pulls at Union’s Infamous Roots; Laborers Fight Corruption from the Inside Out, WASH. POST, June 7, 1998, at A1.

27. For example, in the HEREIU Int’l case, the judge received three names from the government and three from HEREIU. HEREIU’s nominees were allies of president Edward Hanley. The government told the judge that if one of the union’s nominees was chosen, the government would cease cooperating and would prosecute the suit. One of the government’s suggestions, Kurt Muellenberg, a former head of the DOJ’s Organized Crime and Racketeering Section, was appointed. Interview with anonymous Department of Labor official (Aug. 7, 2002) (notes on ﬁle with author).

28. Consent decree, District Council of Carpenters (March 4, 1994); United States

v. Dist. Council, 778 F. Supp. 738 (S.D.N.Y. 1991); United States v. Dist. Council, 941 F. Supp. 349, 154 L.R.R.M. (BNA) 2281 (S.D.N.Y. 1996).

29. See infra Table III.

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federal prosecutor.³⁰Thomas Puccio, trustee in the IBT Local 295 case, was former head of the federal Organized Crime Strike Force in Brooklyn.³¹Of the three members of the Independent Review Board in the IBT International case, one, William H. Webster, was a former FBI director, another, Charles Carberry, a former assistant United States attorney, and the third, Michael Holland, the elections monitor, a labor lawyer.³²Kurt Muellenberg, former head of the Department of Justice’s Organized Crime & Racketeering Section, served as trustee in the HEREIU International case, and is currently serving as trustee in the HEREIU Local 69 case.³³Only a few, like Gabriel Rosetti Jr. in LIUNA Local 210 and Robert Bloch in the Chicago Laborers’ District Council (CLDC), had significant prior experience in labor law.³⁴

It is not surprising that former federal prosecutors should be chosen as trustees in civil RICO cases involving labor racketeering. These cases, while civil in form, are part and parcel of federal law enforcement’s attack on organized crime. These labor racketeering cases are won in the remedial phase, not at the trial or with a favorable decree. The prosecutors have a clear idea of what they want to accomplish— the eradication of organized crime elements from the union and the establishment of healthy union governance that will resist future

30. Harold Ackerman first chose Joel Jacobson, a career union official, to be the Local 560 trustee. See Jacobs & Santore, supra note 5. After a year, Judge Ackerman replaced Jacobson because he had not moved vigorously to purge organized crime figures and their associates from the union. See id. Perhaps Judge Ackerman’s unhappy experience with a trustee drawn from the ranks of organized labor influenced decision makers in later cases to choose their trustees from the ranks of former federal prosecutors.

31. See Tom Robbins, The Clean-Up Man: Chic Ex-Prosecutor Makes a Bundle Overseeing Teamsters Local, VILLAGE VOICE, April 18, 2001.

32. Jacobs & Peters, supra note 10, at 245, 247. In addition, Holland was the first elections officer in the triumvirate trusteeship appointed to implement the consent decree in the IBT Int’l case. Holland’s successor was Barbara Quindel, a labor lawyer. Hearings on Invalidated 1996 Teamster Election: Hearings Before the Subcomm. on Oversight and Investigations of the House Comm. on Educ. and the Workforce, 105th Cong. 254–60 (1997). See Table III infra.

33. However, a few trustees have been drawn from the ranks of those with other backgrounds. James Flanagan, the trustee for HEREIU Local 54, was a former deputy director of the New Jersey Division of Gaming Enforcement. Flanagan, supra note 23. It is notable that the Division of Gaming Enforcement was authorized to certify unions involved in the Atlantic City gaming industry as free of corruption and racketeering as part of the attempt to keep organized crime out of Atlantic City casinos. Id. This position, therefore, gave Flanagan considerable knowledge of unions and labor law, and contacts within the FBI and Department of Labor. Id. Gabriel Rosetti, Jr. the trustee for LIUNA Local 210, was a LIUNA member for over thirty years. Mencimer, supra note 26, at A1. Robert E. Bloch, the trustee for the LIUNA Chicago Laborer’s District Council, was an attorney in private practice who had previously served as counsel to LIUNA International. NAT’L LEGAL AND POL’Y CTR., UNION CORRUPTION UPDATE (Aug. 16, 1999). However, Bloch was assisted in his trusteeship by another court-appointed monitor, Steven Miller, who had previously served as the chief of the Special Prosecutions Section of the U.S. Attorney’s Ofﬁce for the Northern District of Illinois. NAT’L LEGAL AND POL’Y CTR., supra note 26.

34. Mencimer, supra note 26, at A1; NAT’L LEGAL AND POL’Y CTR., supra note 33.

III. The Trustee’s Powers

The trustee’s powers emanate from the court’s order/decree or from the court-approved consent agreement. In some cases, consent decrees have given the trustee all the powers of all the union’s officers, in effect, the power to administer the union, including negotiating contracts, handling grievances, and initiating collective action, including strikes.⁴⁵ This type of all-powerful trusteeship, resembling the trustee

39. See infra Table IV.

40. The Philadelphia Roofers Local 30/30B decree established a “decreeship” with an indefinite term. Judge Bechtle believed that success could be achieved only by convincing the rank-and-file and the racketeers that court supervision would last as long as necessary to solve the problem. Local 30, 686 F. Supp. at 1163, 1168.

41. See infra Table IV.

42. See infra Table IV.

43. United States v. Mason Tenders Dist. Council of Greater New York, 1994 WL 742637 (S.D.N.Y. Dec. 27, 1994).

44. HEREIU Int’l, Civ. No. 95–4596; see also Union Democracy, Part VII: Government Supervision of the Hotel Employees and Restaurant Employees International Union: Hearings Before the Subcomm. on Employer-Employee Relations of the House Comm. on Educ. and the Workforce, 105th Cong. 18–19 (1999) (statement of Kurt W. Muellenberg, Esq., former monitor of the HEREIU).

45. For example, Trustee Robert Bloch in the Chicago Laborers District Council trusteeship negotiated a new three-year labor contract that provided for higher wages, better benefits, and, for the first time, a grievance procedure. Press Release, U.S. Dep’t of Justice, Consent Decree Allows Federal Court to Supervise Purge of Organized Crime from 19,000 Member Chicago Laborers’ Council (Aug. 12, 1999).

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in a corporate bankruptcy, might not be effective in the union context;⁴⁶the trustee has to spend a high percentage of time keeping the union going rather than working on organizational reform.⁴⁷On the other hand, the all-powerful trustee is in a position to earn the confidence of the rank-and-file by administering the union to his or her advantage. The trustee will be assisting the membership to achieve its goals rather than functioning solely as a policeman. If the budget permits, trustees who find themselves in this position usually hire a seasoned union official to handle the day-to-day running of the union, while the trustee concentrates on investigations, discipline, elections, and communications with the rank-and-file. Where the trustee could not, or would not, delegate administrative responsibilities, the trusteeship foundered.⁴⁸

Obviously, too little authority can doom a trusteeship.⁴⁹ Trustees need the power to remove from union ofﬁce, subject to court review, and to expel from the union, those officers who have embezzled union funds, taken bribes from employers, and are members or associates of, or who knowingly associate with, members or associates of organized crime.⁵⁰

The consent decree in the IBT International case gave the Trustee Administrator the authority of the IBT general president solely in the area of discipline.⁵¹As per the IBT constitution, this was sufficient

46. In liquidations under the Bankruptcy Code, it is routine for trustees to be appointed in order to protect the liquidating company’s assets and the interests of lawful creditors. See 11 U.S.C. §§ 701–704 (2000). Trustees are less often appointed in Chapter 11 reorganizations, but they may be appointed where there is a threat of management fraud or gross incompetence. See 11 U.S.C. §§ 1104–1108 (2000).

47. In the LIUNA Local 6A trusteeship, Trustee Eugene Anderson and his assistant, Robert Gaynor, spent so much time supervising the daily administration of the union that they didn’t have time to interact directly with union members. Eugene Kiely, Local 560: Proof Is in the Vote; Election Is Test of U.S. Efforts to Clean Up Teamsters, THE RECORD, Nov. 27, 1988, at A2. It is difﬁcult, Gaynor said, “to gain their confidence and convince some to take an active role in the union.” Id.

48. In the Philadelphia Roofers Local 30/30B case, Robert Welsh was the only person responsible for enforcing the court’s decree. United Union of Roofers, Waterproofers and Allied Workers, AFL-CIO v. Composition Roofers Union, Local 30, United Union of Roofers, Waterproofers and Allied Workers, AFL-CIO, 2003 WL 2125067 at *3 (E.D. Pa. March 28, 2003). This trusteeship was far from successful; the International had to impose an emergency trusteeship only two years after the court imposed decreeship ended.

Id.

49. One of the weakest trusteeships (in terms of legal basis) was the Philadelphia Roofers Local 30/30B case. There, the decree provided the monitor with the power to oversee negotiations, but not take part, and granted no power to remove corrupt members of the union. Local 30, 686 F. Supp. at 1172–73. The judge did not want to displace the elected union officials’ responsibility to run the union all together. Id. at 1168. “The court [is] . . . leaving the Union institution and its present leadership in place, but . . . removing from Union control those areas of activity which the Union has misused in the past.” Id.

50. Trusteeships have differed with respect to allocating the authority to decide whether an officer or member has knowingly associated with members or associates of organized crime. Though this power has been challenged on the ground that it violates freedom of association and smacks of totalitarianism, the power itself has been upheld in every case.

51. United States v. Local 1804–1, at 4–5 (consent judgment for Local 1804–1).

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authority to expel union members, not just officers, for bringing dishonor and disrepute to the Teamsters.⁵² Judge Edelstein agreed; the Second Circuit affirmed.⁵³

The trustees in the LIUNA Local 6A and HEREIU Local 54 cases had authority to bar from union elections candidates who knowingly associated with organized crime figures, but lacked power to expel such individuals from the union.⁵⁴Disappointed ofﬁce seekers continued to influence other union members and to turn up at union meetings, thereby sustaining the atmosphere of intimidation that had prevailed for decades.⁵⁵

The flip side of the power to ﬁre and expel is the power to hire and appoint. The union trustees have usually had the power to hire members of the union staff, including, importantly, business agents.⁵⁶ The trustee can demonstrate that a new regime is in place. Cleaning house is an important signal of a clean break with the past. It also provides opportunities for new leadership. The danger is that making snap hiring decisions risks appointing people who are incompetent, unpopular, or otherwise not likely to be effective leaders. Another problem is that the rank-and-file may deeply resent having their officers chosen, or imposed, by “the government.” officers chosen in this way, seen as “government men,” have not been able to function effectively. It is therefore highly desirable for the union members themselves to be involved in selecting new officers.

Trustees typically have the authority to examine all books and records, and to compel sworn statements by officers, agents, representatives, employees, and members. In many cases the trustees have authority to review all contracts or proposed contracts and to veto improper expenditures.⁵⁷The corrupt regime may have accelerated its contracts with cronies before the trustee assumed his position, in effect providing generous golden handshakes to as many members of the hereto-fore-dominant clique as possible. The trustee must also scrutinize the

52. Id.

53. United States v. Int’l Brotherhood of Teamsters, 745 F. Supp. 908, 135 L.R.R.M. (BNA) 3079 (S.D.N.Y. 1990), aff ’d, 941 F.2d 1292, 138 L.R.R.M. (BNA) 2219 (2d Cir. 1991).

54. See United States v. Local 6A, 86 Civ. 4819 (1987); United States v. Hanley, 1992

U.S. Dist. LEXIS 22192 (D.N.J. Dec. 3, 1992) (affirming Monitor’s decision to ban certain candidates from elections, but declining to expel the candidates from the union), aff ’d, United States v. Hanley, 6 F.3d 78 (3d Cir. 1993).

55. Flanagan, supra note 23.

56. Organizers recruit, organize employees, and perform certain election-related tasks. Business agents represent Union members. Their responsibilities include negotiating labor contracts, administering the grievance-arbitration process, ﬁling unfair labor charges, and making decisions regarding strikes and other actions against employers.

57. In the case of Roofers Local 30/30B, Judge Bechtle’s decree stated, “[t]he court will establish direct control of all matters within the jurisdiction of the Union that require the expenditure of any funds of the Union or any affiliated entity for the transfer of any of its assets.” Local 30, 686 F. Supp. at 1172.

430 The Labor Lawyer 430 (2004)

payroll for no-show workers, improper reimbursements, and other fraudulent expenditures.

In some cases, the power to bring suit on behalf of the union has enabled trustees to obtain reimbursement for exploitations of the union’s assets. For example, in the Mason Tenders District Council case, Monitor Lawrence Pedowitz ﬁled lawsuits against former officers and trustees, recovering $12 million of the $15 million in assets lost due to their malfeasance.⁵⁸Ron DePetris, trustee over IBT Local 851, also recovered money for that local.⁵⁹These two cases strongly suggest that every trustee should have the authority to sue those who have victimized the union and its pension and welfare funds. Such suits enable the trustee to gain credibility with the rank-and-file.

RICO trustees are almost always empowered to implement and monitor elections. Holding a fair and competitive election is an important step in the union’s rehabilitation process. In many mob-dominated unions, there has not been a fair election in the memory of any living union member.⁶⁰The trustee must promulgate rules for candidates getting on the ballot as well as voting procedures.⁶¹

IV. The Terms of the Trustee’s Employment⁶²

At first blush, it might seem advantageous to have a fulltime trustee, given the enormous challenge of reforming a corrupted union. However, it is very difﬁcult to recruit a fulltime trustee from the ranks of private sector law firm attorneys with prior federal prosecutorial or organized crime control experience. The attorney would have to take an extended or indefinite leave from his or her law firm and perhaps a diminution in pay. More importantly, a union trusteeship is not a step

58. Impediments to Union Democracy: Hearing Before the Subcomm. on Employer-Employee Relations of the House Comm. on Educ. and the Workforce, 105th Cong. 79–87 (1998) (statement of Michael S. Bearse, General Counsel, LIUNA).

59. DePetris, seeking to recover Local IBT 851 assets that had been dissipated and misappropriated, ﬁled two civil RICO claims against freight-forwarding companies and Local 851’s former secretary-treasurer. JAMES B. JACOBS, GOTHAM UNBOUND 172–74 (1999). This was the first time a court-appointed monitor initiated a suit to recover civil damages on behalf of a labor union for past corruption. Id. DePetris settled for more than $3 million for the financially struggling union. Id.

60. While the 1995 rank-and-file election of the New York District Council of Carpenters officers was the first in 121 years, it resulted in the reelection of the incumbent officers. See Kenneth C. Crowe, Hammering Away at the Incumbent, NEWSDAY, July 18, 1995, at A31.

61. The election rules have special significance for unions with a history of racketeering. As Judge Edelstein commented, “election rules must not be viewed in a vacuum, but instead placed in their proper context. This Court has reiterated that the [IBT] Consent Decree is a unique attempt to cleanse this union. These election rules are the linchpin in that effort. This Court will only approve election rules that will guarantee honest, fair, and free elections completely secure from harassment, intimidation, coercion, hooliganism, threats, or any variant of these, no matter under what guise.” United States v. International Brotherhood of Teamsters, 742 F. Supp. 94, 97, 134 L.R.R.M. (BNA) 3178 (S.D.N.Y. 1990).
62. See infra Table VI.

The RICO TRUSTEESHIPS after TWENTY YEARS 431

along a career path. Years later, when the trusteeship is terminated, the lawyer/trustee would have to reconnect with his old firm or find a new one. There would be no business and no clients to bring to the firm. He certainly could not count on being appointed trustee in another labor racketeering case since there are few such cases and the judges and U.S. Attorneys often prefer to appoint someone they know.⁶³Realistically, if the RICO suits required fulltime trustees, they would have to look to another pool, perhaps retired prosecutors, or more likely career union officials; the latter would not enjoy the trust and support of federal law enforcement agents, who probably would not share investigative information with them.⁶⁴Thus, the trustees mostly serve on a part-time basis, compensated at an hourly rate. Hours per week might vary from thirty or more at the beginning of the trusteeship to ten or less as the trusteeship matures, the specific number of hours left to the trustee’s discretion.⁶⁵

Compensation is an important issue. Big firm lawyers bill their time at $200–$500 per hour, rates that are staggering to union members. Some of the trustees have earned as much as $250,000 per year for their work as part-time trustees.⁶⁶Ironically, trustee compensation occasionally exceeds the salaries of the allegedly corrupt union officials whom the RICO prosecutors condemned as receiving bloated and unjustified salaries indicative of racketeering.⁶⁷ The trustee’s wages have often drawn criticism from those who oppose the trusteeship on other grounds, and in some cases, may have undermined the trustee’s legitimacy in the eyes of the union’s members.⁶⁸For example,

63. Interview with anonymous Department of Labor official (Aug. 7, 2002) (notes on ﬁle with author).

64. The failure of Joel Jacobson, the first trustee in the Local 560 case, to function effectively serves as an example. However, officials have often served effectively as “deputy” monitors that aid the trustee with the day-to-day running of the union and relations with the rank-and-file. For example, Steve Hammond, a longtime LIUNA member, served in this capacity in the MTDC trusteeship, and Henry Tamarin, a HEREIU vice president, served in this capacity in the HEREIU Local 100 trusteeship. See Mason Tenders Local 59 v. Laborers’ Int’l Union of N. Am., 924 F. Supp. 528 (S.D.N.Y. 1996); Interview with Mary Shannon Little, court officer for the Local 100 trusteeship (Nov. 2002) (notes on ﬁle with author). Another example is Frank Jackiewicz, a retired official of New Jersey Teamsters Local 843 and former secretary and chief contract negotiator of the Brewery Workers joint local executive board of New Jersey. Jackiewicz was appointed by Judge Ackerman to assist Ed Stier in the day-to-day administration of IBT Local 560. STIER, ANDERSON &MALONE, LLC, supra note 23, at 367.

65. The trustee typically has to present his weekly or monthly billing to the judge for approval, but we know of no case of a judge rejecting the trustee’s bill; doing so might be tantamount to a vote of no confidence requiring the trustee’s resignation. The trustee himself decides how many hours are necessary.
66. According to Carl Biers, Kurt Muellenberg made $296,000 a year for his work during the HEREIU trusteeship. Carl Biers, Monitor Airs Hotel Union’s Dirty Linen, UNION DEMOCRACY REV. NO. 121.

67. Robbins, supra note 31, at 22.

68. For an extreme example of this kind of criticism, see id.

432 The Labor Lawyer 432 (2004)

the IBT went to court to protest the $350 hourly rate billed by Frederick Lacey as “administrator” in the triumvirate trusteeship in the IBT International case.⁶⁹

The trusteeship’s budget typically involves more than just the trustee’s wages. Trustees are usually authorized to hire fulltime or part-time staff and consultants. Not uncommonly, the lawyer-trustee hires a law firm associate as an assistant.⁷⁰In some cases, the international union assigns an officer, acceptable to the trustee, to assist with collective bargaining, grievance handling, and routine administration while the trustee concentrates on audits, investigations, and elections.⁷¹

One would expect that a trusteeship over an international union’s central ofﬁce and administrative appointees would require more time, personnel, and resources than a trusteeship over a local union. Certainly, that intuition is confirmed in the case of the IBT International trusteeship that originally was comprised of three trustees and their staffs.⁷²After 1992, a three-person Independent Review Board (IRB) involved a fairly large scale operation including the continuation of the original investigations officer who, under the IRB, has a staff of two fulltime lawyers and six to eight fulltime investigators.⁷³According to IBT general president James P. Hoffa, IRB costs the IBT approximately $8–9 million per year.⁷⁴LIUNA estimates that it spends $5 million per year on the remediation effort led by Robert Luskin, plus a hearings officer and appeals officer.⁷⁵By contrast, the trusteeship over the HEREIU International’s central ofﬁce was a much smaller and cheaper operation.⁷⁶

69. United States v. Int’l B’hd. of Teamsters, 1992 WL 297489, 153 L.R.R.M. (BNA) 2430 (S.D.N.Y. Oct. 6, 1992).

70. Eugene Anderson (LIUNA Local 6A) hired his law firm associate, Ronald Gaynor, to assist him. Interview with Eugene Anderson (Aug. 5, 2002) (notes on ﬁle with author). Robert Bloch, the CLDC trustee, named a law firm partner to an important position in the Chicago Laborers’ Pension Fund. NAT’L LEGAL AND POL’Y CTR., supra note 33.
71. For example, in the Mason Tenders District Council case, LIUNA officer Steve Hammond assisted Lawrence Pedowitz. See Mason Tenders Local 59, 924 F. Supp. 528. Similarly, in the HEREIU Local 100 case, Henry Tamarin, a HEREIU vice resident, assisted monitor Mary Shannon Little. Little, supra note 64. Tamarin also assisted trustee James Flanagan in the reform of HEREIU Local 54 in Atlantic City. Flanagan, supra note 23.

72. STIER, ANDERSON & MALONE, LLC, supra note 23, at 305.

73. Id. at 302.

74. Steven Greenhouse, Teamsters Push to End Decade of Supervision, N.Y. TIMES, Aug. 14, 1999, at A1 (stating that the trusteeship had cost the IBT $82 million, or about $8–9 million per year).

75. The internal reform process had cost about $35 million by September 1999. Mark Murray, Labor on Patrol, NAT’L J., Sept. 4, 1999, at 2489.

76. Kurt Muellenberg, retired from the Department of Justice and not seeking a second career in the private sector, agreed to a $190 hourly rate. Muellenberg, supra note 36.

The RICO TRUSTEESHIPS after TWENTY YEARS 433

Covering the costs of a RICO trusteeship often presents a major problem.⁷⁷ The trusteeship is installed over a union whose coffers have been plundered by racketeers and by litigation costs. Generously funding the trusteeship could bankrupt the union or require dues increases that would cause the rank-and-file to abandon it. In a few cases, financial assistance has been obtained from the international union, a much deeper pocket.⁷⁸However, some trusteeships have foundered due to inadequate funding (e.g., LIUNA Local 6A).

VII. The Complexity of Evaluation

What should we conclude about this twenty-year effort to eliminate labor racketeering? There is no point in bringing civil RICO suits seeking trusteeships if such trusteeships do not solve the problems that provoke the suits. Moreover, in order to make sound future decisions about how to attack corrupted unions and other organizations, we would like to know what, over the course of the past twenty years, worked best. What is the most valuable background for a trustee? What is the most efficient preparation for the job? How much should a trustee be compensated and by whom? What should be the trusteeship’s duration? What powers and authority should a trustee have? What remedial strategies work best? What criteria can the court use to determine whether the trusteeship has achieved its goal(s)? When should the trusteeship be terminated? Evaluating the success of the RICO union trusteeships individually and as a whole is essential but extremely complex.

88. Muellenberg, supra note 36.

89. Id.

90. Id.

91. The MTDC had its own investigations officer, Michael Chertoff. Consent decree, United States v. Mason Tenders Dist. Council of Greater New York, 94 Civ. 6487 (S.D.N.Y. 1994). The LIUNA reform team is unique in having a four-person infrastructure for investigations and prosecutions of union members: W. Douglas Gow serves as inspector general, investigating allegations of member impropriety or fraud; Robert Luskin prosecutes disciplinary cases; Peter Vaira serves as hearing officer, deciding a member’s guilt or innocence on the basis of evidence gathered by the inspector general (as well as hearing the member’s defense); and W. Neil Eggleston serves as appellate officer, hearing appeals from rulings by the hearing officer. ORGANIZED LABOR ACCOUNTABILITY PROJECT, NAT’L LEGAL AND POL’Y CTR., FAILURE OF LIUNA “INTERNAL REFORM EFFORT” 3, 4 ( Jan. 1999).

92. See STIER, ANDERSON &MALONE, LLC, supra note 23; email correspondence from Edward Stier to James B. Jacobs (Mar. 3, 2004) (on ﬁle with author).

438 The Labor Lawyer 438 (2004)

Even the meaning of “success” is debatable. Do we mean whether the trustee achieved the goals set out in the consent decree? But what if those goals were too modest? Or too ambitious? Clearly, a trusteeship has not been successful if the union remains in the hands of or under the influence of organized crime or a clique that for many years was closely connected to organized crime. For a case to be declared successful, there would need to be the expulsion from the union of organized crime figures and their allies, competitive elections, and regime change.

At what point in time should we make a judgment on whether the trusteeship has been successful? Is it appropriate to assay success after the term first specified in the decree? Or the term as extended? Or after some fixed period like one year? Five years? Or only when the trusteeship is terminated, no matter how long that takes? Is a success a success even if it takes twenty years? To pile on more complications, it is sometimes not obvious when a trusteeship has ended. In a number of cases, while the judge has ended the original form of the trusteeship, he has continued monitoring the union through some new arrangement.⁹³

One other important point bears mention. While it may be easy to ascertain whether some major organized crime figures have been expelled from the union, it is likely to be very difﬁcult to determine whether all mob connected persons have been expelled and whether those who have been expelled continue to exert influence over union officers. Only FBI or DOL agents may know whether such relationships continue, but even they may not know. Such relationships may be too well hidden or the agents may have ceased their monitoring because they stopped working on the case. Even if the agents believe that they know, they will not share such information with university based researchers.

With the above cautions and caveats in mind, and with the knowledge that, though sorely needed, no evaluation of the civil RICO trusteeships has ever been done, we have tried to begin our own rudimentary evaluation. For each trusteeship, we have sought to determine whether it can be confidently said that organized crime no longer controls or influences the union officials. Our conclusions are based upon interviews and questionnaire responses provided by participants (DOJ lawyers, trustees, and judges) and on our review of the paper record, including trustee reports, judicial decisions, and criminal proceedings during and after the trusteeships. Nevertheless, we emphasize that these are tentative conclusions.

93. For example, in the Mason Tenders District Council case, after the expiration of the trusteeship, a “supplemental” consent decree was entered into in January 1999 that provided that the trustee, Lawrence Pedowitz, would act as a review monitor for another thirty-six months, with power to apply to the court for restoration of his trustee powers if he concluded the union was being run corruptly. Mason Tenders, 1994 WL 742637; Pedowitz, supra note 23.

There are two criteria for determining whether success has been achieved: (1) Is there persuasive evidence that the organized crime element has been purged from the union? and (2) Has the union held at least one competitive election for its top officers?⁹⁴If we can confidently answer both questions affirmatively, we characterize the case as “clearly successful”. We reached this conclusion in four cases: the Mason Tenders District Council, HEREIU Local 54, HEREIU Local 100, and IBT Local 560. We conclude that in three other cases—Roofers Local 30/30B, LIUNA Local 6A, IBT Local 282, and the NYC District Council of Carpenters—the trusteeship has been “clearly unsuccessful.” The remaining cases, unfortunately, are still ambiguous.

The RICO TRUSTEESHIPS after TWENTY YEARS 439

VIII. Case Studies

A. A Success Story: HEREIU Local 54 (Atlantic City)

HEREIU Local 54 [hereinafter Local 54] represents hotel and restaurant workers in the Atlantic City area. The passage of the New Jersey Casino Control Act,⁹⁵which brought casino gambling to Atlantic City, swelled Local 54’s ranks.⁹⁶ The union’s annual dues collection catapulted from $269,000 in 1979 to $1,389,000 in 1982.⁹⁷In 1979, Frank Gerace was appointed president of Local 54 to replace Ralph Natale, an associate of the Philadelphia Bruno LCN crime family, who was convicted and sentenced to thirty years’ imprisonment for drug trafficking and other offenses.⁹⁸ Gerace was alleged to be an associate of Nicodemo Scarfo, the Bruno LCN crime family capo in control of the Atlantic City area.⁹⁹

In 1981, the New Jersey Casino Control Commission and the Division of Gaming Enforcement began an investigation to determine if Local 54 should be approved to represent casino employees.¹⁰⁰It concluded that Scarfo controlled the local, and ordered that unless Gerace and two others were removed from union ofﬁce, Local 54 would be prohibited from collecting dues—essentially a death sentence for a union.¹⁰¹After a protracted court battle that ultimately went to the

94. In other words, we do not consider union democracy to be the goal of the RICO trusteeship. We believe that union democracy, especially competitive elections and accountability, are indicia that the union is no longer under organized crime control and that democratic processes make it less likely, albeit hardly impossible, that organized crime could regain control. Cf. Eric Ames Tilles, Union Receiverships Under RICO: A Union Democracy Perspective, 137 U. PA.L. REV. 929 (1989).

95. N.J. STAT. ANN. §§ 5:12–1 to –210 (West 1996 & Supp. 2003).

96. See THE EDGE, supra note 2, at 75 (noting that the opening of each new casino brought between 1,500 and 2,000 new members into Local 54).

97. Id. at 76.

98. Id.

         99. Id. Later, Scarfo became boss of the Philadelphia family. Id. at 78.
         100. Id. at 79.
          101. Id.

440    The Labor Lawyer 440 (2004)

U.S. Supreme Court,¹⁰²Gerace and the others resigned their ofﬁces.¹⁰³

Meanwhile, the U.S. Senate Permanent Subcommittee on Investigation concluded in 1984 that mob interests controlled Local 54 and exerted “substantial influence” over the HEREIU International union.¹⁰⁴ During the course of the committee’s three-year probe, thirty-four union officials and reputed mobsters took the Fifth Amendment.¹⁰⁵The Senate report found that the dental plans for the Atlantic City and Las Vegas locals had outrageously excessive administrative costs (of 40–45 percent in contrast to 10–15 percent for similar plans in the private sector), parts of which were kicked back to LCN figures.¹⁰⁶

Following the release of the Senate subcommittee’s report, the secretary of labor charged HEREIU International General President Edward Hanley and other top HEREIU officials with financial mismanagement in connection with HEREIU’s dental benefit program for foodservice workers in Atlantic City.¹⁰⁷In addition, in September 1985, the secretary of labor sued the dental benefit fund, the fund administrator, the pension fund trustees, and various service providers, but not the union itself or any of its officials, alleging that Hanley and other HEREIU leaders violated ERISA by signing a sweetheart contract for the Local 54 dental plan.¹⁰⁸In April 1988, the HEREIU Welfare Fund trustees agreed to the entry of two consent decrees, settling DOL’s two lawsuits.¹⁰⁹The HEREIU Welfare Fund received $3.85 million from the union.¹¹⁰But the pension fund trustees were not personally liable, did not have to resign, and did not admit to any of the complaint’s allegations.¹¹¹

On December 19, 1990, the DOJ ﬁled a civil RICO suit against Local 54, HEREIU President Edward Hanley, nine current and former officers of Local 54, ten individuals associated with the Bruno/Scarfo family, and, nominally, Local 54’s affiliated benefit plans and severance fund.¹¹²The suit alleged twenty years of labor racketeering by the

102. Brown v. Hotel and Rest. Employees and Bartenders Int’l Union Local 54, 468 U.S. 491 (1984).

103. THE EDGE, supra note 2, at 80. Local 54 then employed Gerace as a “consultant.” Id.

104. S. REP. NO.. 98–595, at 7 (1984).
105. Id.
106. Id. at 8.
107. See THE EDGE, supra note 2, at 77–78.
108. See id. at 78–79; Brock v. Frank Gerace, Civ. No. 85–3669 (D.N.J. 1985).
109. HEREIU Welfare Fund Announces Settlement, PR NEWSWIRE, Apr. 8, 1988, LEXIS, PR Newswire ﬁle.

110. Id.

111. Id.

112. The named individual defendants were Edward T. Hanley; Francis Gerace (former president of Local 54 and then administrative aide to HEREIU General President Edward Hanley); Roy Silbert (president of Local 54); Felix Bocchiccio Jr. (vice president of Local 54); Thelma Hilferty (secretary-treasurer of Local 54); Daniel Diadone (member of Local 54’s executive board); Anthony Staino Jr., (member of Local 54’s executive board); Joseph Erace (former business agent of Local 54); Karlos Lasane (business agent of Local 54); Eli Kirkland (organizer of Local 54); Lawrence Smith (administrator of the HEREIU Local 170 Welfare Fund, a predecessor to Local 54’s dental and severance plan); Nicodemo Scarfo (alleged boss of the Bruno/Scarfo family, at the time serving concurrent life and fifty-five year sentences for a 1989 RICO conviction involving murder and extortion and a 1989 murder conviction); Anthony Piccolo (a.k.a. “Tony Buck,” cousin of Nicodemo Scarfo and alleged associate of the Bruno/Scarfo family); Nicodemo Salvatore Scarfo; Albert Daidone (former vice president of Local 54 and an alleged associate of Angelo Bruno, former boss of the Bruno/Scarfo family; convicted in 1984 of the 1980 murder of John McCullough, the former president of Roofers Local 30, and serving a life sentence); Ralph Natale (former secretary-treasurer of Local 170, a predecessor union to Local 54, and an alleged member of the Bruno/Scarfo family); Philip Leonetti (nephew of Nicodemo Scarfo and former underboss of the Bruno/Scarfo family, currently serving a forty-five year sentence on a 1989 RICO conviction for murder and extortion); Lawrence Merlino (former capo of the Bruno/Scarfo family, currently serving a life sentence for a murder conviction); Frank Materio (former organizer for Local 54 and an alleged associate of the Bruno/Scarfo family); Frank Lentino (former business agent and ofﬁce manager for Local 54 and an alleged associate of the Bruno Scarfo family; convicted of paying bribes to Atlantic City Mayor Michael Matthews in 1984); and Raymond Martorano (alleged member of Bruno/Scarfo family, convicted with Albert Daidone for the murder of John McCullough and currently serving a life sentence). United States v. Edward T. Hanley, No. 90–5017 (GEB) (D.N.J. 1990) (HEREIU Compl.).

The RICO TRUSTEESHIPS after TWENTY YEARS 441

Bruno/Scarfo family.¹¹³The consent decree that settled the RICO suit enjoined most of the defendants—all those alleged in the complaint to be LCN members or associates—from permanently participating in the affairs of the Local; some members were enjoined from participating for seven to ten years.¹¹⁴ The decree called for a court-appointed monitor with authority to investigate, audit, and review all facets of Local 54’s and its affiliate benefit plans’ operations.¹¹⁵The monitor would sit on the Board of Trustees of the HEREIU International Union Welfare and Pension Funds, with full rights of a trustee and specific authority, if necessary, to petition the court to protect the rights of Local 54 members.¹¹⁶President Hanley agreed not to take any action involving Local 54 without the prior consent of the monitor, not to impede the monitor, and affirmatively to assist the monitor.¹¹⁷ In April 1991, the court appointed as monitor James F. Flanagan III, former deputy director of the New Jersey Division of Gaming Enforcement.¹¹⁸The decree called for his term to last six years.¹¹⁹Local 54 elections, scheduled for June 1991, were postponed; the monitor would hold secret ballot elections as soon as “an open democratic climate” was restored.¹²⁰

Through his experience as New Jersey’s deputy director of Gaming

113. Id.

114. Consent decree, United States v. Edward T. Hanley, No. 90–5017 (GEB) (D.N.J. 1991) [hereinafter Hanley consent decree].

115. Id.

116. Id.

117. Id.

118. Flanagan, supra note 23.

119. Hanley consent decree, No. 90–5017 (GEB) . It ended on schedule in March 1997. Flanagan, supra note 23.

120. Hanley consent decree, No. 90–5017 (GEB); Flanagan, supra note 23.

442 The Labor Lawyer 442 (2004)

Enforcement, Flanagan came to his new job with knowledge of the Bruno/Scarfo family and Local 54.¹²¹He was briefed by Assistant U.S. Attorneys and DOL and FBI investigators whom he knew from previous investigations.¹²²For the first four months of the trusteeship, DOL agents stayed with Flanagan at the Local 54 offices during working hours because of concern that LCN would try to intimidate him.¹²³

From the beginning, Flanagan attempted to win the support of the rank and ﬁle.¹²⁴ He promised the membership that he would open his own mail at the Local’s headquarters.¹²⁵He encouraged union members to contact him by telephone or in person and set up a post ofﬁce box in another town.¹²⁶He held special meetings, also attended by DOL agents, to discuss the trusteeship’s progress.¹²⁷He also published a column in the Local’s quarterly newsletter.¹²⁸

In Flanagan’s view, the main objective of the trusteeship was to bring democracy to Local 54.¹²⁹With the labor racketeers barred from participating in the union, Flanagan could concentrate on stimulating membership participation in union affairs.¹³⁰ Restoring democracy was to be accomplished by free and fair elections, a fair process for handling grievances, and the termination of sweetheart collective bargaining agreements.¹³¹

Flanagan initially had only one staff member, a lawyer, who had previously worked for the National Labor Relations Board.¹³²The International union, with Flanagan’s approval, assigned two officials to Local 54 for one year to focus on identifying administrative problems and addressing the routine bread-and-butter trade union issues.¹³³Flanagan hired Michael Holland, formerly elections officer in the IBT

121. Flanagan, supra note 23.

122. Id.

123. Id. The DOL remained actively involved in this trusteeship until its conclusion.

124. Id.

125. Id.

126. Id.

127. Id.

128. Id.

129. Id.

130. Id.

131. Id. In one particularly egregious example of a sweetheart contract, Local 54 had contracted with a company to supply computers to the local. Id. Although the HEREIU International had offered to supply computers free of charge, the local still bought computers from the company, which were often worth only about 10 percent of their retail price. Id. It was later discovered that the company was owned and operated by several LCN members. Id. One of Flanagan’s first moves was to dissolve the contract with the company and allow the International to supply the Local with computers. Id. The company sued Flanagan in an attempt to enforce the contract, but the suit ended with a settlement favorable to Flanagan. Id. When the company sued the trustee, DOJ brought a civil RICO countersuit against the company, which disappeared thereafter. See Tedco Computer Servs. v. Local 54, Hotel Employees and Rest. Employees Int’l Union, No. 91– 3052 (D.N.J. 1991).

132. Flanagan, supra note 23.

133. Id.

The RICO TRUSTEESHIPS after TWENTY YEARS 443

International case, as a consultant.¹³⁴Finally, he hired an accounting firm to do a quarterly review and annual audit of the Local.¹³⁵

The civil RICO suit forced eight officers and members out of the union.¹³⁶ Flanagan did not undertake any disciplinary actions to remove other members, but he did scrutinize everyone seeking union ofﬁce.¹³⁷Flanagan did not have the power to expel members from the union, only to forbid members from running for and holding union ofﬁce.¹³⁸He found eight candidates to be associates of organized crime figures and barred them from the 1993 election.¹³⁹

Flanagan mainly concentrated on holding free and fair elections.¹⁴⁰ Prior to the civil RICO ﬁling, there had not been a contested election for more than ten years.¹⁴¹During this period, no more than 5 percent of the 15,000 members voted in any election.¹⁴² In the lead-up to the 1993 election, all candidates had to undergo FBI and DOL background checks; a grievance procedure was formulated to deal with election disputes.¹⁴³

In the first election, held in 1993, there were three LCN-controlled slates.¹⁴⁴ Flanagan ruled all three slates ineligible based on LCN connections uncovered through the FBI and DOL background checks.¹⁴⁵ Some candidates appealed to Judge Brown.¹⁴⁶Judge Brown reviewed Flanagan’s decisions according to an “arbitrary and capricious” standard—and on five occasions DOL agents working on the investigation submitted affidavits to Judge Brown establishing the organized crime association or connection that provided the basis for ruling the individuals ineligible.¹⁴⁷Under the agreement with the DOL agents, Judge Brown sealed the affidavits from the public; no evidentiary hearings were held.¹⁴⁸ The candidates appealed the decision to seal the affidavits, but the Third Circuit affirmed.¹⁴⁹Approximately 3,400 members,

134. Id.
135. Id.
136. Hanley consent decree, No. 90–5017 (GEB).
137. Flanagan, supra note 23.
138. Hanley consent decree, No. 90–5017 (GEB).
139. Flanagan, supra note 23; see also Hanley, 1992 U.S. Dist. LEXIS 22192; Hanley consent decree, No. 90–5017 (GEB). 140. Flanagan, supra note 23. 141. OFFICE OF THE INSPECTOR GEN., U.S. DEP’TOF LABOR, SEMIANNUAL REPORT TO THE CONGRESS,APRIL1–SEPTEMBER30, 1996, at 33 (1996) [hereinafter DOL REPORT].

142. Id.

143. Flanagan, supra note 23; see also Hanley, 1992 U.S. Dist. LEXIS 22192.

144. Id.

145. Flanagan, supra note 23; see also Hanley, 1992 U.S. Dist. LEXIS 22192. Federal investigators taped Natale’s phone conversations from Danbury Prison and used the evidence to disqualify Natale’s preferred candidates. Id.

146. See Hanley, 1992 U.S. Dist. LEXIS 22192.

147. Id.

148. Id.

149. Id.

444 The Labor Lawyer 444 (2004)

or 22 percent of the eligible membership, voted in the election.¹⁵⁰Flanagan and the DOL agents held an all-night session to count the votes in front of the membership, hoping to show their commitment to union democracy and real reform.¹⁵¹

In the August 1996 election, over ninety candidates competed for union ofﬁce, including four candidates for president; not one candidate was alleged to have an association with organized crime. This time, approximately 5,098, or 33 percent of the union membership, voted.¹⁵²All the incumbents were defeated.¹⁵³An entire leadership transition had been accomplished.

When the trusteeship ended in 1997, the union appeared to be operating successfully.¹⁵⁴A 1997 audit showed a surplus of more than $1.3 million in the local’s treasury, in contrast to the $625,000 deﬁcit in 1990.¹⁵⁵

The trusteeship had lasted six years.¹⁵⁶For the first one-and-a-half years, Flanagan worked at the Local three to four days a week.¹⁵⁷After the 1993 election, the new leadership started to run the union, and the monitor’s role decreased.¹⁵⁸During the last one-and-a-half years, Flanagan was again at the Local more often, in part because of responsibilities related to the 1996 election.¹⁵⁹Flanagan’s fees, and all the fees of the trusteeship, were paid by Local 54.¹⁶⁰ Flanagan was paid $180 per hour, billing about $20,000 per month on average—about twenty-five to twenty-eight hours per week.¹⁶¹In the seventy-one months of the monitorship, Flanagan’s bills were never challenged by the parties.¹⁶²

There are several factors that may account for the Local 54 trusteeship’s success. Local 54 entered into the consent decree relatively early on in the government’s investigation and prosecution, which created a positive environment for the remedial effort—no bitter adversarial litigation between Local 54 and the government occurred. Additionally, HEREIU provided important assistance by assigning two competent and committed union officers to aid the court appointed

150. DOL REPORT, supra note 141, at 33.
151. Flanagan, supra note 23.
152. DOL REPORT, supra note 141, at 33.
153. Flanagan, supra note 23.
154. Two rounds of fair and untainted elections had been held. There had been a complete break with the clique that had controlled the local before the RICO suit. Id.

155. Kathy Seal, Union Monitor Remains, HOTEL &MOTEL MGMT., Apr. 7, 1997.

156. Flanagan, supra note 23.

157. Id.

158. Id.

159. Id.

160. Id.

161. Seal, supra note 155.

162. Flanagan, supra note 23.

The RICO TRUSTEESHIPS after TWENTY YEARS 445

trustee in the re-democratization of the union.¹⁶³Additionally, the demographics of Local 54 were good for remediation: the membership of the Atlantic City local was comparatively diverse and fluid; this meant that a significant percentage of the membership was not emotionally committed to or scarred by the old regime.¹⁶⁴

B. An Unsuccessful Trusteeship: Roofers Local –30/30B, Philadelphia, Pennsylvania

In 1988, when the government brought a civil RICO case against the Union, it represented approximately 2,000 persons employed in roofing work in eastern Pennsylvania, southern New Jersey, and Delaware.¹⁶⁵The Union had two parts: Local 30 represented employees of commercial roofers, while Local 30B represented employees of residential roofers.¹⁶⁶ These locals were affiliates of the United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association, the international roofers union.¹⁶⁷

Corruption and racketeering pervaded Local 30/30B, of the United Slate, Tile and Composition Roofers, Damp and Waterproof Workers Association since at least the late 1960s. From the late 1960s through the 1970s, Local 30 was headed by John McCullough, who was a close associate of Philadelphia LCN boss Angelo Bruno.¹⁶⁸McCullough ran the union for the benefit of the Bruno crime family.¹⁶⁹ On March 21, 1980, Bruno was assassinated by a faction unhappy with his leadership.¹⁷⁰Eventually, Phil Testa emerged as boss of the Philadelphia family.¹⁷¹ Testa tried to convince McCullough to let his protégé's control a new union local for Atlantic City casinos’ security personnel, but McCullough refused.¹⁷²On December 16, 1980, McCullough was murdered at home in the presence of his wife.¹⁷³

With McCullough gone, various LCN factions fought to control Local 30/30B. On March 15, 1981, Phil Testa was assassinated by a remote controlled bomb hidden under the porch of his duplex.¹⁷⁴The

163. Robert C. Stewart, Letter to the Editor, Voice of the Bar: Local 560 Prosecutor Rebuts Criticism of Trusteeship, N.J.L.J., Nov. 15, 1999, at 25.

164. Id.

165. Local 30, 686 F. Supp. at 1142.

166. Id. at 1143.

167. Id.

168. See GUINTHER&FRIEL, supra note 24, at 66 (“McCullough and Bruno, I learned, had not only been partners in crime; they genuinely seemed to like one another.”).

169. See id. at 62–66.

170. Id. at 39.

171. Id. at 25.

172. Id. at 67 (“During the early fall of 1980, [Testa] had two—by one account, three—meetings with Big John in which he advised him that it would be to everyone’s interest if he backed off from his Atlantic City activities.”).

173. Id. at 46.

174. Id. at 25–26.

446 The Labor Lawyer 446 (2004)

bomb was packed with roofing nails and explosives.¹⁷⁵Underboss Pete Casella and capo Frank Narducci blamed the attack on the Philadelphia roofers union, but the two men were later determined to have been behind the assassination.¹⁷⁶Another power struggle ensued; this time, Nicodemo “Little Nicky” Scarfo, a capo based in Atlantic City, became the boss of the Philadelphia LCN family.¹⁷⁷

Backed by Scarfo, Stephen Traitz was installed in 1981 as the new head of Roofer’s 30/30B.¹⁷⁸From September 1985 through February 1986, the FBI, by means of a bug, conducted electronic surveillance of Local 30/30B’s business ofﬁces.¹⁷⁹ The intercepted conversations led to criminal RICO charges against thirteen union officials, including Traitz.¹⁸⁰The evidence showed that Traitz did jobs for Scarfo, such as collecting debts and resolving disputes between labor unions and LCN-affiliated contractors.¹⁸¹Scarfo exercised influence over Local 30/30B affairs and activities and signed off on various acts of union violence against contractors and members of other unions.¹⁸²On November 23, 1987, a federal jury found thirteen officers and employees of the Roofers Union guilty of conducting and participating in the affairs of the Roofer’s Local through a pattern of racketeering activity, and guilty of RICO conspiracy; bribery of federal, state, and local public officials; mail fraud; extortion; illegal kickbacks; embezzlement from union benefit plans; and collection of debts for organized crime.¹⁸³

The U.S. Attorney almost immediately followed up the criminal RICO case with a civil RICO suit naming as defendants the same men convicted in the criminal RICO case.¹⁸⁴In a hearing for a preliminary injunction, the government presented its evidence in three parts.¹⁸⁵ First, it presented the testimony of fifty witnesses who “described improper and/or illegal acts allegedly committed by the individual defendants and/or the Union and/or members or supporters of the Union.”¹⁸⁶ Second, the government presented approximately eleven audiotapes culled from the voluminous electronic evidence presented in the criminal

175. Id.

176. Id. at 148.

177. Id. at 82.

178. Local 30, 686 F. Supp. at 1157.

179. Id. at 1154–55.

180. Id. at 1155. These are Stephen Traitz, business manager; Edward P. Hurst, president; Michael Mangini, business agent; Robert Crosley, business agent; Michael Daly, recording secretary and business agent; Daniel Cannon, dispatcher and business agent; Mark Osborn, organizer; Robert Medina, business agent; Ernest Williams, business agent; James Nuzzi, organizer; Stephen Traitz III, organizer; Joseph Traitz, organizer; and Richard Schoenberger, organizer. Id.

181. Id. at 1157.

182. Id.
183. Id. at 1141.
184. Id.
185. Id. at 1142.
186. Id.

The RICO TRUSTEESHIPS after TWENTY YEARS 447

RICO trial.¹⁸⁷Third, the government presented the testimony of University of Pennsylvania law professor Clyde W. Summers, a prominent labor scholar who specializes in union democracy.¹⁸⁸The government’s requested injunctive relief included removal from ofﬁce of Local 30/30B officers, chosen by Traitz, elected after the old officers were convicted and sentenced to prison;¹⁸⁹the government also asked that Local 30/30B be placed under a court-appointed trustee.¹⁹⁰In opposition, the attorneys for the Roofers asked Judge Louis C. Bechtle to deny injunctive relief or “at most to impose some sort of limited monitorship whereby the current officers would continue to run” the Local.¹⁹¹ The judge granted a limited “decreeship,” along the lines the defendants desired.¹⁹²

Judge Bechtle ordered a financial audit of the union and its associated benefits funds.¹⁹³All thirteen of the civil RICO defendants were barred for life from any participation in the roofing industry.¹⁹⁴Judge Bechtle left the Local’s newly elected officers in place while attempting to limit or excise their control over certain union functions, particularly collective bargaining which had been marked by racketeering and violence in the past.¹⁹⁵Judge Bechtle hoped that focusing on remedying improper practices, not people, would reform the union while respecting its autonomy.¹⁹⁶ The judge explained that as long as the Local

187. Id.

188. Id.

189. Id. Roofers Local 30/30B held elections on December 21, 1987, to replace those leaders who were convicted in the November 1987 criminal RICO suit. Id. at 1160. This was the first contested election in nearly twenty years, with dissident Mike Sullivan running a slate. Id. at 1143. Sullivan and his supporters were subject to work-related reprisals as well as verbal and physical threats and vandalism. Id. at 1160. Despite Sullivan’s efforts, when 1,046 of the 1,500 eligible members voted, they overwhelmingly selected the slate that had close ties to the convicted leaders. Id. at 1160–61. The new business manager was the brother of one of the convicted leaders, and many others on the slate had either worked with, or directly for, others among the thirteen defendants. Id. at 1159. It must be noted that the “new leadership” to which Judge Bechtle referred had been “elected” only days before the start of the trial. Opposition candidates had been barred from the union, removed from shop steward positions; those union members who dared to challenge the clique were threatened with violence and accosted when they attempted to hand out election literature. Id. at 1160. The board that was eventually installed was comprised of longtime associates of the convicted officials. Id. at 1161. It reappointed all of the business agents who had served under the old regime. Id.; see also Goldberg, Cleaning Labor’s House, supra note 8, at 981.

190. Local 30, 686 F. Supp. at 1142.

191. Id.

192. Id.

193. Id. at 1169.

194. Id. (“The court intends that the Decree assure that former convicted defendants play no part in this Union from any position of influence.”).

195. Id. at 1168.

196. Id. (“[T]here must be a blend that will both (a) accommodate the requirement that the court provide a strong remedial role in the functioning of Local 30/30B short of a trusteeship; and (b) demonstrate a tolerance for the existence, during this period, of Local 30/30B as a labor Union operating as a meaningful, necessary institution that the membership can truly belong to, be a part of, have a voice in, be loyal to, and be led by persons chosen through a genuine democratic process within the Union.”).

448 The Labor Lawyer 448 (2004)

functioned in a lawful manner, he would respect its autonomy, but that he would not tolerate violence, extortion, intimidation, and any meddling by the individuals convicted in the criminal RICO case.¹⁹⁷

Acknowledging that Local 30/30B’s officers were, to some extent, Traitz’s protégé's, Judge Bechtle recognized that there was a risk in leaving the union’s officers in power.¹⁹⁸He noted that the newly elected board members, “following the conviction of the previous leaders . . . rather than repudiate the old regime, embraced it, supported it, and marched for it.”¹⁹⁹

I am sure there are membership influences that have carried some degree of loyalty from the past into the present. This was not unexpected. It has been the court’s view that a certain amount of that has to be tolerated and dealt with effectively. The most effective solution to that will simply be the passage of time. A new generation of membership functioning under lawful procedures will make that effort an unnecessary and unattractive alternative for a growing membership and hence, not a significant factor. ²⁰⁰

As court liaison officer (CLO), Judge Bechtle chose Robert Welsh, a former law clerk who had served as an Assistant U.S. Attorney in Philadelphia from 1980 to 1986 and as chief of the Philadelphia office's major crimes section from 1984 to 1986.²⁰¹The CLO was to function more as an observer than as a reformer.²⁰²Judge Bechtle ordered that face-to-face collective bargaining sessions had to contain equal numbers of union representatives and employer representatives unless the CLO agreed to the deviation.²⁰³The CLO was required to be present at any face to face negotiations.²⁰⁴At such negotiations, the CLO could participate in the content or direction of the meeting, so long as there was no violence or intimidation.²⁰⁵No collective bargaining agreement would take effect until the CLO investigated and signed off.²⁰⁶

At the beginning of his trusteeship, Welsh worked as CLO for an average of ten hours a week, but this slowly subsided to about two hours a month by the end of the trusteeship.²⁰⁷ He spent most of that time

197. Interview with Judge Louis C. Bechtle, Eastern District of Pennsylvania (Aug. 12, 2002) (notes on ﬁle with author).

198. Local 30, 686 F. Supp. at 1168.

199. Id.

200. Bechtle, supra note 197.

201. MARTINDALE HUBBLE, MARTINDALE HUBBLE LAW DIRECTORY, available at

http://martindale.com (2002).

202. Telephone interview with Robert Welsh, Special Master, Roofers Local 30/30B, in Philadelphia, Pa. (Feb. 4, 2004) (notes on ﬁle with author).

203. Local 30, 686 F. Supp. at 1172–73.

204. Id.

205. Id.

206. Id. at 1173.

207. Welsh, supra note 202.

The RICO TRUSTEESHIPS after TWENTY YEARS 449

monitoring transactions, interviewing people who were reported to have connections with racketeering, talking to people within the roofing industry, and supervising negotiations.²⁰⁸There was no shortage of people to step forward to provide Welsh with information; as he comments, “[p]eople reached out. Everybody wanted to talk, wanted to manipulate the situation. Dissidents, contractors, industry insiders, owners of buildings where roofing was being done, each one was trying to play an angle.”²⁰⁹

One of Welsh’s most time-consuming tasks was trying to sort out the structural problems that existed between the Local 30 commercial roofers section and the Local 30B residential roofers group.²¹⁰The existence of Local 30B created a “permanent underclass of residential roofers.”²¹¹ Those who worked in residential roofing were usually smaller operators who were coerced through violence and threats to sign union contracts, while still collecting less than half of what the commercial roofers in Local 30 were collecting.²¹²The result of this was that the racketeers maintained two separate unions, one with high-price workers, and one with low-price workers. Employers who paid off were permitted to sign contracts with the low-rate union, a typical mob labor racketeering tactic. Welsh ended this species of racketeering by combining the two unions.²¹³

The inadequacy of the decree and the CLO’s powers was crystal clear as early as the June 1989 election. Welsh required mail balloting because “although the members have been courteous and respectful to me, there has been a pattern of intimidation directed at those perceived to be exercising their lawful political rights.”²¹⁴The Traitz connected leadership preserved by the decree was reelected by a two-to-one margin.²¹⁵The campaign was characterized by intimidation as usual.²¹⁶At a membership meeting two months before the election, officers whipped the crowd into such a frenzy against the opposition slate that those candidates had to be escorted out.²¹⁷Welsh observed the event, but lacked authority to take action; he later explained that “a group of reformers tried to make political changes, and suffered mightily for it. I couldn’t help them much, because they were labeled dissidents, and therefore were subject to difficulties getting jobs.”²¹⁸

208. Id.
209. Id.
210. Id.; see also Local 30, 686 F. Supp. at 1163.
211. Welsh, supra note 202.
212. Id.
213. Id.
214. Lisa Ellis, Mail Ballot for Roofers Is Proposed, PHILA. INQUIRER, Apr. 6, 1989, at B5.

215. Goldberg, Cleaning Labor’s House, supra note 8, at 983.

216. Id. 217. Id. 218. Welsh, supra note 81.

450 The Labor Lawyer 450 (2004)

During the 1990s, Welsh’s role as CLO appears to have been relatively passive, as it was designed to be.²¹⁹ He did monitor meetings, sign checks and contracts, and generally oversaw the union’s compliance with the decree,²²⁰but without a permanent staff or power to bring disciplinary charges, and with the U.S. Attorney’s Ofﬁce on the sidelines, he was unable to initiate investigations of continued mob influence in the union. While several rounds of procedurally proper elections did take place, there was no decisive break with the old regime or a significant change in the culture of the union.

At Welsh’s request, Judge Bechtle terminated the decreeship on September 28, 1999, stating “[t]he time is now for this court to step aside . . . It’s about time for the union to function free of the shadow of the court.”²²¹ However, Judge Bechtle did reaffirm the provision that effectively barred the former officials who had originally been convicted of RICO charges from playing any role in union activities.²²²Welsh called Local 30/30B a “flagship local for the national union.”²²³Indeed, the Local’s reputation was so rehabilitated that the International ordered five moribund roofers locals to combine with Local 30/30B.²²⁴

Although Judge Bechtle had ordered the monitorship of the union itself to end, the court’s authority over the individual defendants remains indefinite.²²⁵ One year later, on October 24, 2000, Robert Welsh was once again in front of Judge Bechtle in his capacity as monitor over those defendants’ activities within the union, this time asking to investigate reports that some of the former officers who had been banned for life from union activities were once again trying to influence its internal affairs.²²⁶While Judge Bechtle granted his request that subpoenas be issued, Welsh was unable to develop a case that any of the original defendants had returned to power within the union.²²⁷

More problems surfaced in the spring of 2003. An investigation by the International revealed instances of physical violence, threats of violence, and extortion at job sites.²²⁸The International became concerned

219. Id.

220. Telephone interview with Robert Welsh, Court Liaison officer, Roofers Local 30/30B in Philadelphia, Pa. (Feb. 17, 2004) (notes on ﬁle with author).

221. Joseph A. Slobodzian, Judge Revokes Court Scrutiny of Roofers Local 30 After 11 Years, PHILA. INQUIRER, Sept. 28, 1999, at B01.

222. Id. See also United Union of Roofers v. Composition Roofers Union, Local 30, 2003 WL 21250627, at *3 (E.D. Pa. Mar. 28, 2003).

223. Joseph A. Slobodzian, Roofer’s Union Gets New Scrutiny, PHILA. INQUIRER, Oct. 28, 2000, at B1.

224. Id. Then business manager Thomas Pendrick noted that the value of Local 30/30B’s benefit funds had topped $120 million; just ten years before, the funds had been on the verge of bankruptcy. Pendrick, a union vice president, was appointed to work with other troubled locals around the country.

225. Welsh, supra note 220.

226. Slobodzian, supra note 221, at B1.

227. Welsh, supra note 220.

228. United Union of Roofers, 2003 WL 21250627, at *3.

The RICO TRUSTEESHIPS after TWENTY YEARS 451

about reports of financial malpractice and mismanagement, unauthorized reductions in Local 30/30B’s initiation fees, and the failure of the Local board to fulfill its duties, such as not properly investigating reports of extortion at job sites.²²⁹Based upon its investigation, the International put Local 30/30B under trusteeship on March 21, 2003.²³⁰When the trustee appointed by the International union attempted to enter the Local 30 ofﬁce, union officers refused to allow him to take control of the premises, withholding keys and security codes to the building.²³¹At that point, the International took the Local to court.²³²On March 26, 2003, U.S. District Judge Franklin S. Van Antwerpen granted the International’s request to impose a trusteeship for up to eighteen months.²³³With little advancement in union democracy, and a return to racketeering as usual, we consider the Local 30/30B decreeship not to have been successful.

Judge Bechtle left the incumbent officers in place out of respect for union democracy. In so doing, he missed the true problem. Replacing incumbents does not destroy union democracy where there is no democracy to destroy. Allowing those who were undemocratically selected to continue in their positions does not foster democracy. As labor scholar Clyde Summers states, “Stephen Traitz was not chosen by the members of the Roofers Local, but by the Maﬁa, and he served the Mafia's purposes. The new officers were not freely chosen by the members, but were chosen by convicted officers and elected in a climate of intimidation produced by pervasive violence and denial of job rights.”²³⁴By allowing those who were illegally selected to remain in power, Judge Bechtle indulgently affirmed the control of the racketeers.

The Roofer’s decreeship suffered from its own half measures. Not four months after the ﬁling of the decree, a law student commentator correctly predicted that it would be a failure.²³⁵ By taking half measures, trying to balance the desires of the union with the needs of justice, Judge Bechtle doomed the decree. For example, critics of the decreeship make the point that while no face-to-face bargaining can take place without the CLO, the CLO has no power to participate in the bargaining. Additionally, critics point out that measures such as limiting the number of union representatives at such bargaining has little impact—there were almost 100 contractors present at the Rifle Club

229. Id.

230. Id.

231. Id.

232. Id. An accountant who examined Local 30’s records testified that over the course of one year revenue dropped $31,096.00 while expenses increased $518,125.00. Joseph A. Slobodzian, Judge Extends Union Trusteeship, PHILA. INQUIRER, Mar. 27, 2003, at B8.

233. United Union of Roofers, 2003 WL 21250627, at *7.

234. Summers, supra note 8, at 694.

235. Tilles, supra note 94, at 948.

452 The Labor Lawyer 452 (2004)

meeting when a small group of union leaders, McCullough and Traitz primarily, began their reign of terror—“the court does not address in its decreeship the problem of enabling the ‘terrorized’ victims of the union leadership to exercise the rights they had prior to the decree. Why will individuals report incidents to the liaison officer that they would not report to the police?”²³⁶

IX. Conclusion

The U.S. Department of Justice’s use of civil RICO to eradicate entrenched organized crime labor racketeering ought to be considered a major chapter in American law enforcement history and in American labor history. At least twenty civil RICO suits have so far been ﬁled, three of them against international unions. In every case, the government has succeeded in obtaining, by order or consent decree, a court-appointed trustee, monitor, or court liaison officer. But these “trustees” have been differently empowered, financed, and tenured. Some have plugged away at their mission for more than a decade; others have expired after just eighteen months. Some have expelled dozens of union officers; others have expelled nobody. Some have assumed administrative control over the union; others have functioned only as “cops.” Some appear to have succeeded brilliantly in bringing forth a new leadership cadre unrelated to the faction that corruptly dominated the union for decades; others have failed to free the union from the labor racketeers.

Do the civil RICO suits and court-appointed trustees provide a solution to “mobbedup” labor unions, only a partial solution, or no solution at all? Remarkably, after twenty years of massive legal effort, there is no clear answer. Indeed, very little is known about the nature and progress of these trusteeships or about how to evaluate them. In seeking to analyze the civil RICO union suits as a whole, this article draws together disparate information and presents new information as well. It provides a kind of progress report on where things stand after twenty years of litigation and trustee-initiated remediation. While a definitive evaluation requires a longer time frame and a bigger study, this article demonstrates that so far the results of the civil RICO suits and trusteeships are mixed. There have been major successes and major failures. There are many ongoing cases whose success or failure is not yet clear.

In addition to offering a progress report, this article constitutes a plea for more research. The ongoing experiment in attempting to reform corrupted unions by means of civil RICO suits and court appointed trustees is a vitally important experiment in organizational change and reform that will be of interest to policymakers charged with attacking organizational corruption in the United States and other

236. Id.

The RICO TRUSTEESHIPS after TWENTY YEARS 453

countries in years to come. We must determine what has worked and what hasn’t in order to perfect this strategy of reform.

The National Institute of Justice (NIJ), the research unit of the Department of Justice, seems to us the logical agency to take responsibility for comprehensively researching and evaluating the civil RICO labor racketeering litigation. The trustees need to be completely debriefed and their experiences placed “on the record.” Their reports need to be brought together and archived. The trustees themselves should be brought together at a number of workshops or conferences where they can share, compare, and debate their experiences. Finally, the NIJ staff itself should undertake a systematic analysis of best practices. All that at least would constitute a solid start on giving the RICO union trusteeships the kind of saliency that a law enforcement “experiment” of this magnitude deserves.

454 The Labor Lawyer 454 (2004)

TABLE I : Civil RICO Suits Against "Mobbed-Up" Unions

*This lawsuit resulted in three separate court-appointed trustees for ILA Locals 1814, 1588, and 1909.

TABLE II: Derivative Trusteeships Imposed by the Laborers’ International Union of North America (Continued )