A Look Under The Hood of Teamsters 807
LONG ISLAND CITY, N.Y
At 10 a.m. on March 8, 1995, a seven-member "strike force" descended quietly on the two-story, red-brick offices here of Local 807, International Brotherhood of Teamsters.
The attack team didn't consist of FBI agents or crusading New York police. Instead, it was made up of lawyers and officials from Teamsters national headquarters - armed with an order to seize control of a union branch suspected of corruption.
Team leader Joseph Padellaro quickly confronted the patriarch of the local, Joseph Mangan, and two of his top cronies. Bellowing like a drill sergeant, Mr. Padellaro ordered them to surrender their company credit cards, car keys, and officerships. His targets were stunned. Mangan, for one, had been with the local since 1924 and ruled it, his way, for 25 years.
"There was shock and confusion," recalls Gene Maney, an official who was part of the invading force.
The move was so unexpected that Mr. Mangan and the other local officials had no time to hide or destroy potentially incriminating documents. It is something that may now come back to haunt them.
Since the initial raid, a trustee appointed by the national headquarters, working with an investigator and auditor, has unearthed evidence of what they say points to corruption and mob influence in Local 807. Ron Carey, president of the Teamsters, yesterday announced internal union charges against Mr. Mangan and John Hohmann, the local's former secretary-treasurer. Among other things, Mr. Carey has demanded the pair return $170,000. Union officials expect to make additional claims against the men.
Welcome to the cleanup of unions, 1990s style. National unions are using the trustee approach to root out corruption and mafia influence within their own ranks by first taking control of renegade locals, then putting in their own leader, complete with auditors and investigators, to manage the day-to-day affairs until new elections can be held.
It's a low-key method that is perhaps fit for an era when union corruption is as likely to involve laptops as lead pipes.
"The trusteeships are a very legitimate role to make sure there is not illegal activity or corruption," says Richard Hurd, director of labor studies at Cornell University in Ithaca, N.Y. "The trustees are providing a useful service to the members." The alternative, he notes, is an expensive court-appointed lawyer.
Besides the Teamsters, other unions that have used trustees to replace a local's leaders include the Service Employees International and the Hotel Employees & Restaurant Employees Union (which used one to replace inept local management).
Mr. Hurd says older unions that are more decentralized, rather than nationally coordinated ones like the United Auto Workers, are more likely to have problems.
Few unions, however, have used the approach as frequently as the Teamsters. Since 1992, Carey, the union's reform-minded president, has appointed 61 trustees to manage the day-to-day affairs of locals. In New York City alone, 39 percent of the Teamster locals are in trusteeships.
Local 807 is thus far from alone. But its story provides a rare inside look at the problems the Teamsters face - and the challenges confronting trustees as they try to eliminate them.
Perhaps the tale should begin a year ago, when New York Gov. George Pataki (R) charged mob influence at the Javits Center, New York's main convention house, which counted on the Local 807 to move trade shows in and out.
The Pataki charges followed a report by the Independent Review Board (IRB), set up by the US Department of Justice to monitor Teamster activities. In a long report sent to Carey last March, the IRB documented organized crime activity in the local.
'Like a candy store'
These events culminated in the strike force seizure of 807's building and the appointment of trustee Johnnie Brown. After a year of examining the books, he sums up what he found: "It was like a candy store," said Mr. Brown in an interview in Mangan's old office. This is an inside look at some of the sweets.
When the shocked Mangan left the building last year in the wake of the strike-force assault, he handed over the keys to his Teamster-owned car. Brown and investigator Alfred Fernandez quickly found that the cars driven by the top officials had an interesting history.
Back in February 1991, the union assessed the members 5 cents an hour for every hour worked, including overtime, ostensibly to help the solvency of the local. At a Feb. 15 meeting, according to the executive board minutes, then-Secretary-Treasurer Hohmann explained that the "financial hardship" of the local necessitated the levy.
"After they got the assessment we found they went out and bought brand new cars," says Brown, who is also an official at another Teamster local.
The cars, big Lincolns or Buicks, were sold after three years. According to Brown, the buyers were relatives or friends. He says the highest price paid for the used cars was $5,250 for a vehicle that cost $35,000 only three years earlier. According to the Kelly Blue Book, a comparable car would retail for $16,700 to $20,000.
As they pored over the books, investigators also found there was little documentation of postal expenses. Every month the union would write a check for $600 to $800 in cash for stamps. Brown says the union did not receive any receipts from the post office to document the expense. But Brown doubts the money went toward stamps, since the local only sent out one or two mailings a year.
Reviewing the expense ledgers, Fligel, Brint & Co., auditors brought in at the start of Local 807's trusteeship, concluded: "Many expense reports had handwritten receipts or [were] reimbursed with blank receipts, explanations were vague and proper approvals were not always indicated. Therefore this area obviously does not have proper internal controls."
The investigators also found plenty of instances of nepotism. Among the charges leveled yesterday by national union officials in a written statement was that Hohmann violated federal retirement laws by hiring his wife, Marjorie Hohmann.
Carey demanded restitution of $74,338 paid to Mrs. Hohmann, plus $43,100 she received in medical benefits for which the union alleges she was not eligible. Neither Hohmann could be reached for comment.
Mangan's son, Warren, a lawyer, did most of the union's legal work. The local's records show the Long Island City law firm of O'Connor & Mangan received about $1 million per year in legal fees from the Local 807.
As a favor to Warren Mangan, local 807 sold his employees at the law firm health insurance even though they were not members of the local, according to the auditors and union documents.
Last December trustee Brown cancelled that insurance, since there was no "participation agreement," a legal pact that would have allowed nonunion members to buy the group policy.
One federal investigator, who requested anonymity, says it was a violation of the law for the health plan to be sold to outsiders without a participation agreement or some valid reason for the coverage.
Neither Warren nor Joseph Magnan responded to questions about the allegations by press time.
The union's former officers, in fact, seem to have made a practice of selling health insurance to unqualified people. On April 24, trustee Brown canceled the health insurance of 70 people who worked for Wackenhut Corp., which provides security for the New York Racing Association.
Although Wackenhut had a participation agreement with the union, the people covered were supervisors, not workers. Thus, Brown says, they were not eligible.
The trustee also says 807 members were surprised to learn that the former officials gave themselves $50 for every meeting they attended at their own building. Brown says they claimed it was for expenses, such as parking, even though the union owned the parking lot.
One of investigator Fernandez's jobs was to search for the influence of organized crime on the local. He did not have to look far.
Among the Teamsters at the Javits Center was Michael Porta Jr. In its final report to the parent Teamsters union in January of 1995, the IRB charged Mr. Porta with "knowingly associating with members of the Gambino LCN [La Cosa Nostra] family."
Porta started working at Javits one month after pleading guilty to criminal conduct while an official with the International Longshoreman's Association. Porta was not alone. In a March 6, 1995, report the IRB stated: "At least 11 local 807 members currently working in the trade show division have ties to organized crime."
Nepotism was rampant at the union's trade-show division as well. It was run by Robert Rabbitt Sr. At Javits, Fernandez found that 11 of 47 members on the seniority list, the people supposed to get picked to work first, were relatives or friends of Mr. Rabbitt, who lives in Greenwood Lake, N.Y. At least 15 other men were related to a Local 807 officer, shop steward, or trade-show division member. When contacted by the Monitor, Mr. Rabbitt's lawyer said Rabbitt had no comment.
One of the attractions of working at the Javits Center was a lucrative contract. In addition to making $23 an hour, workers got an additional $2.48 per hour for vacation pay, $3.71 for their pension, and $3.14 for health coverage. Then there was a retirement-insurance payment of $5.60 per hour. Brown has discovered that there is $7 million in this annuity fund, most of it for the 47 people on the seniority list.
Rabbitt at work
While Rabbitt was taking care of his friends at the Javits Center, Brown found that other members of the union were ignored. Members could not get copies of their contracts - if there were contracts. "Over 200 contracts had not been signed," he says.
Members of the union apparently didn't complain because of the threat of violence. Bob McDonnell, a business agent for the local, says a popular saying around the union hall was "Don't make waves." After Mr. McDonnell questioned some of the practices, he recalls one business agent asking him, "Do you want to end up dead?"
Such questions are not unheard of with the Teamsters. In his 1992 book "Which Side Are You On?," Thomas Geoghegan, a Chicago labor lawyer recounts how his clients, trying to reform the Teamsters, used to get beaten up.
"Many of the members are so scared, they can hardly talk, even when their wives, the night before, have written in longhand ... everything the men should say," wrote Mr. Geoghegan.
A month after Brown started running 807, the union held a general membership meeting. Nancy Stella, director of communications for the Teamsters International, was afraid there was going to be violence.
"The Rabbitts assured the members, 'Don't worry; we'll get our union back,'" recalls Ms. Stella. But Brown managed to keep the meeting free of violence.
Kudos for new stewards
Today, many of the members support the trusteeship. "It's the best thing that ever happened," says John Sullivan, a shop steward at Florence Building Materials in Huntington, N.Y.
He says the old officials used to settle for whatever management would give them. With the old Teamster negotiators, they received a 50 cent per hour wage increase over three years. Last December, the new negotiators won them an additional $3 per hour over five years.
One other sign that the new Trustees have won over the membership took place on April 11, when the local held its election for delegates to the International's annual meeting in Philadelphia.
The top four vote getters - who will represent the local - far outpolled some of the former officers. "The membership has sent a message - we don't want you guys back," says Brown.