OFFICE
OF THE INDEPENDENT HEARING OFFICER
LABORERS'
INTERNATIONAL UNION OF NORTH AMERICA
IN
THE MATTER OF: ) DOCKET NO.
)
ARTHUR
A. COIA ) 97-52D
ORDER
AND MEMORANDUM
This Order and Memorandum
addresses the disciplinary charges of November 6, 1997, as amended on March 23 and April 8, 1998, filed
by the Laborers’ International Union of North America (“LIUNA” or “International
Union”) General Executive Board Attorney (“GEB Attorney”) against Arthur A.
Coia (“Coia” or “Respondent Coia”), the International General President of
LIUNA.
I INTRODUCTION
The Independent Hearing Officer
(“IHO”) held a hearing which began on April 14, 1998 and ended on June 23,
1998. There were 22 hearing days. The transcripts from the hearing total over
5500 pages, and over 500 exhibits were submitted into evidence. Both the GEB Attorney and counsel for Coia
submitted post-hearing briefs on September 25, 1998 and post-hearing responsive
briefs on November 24, 1998.
Coia has been charged with sixteen
charges arising out of five separate subject categories which may be described
as follows: Coia’s Knowing Association with a Member of La Cosa Nostra’s
(“LCN”) New England Crime Family; Coia’s Role in the Trusteeship of Local 66;
Coia’s Role in the International Union’s Investigation of Ronald Fino’s
Allegations; Coia’s
1
Appointment of
John Serpico as Chairman of the GEB Hearings Panel; and Coia’s Dealings with
Viking Oldsmobile.
The incidents in question span the
time period from 1981 to the present and involve periods of Coia’s career from
his early involvement in LIUNA to his ascent to the offices of International
General Secretary-Treasurer and International General President.
In this matter, the GEB Attorney
has presented much evidence which is far outside the scope of the charges. The IHO has dealt with these occasions as
they arose and has made no blanket prohibitions.
General Legal Standards
The following standards apply to
the charges.
Barred Conduct
Pursuant to the LIUNA Ethics and
Disciplinary Procedures (“EDP”) and the LIUNA Ethical Practices Code (“EPC”),
union officers are prohibited from engaging in “barred conduct,” which is
defined to include --
a) committing any act of racketeering, as defined in
18 U.S.C. § 1961(1);
b) knowingly associating with any member or associate
of the organized crime syndicate known as La Cosa Nostra (LCN);
c) knowingly permitting any member or associate of the
LCN to exercise control or influence in the conduct of the affairs of the
Union; or
d) obstructing or interfering with the LIUNA Inspector
General, the GEB Attorney, or the Independent Hearing Officer . . . .
EDP, Section 1, Ethical Practices Code; EPC, Barred
Conduct.
Knowing Association with the
LCN and Permitting LCN Influence on the Union
According to the EDP and the EPC,
“knowing association” occurs when --
a) an individual knows that the person with whom he or
she is associating is a member or associate of the LCN;
b) the association relates directly or indirectly to
the affairs of the Union; and
c) the association is more than fleeting or casual.
EDP, Section 1, Ethical Practices Code; EPC, Barred
Conduct. See also In
the Matter of Rocco J. Napoli and Thomas Fallacara, IHO Order and
Memorandum, 96-65D at 5-6 ¶ 19 (September 25, 1997)(defining “knowing
association”).
Knowledge is established if an individual: (a) had actual knowledge that the person
with whom he was associating was an LCN member; (b) reasonably should have
known that the person with whom he was associating was an LCN member; or (c)
deliberately remained ignorant of facts that would demonstrate that the person
with whom he was associating was an LCN member. Fallacara, IHO 96-65D at 7.
The relationship to the affairs of
the union need not on its face affect the operation of the union; it need only
reflect that the “knowing association” permits undesirable individuals to have
easy access to the union officers and members in the total atmosphere of the
labor union operation. See In
the Matter of Trusteeship Proceeding Chicago Dist. Council, IHO Order and
Memorandum, 97-30T at 9 (February 7, 1998).
See also Fallacara, IHO 96-65D at 6 ¶ 20.
The GEB Attorney must also
demonstrate that the charged party’s association was “more than fleeting or
casual.” See generally United
States v. International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers
of Am., 824 F. Supp. 410, 414 (S.D.N.Y. 1993); United States v.
International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am.,
745 F. Supp. 908, 917-18 (S.D.N.Y. 1990), aff’d, 941 F.2d 1292 (2d Cir.
1991), cert. denied, 502 U.S. 1091 (1992)(contact that was
“knowing, purposeful and not fleeting” was enough to constitute “knowing
association”).
The EDP and EPC incorporate
certain exceptions to the definition of “knowing association” which are
contained in a Consent Decree entered in the case of United States v.
District Council of New York City and Vicinity of The United Bhd. of Carpenters
and Joiners of Am., No. 90 Civ. 5722 (CSH), 1993 WL 364443 at *3-4
(S.D.N.Y. 1993) (“the Carpenters’ Consent Decree”). Those exceptions would permit a LIUNA officer to —
1) Meet or communicate with a “barred person” who is
an employer to discuss the negotiation, execution or management of a collective
bargaining agreement, or a labor dispute, when the officer represents, seeks to
represent, or would admit to membership the employees of that employer.
2) Meet or communicate with a “barred person” who is a
representative of a labor organization to discuss union matters.
3) Meet or communicate with an officer, employee or
member of LIUNA and its constituent locals.
See id.
The Carpenters’ Consent Decree
also permits a “member” who holds no elected, appointed or salaried position in
the union, or any constituent local, to meet or communicate with “barred
persons regarding matters unrelated to the union or any constituent local.”[1] Id. at
4.
“A ‘barred person’ is (1) any
member or associate of any La Cosa Nostra crime family or any other criminal
group, or (2) any person prohibited from participating in Union affairs.” EDP, Appendix B.
Obstruction of the GEB Attorney
and Inspector General
The LIUNA Appellate Officer has
determined that in “obstruction” cases involving false testimony during
depositions, the GEB Attorney must show that the testimony was material and
would have impeded the Inspector General’s (“IG”) investigation by being
misleading and intentionally deceptive.
See In Re Martire, 1997 A.O. 81 (97-008D). In order for a statement to be considered
material, “the statement must have a ‘natural tendency to influence, or [be]
capable of influencing, the decision making body to which it was
addressed’.” United States v. Gaudin,
515 U.S. 506, 509 (1995), citing, Kungys v. United States, 485
U.S. 759, 770 (1988).
Title 29 U.S.C. § 501(a)
The GEB Attorney also cites the
following statutory provision in support of his claims:
The officers, agents, shop stewards, and other
representatives of a labor organization occupy positions of trust in relation
to such organization and its members as a group. It is, therefore, the duty of each such person, taking into
account the special problems and functions of a labor organization, to hold its
money and property solely for the benefit of the organization and its members
and to manage, invest, and expend the same in accordance with its constitution
and bylaws and any resolutions of the governing bodies adopted thereunder, to
refrain from dealing with such organization as an adverse party or in behalf of
an adverse party in any matter connected with his duties and from holding or
acquiring any pecuniary or personal interest which conflicts with the interests
of such organization, and to account to the organization for any profit
received by him in whatever capacity in connection with transactions conducted
by him or under his direction on behalf of the organization. A general exculpatory provision in the
constitution and bylaws of such a labor organization or a general exculpatory
resolution of a governing body purporting to relieve any
such person of liability for breach of the duties declared by this section
shall be void as against public policy.
29 U.S.C. § 501(a)(1959).
The IHO has determined that
section 501(a) was intended to prevent misuse of union funds and to forbid
union officials from receiving payments from third parties or making a private
profit from union contracts. Thus, the
statute pertains only to financial transactions. See In the Matter of Baker, IHO Order and
Memorandum, 97-55D at 13 (July 21, 1998).
See also, Guarnaccia v. Kenin, 234 F. Supp. 429,
442 (S.D.N.Y. 1964), aff’d sub nom. Gurton v. Arons, 339 F.2d 371 (2d
Cir. 1964) (ruling 29 U.S.C. § 501(a) not a catch-all for breaches of fiduciary
duty).
The Uniform Local Union
Constitution
Article III, Section 3(d) of the
LIUNA Uniform Local Union Constitution requires that all members refrain from
“interfering with the proper conduct of all the business of the
Organization.” Uniform Local Union
Constitution, Article III, Section 3(d).
In Baker, the IHO
determined that, in order to establish a violation of Article III, Section 3(d)
of the Constitution, the GEB Attorney must show that the charged member
committed a deliberate affirmative act which would constitute interference with
the proper conduct of union business. Baker,
IHO 97-55D at 11. Mere nonfeasance on
the part of the member is insufficient.
II. KNOWING ASSOCIATION WITH A MEMBER OF THE NEW
ENGLAND LCN
Charge I alleges:
Barred Conduct — Knowing Association with LCN
Member: From in or about 1981 until in
or about 1987, ARTHUR A. COIA knowingly associated with a member of the
Patriarca Family, Raymond Patriarca, Jr., in violation of the barred conduct
provisions of the LIUNA EDP and EPC.
Charge II alleges:[2]
Barred Conduct — Permitting LCN Influence: In or about 1987, ARTHUR A. COIA knowingly
permitted a member of the Patriarca Family, namely Raymond Patriarca, Jr., to
exercise control or influence over the conduct of Union affairs, to wit: at the behest of Raymond Patriarca, Jr.,
Coia assisted Nino Cucinotta in joining Local 271 and in receiving job
referrals, in violation of the barred conduct provisions of the LIUNA EDP and
EPC.
Charge III alleges:
Breaching Constitutional Duties of LIUNA Members and
Officers: In knowingly associating with
an LCN member and/or permitting him to influence Union affairs, as alleged more
specifically above in Charges I and II, ARTHUR A. COIA failed to honor his
obligation as a LIUNA member to refrain from interfering with the proper conduct
of LIUNA business, and breached his duty as an Executive Board member of Local
271 to see to it that the affairs and business of his Local Union were properly
conducted, in violation of Article III, Section 3(d) and Article IV, Section
4(H)(9) of the Uniform Local Union Constitution.
Chronology
The following chronology[3] is relevant to understanding the context of the above
charges:
•
In the late 1950s, at
the age of 13, Thomas Hillary (“Hillary”) met Raymond Patriarca, Jr.
(“Patriarca, Jr.”) in Providence, Rhode Island. Patriarca, Jr. is the son of Raymond Patriarca, Sr. (“Patriarca,
Sr.”), an LCN member.
•
Hillary dropped out of
school at age sixteen in order to spend his time at the Patriarca family
headquarters known as “the Office.”
•
Patriarca, Jr. married
in the mid 1960s and Patriarca, Sr. moved out of the Patriarca family
home. Thereafter, Hillary and
Patriarca, Sr. lived together in a one bedroom apartment.
•
Patriarca, Sr. went to
prison in 1969 and remained there until 1973.
•
In the early 1970s,
Hillary rendered some minor assistance to a political campaign in which Albert
Lepore, Jr. (“Lepore, Jr.”) was a candidate for Rhode Island State
Representative. Lepore, Jr. was Coia’s
law partner.
•
In 1974, Hillary moved
to Las Vegas, Nevada where he remained until 1980.
•
Hillary moved to Boston,
Massachusetts in 1980.
•
In 1981, Coia and his
father, Arthur E. Coia (“Coia, Sr.”), were indicted, along with Lepore, Jr. and
Patriarca, Sr. in Miami, Florida.
•
In 1982, Patriarca,
Sr.’s case was severed from the Florida prosecution and was transferred to the
District of Rhode Island due to his illness.
•
Antonino “Nino”
Cucinotta (“Cucinotta”) became Patriarca, Jr.’s driver in 1981 and continued in
that role until approximately 1986.
•
Between 1981 and 1984,
Patriarca, Jr., on behalf of his father, visited Coia’s law office, Coia &
Lepore, to meet with defense attorneys working on the case in Florida.
•
Sometime between 1981
and 1984, Coia and Patriarca, Jr. attempted to breed one of Coia’s champion
male Rottweilers with one of Patriarca, Jr.’s champion female Rottweilers at
Coia’s kennel, Southwind Farms, in Rehoboth, Massachusetts.
•
Patriarca, Sr. died in
1984.
•
The case in Florida was
dismissed against Coia and the other defendants in December of 1984.
•
Hillary moved to Palm
Springs, California in 1985.
•
Hillary returned to
Boston in 1988.
Introduction
Charges I and III are based upon the following three
alleged incidents:
•
Patriarca, Jr. visited
Coia’s law firm, Coia & Lepore, between July of 1984 and April of 1986.
•
Coia allegedly
represented Patriaria, Jr. in a legal matter.
•
In 1982 or 1983,
Patriarca, Jr. attempted to breed his champion female Rottweiler with Coia’s
champion male Rottweiler at Coia’s kennel, Southwind Farms.
The GEB Attorney alleges that Coia
knowingly associated with Patriarca, Jr., a member of the LCN, from 1981
through 1987, in violation of the EPC, EDP and the LIUNA International Union
Constitution (“International Constitution”).
In addition, the GEB Attorney
alleges certain other incidents which occurred outside of this 1981 to 1987
time period. These incidents are:
•
In the early 1970s, Coia
participated in his law partner’s campaign for a seat in the Rhode Island State
Legislature and, during this campaign, an LCN member assisted with one of the
campaign’s advertising projects.
•
In the late 1980s, Coia
and Patriarca, Jr. allegedly had a brief conversation on a construction site in
Rhode Island.
•
In 1990, Coia allegedly
had a conversation with Hillary regarding a young man who was engaged to Coia’s
daughter.
In his opening statement on April
14, 1998, the GEB Attorney asserted that the core of the evidence on Charges I
through III would come from the testimony of Cucinotta, but that the context of
the charges -- the “relationship” between the Patriarca family and the Coia
family -- would come from Hillary.
Transcript (“Tr.”) 11. The GEB
Attorney further asserted that, “[A]t every point of tangency between Tommy
Hillary and Nino Cucinotta, Mr. Hillary [would] confirm Mr. Cucinotta in every
significant respect.” Tr. 15.
As demonstrated below, Hillary
failed to corroborate Cucinotta on any material point.
In his post-hearing briefs, the GEB Attorney informed
the IHO that Cucinotta was not credible on some points. GEB Attorney Response Brief (“GEB Resp.
Br.”) at 2. He specifically abandoned
his reliance on Cucinotta and conceded that “Cucinotta’s testimony should be
credited only in certain respects” but not all respects as originally
intended. See id.
(emphasisadded). The GEB Attorney
failed to identify what those “certain respects” were other than to say that
Cucinotta’s description of the inside of Coia & Lepore was extremely
detailed. Id. at 5. The GEB Attorney also dropped Charge II,
which was based on Cucinotta’s testimony. GEB Br. at 52 n.2. The evidentiary effect of these concessions
will be discussed, infra at ¶¶ 63-4.
Findings of Fact
The Hillary Allegations
History/Background
21907540.
Coia has been a member
of LIUNA since 1957. General Executive
Board Attorney Exhibit (“GEB Ex.”) 200, Tab B at 7. During the time period of 1981 through 1987, Coia served as LIUNA’s
Assistant Regional Manager for the New England Region, the Business Manager for
the Rhode Island Laborers’ District Council and the Vice President of Local
271. GEB Ex. 200, Tab B at 7-8, Tab E
at 31-32. He and Lepore, Jr. were also
partners during this same time period in the law firm of Coia & Lepore
located in Providence, Rhode Island. Tr. 4804.
21907541.
Hillary became friends
with Patriarca, Jr. in the late 1950s, when they were both 13 years old. Tr. 394-95.
21907542.
Hillary also knew
Patriarca, Sr. very well and regularly visited the Patriarca home. Tr.
397-98. Patriarca, Sr. grew to like
Hillary and confided in him. Tr. at
397.
21907543.
Hillary quit school in
the early 1960s when he was 16 years old and moved into the Patriarca home in
Providence. Tr. 397. Patriarca, Sr. told Hillary that he was
having trouble with “the Feds” and asked him to take care of his wife who was
dying of cancer. Tr. 399-400. Hillary took care of Mrs. Patriarca every
day until she died in the mid 1960s.
Tr. 400. He went to her funeral
in the Patriarca family car. Tr. 401.
In the mid 1960s, Hillary was the best man for
Patriarca, Jr. at his wedding. Tr. 401.
When
Patriarca, Jr. married, his father moved out of the family home and turned it
over to Patriarca, Jr. and his new wife.
Tr. 401-02. Hillary and Patriarca,
Sr. then moved into a one bedroom apartment, where they lived together for
about a year. Tr. 402-03.
21907544.
Hillary, who is currently in the Federal
Witness Protection Program, testified herein on April 15 and 16, 1998. Tr. 382-825. The GEB Attorney asserted in his opening statement that Hillary
was called as a witness for two purposes:
to establish the “context” of the Patriarca-Coia connection and to
corroborate Cucinotta’s testimony. Tr.
11-15.
21907545.
Patriarca, Sr. was the Boss, or the head, of
the New England LCN family[4] and conducted his illicit mob operations from the
premises of his family business, Coin-o-matic Distributers, National Cigarette
Service (“Coin-o-matic”) located on Atwells Avenue in Providence, Rhode
Island. Tr. 404. The family referred to the Coin-o-matic
location as “the Office.” Id. Hillary and Patriarca, Jr. frequented “the
Office” whenever they were not in school.
Tr. 397.
21907546.
Hillary was at “the Office” every day from
the early 1960s until Patriarca, Sr. went to jail in 1969. Tr. 404-05.
21907547.
Hillary testified that Patriarca, Sr. and
Coia, Sr. were good friends, and he saw Coia, Sr. at “the Office” on a regular
basis. Tr. 411-12.
21907548.
The GEB Attorney portrayed Hillary as a
person with knowledge of the inner workings of the Patriarca family, its
members and associates. He
characterized Hillary as a “surrogate son to Raymond Patriarca, Sr. and . .
.very well the son that Raymond Patriarca, Sr., wished he had had.” Tr. 12.
21907549.
Hillary’s testimony was
offered to show Coia’s purported connection with Patriarca, Jr. and he
testified to three events which, according to the GEB Attorney, demonstrated
this illicit association. Those events
are set out below.
Coia’s Association with Hillary
During Lepore, Jr.’s Campaign
21907550.
Hillary testified that,
in the early 1970s, Lepore, Jr., Coia’s law partner, ran for a seat in the
Rhode Island State Legislature. Tr.
441, 657, 717-31.
21907551.
Lepore, Jr. had
participated in Rhode Island politics for a number of years prior to this campaign. Tr. 3736-37.
21907552.
Hillary testified that
his contribution to the campaign consisted of renting a trolley and driving it around Providence as a means
to promote Lepore, Jr.’s candidacy. Tr.
451-53, 724, 729.
21907553.
Hillary stated that he
saw Coia “around” during the campaign but no testimony was offered as to what
activity Coia performed during the campaign.
Tr. 453.
21907554.
The GEB Attorney
concedes in his responsive brief that there was “nothing sinister” about
Hillary’s supposed contact with Coia during Lepore’s political campaign. See GEB Resp. Br. at 3.
21907555.
The conclusion one is to draw from these
facts is unclear. It appears the GEB
Attorney is alleging some connection between Coia and Patriarca, Jr. due to the
fact that Hillary had some minor participation in the same political campaign
as Coia. Aside from this vague
suggested connection, Hillary’s testimony on this matter was sharply
contradicted on all major points, including the year of the campaign and who
the candidate was. Tr. 730-31. There was no evidence that Coia and Hillary
actually met or spoke during the campaign.
21907556.
The fact that Coia
and Hillary may have had some unspecified contact during a political campaign
in the early 1970s carries little, if any, weight in the factual determination
of this matter.
The Kendall Estates Incident
21907557.
In 1988, Hillary
returned to New England after a three year absence. Tr. 465-66.
21907558.
Hillary testified that,
sometime in the late 1980s, he was with Patriarca, Jr. at Kendall Estates,
which was a housing development Patriarca, Jr. was building outside of
Providence, Rhode Island. Tr. 468-70,
656, 697.
21907559.
While at Kendall
Estates, Hillary testified that he saw a car operated by Coia drive onto the
site and that Patriarca, Jr. allegedly approached the vehicle and spoke briefly
to Coia, before the car drove
away. Tr. 698-701.
21907560.
At the time in question,
Hillary had not seen Coia in approximately fifteen years and could not explain
how he identified him as the driver.
Tr. 701, 708-09. The record
further reflects that Hillary --
•
was unable to provide
any distinguishing characteristics about the driver;
•
heard none of the
conversation involved;
•
did not discuss the
matter with Patriarca, Jr. after the car departed;
•
could not remember
whether anyone else was in the car at the time; and
•
could not remember what
kind of car it was.
Tr. 699-700; 708-09.
21907561.
Hillary stated that this
incident at Kendall Estates was the only time he saw Coia with Patriarca,
Jr. Tr. 656.
21907562.
Hillary’s testimony
concerning the Kendall Estates incident carries little, if any, weight in the
factual determination of this matter.
The Union House Incident
21907563.
During the late 1980s, Philip Ottavianni, Jr.
(“Ottavianni, Jr.”) was a LIUNA International Representative and his family
owned the Union House Restaurant located in the same building as the
Massachusetts District Council. Tr.
473, 736. Ottavianni, Jr., was also
engaged to marry Coia’s daughter. Tr.
732-33.
21907564.
Hillary testified that,
during an evening in 1989 or 1990, he was in the bar of the Union House when he
encountered Coia, whom he had not seen in approximately fifteen years.[5] Tr.
476-77. Ottavianni, Jr. was also
present in another area of the bar. Tr.
476.
21907565.
Hillary told Coia that
he had “taken over” the Framingham area and Coia’s response was “good.” Tr.
478.
21907566.
Coia allegedly asked Hillary
about the reputation of Ottavianni, Jr. and was told that the young man was
financially indebted to many people and that he was involved in gambling and
drug usage. Tr. 478-79.
21907567.
The entire conversation
between Hillary and Coia in the bar at the Union House lasted only a few
minutes. Tr. 478-79.
21907568.
From this short
conversation between Hillary and Coia, the GEB Attorney argues that 1) Coia had
knowledge of Hillary’s mob connections and 2) Coia had sought the advice of a
mob figure. The GEB Attorney further
asserts that Hillary’s testimony shows that Coia was “part of an overall
network of quid pro quos, of favors, of back scratching” between Coia and the
LCN. Tr. 15-16.
21907569.
Even if this event took
place, the conversation between Hillary and Coia is hardly indicative of an
LCN-related encounter in which favors were exchanged.
21907570.
Hillary’s comment that
he had “taken over” the Framingham area, and Coia’s alleged response of “good,”
is meaningless in this context. There
is no evidence to give it a sinister connotation.
21907571.
The IHO does not find
Hillary’s testimony concerning this incident to be indicative of any
relationship between Coia and the LCN, nor does such testimony establish any
association between Coia and any organized crime associate or element.
Coia’s Meetings With Patriarca,
Jr. at the Offices of Coia & Lepore
Meetings During the Time Period
From 1981 Through 1984
21907572.
In September of 1981,
Coia was indicted along with his father, Lepore Jr. and Patriarca, Sr. in United
States v. Coia, No. 81-417-CR-JLK (S.D. Fla.) (the “Hauser case”).[6] See
Respondent’s Exhibit (“R. Ex.”) 32.
21907573.
Coia and Lepore, Jr.
were indicted for allegedly accepting a $30,000 legal fee from a Florida
insurance company as a ruse to transfer a bribe from that company to Coia, Sr.
who, at the time, was LIUNA’s General-Secretary Treasurer. Tr. 4809.
21907574.
Due to his illness, Patriarca, Sr.’s case was
severed and was transferred to the District of Rhode Island in February or
March of 1982. See R. Ex. 32,
32A.
21907575.
Attorneys for the
defendants in the Hauser case held joint defense meetings at the law offices of
Coia & Lepore. Tr. 3752, 3994-95,
4550. Patriarca, Jr. attended these
meetings on behalf of his father who was ill and unable to attend. Tr. 4815.
Coia met Patriarca, Jr. for the first time at these meetings. Tr. 4813.
21907576.
The Hauser case was
dismissed in December of 1984 on a Rule 29 motion at the end of the
government’s case. R. Ex. 124 at 2716-17.
21907577.
The GEB Attorney
concedes that Coia, as a defendant in a criminal matter, could properly
associate with Patriarca, Jr. for the purposes of the joint defense meetings
held at Coia & Lepore. See
GEB Br. at 58.
21907578.
The IHO finds that
Coia’s meetings with Patriarca, Jr. at Coia & Lepore for purposes of the
joint defense were not an association amounting to “barred conduct.”
Meetings Between 1984 and 1987
21907579.
The GEB Attorney further
argues that Coia and Patriarca, Jr. continued to meet after the Hauser case was
resolved and that, during this time period, Coia performed legal work for
Patriarca, Jr. GEB Br. at 57. These alleged meetings, he contends, were
“barred conduct.”
21907580.
The GEB Attorney
attempted to prove that these alleged meetings occurred through Cucinotta’s
testimony. Tr. 19.
21907581.
Cucinotta, who is
currently incarcerated and in the Federal Witness Protection Program, testified
herein on April 16 and 17, 1998. Tr.
839-1059.
21907582.
Cucinotta testified that
he was Patriarca, Jr.’s driver for approximately five years and that he drove
Patriarca, Jr. to the offices of Coia & Lepore two to four times a week for
a period of two years from July of 1984, after Patriarca, Sr. died, until April
of 1986. Tr. 875-76 (testifying that he
drove for Patriarca, Jr.), Tr. 884-86 (testifying that he drove Patriarca, Jr.
to Coia & Lepore), Tr. 963-65 (indicating dates he drove Patriarca, Jr. to
Coia & Lepore). See also
R. Ex. 49. Cucinotta stated that he
waited for Patriarca, Jr. inside the law offices and, while waiting, he spoke
briefly to the secretaries and often fell asleep in a chair near where the
secretaries were working. Tr. 885-86,
965.
21907583.
Cucinotta was born on
January 1, 1942 in Sicily. Tr.
839-40. He has a fifth grade education
and began work as a butcher when he was eight years old. Tr. 840-01.
In 1961, when he was 19 years of age, he came to the United States and
continued to work as a butcher. Tr.
841.
21907584.
Cucinotta met the
Patriarcas for the first time in 1975.
Tr. 846-47. He knew the
Patriarcas were mobsters, but began spending time at the Coin-o-matic in order
to make money. Tr. 846-49. He sold sandwiches, coffee and sodas at the
Bradford Club, located above the Coin-o-matic, and Patriarca, Jr. gave him a cut
of the money that was collected from card games played there. Tr. 848-49.
21907585.
In 1994, Special Agent
William Shay of the Federal Bureau of Investigation (“FBI”) reported to the
local police that “Cucinotta was brought over from Italy years ago to do a hit
for [the] Patriarca [family], and after the hit he became a made man and
[Patriarca’s, Jr.’s] driver.” R. Ex. 45
at 2. This same story was told by Shay
to Luigi Reali (“Reali”), a former Rhode Island State Trooper, who testified
herein. Tr. 4278.
21907586.
During the more subdued
portions of Cucinotta’s testimony, he attempted to portray himself as a
reluctant mob member and a gentleman gangster who ended up in the LCN by
accident. When asked if he spoke to a
certain secretary at Coia & Lepore, he said, “I just show all kind of
respect to any lady.” Tr. 966.
21907587.
Cucinotta related an
incident that took place in either 1975 or 1976, in which Patriarca, Jr. told
him to go to a restaurant and tell a man named Johnny Carr (“Carr”) that Jackie
Sisilini (“Sisilini”) wanted to see him in his office. Tr. 849-50.
Cucinotta delivered this message and Carr was killed when he went to the
location. Later, when discussing Carr’s
murder, Cucinotta was told “another guy went to California” (had been murdered)
by Sisilini, Billy “Blackjack” DelSanto and Frankie “Bo Bo” Maurapisi. Tr. 853-56.
Cucinotta claimed that he had no idea Carr was being set up for the hit
when he delivered the message. Tr.
857. The IHO finds this statement not
credible.
21907588.
Cucinotta stated that,
after this incident, he felt afraid and he came to realize that he was getting
involved in the mob. Tr. 857-58. The IHO finds this statement not credible as
well.
21907589.
Cucinotta was inducted
into the LCN during a formal ceremony in October of 1977. Tr. 861-66.
He testified, however, that he was unaware the ceremony would take
place; he was simply called to a meeting and, once there, found out that he was
to be inducted. See id.
The IHO does not find credible Cucinotta’s testimony that he was inducted into
the LCN by surprise.
21907590.
In 1988, Cucinotta
sustained a head injury which apparently caused the onslaught of certain
psychiatric problems which remain to this day.
Tr. 920-21 (describing head injury).
In fact, he stated at the hearing herein that his “head [was] not right”
and that it had not been right since 1988.
Tr. 993-1000.
21907591.
Cucinotta admitted he
has a history of psychiatric problems consisting of depression, feelings of
hopelessness, suicidal tendencies, anxiety attacks, persistent headaches and
difficulty with concentration. Tr.
993-1000; R. Ex. 48. These conditions
are corroborated by medical records from the Rhode Island Workers’ Compensation
Board. Id.
21907592.
Cucinotta began
suffering from depression in 1989 and once admitted to a doctor that he felt
like going to the highest bridge and jumping.
Tr. 993-1000. He has
contemplated suicide and often breaks down and cries. (He broke down at least twice on the witness stand in this
case). See id. Cucinotta testified that he sometimes became
so confused while driving his car that he was unable to find his way home. Tr. 996.
When this happened, he would park the car “and just stay there and break
down and cry.” Id.
21907593.
When questioning Cucinotta
about his criminal history, the GEB Attorney asked him if he had committed a
double murder on April 1, 1994. Tr.
922.
21907594.
Cucinotta described the
night he committed the double murders of Ronald Capola (“Capola”) and Peter
Scarpallini (“Scarpallini”) in shocking detail. His narrative reminded one of an actor performing the
Stanislavsky method of using mental recall of past experience to portray the
present. The drama with which he
related the story of the night he murdered the two men was chilling. He had clearly removed himself from reality
and then recounted the murders as though they had happened only moments
before. As he stood in the witness box,
the story flowed from him with mixed emotions of intense anger, sadness,
regret, bitterness and defeat and, once he began to speak, he was not to be
stopped until his confession was complete.
Tr. 923-37.
21907595.
Cucinotta’s testimony
about the murders is summarized as follows:
On April 1, 1994, he was at the St. Mary’s social club in Johnston, Rhode
Island with his close friend Nicky Leonardo, whom he referred to as
“Nicole.” Tr. 925. Capola, whom Cucinotta referred to as a long
time “close friend,” was also at the club.
Tr. 926. Cucinotta testified
that he was getting a beer from behind the bar when he was interrupted by
Scarpallini who told him that Capola no longer wanted him in the club. Tr. 929.
This infuriated Cucinotta. He
left the club, retrieved a handgun, then returned and shot Capola and
Scarpallini to death. Tr. 929-37.
21907596.
On May 2, 1995,
Cucinotta pled guilty to second degree murder for the Capola and Scarpallini
killings. R. Ex. 46-47. He was sentenced to an aggregate term of 120
years in prison. Id.
21907597.
After Cucinotta finished his testimony
concerning the murders, the IHO put the following statement on the record:
[D]uring the last 10 minutes of this testimony,
[Cucinotta] was standing and it is my impression that he was very emotional,
his voice broke a number of times. He
did not sit and was extraordinarily agitated, and I think the record ought to
reflect that the testimony was not in a peaceful manner. He stood up and was extremely agitated,
gestured a lot and hammered the table and broke down several times.
Tr. 943-44.
21907598.
In December of 1994, as
part of a plea agreement, Cucinotta was scheduled to testify at the sentencing
hearing in a federal criminal case involving Patriarca, Jr. Prior to that hearing in October of 1994,
the trial Judge examined him for two days in camera and the transcripts
of that examination remain under seal.
R. Ex. 36. In a published
opinion, however, United States District Court Judge Wolf stated that,
“Cucinotta, while competent for the purpose of deciding whether to cooperate
with the government, was emotionally very fragile and plainly vulnerable to
being effectively impeached.” United
States v. Patriarca, 912 F. Supp. 596, 630 (D. Mass. 1995). See R. Ex. 37. Cucinotta did not testify at the sentencing
hearing.
21907599.
When questioned about a cooperation agreement
into which he had entered with the government in the Patriarca, Jr. matter and
his concomitant motions for sentence reduction, Cucinotta denied having any
knowledge of them. Tr. 1003-04,
1017-18; R. Ex. 39, 41, 42. He tried to
explain that “I got the fifth grade [education]. . . . I know how to just read
and write in Italian. . . . I don’t know how to read and write in
English.” Tr. 1004. When pressed further about the existence of
his 1995 motion for sentence reduction, he stated “They didn’t make no deal
with me. . . I don’t know. I don’t know
if yes, if not, I don’t know.” Tr.
1018.
21907600.
In his responsive brief,
the GEB Attorney candidly concedes that Cucinotta’s evidence does not establish
“the frequency of meetings” between Coia and Patriarca, Jr. GEB Resp. Br. at 2 n.1. This concession should be considered with the
GEB Attorney’s dismissal of Charge II.
Cucinotta’s testimony was to be the evidence to support that charge
also. Cucinotta’s bizarre performance
on the witness stand and his severe psychiatric problems, in combination with
the GEB Attorney’s concession and his dismissal of Charge II, leads to the
conclusion that, as a witness, Cucinotta is not credible.
21907601.
Cucinotta’s testimony
was contradicted by additional credible evidence, including:
•
The FBI surveillance files
of Patriarca, Jr. at Coia & Lepore;
•
The testimony of former
Rhode Island State Trooper Reali;
•
The testimony of certain
former secretaries at Coia & Lepore;
•
The testimony of Armand
Sabitoni (“Sabitoni”); and,
•
The IHO’s site visit to
the offices of Coia & Lepore.
These will be discussed seriatim.
The FBI Surveillance Files
21907602.
On April 16, 1998, counsel for Coia received
a letter from Assistant United States Attorney Craig Oswald regarding a review
of the FBI surveillance files of Patriarca, Jr. GEB Ex. 7.
21907603.
The FBI surveillance
files produced by the Department of Justice (“DOJ”) reveal that Patriarca, Jr.
was seen at the offices of Coia & Lepore on only four occasions: March 3, 1982, June 2, 1982, June 7, 1982
and June 9, 1982.[7] R. Ex.
33.
Luigi Reali
21907604.
Reali has been the
Director of Security for LIUNA since July 1, 1995. Tr. 4208-09. Although he
often works as Coia’s bodyguard, his testimony was independently corroborated by
at least six other witnesses, as well as other credible evidence. The IHO finds Reali’s testimony to be
credible.
21907605.
Reali was a member of
the Rhode Island State Police for 18 years from 1971 through 1989 and was a
member of the department’s organized crime intelligence unit from 1983 until
his retirement in 1989. Tr.
4209-11.
21907606.
From January of 1985
through May of 1985, Reali was the head of a squad detailed to surveil
Patriarca, Jr.’s movements 24 hours a day, 7 days a week. Tr. 4213.
This surveillance was later scaled back to the daylight hours from May
of 1985 though September of 1985. Tr.
4215-16.
21907607.
Reali testified that
neither he nor his squad ever saw Patriarca, Jr. at the law firm of Coia &
Lepore during this surveillance and never saw Patriarca, Jr. meet with
Coia. Tr. 4215.
21907608.
In January of 1986, a
task force created among the Rhode Island State Police, the FBI, and the
Providence Police placed a listening device, “a bug,” in Patriarca, Jr.’s car. Tr.
4219. The bug was placed in the vehicle
in January of 1986 and it required continuing surveillance of Patriarca, Jr.’s
car. Tr. 4220-21.
21907609.
Reali stated that the
Rhode Island State Police worked closely with the FBI on a daily basis from
September of 1985 through 1986 and that he was unaware of any sightings of
Patriarca, Jr. visiting Coia & Lepore or any contact between Coia and
Patriarca, Jr. during this time. Tr.
4224-25, 4285-86.
21907610.
In response to a Court
Order, the legal counsel to the Rhode Island State Police sent Coia a letter
which stated,
. . . please be advised that the Rhode Island State
Police files specifically relating to Arthur A. Coia, Arthur E. Coia, Raymond
Patriarca, Jr. or the Laborers International Union of North America covering
the period 1984 to 1986 do not contain any documents that would tend to indicate
that Patriarca, Jr. visited several times per week for many weeks with Arthur
A. Coia or at the Arthur E. Coia building at 226 South Main Street, Providence,
Rhode Island.
R. Ex. 363.
21907611.
Affidavits were
submitted herein by Richard Tamburini, the head of the Providence Police
Department’s Organized Crime Division from 1981 to 1988 and the current Chief
of Police in Johnston, Rhode Island, and John Scuncio, a former member of the
Rhode Island State Police Intelligence Unit and currently the Chief of Police
in Hopkington, Rhode Island. R. Ex.
364, 365. The affidavits indicate that
they have no knowledge of any association between Coia and Patriarca, Jr. or
that any regular meetings between Coia and Patriarca, Jr. took place at Coia
& Lepore or elsewhere from 1984 through 1986. See id. The
IHO credits these affidavits.
The Former Secretaries of Coia
& Lepore
21907612.
Nancy R. Hermiz
(“Hermiz”), Lisa Aceto (“Aceto”), Linda Moretti (“Moretti), Anna Menna
(“Menna”), and Ramona Santos (“Santos”) testified herein on June 10-11, 1998 in
Providence, Rhode Island.
21907613.
They were employed by
Coia & Lepore in the following capacities:
Hermiz Full-time Secretary June, 1975-April, 1986
Aceto Full-time Secretary April, 1981-1983
Moretti Full-time Secretary 1977-1986
Menna Full-time Secretary 1981-June, 1986
Santos Receptionist then September, 1983-March,
1998
Full-time
Secretary
Tr. 4091, 4115-16, 4151, 4184, 4207.
21907614.
Menna, Hermiz, Aceto,
and Moretti all remembered the Hauser case and recalled that the defense
attorneys visited Coia & Lepore to prepare for the trial. Tr. 4115-16 (Aceto recollecting Hauser
case); Tr. 4091 (Hermiz recollecting Hauser case); Tr. 4151 (Moretti
recollecting Hauser case); Tr. 4184 (Menna recollecting Hauser case).
21907615.
Hermiz saw Patriarca,
Jr. at Coia & Lepore two or three times prior to, but never after, August
of 1984. Tr. 4093.
21907616.
Moretti testified that
she may have seen Patriarca, Jr. at Coia & Lepore six or seven times prior
to, but not after, August of 1984. Tr.
4152-53.
21907617.
Menna stated that Patriarca, Jr. visited Coia
& Lepore five or six times prior to, but not after, August of 1984. Tr. 4186-87.
21907618.
Aceto, Moretti and Menna
recalled that Patriarca, Jr. was always accompanied to Coia & Lepore by
Cucinotta. Tr. 4126 (Aceto testifying
to Cucinotta’s presence with Patriarca, Jr.), 4154 (Moretti testifying to
Cucinotta’s presence with Patriarca, Jr.), 4188 (Menna testifying to
Cucinotta’s presence with Patriarca, Jr.).
21907619.
Santos was a
receptionist from September of 1983 until March of 1984 when she became a
full-time secretary. Tr. 4204-05. After March of 1984, her desk was located in
the common area of the office space.
She testified that she never saw Patriarca, Jr. at Coia & Lepore and
that she would have noticed him at the office had he visited. Tr. 4206-07. See R. Ex. 359 (map of office).
21907620.
Although all five women
are former employees of Coia, they corroborated one another, and their
testimony is consistent with other credible evidence herein. As such, the IHO finds them to be credible
witnesses.
Armand Sabitoni
21907621.
Sabitoni, International
Vice President and New England Regional Manager, testified herein on June 2-3,
1998 in Washington, D.C. Tr. 3727-4049.
21907622.
Sabitoni was an
associate attorney at Coia & Lepore in the early 1980s and became a partner
in August of 1986. Tr. 3731.
21907623.
Sabitoni testified that
he recalled the Hauser case and the joint defense meetings that were held at
Coia & Lepore. Tr. 3750
(recollecting Hauser case); Tr. 3752 (recollecting defense meetings). He was present at the firm during one of
these meetings and learned from the secretaries that there had been
others. Tr. 3752-55.
21907624.
During the 1980s,
Sabitoni spoke with Coia several times a day since their offices were only
about 30 feet apart, and he would have known if Patriarca, Jr. had been a
regular visitor to the firm. Tr.
3762-70, 3816-18. Sabitoni stated that
between August of 1984 and April of 1986, Patriarca, Jr. did not visit Coia
& Lepore. Tr. 3769.
21907625.
Although Sabitoni now
works closely with Coia as an International Vice President, and has had a
personal friendship with him for many years, his testimony is corroborated by
Reali, the five former secretaries of Coia & Lepore, and the FBI
surveillance files. The IHO finds his
testimony to be credible.
The IHO’s Site Visit to Coia
& Lepore
21907626.
On June 10, 1998, the
IHO and all counsel made a site visit to the law firm of Coia &
Lepore. Tr. 4173-78. The firm’s office suite consists of a
reception area and a separate office enclave in which the individual attorney’s
offices open onto a central area containing the secretaries’ cubicles. These cubicles are approximately four feet
high and a secretary seated behind one could easily see the entire office
space.
21907627.
If Cucinotta sat in the
inner office area which he described, he would have been plainly visible to
everyone in the office. The room is
such that any person passing through would be seen by all of the secretaries. Sabitoni stated during the site visit that the
center office space was “wide open” in the early 1980s because only four
secretaries cubicles were there at the time, rather than the six currently
there. Tr. 4172-73. Sabitoni also stated that the area was not
as congested then as it was during the IHO’s site visit. Tr. 4174.
21907628.
Based upon the site
visit, the IHO finds that Patriarca, Jr. could not have visited Coia &
Lepore on a regular basis without the secretaries and other attorneys in the
office being aware of it. As such,
their testimony is inconsistent with Cucinotta regarding the frequency of
meetings both prior to and after 1984.
21907629.
The IHO places no weight
on Cucinotta’s testimony and credits the testimony of the office personnel and
the other sources of information.
Legal Work Performed by Coia
& Lepore for Patriarca, Jr.
21907630.
The GEB Attorney alleges
that Coia performed legal work for Patriarca, Jr. and, indeed, it appears that
Coia & Lepore incorporated one of Patriarca, Jr.’s companies. Tr. 4855-58; GEB Ex. 213. When asked about this work, James Lepore,
another attorney in the firm, stated that the matter comprised only five or six
hours of billable time. GEB Ex. 213; R.
Ex. 389. The invoice sent to Patriarca,
Jr. for this work was in the amount of $711.85 and it reflected that the
services and costs involved were: the
incorporation of a business, filing fees, a corporate kit, and the preparation
of the annual report and minutes. GEB
Ex. 213, R. Ex. 389.
21907631.
Coia testified that he
never worked on the file and that he only learned of its existence when he was
preparing for one of his depositions in this case. Tr. 4855-56.
21907632.
The IHO does not find
the evidence of any legal work performed by the law firm probative as to a
“business relationship” between Coia and Patriarca, Jr. or to Coia’s alleged
relationship with the LCN.
Coia’s Association with
Patriarca, Jr. and the Rottweiler Breeding
21907633.
From the early 1980s
until either 1990 or 1991, Coia and his wife owned a dog breeding kennel known
as Southwind Farms. R. Ex. 369. This facility had been recognized by the
American Kennel Association and was renowned for producing champion
Rottweilers. Tr. 4823, 4827. See R. Ex. 369-377A-C.
21907634.
Coia testified that,
during the preparation of the joint defense in the Hauser case, Patriarca, Jr.
saw pictures of Coia’s champion Rottweilers in his office at Coia &
Lepore. Tr. 4850. Patriarca, Jr. was also a Rottweiler
enthusiast and he sent one of his own dogs to be bred at Southwind Farms in
1982 or 1983. Tr. 4852-53. Coia’s wife and a dog handler conducted the
breeding, which was unsuccessful. Tr.
4854.
There is no indication that Coia
had any contact with Patriarca, Jr. during the course of the breeding.
Patriarca, Jr.’s FBI 302
Statement
21907635.
An FBI report (commonly
known as a “FBI 302") of an interview, given by Patriarca, Jr. to the FBI
on August 8, 1996, (the “Patriarca 302"), was offered into evidence during
the hearing. R. Ex. 49A. The Patriarca 302 was made available to Coia
by the DOJ.
21907636.
The Patriarca 302
contains the following language
. . . [although] Coia, Sr. and [Patriarca, Jr.’s]
father had a long term business relationship, he never had such a relationship
with Arthur A. Coia. Patriarca added
that ‘no one who reports to him [Patriarca, Jr.] has any such relationship to Arthur
A. Coia’, and added that ‘Arthur [A. Coia] does not have the balls to be a
gangster.
R. Ex. 49A.
Discussion
A complicating factor in
determining Charges I and III is the relationship between Coia, Sr. and
Patriarca, Sr. It is a factual element which
confuses the analysis of the charges.
In this proceeding and others heard by the IHO, there was testimony that
Coia, Sr. had a relationship with Patriarca, Sr. as well as other LCN members
across the country.[8] Some allegations are credible, others are patently
incorrect. Coia, Sr. died in March of
1993, and no issue regarding his activities has been presented to the IHO for a
determination. Nevertheless,
allegations of certain acts or relationships of Coia, Sr., correct or
incorrect, are necessarily present in the chronology of this and other cases.
The problem for the fact finder
with the background presence of Coia, Sr. is that events are often described
with him being the actor, with an inference that his son, who was also in the union
hierarchy at the time, shared responsibility or knowledge of them. Indeed, the GEB Attorney often makes the
statement that Coia was “the son of a legendary Rhode Island labor leader
within LIUNA and himself an heir apparent for high office within LIUNA.” GEB Br. at 58-59. See GEB Resp. Br. at 6.
Another example of this appears in the testimony of Hillary and
Cucinotta, both of whom stated that persons were sent to Local 271 by the
Patriarcas to obtain jobs and that, allegedly, Coia, Sr. made the arrangements. No witness, however, implicated Respondent
Coia in obtaining jobs for them at Local 271 and, indeed, the GEB Attorney
abandoned this allegation. In reading
the transcript, however, the questioning by the GEB Attorney of certain
witnesses implied that Respondent Coia was deeply involved in arranging jobs
for Patriarca family members and associates merely by invoking the name Coia,
Sr.
The GEB Attorney’s position on
Patriarca, Jr.’s visits to Coia & Lepore should be viewed in a historical
spectrum. At the outset, the GEB
Attorney contended in his opening statement that Coia met regularly with
Patriarca, Jr. from 1984 through 1987 at Coia & Lepore. These meetings were to be proven by
Cucinotta and then corroborated by Hillary although Hillary had no firsthand
knowledge of these matters. The GEB
Attorney said that the core of the evidence would be from Cucinotta and Hillary
would confirm Cucinotta in every significant respect. Tr. 11, 15.
Both parties agree there were
visits to Coia & Lepore by Patriarca, Jr. during the pendency of the Hauser
case. The problem arose that Cucinotta,
perhaps out of simple mistake, perhaps out of his desire to testify somewhere
in order to obtain a sentencing reduction, or perhaps a combination of both,
testified that the visits continued for far beyond the period of time that any
other witness recalled. As determined
above, this testimony runs contrary to the surveillance evidence, witness
testimony, and common sense.
Moreover, Cucinotta’s bizarre performance
on the witness stand, and his impeachment during cross examination, caused the
GEB Attorney to distance himself from him.
In fact, the GEB Attorney stated in his post-hearing brief that the
evidence did not establish .” . . the frequency of meetings between Coia and
Raymond, Jr. after 1984 as recalled by Raymond, Jr.’s driver, Anthonio [sic]
Cucinotta.” GEB Resp. Br. at 2
n.1. In other words, although
Cucinotta is the GEB Attorney’s witness, one cannot believe everything he
said. As noted earlier, Hillary made no
contribution to the proof of this matter.
Although asserted to be probative by the GEB Attorney in his opening
statement, the Hillary/Cucinotta combination simply disintegrated once both
witnesses appeared on the witness stand, and there is no evidence of Patriarca,
Jr. and Coia meeting after 1984.
Nevertheless, the GEB Attorney
argues in his post-hearing briefs that, due to Coia’s position in the 1980s as
an up and coming LIUNA labor leader and Patriarca, Jr.’s position as a made
member of the LCN and the son of the Boss of the New England LCN family, “any
contact between Coia and Raymond, Jr. conveyed the unmistakable message that
the LCN had significant influence within LIUNA.” GEB Br. at 59 (emphasis omitted). See GEB Resp. Br. at 5-6.
He further argues that the “unique positions” of Coia and Patriarca, Jr.
send a message to the union membership that the LCN has “easy access to the
Union officers and members in the total atmosphere [of the] labor union
operation.” GEB Br. at 60, citing, Fallacara, IHO 96-65D at 6, ¶
210. This argument flies in the face of
his concession that the joint defense meetings between Coia and Patriarca, Jr.
were proper.
The GEB Attorney also relies
extensively on the Patriarca family influence at Local 271. Although, historically, the Patriarcas may
have had influence at that Local during Coia, Sr.’s tenure, it is not relevant
to the charges here against Respondent Coia and will not be considered by the
IHO in rendering his final decision.
The GEB Attorney also implicitly
argues that there was an improper relationship between Local 271 and the law
firm of Coia & Lepore since it shared office space with the Local and did
extensive legal work for it. This
argument does not have any probative value relative to the charges in this
matter.
The GEB Attorney, citing the Fallacara
test for “knowing association,” also contends that the mere appearance of mob
access to the union is sufficient to discipline a union official. See supra pp. 2-3. There is no indication in the record,
however, that Patriarca, Jr. had access to the union. He visited Coia at Coia & Lepore on only a few
occasions. No credible evidence was put
forth to show that he and Coia were together at any other time.
Teamsters Case Law
The GEB Attorney offers a number
of cases decided by the Court appointed Independent Administrator of the
International Brotherhood of Teamsters (“IBT” or “Teamsters”) as well as
certain federal court decisions to support his position, but the language
quoted therefrom is taken out of context.
All of those cases deal with Teamster union officials who either invited
LCN figures into their union, regularly
socialized with them, or sought their assistance in union affairs. An examination of the facts in those cases
reveals far different fact patterns than the one presented here.
In all of the Teamsters’ cases cited by the GEB Attorney, the
relationships between the charged persons and the LCN members and associates
continued for a number of years, on regular social and business levels.
In United States v.
International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am.
(“DiGirlamo”), 824 F. Supp. 410 (S.D.N.Y. 1993), DiGirlamo was the
bookkeeper for IBT Local 41 in Kansas City, Missouri and the evidence therein
established that he associated with four men -- Charles Moretina, James
Moretina, Peter Simone (“Simone”), and Frank Tousa (“Tousa”) -- whom he knew to
be members of the Kansas City LCN. Id.
at 414-416 (discussing association with C. Moretina, J. Moretina, P. Simone and
F. Tousa).
DiGirlamo’s car was observed by
the FBI outside of Charles Moretina’s house during working hours. He also attended Charles Moretina’s criminal
trial and visited him several times in prison.
Id. at 416. James
Moretina and Simone hired DiGirlamo as an accountant for their business -- Be
Amused Vending Company-- and he would occasionally go to Simone’s illegal
gambling hall to pick up the company’s books.
In fact, during his tenure as the company’s accountant, the FBI seized
illegal gambling equipment which the company owned, and James Moretina and
Simone were eventually convicted for money laundering and illegal
gambling. Id.
DiGirlamo also visited James Moretina’s home and spoke
with him daily on the telephone. Id.
DiGirlamo and Simone had known each other since childhood. They had participated in community sporting
and charity events together, and had spent time at one another’s homes. Id.
DiGirlamo had also prepared Tousa
and his wife’s personal tax returns and had spent time in the Tousas’ home
while doing so. Id.
In United States v.
International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of
Am. (Adelstein), 998 F.2d 120 (2d
Cir. 1993), Adelstein held the positions of Secretary-Treasurer of IBT Local
813, President of IBT Local 1034, and Secretary-Treasurer of the Executive
Board of IBT Joint Council 16.
There was evidence that he had
“decades-long relationships with an entire cast of characters who were members
of organized crime’.” Id. at
123-24 (quoting Independent Administrator).
Adelstein assisted Gambino family member James Failla (“Failla”) in the
mob’s control of both the garbage industry and of IBT Local 813 in New York
City. Id. at 122. He was an associate of the Gambino family
and answered to Failla. He and Failla
often attended the same social affairs, charity affairs, and funerals. Id. at 125.
In United States v.
International Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am.
(Yager), 761 F. Supp. 315 (S.D.N.Y. 1991), the Independent Administrator
prevented the appointment of Yager to the IBT’s General Executive Board since
there was evidence that he had been seen with members of the LCN. Id. at 320. Moreover, the LCN had a history of influence over the IBT Central
States Pension Fund, of which Yager was an officer, and had once engaged in a
scheme to bribe a former United States Senator using pension fund assets. Id.
The Independent Administrator concluded that Yager knew of this, yet did
nothing to stop it. Id.
The GEB Attorney also cites Judge
Edelstein’s statement in United States v. International Bhd. of Teamsters,
Chauffeurs, Warehousemen and Helpers of Am. (Cozza), 764 F. Supp. 797, 813 (S.D.N.Y. 1991), that
“there is no such thing as a purposeful, yet innocent or non-reproachful
association of an Union leader and an underworld figure.” The facts of that case, however, are far
different from those herein. There,
Cozza admitted that he knowingly associated with five members of the Pittsburgh
LCN. This association included daily
visits with John S. LaRocca, who was the Boss of the Pittsburgh family from
1956 until his death in 1984. Id.
at 806.
In a case brought under the Carpenters’
Consent Decree, United States v. District Council of New York City (Fiorino),
941 F.Supp. 349 (S.D.N.Y. 1996), Fiorino knowingly associated with two members
of the Genovese family, Liborio Bellomo and Ralph Coppola. Id. at 357. Although Bellomo was
married to Fiorino’s sister, the Court found that their relationship went
beyond the ordinary contacts of family members. Id. at 368. For
example, there were 372 telephone calls made in a ten month period from
Bellomo’s home to Fiorino’s beeper. Id.
at 369. Fiorino also admitted that he
had met with Coppola on the street, visited him at home, and spoke with him on
the telephone. Id.
The contact alleged by the GEB
Attorney herein is of a far different character than that found in the above
cases. In this matter, there was no
credible evidence presented to show any contact between Patriarca, Jr. and Coia
at any time except for the joint defense meetings at Coia & Lepore.
Conclusions
21907637.
The GEB Attorney has not
proved by a preponderance of the evidence that an ongoing social or business
relationship existed between Coia and Patriarca, Jr. which constituted barred
conduct.
21907638.
The IHO finds that the
GEB Attorney has not proved Charges I and III by a preponderance of the
evidence. As noted above, Charge II has
been withdrawn.
III. THE TRUSTEESHIP OF LOCAL 66
Charge IV alleges:
Barred Conduct — Permitting LCN Influence: From in or about April, 1990 through 1994, ARTHUR
A. COIA knowingly permitted members and/or associates of the LCN to exercise
control or influence over the affairs of the Union, to wit: by his actions and
failures to act, he allowed officers of Local 66 who were influenced and
controlled by the LCN to remain in power, thereby allowing the LCN to continue
its control and influence over Local 66.
Charge V alleges:
Violation of Duty of Loyalty: From in or about 1990 until in or about
1994, ARTHUR A. COIA violated the obligation of undivided loyalty incumbent
upon all members, officers, and employees of LIUNA, including but not limited
to those duties set forth in 29 U.S.C. § 501(a) and the LIUNA Ethical Practices
Code, to wit: through his actions and failures to act, he did not take adequate
steps to investigate and remedy organized crime corruption at Local 66, and he
participated in a course of conduct that permitted and facilitated the
continuation of that corruption during and after the time that LIUNA placed
Local 66 under trusteeship in 1990 through 1992.
Charge VI alleges:
Constitutional Duties of LIUNA Members: In permitting the LCN to exercise influence
over Union affairs, as alleged more specifically above in Charge IV, ARTHUR A.
COIA failed to honor his obligation as a LIUNA member to refrain from
interfering with the proper conduct of LIUNA business, in violation of Article
III, Section 3(d) of the Uniform Local Union Constitution.
Introduction
In Charges IV through VI, the GEB
Attorney asserts that Coia failed to take adequate measures to ensure that LCN
influence was eradicated from LIUNA Local Union 66 (“Local 66") after he
was appointed as the Hearings Panel Officer to rule upon an emergency
trusteeship for the Local.
Findings of Fact
21907639.
Local 66 is located in
Melville, New York. See GEB Ex.
32.
21907640.
From 1985 through
December of 1989, the following persons served as officers of Local 66:
Michael LaBarbara, Jr. (“LaBarbara, Jr.”)
Business
Manager/Secretary-Treasurer;
James Abbatiello, Sr. (“Abbatiello, Sr.”)
Assistant
Business Manager and Recording Secretary;
Peter Vario (“Vario”)
Vice President of Local 66 and Administrator of Local
66's Benefit Funds;
Benjamin DeLucia (“DeLucia”)
President;
Santo Ippolito (“Ippolito”)
Executive
Board Member and Field Representative;
Frank Chimento
(“Chimento”)
Executive Board Member;
James Abbatiello, Jr. (“Abbatiello, Jr.”)
Executive Board member;
Michael LaBarbara, III (“LaBarbara, III”)
Field Representative;
Gerald Losquadro (“Losquadro”)
Field Representative;
Bruno Leone, Jr. (“Leone”)
Field Representative.
See R. Ex. 120.
21907641.
On December 12, 1988, a
51 count federal indictment was returned against three officers of the Local 66
Executive Board (“the Board”) -- Vario, LaBarbara, Jr., and Abbatiello, Sr. --
charging them with using Local 66 to engage in a course of racketeering
activity for the benefit of the Luchese crime family. GEB Ex. 10.
21907642.
At the January 26, 1989
Local 66 Board meeting, the remaining members of the Board voted to pay for the
legal expenses incurred by Vario, LaBarbara, Jr., and Abbatiello, Sr. in their
defense against the indictment. GEB Ex.
9, Tab 23; R. Ex. 110. In all, Local 66
would eventually pay approximately $400,000 in legal expenses on their
behalf. GEB Ex. 9, 11.
21907643.
The Local’s attorney,
Jeffrey S. Dubin (“Dubin”), advised the Board that it was legal for the Local
to pay the attorneys’ fees. Tr.
1100-01. This advice was incorrect. Tr.
1237-38; GEB Ex. 41.
21907644.
On December 14, 1989, LaBarbara,
Jr. and Abbatiello, Sr. resigned from the Board and, as severance packages, the
Local gave each a new Lincoln Town car.
GEB Ex. 17-18 (resigning from posts), 21-23 (receiving automobiles from
Local). Vario was given a cash payment
of $35,769.50 in lieu of a car.[9] GEB Ex. 24,
25. Dubin had advised the Board that it
could make this cash award to Vario.
GEB Ex. 9, Tab 28.
21907645.
On September 26, 1989, LaBarbara, Jr. and
Abbatiello, Sr. pled guilty to various federal charges and, on December 15,
1989, they were each sentenced to 14 months in prison, two years probation, and
fines of approximately $37,000. GEB Ex.
14, 19, 20. On March 29, 1990, Vario
was convicted and sentenced to 46 months in prison, three years probation, and
a fine of $106,360. GEB Ex. 30,
32.
21907646.
On January 8, 1990,
Samuel Caivano, the Regional Manager in whose jurisdiction Local 66 was
located, wrote a letter to General President Angelo Fosco ("Fosco")
requesting that Local 66 be placed under trusteeship. GEB Ex. 26. Samuel
Caivano said:
Because of circumstances surrounding the conviction
and incarceration of several key local union officials, I strongly recommend
that emergency trusteeship be placed over Local Union 66, Melville, New York.
This Regional Office has been monitoring the current
situation at Local Union 66, and I believe that the only way to guarantee
quality representation for the membership as well as restoring the integrity of
the Local Union is through the immediate imposition of emergency trusteeship.
Your immediate attention to this problem would be
appreciated.
Id.
21907647.
On March 15, 1990, in
response to Samuel Caivano’s recommendation, Fosco placed Local 66 under
emergency trusteeship pursuant to Article IX, Section 7 of the International
Constitution which authorizes the General President to do so when necessary to
correct corruption or financial malpractice, assure the performance of
collective bargaining agreements, restore democratic procedures, carry out the
legitimate objects of the local union or protect the organization as an
institution. International Constitution, Article IX, Section 7. See R. Ex. 31, 54, 58, 59.
21907648.
In conformance with
Article IX, Section 7, Fosco convened a Special Hearings Panel (“the Panel”) to
determine if the emergency trusteeship over Local 66 was properly imposed and
if it should be continued. R. Ex.
60. Such a Panel usually consisted of
one or more International Vice Presidents who acted as Hearing Officers. International Constitution, Article VIII,
Section 2(a-vii). They were assisted by
one or more attorneys from the LIUNA General Counsel’s[10] office. Tr.
3584. Coia, who was then the
International General Secretary-Treasurer, was appointed to sit as the sole
member of the Local 66 Panel. Tr. 1175-76. Two attorneys from the General Counsel’s
office, David Elbaor (“Elbaor”) and Ted Green (“Green”), accompanied him to the
hearing See id.
21907649.
As the Hearing Officer
assigned to the Local 66 Panel, Coia’s sole duty was to determine whether the
trusteeship was properly imposed and whether a good faith basis existed to
continue it. See International
Constitution, Article IX, Section 2(a-vii), Section 7. See id. Article X, Section 4.
21907650.
The hearing was convened
on April 10, 1990 and evidence was presented to the Panel regarding financial
malpractice and corruption at Local 66.
See generally R. Ex. 63.
An audit report revealed that approximately $400,000 of the Local’s
funds had been spent on legal fees for Vario, LaBarbara, Jr., and Abbatiello,
Sr. See id. at 4, 6,
39.
21907651.
As was the practice at
that time, the Panel’s report was drafted by the attorneys who accompanied Coia
to the hearing. Tr. 1431, 3585, 4587,
4590. Coia approved the report, signed
it, and submitted it to the GEB for its approval. GEB Ex. 34. The report
made the following findings:
1. In
December, 1989, the Business Manager/Secretary-Treasurer, and the Recording
Secretary/Assistant Business Manager of the Local Union pled guilty to
indictments alleging numerous violations of RICO and Section 302 of the
Taft-Hartley involving the taking of money from contractors for personal
benefit. The Business Manager and
Recording Secretary/Assistant Business Manager immediately resigned from
office. In March, 1990, the Vice President,
who was also an Organizer of the Local Union and the Administrator of the Local
Union Funds, was convicted for his part in the same course of conduct.
2. The
Local Union has paid the legal expenses of all three officers.
3. The
former Vice President and Fund Administrator has interfered with the conduct of
Local Union business following the resignation of the Business
Manager/Secretary-Treasurer and the Recording Secretary/Assistant Business
Manager in December, 1989 up to and beyond the point at which his own trial was
conducted.
4. The
trustee has taken various steps to rectify the situation. A full audit of Local Union affairs is being
conducted and appropriate remedial action will be taken. Through its trustees, the Local Union will
see to it that the funds not retain, as an employee or agent, any person
disqualified by ERISA. Other action is
being taken to see that appropriate collective bargaining procedures are
restored.
5. Under
the circumstances it is clear that the Local Union was facing an emergency
condition when the General President imposed trusteeship on [March 15], 1990.
Id.
21907652.
The Panel report
recommended “[t]hat the General President’s decision to impose an emergency
trusteeship be ratified and that a continuation of the trusteeship be
authorized.” GEB Ex. 34. The GEB adopted the recommendation. GEB Ex. 39.
21907653.
At the time, it was the
accepted policy and practice of the International Union to appoint the Regional
Manager as the trustee of a local placed in receivership, or to defer to the
Regional Manager’s recommendation when selecting an alternative trustee. Tr. 3667-68. Regional Managers, as a general rule, were and still are, very
protective of their regions and the prerogatives and procedures that go along
with their position. Tr. 3519-23, 3819-23.
21907654.
Daniel Caivano was
appointed the interim trustee upon the recommendation of his uncle, Samuel
Caivano, the Regional Manager. GEB Ex.
31; R. Ex. 57. As Local 66's trustee,
Daniel Caivano was “authorized to take full charge of the affairs of the
[Local] . . . and to take such other action as, in [his] . . . judgement, [was]
necessary for the preservation of the [Local] and its interests.” See International Constitution,
Article IX, Section 7. Only General
President Fosco was constitutionally authorized to remove him from his
post. Id.
21907655.
Daniel Caivano exercised his authority as
trustee to appoint DeLucia and LaBarbara, III as deputy trustees with power
only to co-sign the checks Daniel Caivano wrote for Local 66. R. Ex. 103 at 83. He also appointed DeLucia, LaBarbara, III, Losquadro, and himself
as trustees of the Local 66 Funds, while Abbatiello, Jr. became the
Administrator of the Funds.[11] Id. at 72-73, 75-76.
21907656.
Upon learning of these
appointments, Coia admonished Samuel Caivano and Fosco regarding the negative
perception which arose from retaining the sons of the convicted felons as Local
66 officials. Tr. 4931-33, 5313. Coia testified that he and Samuel Caivano
had an argument on this subject but that Samuel Caivano persisted by stating,
“[T]he sins of the fathers should not be put on to the kids.” Tr. 4933.
21907657.
Daniel Caivano said he
appointed Abbatiello, Jr. and LaBarbara, III to positions of authority at Local
66 because they had never been accused of engaging in any wrongdoing. R. Ex. 103 at 95.
21907658.
In his opening
statement, the GEB Attorney stated that the handling of the Local 66 matter was
a “museum quality example of how local unions were corrupted and controlled by
organized crime and how the international union sustained that corruption
through the illusion of intervention.”
Tr. 22-23. He argued that Coia,
“had a legal and ethical duty to make every effort to protect the members of
Local 66 from continued corruption, and he failed to do so.” GEB Resp. Br. at 7.
21907659.
The GEB Attorney
contends that Coia violated his fiduciary duty by not doing more to eradicate
LCN influence from Local 66 after he sat as the Hearing Officer at the
emergency trusteeship hearing. The GEB
Attorney’s argument fails to recognize the institutional makeup of the
International Union at that time, prior to the adoption of the EDP.
Pre-Reform Trusteeship
Procedure
21907660.
Prior to the adoption of
the EDP, the International Union was governed solely by federal law and the
International and Local Union Constitutions.
At the time, the International Union’s control over the local unions was
limited to its power to place the local union into trusteeship pursuant to 29
U.S.C. § 462.
21907661.
Article IX, Section 7 of
the International Constitution conformed to 29 U.S.C. § 462 and a trusteeship
could be imposed on a local union to correct corruption or financial
malpractice, assure the performance of collective bargaining agreements or
other duties of a bargaining representative, restore democratic procedures,
carry out the legitimate objects of the local union or protect the organization
as an institution. International
Constitution, Article IX, Section 7.
21907662.
A trusteeship is
presumed valid for 18 months. 29 U.S.C.
§ 464(c).
21907663.
Aside from its statutory
and constitutional authority to impose a trusteeship, the International Union
had no control over the local unions.
21907664.
Historically, a parent
labor organization and its affiliates do not always share common
interests. The parent organization is
limited by federal law and its constitution when exercising its authority over
a subordinate affiliate. See generally
Laborers’ Int’l Union of N. Am. v. National Post Office Mail Handlers,
Watchmen, Messengers and Group Leaders Div. of the Laborers’ Int’l Union of N.
Am., 880 F.2d 1388 (D.C. Cir. 1989).
The relationship between an international union and its local unions
cannot be compared to the business arena where the head organization controls
subordinate entities, but is more analogous the United States Government’s
concept of our nation’s federalism and separation of powers. See Ann B. Whitley, Note, Collective Institutional Guilt: The
Emergence of International Unions’ RICO Liability for Local Union Crimes, 21
Am. J. Crim. L. 291 (1994).
21907665.
The GEB Attorney has
based Charges IV through VI to a great extent on the fact that the sons of the
convicted officers remained in positions of power after the continuation of the
trusteeship, and Coia did nothing to remove them.
21907666.
As the Hearing Officer, Coia had no authority
to participate in the operation of the trusteeship and had no power to appoint
or even recommend a trustee for Local 66.
See generally International Constitution, Article IX,
Section 7 (discussing process of appointing trustee). Unlike a judicial trusteeship, where the judge has continuing
oversight, the Hearing Officer merely confirms or denies the need for the
trusteeship. Id. The
General President then assumes the role of the judge and supervises the
trustee. The Hearing Officer is similar
to a Special Hearing Master whose job is to find facts with respect to very
specifically defined issues.
21907667.
Coia’s only
constitutional role as the Hearing Officer at Local 66 was to determine whether
the emergency trusteeship should be continued.
He did all that he was legally required to do in this position. He could not appoint or remove the trustee
and he had no legal authority over the actions of the trustee; this power was
reserved for the General President who, at the relevant time herein, was Fosco.
21907668.
Even today, the IHO,
when sitting as the Hearing Officer in a trusteeship proceeding pursuant to his
powers under the EDP, cannot choose, remove, or intercede in the activities of
a trustee once that person has been appointed.
The IHO has informally recommended that certain persons be appointed or
removed as trustees without success. It
is unreasonable to think that Coia, in the International Union structure as it
existed prior to the enactment of the EDP, could have constitutionally or
legally done more.
21907669.
The GEB Attorney’s
argument regarding the supervision of the trusteeship is more properly directed
at General President Fosco and his supervision of the trustee, Daniel
Caivano. Coia did not become LIUNA’s
General President until February of 1993, long after the Local 66 trusteeship
had ended. At that time, a local union
was autonomous and the International Officers had very limited power over it
once a trusteeship had ended.
21907670.
The Regional Manager’s
ability to dictate that the two sons remain as deputy trustees was a reflection
of the ineffective LIUNA organization that existed prior to the reform. Today, such a decision would have been overridden
by the IG or the GEB Attorney, but Coia cannot now be held legally responsible
for Samuel Caivano’s actions.
The Local 66 Bonding Claim
21907671.
As a defense to Charges
IV and V -- permitting the LCN to influence Local 66 and failing to eradicate
LCN corruption at Local 66 -- Coia placed over 30 documents into the record to
show that efforts were made to protect the interests of the Local by filing a
bonding claim with Eberts & Harrison, Inc., the International Union’s
bonding company, to recover the $416,078.79 in attorneys’ fees paid to the
three indicted, and later convicted, officers’ attorneys. See R. Ex. 68-100.
21907672.
The GEB Attorney, in
rebuttal, attacked Coia’s handling of the claim.
21907673.
In February of 1993,
Coia became the General President and Norwood became the General
Secretary-Treasurer of LIUNA. The final
settlement of the bonding claim was handled by Norwood in his capacity as the
General Secretary-Treasurer in April of 1994, four years after Coia sat as
Hearing Officer at Local 66.
21907674.
The evidence of the
bonding claim, and the rebuttal thereto, are irrelevant to the Local 66 charges
and will not be discussed further.
Conclusions
21907675.
After Coia made his
recommendation to the GEB to continue the trusteeship at Local 66, he had no
further constitutional duties that permitted or required him to appoint the
trustee(s) or oversee the operation of the trusteeship.
21907676.
The evidence in the
record does not prove that Coia committed “barred conduct” in violation of the
EDP by allowing the LCN to continue its control and influence over Local 66
after he recommended the continuation of the trusteeship in April of 1990.
21907677.
The GEB Attorney does
not offer any suggestions as to how Coia breached his fiduciary duty, except to
assert that he could have done more.
The IHO finds that Coia did not breach his fiduciary duty during or
after the Local 66 trusteeship hearing.
21907678.
The GEB Attorney has
failed to prove that Coia interfered with the proper conduct of Local 66's
union business after he recommended the continuation of the trusteeship in
April of 1990.
21907679.
The IHO finds that the
GEB Attorney has not proven Charges IV through VI by a preponderance of the
evidence.
IV. THE INVESTIGATION OF RONALD FINO’S ALLEGATIONS
Charge VII alleges:
Barred Conduct — Permitting LCN Influence: From in or about April 1990 until in or
about 1992, ARTHUR A. COIA knowingly permitted members and/or associates of the
LCN to exercise control or influence over the affairs of the Union, to wit:
through Coia’s actions, LIUNA supported the defense of LCN members and
associates who had corrupted LIUNA by authorizing and approving the expenditure
of substantial Union funds to attack the credibility of Ronald Fino, but not to
determine in good faith the truth or falsity of Fino’s allegations, when Coia
knew or should have known that at least some of Fino’s allegations of LCN
influence over LIUNA were credible and true.
Charge VIII alleges:
Violation of Duty of Loyalty: From in or about 1990 until in or about
1992, ARTHUR A. COIA violated the obligation of undivided loyalty incumbent
upon all members, officers, and employees of LIUNA, including but not limited
to those duties set forth in 29 U.S.C. § 501(a) and the LIUNA Ethical Practices
Code, to wit: he authorized and approved the expenditure of substantial Union
funds for legal aid investigative work which benefited LCN members and
associates, to the detriment of LIUNA and its members, and failed to authorize
or approve the use of Union resources to determine in good faith the truth or
falsity of Fino’s allegations of LCN control over LIUNA.
Charges IX alleges:
Constitutional Duties of LIUNA Members: In permitting the LCN to exercise influence
over Union affairs as alleged more specifically above in Charge VII, ARTHUR A.
COIA failed to honor his obligation as a LIUNA member to refrain from
interfering with the proper conduct of LIUNA business, in violation of Article
III, Section 3(d) of the Uniform Local Union Constitution.
Introduction
Initially, the GEB Attorney
charged Coia with permitting the LCN to influence LIUNA by authorizing the
expenditure of International Union funds to attack the credibility of Ronald
Fino (“Fino”), the former Business Manager of LIUNA Local Union 210 (“Local
210"), after the media reported that Fino had been exposed as an FBI
informant and was alleging LCN infiltration at the highest levels of
LIUNA. The GEB Attorney contended that the
International Union’s attorneys were deployed by Coia to investigate Fino for
the sole purpose of discrediting him and allowing their information to be
shared with attorneys representing known LCN members. Tr. 43-45. Furthermore,
he charged Coia with failing to authorize the expenditure of Union funds to
determine the veracity of Fino’s allegations which had surfaced in media
reports, in his testimony in a criminal proceeding in New York, and in FBI 302
reports obtained by the International Union.
See Charges VII through IX, supra at 47-48.
In his case in chief, the GEB
Attorney presented evidence that only one investigation, conducted by attorney
Anthony Traini (“Traini”), took place after Fino surfaced as an FBI informant
and this investigation was designed solely to impugn Fino. He asserted that the International Union
should have conducted an investigation into the substance, truth or falsity of
Fino’s allegations. The defense then
countered and presented substantial evidence that an extensive investigation,
or “legal audit,” had in fact been conducted by the LIUNA General Counsel’s
Office into the substance of Fino’s allegations. See R. Ex. 122, 125-26, 128, 130, 135-41, 143-63, 168-73
In his post-hearing briefs, the
GEB Attorney abandoned his original position and argued that Coia was more
concerned with following the investigation into Fino’s credibility than the
investigation conducted by the General Counsel. GEB Br. at 95, 100.
Findings of Fact
Fino’s Allegations and LIUNA’s
Response Thereto
21907680.
Fino served as the
Business Manager of Local 210, in Buffalo, New York from 1973 until he retired
in 1988. Tr. 2316 (undertaking Business
Manager position), Tr. 2322 (retiring in 1988).
21907681.
In February of 1989, the
Buffalo news media reported that Fino had been an FBI informant during his
entire 15 years as the Business Manager of Local 210 and had provided the FBI
with substantial information of LCN infiltration of LIUNA. Tr. 1627-28. The media further reported that Fino provided information to the
FBI that the .” . . Mafia controlled the parent union’s operation across the
country.” R. Ex. 178 (Michael Beebe, Fino
Goes Into Hiding, Says He Had Been FBI Informer, The Buffalo News, February 2, 1989, at A1.). See also R. Ex. 181 (Michael
Beebe, Fino’s Double Life Recalls Father’s Warning on Mob, The Buffalo News, April 17, 1989 at
A1)(reporting familial involvement of Fino with mob), R. Ex. 182 (Dan Harback, Masked
FBI Agent Acts as Decoy as Threatened Fino Enters Court, The Buffalo News, March 23, 1989 at
A1)(reporting Fino’s FBI contract and mob threats against Fino) .
21907682.
LIUNA’s General Counsel
was aware that the federal government was conducting an aggressive program to
rid labor unions of LCN corruption using the civil provisions of the Racketeer
Influence and Corrupt Organizations Act (“RICO”). Tr. 3407-08. During the
late 1980s and early 1990s, for example, the DOJ embarked upon a campaign of
filing civil RICO suits against numerous international and local labor unions,
with the object of placing them under government trusteeship. At the time the Fino allegations came to
light, this movement was well underway.
The DOJ had been successful in placing IBT Local 560 in New Jersey under
trusteeship. United States v. Local
560, Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am.,
581 F. Supp. 279 (D. N.J. 1984). The
DOJ also filed a civil RICO complaint against the International Brotherhood of
Teamsters on June 28, 1988 and, after a year of intense litigation, entered
into a voluntary Consent Decree with the international union in March of 1989,
placing it under trusteeship. See United States v. International Bhd.
of Teamsters, Chauffeurs, Warehousemen and Helpers of Am., 831 F. Supp. 278
(S.D.N.Y. 1993). The trusteeship over Local 560 was lifted in February of 1999;
the trusteeship over the Teamsters remains in place. Similar suits were also filed against the Roofers Union, United
States v. Local 30, United Slate, Tile, and Composition Roofers Damp and
Waterproof Workers Ass’n, 686 F. Supp. 1139 (E.D. Pa. 1988); the Carpenters
Union, United States v. District Council of New York and Vicinity of the
United Brotherhood of Carpenters & Joiners of America, 778 F. Supp. 738
(S.D.N.Y. 1991); and the International Longshoremens’ Association, United
States v. Local 1804-1 International Longshoremens’ Ass’n, 812 F. Supp.
1303 (S.D.N.Y. 1993). Each of these
suits resulted in some form of trusteeship over the defendant union.
21907683.
Also relevant at this
time was LIUNA’s experience in 1981 in what is described as the Hauser case
wherein Coia, his father, Lepore, Jr. and Patriarca Sr. were indicted for
allegedly receiving kickbacks in return for awarding a union contract to a
Florida insurance company operated by Joseph Hauser. United States v. Coia, 81-417-King (S.D. Fla. 1984.) See also R. Ex. 124. Hauser surfaced in the early 1980s as an FBI
government witness and had testified in a number of federal prosecutions,
including United States v. Accardo, No. 81-23-CR-JWK, (S.D. Fla. June 7,
1982), which involved the receipt of kickbacks from a LIUNA welfare fund. R. Ex. 123 at 1 n.1. In the case involving Coia, the court
dismissed the charges. R. Ex. 124.
21907684.
In response to Fino’s
allegations and in anticipation of possible litigation filed by the DOJ, LIUNA
began two separate investigations in April of 1990. Elbaor, on behalf of LIUNA’s General Counsel, began an inquiry to
determine the substance, truth or falsity of Fino’s allegations and Traini
commenced an investigation into Fino’s background and credibility for use as
future impeachment material. These two
investigations ran simultaneously but on separate tracks, and will be discussed
seriatim.
Elbaor’s Investigation
21907685.
During 1990 and 1991,
the General Counsel of LIUNA was Robert Connerton of the Connerton firm. Tr. 1631.
Elbaor, an experienced labor lawyer and former prosecutor, was employed
by the Connerton firm. Tr. 2981.
21907686.
On April 5, 1990, Elbaor held a telephone
conference with Harold Boreanaz (“Boreanaz”), an attorney in Buffalo, New
York. R. Ex. 122 at 1. Boreanaz represented Joseph Rosato
(“Rosato”), a steward at Local 210, who was a defendant in a federal criminal
case in Buffalo. Tr. 1631. Fino was scheduled to be a witness against
Rosato.[12] Boreanaz told Elbaor that he would be willing to
supply the International Union with copies of eighteen FBI 302s on Fino, in
exchange for assistance from the International Union in investigating
Fino. R. Ex. 122 at 1.
21907687.
As reflected in his
memorandum to Connerton on April 6, 1990,
Elbaor emphasized to Boreanaz that the International Union was his
client and he would only participate in the proposed sharing of information if
it would serve the institutional interests of the International Union. R. Ex. 122 at 2.
21907688.
It should be noted that
FBI 302s are not public documents of the FBI or the DOJ. Pursuant to 18 U.S.C. § 3500, they are only
given to defense counsel in criminal cases where a witness, whose interview is
the subject of the 302, testifies at trial.
Since Fino was under FBI protection and unavailable, the only legitimate
means of obtaining his allegations were from the 302s which were provided to
defense counsel in cases where Fino was scheduled to testify. Moreover, the 302s released to these defense
counsel were generally limited to the subject matter of that particular
trial. Id.
21907689.
Elbaor recommended to
Connerton that they meet with Boreanaz for two reasons: (1) “Fino may be a resurrected and improved
Joe Hauser,” and (2) “his [Fino’s] accusations may be the springboard for a
RICO civil action against LIUNA, or its Regions, or its District Councils.” R.
Ex. 122 at 3.
21907690.
On April 10, 1990,
Connerton and Elbaor met with Boreanaz in Buffalo and obtained all of the Fino
302s that Boreanaz had in his possession.
R. Ex. 125. Boreanaz told Elbaor
and Connerton that he had obtained the 302s from Paul Cambria (“Cambria”),
another criminal defense attorney in Buffalo, who had received them from a
prosecutor during pre-trial discovery in an unrelated case. Id.
21907691.
On April 12, 1990,
Elbaor sent a memorandum to Coia and Fosco with copies of Fino’s FBI 302s.[13] R. Ex. 126.
21907692.
After Elbaor received
the Fino 302s, he recommended to Connerton that the General Counsel’s office
conduct a “legal audit of the International [to] see what we can learn.” Tr. 3047.
Elbaor’s task was to .” . . identify what [Fino’s] allegations were,
[and] see which ones were capable of verification.” Id.
21907693.
A “legal audit,” also
known as an internal investigation, is a recognized concept in which a
corporation, partnership, labor union or other business entity utilizes a
lawyer or law firm to investigate internal matters under the protection of the
attorney client privilege. See e.g.,
Corporate internal investigations, Webb, Tarun, Molo,
Law Journal Seminar Press (1990);
Stephen F. Black, Internal
Corporate Investigations, Business
Law Monographs Vol. C5, Matthew Bender Co., Inc. (1998). The attorney’s task is to investigate the
matter in question and report to the entity’s officers with findings and legal
advice. Id. A substantial body of case law has developed
involving the techniques and use of this procedure, which is widely employed by
corporations. Id.
21907694.
A legal audit was an
acceptable tool for Elbaor to utilize when conducting his investigation into
Fino’s allegations.
21907695.
Elbaor was well
qualified to conduct the legal audit into Fino’s allegations. From 1976 through October of 1980, Elbaor
worked at DOJ headquarters in Washington, D.C. as a trial attorney in the
General Crimes Section, and he also served on temporary duty for a six month
period as a Special Assistant in the U.S. Attorney’s office in the Eastern
District of Virginia. Tr. 2983. In addition, he was assigned to the Labor
Unit of the Criminal Division where he investigated and prosecuted both labor
union and ERISA cases. Tr. 2984. Later, he joined the Organized Crime and
Racketeering Section of the Criminal Division in a special unit known as Strike
Force 18, which specialized in RICO investigations, including those involving
labor racketeering. Tr. 2985. He joined the Connerton firm in 1980 where
he became a partner and, in 1994, began his own practice. Tr. 2981-82. Currently, he works on civil RICO litigation matters and bonding claims
for LIUNA. 2986-87.
21907696.
Elbaor reviewed the FBI
302s and compiled a catalogue of the allegations made by Fino therein. GEB Ex. 72, 121; R. Ex. 130.
21907697.
Elbaor monitored Fino’s
testimony during the trial of John M. Riggi, John J. Riggi, Vincent Riggi, Salvatore
Timpani and Girolamo Palermo. Tr. 3367;
R. Ex. 134. John M. Riggi was a LIUNA
local union officer who had been charged with various counts of labor
racketeering. Id.; GEB Ex.
114. Elbaor also read the transcript of
Fino’s March 7, 1990 testimony in U.S. v. Guarnieri before Judge McAvoy
in the Northern District of New York.
R. Ex. 137.
21907698.
In a series of
memoranda, Elbaor detailed Fino’s testimony during the Guarnieri and Riggi
trials, as well as his testimony before a Grand Jury in Newark, New Jersey. See R. Ex. 134-138.
21907699.
On March 5, 1991, after
completing his investigation of the Fino allegations that he determined were
capable of verification, Elbaor submitted his audit report to the GEB for its
review. R. Ex. 173. In the introductory letter accompanying the
report, Elbaor stated,
With respect to the methodology of the audit, its
intent was not to destroy Fino’s overall credibility, but to neutrally examine
his allegations against interviews and records generated contemporaneously with
events in question. There proved in
this process sufficient information to justify serious doubt and critical
enquiry about Fino’s credibility, and his motivations for making his
allegations in the first place. But
delving into that, and reporting on it, would have required an inordinate
amount of time and resources, and would have required a far lengthier audit
having a conclusion probably identical to that readily extrapolated from the
present audit report.
The audit as embodied in its report focuses on
allegations affecting the International Union, not its affiliate Local 210, nor
other affiliates or businesses.
Id. Elbaor was of the opinion that Fino’s
testimony was broad, vague and contained few verifiable details regarding his
contacts with individuals in the labor union.
R. Ex. 134 at 2. The record
reflects that neither Coia nor anyone else ever attempted to impede or improperly
influence Elbaor’s work.
21907700.
The IHO finds that a
legal audit of Fino’s allegations was conducted by LIUNA and the GEB Attorney’s
assertion that an investigation of the substance, truth or falsity of Fino’s
allegations was not conducted is contradicted by the record.
Traini’s Investigation
21907701.
Traini is an attorney
from New England whose practice is concentrated in the area of criminal
defense. Tr. 4645. He participated on the defense team which
successfully represented both Coia and Coia, Sr. in the Hauser case in Florida
in the early 1980s. Tr. 5192.
21907702.
The International Union,
on Coia’s recommendation, employed Traini to conduct an investigation into
Fino’s background for the purpose of defending the International Union in the
event the DOJ used him as a witness to prosecute a civil RICO case against it. Tr. 2271, 5188, 5192-93.
21907703.
Philip D. Smith
(“Smith”) testified herein on April 29, 1998.
Tr. 2268. Smith, an investigator
with the office of LIUNA’s IG, interviewed Traini in April of 1997. Tr. 2270.
Traini told Smith that Coia assigned him the duty of investigating Fino
in order to obtain background material which could be used to impeach him in
the event that he ever testified against the International Union or its
officials. Tr. 2271.
21907704.
Traini noted that, in
light of Fino’s allegations against the International Union and “of the
government’s long history of attempting to indict and convict officers of the
Laborer’s Union and to take control of the International, . . . a need may
arise in the future to question the believability of Fino before a jury,
particularly in the context of a civil RICO case.” R. Ex. 183 at 9. See
also GEB Ex. 92 He undertook his
investigation in an .” . . attempt to discover facts and circumstances which
might be relevant to undermining Fino’s credibility.” R. Ex. 183 at 9. Traini
characterized “Fino [as] a prime weapon in the government’s arsenal against the
union.” Id.
21907705.
Traini examined the
potential credibility of a key prosecution witness, a task that criminal
defense attorneys are hired to do.
21907706.
In light of the evidence
of Elbaor’s investigation, it appears that Traini was providing LIUNA with only
one branch of dual investigations and was preparing for anticipated
litigation. There is no evidence that
Traini was asked to destroy evidence or create false testimony.
21907707.
The GEB Attorney’s
argument that Traini was not impartial, was paid too much money, or that Coia
did not render the same level of assistance to Elbaor and did not disclose the
details of Traini’s investigation to Elbaor, carry little weight in the factual
determination of Charges VII, VIII, and IX, in view of the dual investigations
and Traini’s role as a possible defense counsel.
Coia’s Responsibility to
Investigate Fino’s Allegations
21907708.
The investigation of
Fino’s allegations was conducted under the auspices of LIUNA’s General
Counsel. See generally R.
Ex. 173.
21907709.
Article IX, Section 19
of the International Constitution sets forth the duties of the General Counsel and states:
The General President, with the approval of the
General Executive Board, shall retain the services of a General Counsel and
such Associate Counsel as may be deemed necessary and proper.
The General Counsel shall perform his duties under the
supervision and direction of the General President with the approval of the
General Executive Board.
International Constitution, Article IX, Section 19
(emphasis added).
21907710.
At the time Fino’s
allegations became public, Fosco was the International General President and,
pursuant to Article IX, Section 19 of the International Constitution, it was
Fosco’s duty to direct and supervise the General Counsel.
21907711.
Coia, along with the
other members of the GEB, only had the authority and responsibility to approve
Fosco’s direction and supervision of the General Counsel. International Constitution, Article IX, Section
19.
21907712.
As the record reflects,
Coia, in his capacity as General Secretary-Treasurer, along with Fosco and
Connerton, approved the legal bills from Connerton’s firm regarding the Fino
investigation. See GEB Ex. 97,
98, 116; R. Ex. 127-29, 131-33, 141,146,158-58A, 163-65, 167, 170-71.
21907713.
Coia cannot be faulted
for failing to monitor or direct an investigation of Fino or his allegations
because he was not constitutionally required to do so.
The Fino “Information Swap”
21907714.
The GEB Attorney
contends that Coia permitted union resources to be used in an “information
swap” with attorneys representing LCN members when, as General
Secretary-Treasurer, he authorized the payment of legal fees to Elbaor and
Traini for gathering the information on Fino which was allegedly shared in the
“swap.” Tr. 45-46.
21907715.
There is no indication
Elbaor supplied Boreanaz or any other attorney in Buffalo with anything other
than public documents or material.
Elbaor testified that he gave “very little” information to the attorneys
in Buffalo. Tr. 3360. No confidential or internal union
information was ever exchanged. See
R. Ex. 194. The best source of Fino’s
allegations at the time were the Fino 302s, which, as discussed above, were
obtainable only from the defense counsel in cases where Fino was to
testify. Technically, defense counsel
are not permitted to share 302s with persons not associated with the litigation
wherein they were originally surrendered by the DOJ.
21907716.
The GEB Attorney’s
assertion that Traini “shared investigative information with one member of a
family whom Fino had identified as being involved in LCN corruption” is not
supported by the evidence. GEB Resp.
Br. at 23. In support of this
contention, the GEB Attorney cites a letter from Traini to attorney Lawrence P.
Giardina dated August 23, 1990, wherein Traini thanked Giardina for his
assistance in Buffalo. GEB Ex. 94; see
also GEB Br. at 96. This hardly
establishes that Traini “shared investigative information” with Giardina. Also, an addendum supplied by the GEB
Attorney to his Exhibit 94 specifically states that “there is no known
information to indicate that Lawrence P. Giardina[14] is connected to any of the LCN families.” GEB Ex. 94.
21907717.
The IHO finds that there
was no impropriety with regard to Traini’s contact with Giardina or anyone
else.
Conclusions
21907718.
The record does not
support the GEB Attorney’s allegation in Charge VII that Coia allowed the LCN
to influence the affairs of the Union by spending the Union’s funds to attack
Fino’s credibility, disseminating this information to LCN defense attorneys,
and failing to investigate the veracity of Fino’s allegations.
21907719.
The GEB Attorney’s
argument that Coia breached his fiduciary duty pursuant to 29 U.S.C. § 501(a)
and the EPC by not authorizing union funds to determine the truth or falsity of
Fino’s claims is contradicted by the General Counsel’s investigation. It is apparent that a substantial amount of
funds were expended in determining the veracity of Fino’s allegations and,
therefore, Coia did not breach his fiduciary duty under § 501(a).
21907720.
Coia had neither the
authority nor the duty to control Elbaor’s investigation; that responsibility
was borne solely by the International General President -- Angelo Fosco. See International Constitution,
Article IX, Section 19. Coia’s conduct
regarding the investigations of both Traini and Elbaor was proper and he fully
satisfied his duties as the General Secretary-Treasurer.
21907721.
The allegation in Charge
IX -- Coia’s failure to honor his obligation to refrain from interfering with
the proper conduct of union business -- is not supported by record. There is no evidence that Coia interfered in
any way with the course of Elbaor’s investigation, or that his recommendation
that LIUNA hire Traini interfered with the proper conduct of union
business. As such, the GEB Attorney has
failed to prove a violation of Article III, Section 3(d) of the Uniform Local
Union Constitution.
21907722.
The IHO finds that the
GEB Attorney has not proven Charges VII through IX by a preponderance of the
evidence.
V. THE APPOINTMENT OF JOHN
SERPICO AS CHAIRMAN OF THE GEB HEARINGS PANEL
Charge X alleges:
Barred Conduct — Permitting the LCN to Exercise
Influence Over Union Affairs: From 1993
to 1995, ARTHUR A COIA permitted the LCN to exercise control or influence over
Union affairs, to wit: COIA appointed John Serpico to be Chairman of the GEB
Hearings Panels and permitted Serpico to act as the Union’s chief judicial
officer, knowing that Serpico was an instrument of organized crime influence
over LIUNA, in violation of the barred conduct provisions of the EPC and EDP.
Charge XI alleges:
Violation of Duty of Loyalty: From in or about 1993 until in or about
1995, ARTHUR A. COIA violated the obligation of undivided loyalty incumbent
upon all members, officers, and employees of LIUNA, including but not limited
to those duties set forth in 29 U.S.C. § 501(a) and the LIUNA Ethical Practices
Code, to wit: as LIUNA’s General President, he appointed John Serpico to serve
as Chairman of the GEB Hearings Panels, and authorized the expenditure of Union
funds to increase Serpico’s annual International salary by more than $100,000,
knowing that Serpico was an instrument of organized crime influence over LIUNA.
Charge XII alleges:
Barred Conduct — Knowing Association: From in or
aournd the latter part of 1992 until 1995, ARTHUR A. COIA knowingly associated
with LCN members and associates, including John Serpico, in violation of the
barred conduct provisions of the EDP and EPC.
Charge XIII alleges:
Constitutional Duties of LIUNA Members: In permitting
the LCN to exercise influence over Union affairs, as alleged more specifically
above in Charge X, and in knowingly associating with LCN members and
associates, as alleged more specifically above in Charge XII, ARTHUR A. COIA
failed to honor his obligation as a LIUNA member to refrain from interfering
with the proper conduct of LIUNA business, in violation of Article III, Section
3(d) of the Uniform Local Union Constitution.
Introduction
The GEB Attorney charges that Coia
permitted the LCN to exercise influence over LIUNA by appointing John Serpico
(“Serpico”) to be the chief judicial officer of LIUNA in February of 1993 and
that Coia associated with organized crime associates from 1992 through 1995.
In order to understand these
charges, a recitation of the events surrounding Coia becoming General
Secretary-Treasurer, his ascent to the General Presidency and ultimately his
suspension of Serpico must be examined.
The facts will be set out below in detail.
Findings of Fact
Coia’s Early Contacts with
Serpico
21907723.
In 1988, Coia was the
Regional Manager of the New England and eastern Canada regions. Tr. 4874.
21907724.
In late December of 1988
or early January of 1989, Coia began seeking support from the GEB members to
succeed his father, who was ill, as LIUNA’s General Secretary-Treasurer. Tr. 5159; R. Ex. 387 at 1061. He met with General President Fosco at LIUNA
headquarters to discuss the possibility of him succeeding his father. R. Ex. 387 at 1061-62. Fosco directed him to discuss the matter
with Serpico who, at that time, was the Assistant to the General President and
an International Vice President from Chicago.
Id. at 1062-64; R. Ex. 328 at 396. Curiously, although Serpico held the position of Assistant to the
General President, there was no public acknowledgment of Serpico holding this
post. Tr. 3656-58, 5340-42.
21907725.
Coia contacted Serpico
and agreed to meet with him in Chicago.
Tr. 5160; R. Ex. 387 at 1064.
21907726.
When Coia arrived at
Chicago’s O’Hare Airport, Serpico led him to a small coffee shop inside the
terminal and introduced him to Vincent Solano (“Solano”), whom Coia knew to be
either the President or Business Manager of one of LIUNA’s large Chicago local
unions.[15] Tr. 5160-61;
R. Ex. 387 at 1066-71. Solano told Coia
to sit with him and directed Serpico to go to another area of the coffee
shop. Id. at 1066. Solano then acknowledged that Coia could
become the next LIUNA General Secretary-Treasurer, but told Coia, “I want you
to understand this - that John Serpico will be the next General President of
this union. He pounded on the table and
pointed over [to Serpico]. . . . we’re grooming that man there to be the next
General President.” Id. at
1007. Solano then concluded the
conversation, Serpico returned, and Coia returned to Rhode Island on the next
flight.[16] Id. at
1068-69.
21907727.
According to the LIUNA
Constitution, when a vacancy occurs on the GEB, or in the two General Officer
positions, that vacancy is filled by the GEB.
International Constitution, Article XI, Section 5.
21907728.
Coia was elected the
General Secretary-Treasurer of LIUNA in February of 1989 by the GEB. R. Ex. 387 at 1073.
Coia’s Ascension to the Office
of the General President
21907729.
Angelo Fosco was from
Chicago, as was his father who preceded him as General President. See Chicago District Council,
IHO 97-30T at 49 ¶ 80. The record is
clear from statements made by Fosco to others that he felt compelled to comply
with the dictates of persons he characterized as the “guys in Chicago,”
including their demand that he support Serpico’s candidacy to succeed him as
General President when he retired. R.
Ex. 328 at 355, 369.
21907730.
In early 1992, Fosco
began to “casually” discuss retiring as General President. R. Ex. 387 at 1083, 1086. Coia testified during Serpico’s disciplinary
hearing in May of 1995 that Fosco’s decision to retire was based on the fact
that his LCN benefactor in Chicago, Vincent Solano, had recently died and, as a
result, he had “no one to turn to.” R.
Ex. 387 at 1088. Coia testified that he
understood this to mean “that . . . someone else was calling the shots, [whom
Fosco] did not have a friendly relationship with.” R. Ex. 387 at 1089.
21907731.
Carl Booker (“Booker”),
who at the time of the hearing was an International Vice President and
Assistant to the General President[17], attempted
to dissuade Fosco from endorsing Serpico for the General Presidency on at least
a dozen occasions. R. Ex. 328 at 376;
Tr. 3505. Booker told Fosco that Coia
was more qualified for the job, but Fosco told him that Serpico would be
nominated for the General Presidency because that was what the guys in Chicago wanted.
R. Ex. 328 at 374-75.
21907732.
During this same time
period, Fosco told his secretary, Mary Devella (“Devella”), that he was going
to retire and Serpico would replace him as General President. R. Ex. 387 at 1086. Devella became extremely upset upon learning
this information. Id. at
1088. When Coia was apprised of this,
he confronted Fosco and, in his words, “yelled” at him, stating “[Y]ou know the
problems that this union has had in the past . . . how can you allow, even
think of bringing [in] John Serpico and replacing you in this position?” Id. at 1087-88. Coia requested that Fosco stay on as General
President and offered to assume the responsibilities of the office for
him. Id. Coia warned Fosco that if Serpico did become
the General President, he would resign and “take the key people back to New
England with [him] . . . people that made the operation run effectively.” Id. at 1089.
21907733.
Fosco relented, remained
in office, and Coia assumed all of the responsibilities and duties of the
General Presidency as Fosco’s health deteriorated. R. Ex. 387 at 1089.
21907734.
In November of 1992, Fosco became gravely ill
and it became clear to Coia that a
successor to Fosco would soon be required. R. Ex. 387 at 1091. He
began to actively seek support from the GEB members to replace Fosco as LIUNA’s
General President. R. Ex. 387 at 1090,
1101.
21907735.
A GEB meeting was held
in Florida in early February of 1993 and, although Fosco was too ill to attend,
he flew to Florida in a private plane and stayed nearby in his Florida
residence. R. Ex. 387 at 1102-03. On the third or fourth day of the meeting,
the GEB members were informed that Fosco had died. Id. at 1103.
21907736.
Booker was with the
Fosco family when Fosco died and Coia instructed him to ask Fosco’s wife
whether she would prefer that the election for the next General President be
held immediately or after the funeral.
R. Ex. 387 at 1107. She told
Booker that she wanted the election to be held immediately, so there would not
“be any distractions” at Fosco’s wake in Chicago. Id.
21907737.
At an informal meeting
of the GEB held shortly after Fosco’s death, Coia, pursuant to his authority
under Article VI, Section 5 of the International Constitution, announced that
the election would take place the following morning. International Constitution, Article VI, Section 5; R. Ex. 387 at
1110-11.
21907738.
Coia wanted the election
for General President to be held quickly for two reasons. He did not want an
election to be held in Chicago after Fosco’s burial for fear of a repeat of what
he described as the “bad politicking” that took place in 1975 during Fosco’s
election. R. Ex. 1106-07. Secondly, he wanted to respect Mrs. Fosco’s
wish to have no campaigning at her husband’s wake and funeral. Id. at 1107. Coia also feared that, if too much time
passed, the influence of LIUNA’s Chicago faction would prevail. Id.
Serpico’s Appointment as
Chairman of the Hearings Panel
21907739.
Within hours of Fosco’s
death, Serpico acknowledged that Coia had the votes necessary to be elected
General President and he asked Coia to endorse him for the post of General
Secretary-Treasurer. R. Ex. 387 at
1110-12. Coia
declined this request based on the mob-related “baggage” which Serpico had
acquired as a result of his inclusion in the President’s Commission on Organized
Crime Report. Id. at 1112-13;
Tr. 5333-34 In fact, Coia told Serpico
that he wanted him off the General Executive Board entirely. Tr. 4983.
21907740.
At Serpico’s request,
Coia met with him again the morning after Fosco’s death, and Serpico again
asked Coia for a job with the International Union. R. Ex. 387 at 1114-15. He
stated that he wanted to build up his pension since he would be retiring in two
years when he turned 65. Id. at
1114. Coia told him that he would think
about it. Id. at 1115.
21907741.
Later that day, the GEB
met and elected Coia General President of LIUNA. Tr. 5320.
21907742.
At Fosco’s wake in
Chicago several days later, Coia told Serpico he would appoint him to the
position of Chairman of the Hearings Panel.
R. Ex. 387 at 1116. At one point
during the wake, Coia informed Booker that he had “just gotten rid of
Serpico.” Tr. 4989.
21907743.
Coia testified that his
sole motivation in appointing Serpico to the position of Chairman of the
Hearings Panel was to ensure that Serpico
would retire from the International Union in two years. Tr. 4986.
Coia intended to remove him from
that post if the two year period
expired and Serpico was still in office. Tr. 4989. At that time,
Serpico was an elected International Vice President, a member of the GEB, and
could not be removed by Coia by means of a mere personnel termination.
21907744.
During Serpico's
disciplinary hearing in May of 1995, Coia testified that Serpico and John
Matassa (“Matassa”), a made member of the Chicago LCN and, at that time, a high
ranking LIUNA official in
Chicago[18], approached him at his father's funeral in March of
1993 in Rhode Island. Matassa told him
that, “he didn’t like and the boys here [referring to “the boys” in Chicago]
did not like what [Coia] did by stealing and taking the Presidency from
Chicago.” R. Ex. 387 at 1122.
21907745.
Pursuant to Article
VIII, Section 2(a-vii) of the International Constitution, all recommendations
of the Hearings Panel must be submitted to the GEB for approval. Coia, as General President, sits on the GEB.
21907746.
Serpico almost always
sat on a Hearings Panel with another International Vice President and was
always accompanied by a member of the International Union’s legal staff. Tr. 3584.
The legal staff member always wrote the recommendation which was
submitted to the GEB. Tr. 3585. The GEB had the final authority to either
approve or deny the Panel’s recommendation.
Id. If the GEB did not
accept the recommendation of the Hearings Panel, it could reverse the Panel’s
recommendation or table the recommendation for further deliberations and review
of the record. R. Ex 346 at 8.
21907747.
Serpico was given an
annual salary of $100,000 for the post of Chairman of the Hearings Panel. This was the same salary as a LIUNA Regional
Manager. Tr. 3664. Prior to this post, Serpico was the
Assistant to General President Fosco at an annual salary of approximately
$80,000.
21907748.
The IHO finds that the
salary of the Chairman of the Hearings Panel was commensurate with the salary
of a LIUNA Regional Manager, a job of comparable International Union rank.
21907749.
The IHO finds that Coia
appointed Serpico to the post, not to perpetuate Serpico’s organized crime
influence on the Union, but as a method to facilitate his removal from the
Union.
21907750.
The IHO finds that the move
was not, in this regard, a breach of Coia’s duty authority. The IHO notes that the GEB Attorney made a
monetary settlement with Serpico to cause Serpico to abandon his defense of the
disciplinary charges and to cause him to step down as an International Vice
President.
LIUNA’s Disciplinary Procedure
Prior to the Adoption of the EDP
21907751.
As stated above, Coia
had no authority to remove Serpico from the GEB since Serpico was a duly
elected International Vice President.
Tr. 4986-87.
21907752.
Prior to the adoption of
the EDP, disciplinary actions against members were limited to the filing of
Trial Board[19] charges at the local level pursuant to Article XII,
Sections 1-8 of the Uniform Local Union Constitution. Article XII permitted a member of a local union to file charges
against another member of that same local.
Those charges were then heard by the Executive Board of the local or, in
the event that the Executive Board was disqualified, the charges were heard by
the local’s District Council. See
generally Uniform Local Union Constitution, Article XII, Sections 1-8.
21907753.
No provision existed at
the International level to file disciplinary charges against an International
officer. In order to do so, Trial Board
charges had to be filed in the local union of which the officer was a member,
by another member of that local union. See
Uniform Local Union Constitution, Article XII, Sections 1-8.
21907754.
Prior to the adoption of
the EDP, disciplinary charges were limited to violations of the
Constitution. See Uniform Local
Union Constitution, Article XII, Sections 1-8.
Associating with organized crime figures had never been a subject of
disciplinary charges. The IHO’s
independent research has found no charges brought in any union for associating
with unsavory or underworld figures prior to the Consent Decree arising out of
the litigation between the DOJ and the Teamsters.[20] The Consent
Decree instituted a very detailed procedure for investigating and prosecuting
disciplinary proceedings by an Investigations Officer in hearings before an
Independent Administrator whose decisions were enforced by a federal judge. See
United States v. International Bhd. of Teamsters, Chauffeurs, Warehousemen
and Helpers of Am., 831 F. Supp. 278 (S.D.N.Y. 1993). The Consent Decree which empowered an
International Officer to bring charges against local union officials was a
departure from the protections afforded local unions in the LMRDA and the case
law at the time. Judge Edelstein, in litigation
arising from the decree, felt that existing law was useful only by
analogy. See United States v. International Bhd. of
Teamsters, Chauffeurs, Warehousemen and Helpers of Am., 728 F. Supp. 1032,
1045 (S.D.N.Y. 1990).
21907755.
The Teamsters’
Investigations Officer was empowered by the Consent Decree to bring charges
against any member for violating the union’s constitution.
21907756.
The Teamsters’
constitution provides that a member shall not bring disrepute on the
International Union. See
Constitution of IBT, Article II, Section 2(a), Membership Oath. The Independent Administrator has construed
this provision as encompassing a prohibition against associating with members
of organized crime. No equivalent
provision existed in the LIUNA Constitutions prior to the adoption of the
EDP.
21907757.
Coia approved the
adoption of the EDP in late January of 1995.
The EDP instituted an investigation procedure similar to that contained
in the Teamster Consent Decree. The EDP
created the positions of GEB Attorney, the Inspector General, the IHO and the
Appellate Officer. It made associating
with organized crime a disciplinary offense.
The members of the GEB, with the exception of Serpico and Samuel
Caivano, signed the EDP on February 13, 1995.
See EDP, Agreement, Laborers’ International Union of North
America -- United States, pp. 55-57. On
the same day the EDP was adopted, Coia suspended Serpico and Caivano pursuant
to the new emergency powers granted him by the EDP. The GEB Attorney, a position created with the adoption of the
EDP, filed disciplinary charges shortly thereafter and charged Serpico with
being an associate of organized crime.
Coia testified at Serpico’s disciplinary hearing as the GEB Attorney’s
key witness in May of 1995. See generally
R. Ex. 387.
21907758.
Michael Bearse
(“Bearse”), now LIUNA General Counsel, testified that, during the time Coia was
General Secretary-Treasurer, there were no effective disciplinary procedures at
the International level of the Union to remove a member or officer for
wrongdoing. Tr. 4570-71. He contrasted this situation with the
present day, post-reform procedures:
Prior to reform, the actual practical ability and
power and authority of the international union to intercede into the affairs of
the local union was . . . extremely restricted and limited. We did have authority under the constitution
and under Title 3 of the LMRDA to try and assert a supervision or trusteeship,
assuming we had evidence to establish the legal grounds for such, but otherwise
both the constitution and . . . applicable labor law in the normative models
within the
labor relations community were to recognize that local
unions are separate, distinct, and independent entities.
Tr. 4567.
*
* *.
[P]rior to the enactment of the LIUNA reforms, the
code of ethics and all that’s come with it, there was no ability effectively to
investigate an associational [with the LCN] issue even if there had been . . .
a basis to do that -- but . . . there would have been no basis to look into
association as some kind of prohibited misconduct. Certainly if there were a discrete act of wrongdoing, if there
had been improper selling of jobs or extortion or something of that kind, some
discrete act, a local union could have looked into that and if appropriate
remedied it, or perhaps the international might have come in with a supervision
or trusteeship.
*
* *
[O]ne of the major purposes in LIUNA in enacting the
code [of ethics] and the reforms that have come with it and the particular
provisions in terms of barred conduct was to enable LIUNA to address just that
kind of issue, and it seems to me that necessarily that means that, before we
had the tools that came with the code, before we had the code of ethics, before
we had the policies, before we had a whole army, virtually, of ex-FBI agents,
before we had a GEB Attorney with the ability to take depositions, before we
had a provision that essentially waived the Fifth Amendment, we had no
effective either method or basis to address or remedy that kind of discrete
associational issue.
Tr. 4578-80.
21907759.
After several hearing
days in the Serpico Disciplinary Matter, the GEB Attorney and Serpico reached a
settlement. Serpico left his post as
International Vice President, but remained a member of Local 8 in Chicago. Although the agreement is confidential
correspondence, the IHO takes notice
that the GEB was constrained to pay a sum of money to effectuate Serpico’s
final removal.
IHO makes note of this merely to
emphasize that even, with the EDP, removing Serpico was not an easy task.
Discussion
The GEB Attorney argues that
Coia’s appointment of Serpico as the Chairman of the Hearings Panel meets the
criteria for permitting an organized crime influence to continue in LIUNA, yet
he fails to indicate how Coia was empowered to do more to remove Serpico under
the LIUNA procedures in force at the time.
To view this and the other charges
relating to knowing association with any objectivity, one must examine the
disciplinary machinery available to Coia at the relevant time.
In 1993, there was no EDP or EPC,
no IG, and no GEB Attorney. The only
provision in the Constitutions which permitted any disciplinary action against
a union member was Article XII, Sections 1 through 8 of the Uniform Local Union
Constitution, which permitted a member of the local in which the putative
defendant belonged to file “Trial Board” charges against the defendant. Thus, Coia would have had to convince a
member of Local 8 in Chicago, where Serpico was a member, to file Trial Board
charges against him. This would have
been virtually impossible as a union political matter. The Trial Board would have been made up of
the remaining Local 8 Executive Board members or, if they disqualified themselves,
the members of the Chicago District Council.[21] There would
have been no likelihood of success in this venture and, in fact, the member who
brought the charges would have then been at the mercy of the Local Executive
Board for jobs and other benefits.
Until the adoption of the EDP in
1995, the charge of association with a member of organized crime was not
grounds for dismissal from LIUNA.
It must be kept in mind that
Serpico was unlike other LCN associates.
He did not assert the Fifth Amendment before the President’s Commission
on Organized Crime and he had his own LIUNA power base. He was a powerful political figure in
Chicago and had been appointed and re-appointed Chairman of the Chicago Port
Authority by three Illinois governors. At his disciplinary hearing, he was
defended by a nationally well respected law firm. For Coia to attempt to take on Serpico without recourse to
disciplinary procedures such as those now provided for in the EDP would have
resulted in certain failure.
It should be further noted that,
following the passage of the EDP, Coia immediately suspended Serpico for his
association with organized crime. Tr.
5371-72. Part of the basis for the
suspension, and a great part of the GEB Attorney’s case, was the Chicago airport
incident among Coia, Serpico and Solano, as related by Coia during Serpico’s
Disciplinary Hearing in May of 1995. -- the chief witness of the GEB Attorney.
Moreover, after several hearing
days, Serpico and the GEB Attorney settled the matter. As part of the
settlement, there was a monetary payment to Serpico, indicating that removal of
Serpico was a difficult matter, despite the provisions of the newly adopted
EDP.
Conclusions
21907760.
Coia’s appointment of
Serpico to the post of Chairman of the Hearings Panel was
not intended to permit organized crime influence over
LIUNA, and Serpico’s appointment did not result in organized crime influence
over LIUNA but was intended to facilitate Serpico’s removal from LIUNA.
21907761.
Coia did not violate
Title 29 USC 501(a) by appointing Serpico to the post of
Chairman of
the Hearings Panel. The salary was
commensurate with the salary of a Regional Manager a comparable LIUNA post.
21907762.
Coia’s dealings with
Serpico during 1992 through 1995 were necessitated by Serpico’s position in
LIUNA and not by Coia promoting Serpico’s influence in LIUNA. Their dealings were adversarial and, in
addition, were permitted by the Carpenters’ Exception to barred conduct.
21907763.
The IHO finds that the
GEBAttorney has not proved Charges X through XIII by a preponderance of the
evidence.
VI. COIA’S DEALINGS WITH VIKING
OLDSMOBILE
General Introduction
The three Charges relating to
Coia’s dealings with Viking Oldsmobile-Cadillac-GMC, Inc. (“Viking”) and its
President and CEO Carmine Carcieri (“Carcieri”) must be considered as one
subject. The IHO views Charges XIV, XV,
and XVI as one transaction. The IHO will apply the labor arbitrators’ technique
of examining the evidence as a whole and will focus his inquiry on what the IHO
believes to be the key issue presented by these three charges. See Edna Elkouri & Frank Elkouri,
How Arbitration Works, 322-23
(Marlin M. Volz & Edward P. Goggin eds., 5th Ed. 1997).
Obstruction of the GEB Attorney
Charge XV[22] alleges:
Barred Conduct — Obstruction of the GEB Attorney and
Inspector General: On or about November
29, 1995, August 2, 1996 and January 29, 1997, ARTHUR A. COIA obstructed and/or
interfered with the GEB Attorney and Inspector General, to wit: Coia provided
inaccurate, misleading, and false deposition testimony to the GEB Attorney when
he denied any knowledge of a 1993 bid by PH&H Fleet America to lease
automobiles to LIUNA and its affiliates, despite fully knowing that he had been
briefed on the competing PH&H Fleet America and Viking bids, and that he
had an obligation to answer all questions fully and truthfully, in violation of
the LIUNA barred conduct sections of the Ethics and Disciplinary Procedures and
the LIUNA Ethical Practices Code.
Chronology
The following chronology is relevant to understanding
the context of the above alleged charge:[23]
•
Thomas Needham
(“Needham”) became LIUNA’s Comptroller in 1968 and remained in this position
until he retired in 1995.
•
In 1968, then-General
President Peter Fosco[24] and Needham implemented an automobile “fleet leasing”
program.
•
In 1989, Coia replaced
his father as LIUNA’s General Secretary-Treasurer.
•
In 1989, Coia introduced
Carmine Carcieri (“Carcieri”), the President and CEO of Viking, to then-General
President Angelo Fosco.
•
In 1990, LIUNA awarded
its fleet leasing contract to Viking.
•
In February of 1993,
Coia replaced the late Angelo Fosco as LIUNA’s General President and Norwood
became LIUNA’s General Secretary-Treasurer. Carcieri met with Needham and
Norwood at LIUNA’s headquarters in Washington, D.C. in May of 1993 and,
subsequent to this meeting, Carcieri sent Needham Viking’s proposal for the
1994 fleet leasing contract.
•
In late May or early
June of 1993, Needham received a competing bid from PHH Fleet America (“PHH”)
for the 1994 fleet leasing contract.
•
After receiving the bids
from PHH and Viking, Needham prepared a cost comparison spread sheet and met
with Coia to discuss the price differential.
•
In June of 1993, Needham
received an unsolicited new bid from Viking, which had lowered its prices to
match PHH’s prices.
•
Viking retained LIUNA’s
fleet leasing contract for 1994.
•
In 1995, Viking began to
be phased out as LIUNA’s fleet leasing vendor.
Introduction
In his opening statement to Charge
XV, the GEB Attorney made lengthy comments concerning the history of LIUNA’s
fleet leasing vendors and the 1993 bidding competition between two of those
vendors, Viking and PHH, for the International Union’s 1994 fleet leasing
contract. He stated that Charge XV “is
a charge of obstruction, and that is a charge that Mr. Coia gave false and
misleading testimony in his depositions by flatly denying his knowledge of the
PHH bid when, in fact . . . he not only knew about the bid, but obviously
furnished it to Viking so that they could preserve their contract in
1994.” Tr. 64-65.
The GEB Attorney infers that Coia,
or someone at the behest of Coia, improperly furnished the incumbent fleet
leasing vendor with a competitor’s prices in order to give the incumbent vendor
an advantaged opportunity.
Findings of Fact
LIUNA’s Relationship with
Viking and PHH
21907764.
Needham, who is no
longer a LIUNA employee and not subject to the IHO’s subpoena power, was
LIUNA’s Comptroller for 27 years, from 1968 until his retirement in 1995. Tr. 2494, 4370. Needham did not testify herein but acceded to interviews with
associate GEB Attorney Michael A. Hammer (“Hammer”) and attorney Gilbert O.
Greenman (“Greenman”) of the law firm representing Coia. These attorneys then testified concerning
their interviews with Needham. The IHO
will note where the testimony of these two attorneys differs.
21907765.
During Needham’s career
as LIUNA’s Comptroller, virtually all executive financial decisions were made
by the International General President. Tr. 2494.
21907766.
In the late 1960s, the
International Union did not have an automobile leasing or “fleet leasing”
program. Tr. 2499. Needham instituted the fleet leasing
program in order to control the International Union’s automobile travel
expenses. Tr. 2499-500.
21907767.
Needham handled all
correspondence between the International Union and the fleet leasing
vendors. He disclosed the rates of all
bidders and dictated the rate that needed to be offered by the incumbent vendor
to retain the contract. See R.
Ex. 228A, 231.
21907768.
The International Union
has never had a practice or policy of “blind bidding” for its automobile
leasing contracts. Disclosing
competitive prices to the incumbent vendor was the International Union’s
general practice. Tr. 4375. Booker testified that there was no
prohibition on seeking lower bids by negotiating with an incumbent vendor. Tr. 3613.
In fact, this “was encouraged to get the best price for the best
deal.” Id.
21907769.
In 1990, when Coia was
General Secretary-Treasurer, he introduced Carcieri, the President and CEO of
Viking, to Angelo Fosco. Viking then became LIUNA’s automobile fleet lessor.[25] Tr.
2505. In February of 1993, Coia became
General President and Norwood succeeded him as General Secretary-Treasurer.
21907770.
In May of 1993, Needham
and Norwood met with Carcieri and Joe Picozzi (“Picozzi”), the sales operations
contact at Viking.[26] Picozzi represented that Viking’s 1994 rates would
remain the same or be lower than its 1993 rates. Tr. 2511-12. This
statement proved inaccurate. R. Ex.
252.
21907771.
Upon receiving Viking’s
1994 proposal, Needham sent a memo to Norwood and, referring to the proposal,
stated, “I want you to know that this is an insult to our intelligence. . . .
This turns out to be a real ‘con job’. . . [W]e have to do some real
negotiating on this proposal if we are to stay with Viking. If we can’t get them to come off this
overloaded proposal, we should start taking bids from other companies.” R. Ex.
252.
21907772.
According to Hammer, a
bid was secured from PHH but Norwood told Needham that General President Coia
would want to stay with Viking. Tr.
2520; R. Ex. 253, 256. It was the general
practice of the International Union to remain with the incumbent vendor.
21907773.
According to Hammer,
Needham analyzed PHH’s bid and determined that it was approximately $85,000 per
year lower than Viking’s proposal and approximately $169,000 lower over the
course of the two year contract. Tr. 2522;
GEB Ex. 196.
21907774.
Coia told Needham to
calculate how much higher Viking’s 1994 contract bid was than the one it had
submitted for the previous year’s contract.
Tr. 5048.
21907775.
Needham presented
documents to Coia who, upon seeing them, became angry. Tr. 2527-28. (according to Hammer). See also Tr. 4383-84.
(according to Greenman). According to Hammer, Coia asked Needham to leave the
information with him. Tr. 2529.
21907776.
Needham told Hammer that
he took both a summary cost-out sheet and the bids of Viking and PHH to Coia’s
office; but he told Greenman that he only took the proposals to Coia. Tr. 2527-28 (showing bid and cost out sheet
to Hammer); 4383 (showing proposal to Greenman). The IHO has no reason to doubt
that both attorneys correctly related what Needham told them.
21907777.
Coia returned PHH’s bid
and summary cost-out sheet to Needham but, according to Needham (as related by
Hammer), Coia kept Viking’s original bid.
Tr. 2531.
21907778.
According to Needham (as
related by Greenman), after the initial conversation with Coia, he never had
any other conversation with Coia about the 1993 leasing decision. Tr. 4384-85. Needham thereafter received his instructions from Norwood. See id.
21907779.
In time, Needham
received a new, unsolicited bid from Viking which he stated matched the PHH bid
“dollar for dollar” but, in fact, the new Viking bid did not match the PHH bid
for the 1994 contract “dollar for dollar” on any car. Tr. 2529-30. Viking’s
prices were either slightly higher or lower than PHH’s prices on the various automobiles
although, overall, Viking’s bottom line price met that of PHH. R. Ex. 255.
21907780.
Viking retained LIUNA’s
fleet leasing contract for 1994. Tr.
2530.
21907781.
When R. P. “Bud” Vinall
(“Vinall”) succeeded Norwood as General Secretary-Treasurer of LIUNA, the practice
of revealing price differentials and rates of competitors to the incumbent
vendor continued. See e.g.
R. Ex. 261. Norwood died sometime in
1994.
21907782.
Viking lost the
International Union’s fleet leasing contract in 1995 when it was unable to
secure the kind of financing which would allow it to remain competitive in the
fleet leasing business. Tr. 4411-12.
Coia’s Deposition Testimony in
Question
21907783.
The GEB Attorney
originally argued that Coia obstructed the GEB Attorney’s investigation of him by falsely stating in
his depositions of November 29, 1995, August 2, 1996 and January 29, 1997 that
he had no knowledge of the bid which PHH submitted to LIUNA for the 1994 fleet
leasing contract.
21907784.
The record contains the
following deposition testimony by Coia on November 29, 1995 . Although the GEB Attorney cited the November
29, 1995 deposition in Charge XV and submitted it into evidence, he did not
offered any argument in his post-hearing briefs regarding the probative value
of this deposition. The IHO finds certain
portions of the November 29, 1995 deposition to be particularly enlightening on
this Charge:
[BY THE GEB ATTORNEY:]
Q: Now, in
1993, you described a minute ago what you perceived to be problems [with the
cost of the fleet leasing]. What steps
did you take to change the manner in which the union leased vehicles, the
International Union?
[BY COIA:]
A: I got together with Jim Norwood. And then I assigned him to get more involved
into developing some bid specifications so that we could lower the cost either
by . . . providing certain maintenance on the cars . . . [or] raising the
residual. Whatever methods there were.
He was really in charge -- I put him in charge of that
aspect of it.
*
* *
A: Jim Norwood
was quite good with that.
Q: And did Mr. Norwood then prepare a revised bid
package, if I could call it that?
A: Yes.
*
* *
A: It changed.
Q: And when was that?
A: That had to be in -- that had to be in the mid-to
later part of ‘93, again as part of my restructuring of the organization.
Q: And was that changed bid package put out for bid in
1993?
A: I’m not
sure if it was or not. I can’t say that
for certain. I would have to get
that record back.
*
* *
Q: And were -- have those new set of options been,
since 1993, put out for competitive bid from among different vendors of
vehicles -- suppliers of leased vehicles....
A: Since that time we have noticed other inequities in
the bid process, because the more you do this, the better you get. And we have recently drafted a new
specification to be put out for bid.
Q: I’m now asking about the specifications that were
developed by Mr. Norwood in ‘93.
A: No.
Q: Were they ever put out for competitive bid so that
different suppliers of leased vehicles could provide bids on supplying those
vehicles to the International Union?
A: I don’t think so.
No. I don’t think so.
*
* *
A: You got to understand one thing. When it went into effect, lets say the end
of ‘93, one year goes by. We’re into
the process of it. We’re developing new
ideas. So it’s more appropriate now to
do that for the first of -- January of 1996.
There are only so many times you keep putting these
cars out to bid because -- or anything else for that matter. You get into a way that you’re comfortable
with a firm, the way they do business, and all of a sudden, you got maybe 20
cars out with one firm and then possible ten out with another one and -- ties
and maintenance and insurance and everything else becomes a problem.
Q: To your knowledge, after this -- my understanding
is, and you can stop me if I’m wrong here, sometime after Mr. Carcieri had a
meeting with Mr. Fosco, there was a bid process and Viking was the successful
bidder. Is that correct?
A: Yes.
Q: And when was that, to your knowledge?
A: It may have been the first -- let’s say January 1st
of 1990.
*
* *
Q: Okay. And
since that time, have competitive bids ever been sought again from among
different bidders?
A: I think one other time.
Q: Do you recall when that was?
A: I would have to say -- you know, I hate to make a
statement -- I’m uncertain to it, but it may have been in ‘92.
Q: All right.
A: The best way of handling it is to just check with
Tom Needham.
*
* *
Q: All right. And since you became the General
President in February of ‘93, have the leased vehicle specifications, whatever
they are, been put out to bid?
A: No. They
will be put out to bid.
Q: And when the specifications were put -- well, since
you don’t know whether they were or not, to your knowledge, has Viking
continued to supply the leased vehicles to the International since sometime
around 1990?
A: Yes.
Q: Whether or not they were successful or not
successful, in a second bid, you don’t know whether that actually happened?
[BY MR. GUTMAN- DEFENSE COUNSEL:]
If they had not been successful in the second bid,
would they have --
[BY MR. COIA:]
A. They
wouldn’t have kept it, no.
[BY MR. GUTMAN:]
So if there was a second bid they --
[BY THE GEB ATTORNEY:]
Q. Right. If there was a second bid, they were
successful?
[BY MR. COIA:]
You see --
[BY MR. GUTMAN:]
And if there wasn’t, they won the last one?
[BY MR. COIA:]
A: In my restructuring, Bob, I put different people in
charge of different operations. It was
different before that and before 1993.
The General President had all the decision-making
process, or the handling of these things.
So when you talk about bids and nonbids since 1993 and specifications,
the Secretary-Treasurer was in charge of that. . . .
So I may seem uncertain as to certain things. I’d have to get my staff in here and let
them answer the question, and then I could give you a better answer.
GEB Ex. 200, Tab C at 209-216 (emphasis added). Coia’s testimony at the November 29, 1995
deposition demonstrates that, upon becoming General President, he restructured
the operation of that position and delegated responsibility in many areas to
other persons. Norwood and Needham were
given authority over LIUNA’s fleet-leasing operation and specific questions
concerning that operation had to be directed to them.
21907785.
Coia testified about the
delegation of authority over LIUNA’s fleet leasing program in his deposition of
August 2, 1996 as well.
21907786.
The record contains the
following deposition testimony by Coia on August 2, 1996. The GEB Attorney bases his charge on the
highlighted sections of this testimony:
[BY GEB ATTORNEY:]
Q: . . . .There was a bid process for LIUNA’s rental
car lease in 1993, correct?
* * *
[BY COIA:]
A: I’m not
sure if there was one in ‘93. When I
was -- the first bid process of which Viking was involved I think was in 1990
when they were the low bidder and got the lease arrangement with LIUNA, and
then there were two subsequent ones after that, whether the were in ‘91, ‘92 or
‘93, I’m not sure.
Q: Let me see if I can place you in time here a little
bit. . . I’m handing you an exhibit.
It’s marked Exhibit 2, and why don’t you just take a look at that.
A: Right, I’m familiar with this, yes.
*
* *
Q: To clarify, this Exhibit 2 purports to be a May 19,
1993 memorandum to James Norwood from Thomas Needham regarding Viking proposal
for new fleet lease program and 1994 cars, and I take it from your statement
that you’re familiar with this memorandum?
A: Yes.
Q: Did this memorandum come to you for viewing at a
certain point in time in or around May of 1993?
A: It had to be around there because I was aware of
it.
*
* *
Q: And as
you’ve already testified, in May of 1993 your position was the general
president of LIUNA?
A: Yes. See,
normally this type of proposal or review would be done -- when I say ‘normally’
by my predecessor, which would have been the general president. [Fosco]. I divided and tried to delegate work and
authority to others within the building. . . . Cars was Norwood . . . I tried
to, again, put more responsibility in delegation of authority to others within the
operation so it could be more [efficiently] run. That’s how Norwood was involved with the leasing, to review it
and to make it better.
*
* *
Q: I am going to show you a one-page document, which
has been marked as Exhibit 3. . . .I would ask you to [take] a look at that and
tell me when you’re done.
*
* *
Q: This is a document that is marked May 21, 1993, a
memorandum to James Norwood from Thomas Needham.
A: Yes.
Q: Do you recognize that document?
A: Yes. I
recall this -- when I discussed this with Norwood to have him get back to
Needham to find out what those cost factors really would be, and I believe
that’s how this memorandum came about.
Q: So this . . . is a document that was generated at
your request to further clarify the information?
A: Yes. The
first memorandum when this came back to me showed that this was going to be
significant cost increase from the last proposal that we had, and I wanted to
get back exactly what the cost was going to be, and that is how this one came
about.
*
* *
A: This is a new proposal submitted to us by
Viking. This was their proposal to us
for the upcoming year. We reviewed it,
Norwood, Needham, and myself. I’m not
sure exactly, but I reviewed it, got back to Needham with respect to coming up
exactly what these figures would be in real dollars, and the second
memorandum... reflected what those additional costs would be if we . . .
accepted the Viking proposal, which we did not.
* * *
[BY THE GEB ATTORNEY:]
Q: Are you familiar with that document [the PHH bid]?
[BY COIA:]
A: I don’t recall ever seeing this document.
Q: Do you recall a competing leasing
proposal being made around the June 1993 period which offered a different bid
than the offer provided by Viking?
A: No. This is the first time - this is the first time I’ve seen
this document.
Q: This document being Exhibit 4?
A: Being June 11, 1993, yeah.
I might add to the best of my recollection.
*
* *
Q: Were you aware back in June of 1993 that a competing bid was
made to the Viking proposal for leasing?
A: No.
* * *
A: Let me add -- I want to just add something. If I was aware of this . . . I would have
interviewed these people [at PHH] and found out why and how this was developed
with bid specs and so forth because as you go from this May 21 memorandum with
Viking, we then sat down to come up with better figures with Viking as to
residuals and buyouts and certain type cars.
We changed our process to lower our cost, and they never were
interviewed, PHH. Based on this they
should have been.
* * *
Q: Tell me what you recall about discussing Viking’s
bid proposal in May of 1993 with Tom Needham?
Do you recall having a meeting --
A: I’m not sure exactly with Tom Needham alone, or
with Jim Norwood and Tom Needham, but I can tell you my recollection of the
Viking new bid -- we will call it -- which is the May 19 proposal. No bid, proposal, which was significantly
high. Then we got the actual dollar
factor as to what that would be.
Then Norwood and myself sat down to review the entire
leasing program. . . .
GEB Ex. 200, Tab D at 67-76 (emphasis added).
21907787.
The GEB Attorney also
cites to Coia’s January 29, 1997 deposition where the following exchange
occurred between him and the GEB Attorney.
The GEB Attorney bases his Charge on the highlighted testimony.
[BY THE GEB ATTORNEY:]
Q: . . . . Let me ask you a few questions about the
Viking Leasing contract, just to clear up a couple of points . . .
Viking first started to lease cars to the
International in approximately 1989 or 1990?
I am referencing some of your prior testimony. I am just trying to create a context here.
[BY MR. COIA:]
A. Yes.
*
* *
Q: And Viking ultimately submitted a bid, and arranged
for the contract.
Prior to Viking submitting their proposal, did you
provide Mr. Carcieri or anyone else at Viking with the rates that were being
charged to . . . [PHH], . . . another entity in the bidding process?
A: No.
Q: Okay. Let
me show you . . . Exhibit No. 4 from [the August 2, 1996 deposition]. And I just want to refer to you the second
page, which is a breakdown of a cost comparison of the bid proposals of Viking
and this [PHH], and I will ask --
A: Was this a bid?
*
* *
A: I thought we went over this before. I never knew that this PHH submitted any
proposal to the Laborers.
Q: Okay. I
understand that. I am not asking you
that question over again. What I am
asking you is on the second page, if you know whose handwriting that is; I
don’t think I asked you that before. In
other words, that is not your handwriting?
A: No.
Q: Do you know whose handwriting it is?
A: I think it is Tom Needham’s.
Q: Okay. And
it is your testimony that you don’t recall PHH providing a proposal at all; is
that what you just . . .
*
* *
A: I don’t know.
I think in my testimony, I think, I don’t know if Tom Needham
solicited this on his own or whether it was part of a bid process. I was not aware of it.
GEB Ex. 200, Tab H at 208-211 (emphasis added).
Discussion
The GEB Attorney argues in his
post-hearing brief that Coia cast aside his affirmative duty to cooperate fully
with the GEB Attorney and IG’s investigation of his conduct, and callously
disregarded all LIUNA members’ duty to provide the full and complete truth to
the GEB Attorney and IG by falsely stating that he had never seen or could not
recall seeing the bid from PHH. GEB Br.
at 161-62.
In his responsive brief, the GEB
Attorney states that the “core issue” of Charge XV is: “Did Coia tell the truth
during his deposition testimony when he testified that he had never seen the
bid PHH submitted for the 1994 fleet leasing contract with LIUNA?” GEB Resp. Br. at 62. He characterizes Coia’s testimony as
“unadorned obstruction” and states that “[t]he answer [to charge XV] is as
clear as the matter is simple: Coia lied under oath.” Id.; GEB Br. at 162 (characterizing testimony as unadorned
obstruction).
In order to show that Coia’s
deposition testimony in question was obstructive, the GEB Attorney must show
the testimony was material, misleading, and intentionally deceptive. See In re Martire 1997
A.O. 81 (97-008D).
When viewed in the context of the
entire depositions and the rather disjointed question and answer procedure
utilized by the GEB Attorney, however, it is clear that the GEB Attorney has
not established that Coia attempted to mislead. Coia testified that he had delegated responsibility for LIUNA’s
fleet leasing to Norwood and Needham and the record reflects that he did not
involve himself in the day-to-day operations of the International Union’s
vehicle leasing program. Indeed, at one
point during his November 29, 1995 deposition, he recommended that the GEB
Attorney refer a certain question to Needham.
GEB Ex. 200, Tab C at 214.
Moreover, the GEB Attorney has not
demonstrated how these alleged misstatements were material to an investigation
being conducted by the GEB Attorney. Although the object of the investigation
was not clear from any evidence in the record, the Attorney’s post-hearing
brief suggests that Coia was attempting to avoid testifying that persons at
Viking were shown the PHH bid. The GEB
Attorney further argues that Coia acted improperly by revealing PHH’s bid to
Viking, thus giving Viking the opportunity to submit a more favorable
proposal. This flies in the face of
substantial evidence in the record.
The record reflects that the
International Union does not currently have and has never had a practice or
policy of blind bidding. It negotiates
with incumbent vendors to obtain the lowest rates on services provided to the
Union by soliciting competitive bids and continually sharing the price
differentials to the incumbent.
As a final note, the IHO would
point out that the key evidence on this charge consists of Needham’s
recollections regarding the bidding on the 1994 leasing contract. These recollections were received by way of
the hearsay testimony of attorneys Hammer and Greenman. While there is no doubt that these gentleman
faithfully related what Needham told them, Needham himself was not subjected to
cross-examination. Under these
circumstances, cross examination of Needham in the presence of the IHO would
have been very helpful.
Conclusions
21907788.
The GEB Attorney has not
proved by a preponderance of the evidence that Coia intended to mislead the GEB
Attorney.
21907789.
The GEB Attorney has not
shown that Coia’s alleged statements are material to an investigation by the
GEB Attorney.
21907790.
The IHO finds that
Charge XV is not proven by a preponderance of the evidence.
21907791.
The overall importance of Charge XV is that
it is really a stepping stone to Charge XIV which, as will be seen, is far more
substantial. The IHO will utilize the
recognized technique of labor arbitrators and will refocus the evidence and the
issue. See Edna Elkouri &
Frank Elkouri, How Arbitration Works,
322-23 (Marlin M. Volz & Edward P. Noggin eds., 5th Ed. 1997). The IHO will utilize the information
relating to Viking’s favored incumbent status provided in support of Charge XV
in assessing Coia’s and Carcieri’s actions in Charge XIV.
Coia’s Business Relationship with Viking
Charge XIV alleges:
Ethical Practices Code -- Business and Financial
Activities of Union Officers: From on or about July 12, 1991, to in or about
February 1994, ARTHUR A. COIA, while a member and officer of LIUNA, that is,
General Secretary-Treasurer or General President, received and accepted
something of value from a professional enterprise with which the Union
conducted business, to wit: Coia caused or allowed Viking to structure the
transfer to him of a 1991 Ferrari F40 automobile, Vehicle Identification Number
ZFFMN34A6M0089653, in such a manner as to foster the misleading appearance that
Viking maintained ownership of the automobile and to avoid transferring the
Manufacturer’s Certificate of Origin (“MCO”), thereby allowing Coia to maximize
the value of the automobile on resale, and to avoid the payment of at least
$77,750 in taxes, in violation of the LIUNA Ethical Practices Code, “Business
and Financial Activities of Union Officials,” Section 4.
Introduction
The GEB Attorney has charged Coia
with violating the EPC, Business and Financial Activities of Union Officials,
Section 4 by receiving something of value from a union vendor. Specifically, it is alleged that Coia was
given an opportunity to purchase a Ferrari F40 automobile (“Ferrari” or
“F40") in a joint venture with Viking, the International Union’s fleet
leasing vendor, and profit from its sale.
The EPC, Business and Financial
Practices, Section 4 states in pertinent part:
every officer and representative must avoid any
outside transaction which creates an actual or potential conflict of interest.
. . .
(4) No officer
or representative shall accept “kickbacks,” under-the-table payments, valuable
gifts, lavish entertainment or any personal payment of any kind . . . from a
business or professional enterprise with which the Union does business.
Id.
Findings of Fact
21907792.
As discussed supra
in the Findings of Fact and Conclusions relating to Charge XV, from 1990 to
1995, Viking was the automobile fleet lessor for LIUNA. Coia and Carcieri, the President and CEO of
Viking, were long time friends. Tr.
4412-13.
21907793.
In December of 1987, Carcieri traveled to
Ferrari headquarters in Italy to meet with Giovanni Battista Razzelli
(“Razzelli”), the Directore Generale of the company, to attempt to become a
franchised Ferrari dealer. Tr.
4416-18. Razzelli did not grant
Carcieri a franchise, but agreed to sell him a Ferrari F40. Id. at 4416. See R. Ex. 296, 297.
21907794.
A Ferrari F40 is a
limited edition exotic car which Ferrari began developing in 1987 or 1988 as an
anniversary car, commemorating 40 years of being in business. Tr. 5135-36. Only three to four hundred F40s were originally scheduled for
production. Id.
21907795.
Carcieri and Ferrari of
Italy corresponded over the next few years about his acquisition of an F40 but,
ultimately, Carcieri never received an F40 directly from Italy. See R. Ex. 298-313.
21907796.
Coia testified that he
was aware that Carcieri had spent a great deal of time attempting to acquire
the F40 from Italy but, in April or May of 1991, Carcieri told him that he was
considering canceling the deal. Tr.
5105. Carcieri offered Coia the
opportunity to join him in obtaining an F-40 and requested that Coia take the
financial risk on the car, in exchange for an opportunity to profit on it. Coia
agreed to this arrangement. Id.;
Tr. 5109-10.
21907797.
In July of 1991, Coia
and Viking purchased a Ferrari F40 for $450,000 from Autohaus, a Ferrari
dealership located in Cohasset, Massachusetts.
Tr. 3095 (cost of F40), Tr. 4426-27, 5111-12; GEB Ex. 135 (stating price
paid for F40) and 200, Tab D at 84-85.
Carcieri canceled his order on the F40 he was expecting from Italy.
21907798.
The entire down payment
on the F40 was comprised of a cash payment by Coia and the trade-in of two
vehicles supplied by Coia. GEB Ex. 135,
138. Carcieri secured a $300,000 loan
from GMAC on the Viking floor plan for the balance of the F40 cost. GEB Ex. 136, 137. The F40 was purchased in Viking’s name.
21907799.
For the entire time the
car was carried in Viking’s name, Coia paid all of the carrying costs on the
vehicle including the monthly finance charges, maintenance fees and
insurance. Tr. 5096-96, 5403. See also GEB Ex. 141, 143,
145, 154-61, 163-88.
21907800.
At the time of the F40
transaction, Coia was LIUNA’s General Secretary-Treasurer.
Preservation of the
Manufacturer’s Certificate of Origin (“MCO”)
21907801.
The terms MSO and MCO
are interchangeable and refer to a
“statement from the manufacturer that a vehicle has never been titled in
any state and that the person who is receiving the vehicle or titling the vehicle
would be the initial title owner.” Tr.
2837, 2832 (discussing interchangeable nature of terms).
21907802.
Coia testified in his
depositions on November 29, 1995 and August 2, 1996 that the Ferrari F40 was
titled in Viking’s name in order to preserve the MCO and thereby maintain the
value of the car. GEB Ex. 200, Tab C at
221; Tab D at 88-91.
21907803.
Ordinarily, once an
automobile has been sold, the dealer signs the MCO to the customer and then
presents it to the state transportation authorities to receive a title to the
vehicle. Tr. 2838.
21907804.
A titled or pre-owned
automobile would have a lower resale value than an automobile that retained its
MCO and had never been titled. Tr.
2838. In the exotic car market, there
is a certain “cachet” to being the first owner. Tr. 2839.
21907805.
Coia testified that the
effect of his transaction with Viking was that the dealership retained nominal
ownership of the F40 so that, when it was resold, it would appear as though the
vehicle was an untitled new car. GEB
Ex. 200, Tab C at 223-24. Viking’s name
appeared on the F40's MCO. R. Ex. 318.
21907806.
Viking designated the
Ferrari F40 as a demonstration vehicle so that Coia could use it pursuant to a
temporary loan agreement that Coia and Viking had entered into. GEB Ex. 139, 147. Coia’s use of the car was nominal. Among exotic car enthusiasts, cars such as the F40 are not driven
for pleasure. They are only used for
purposes of demonstration and to keep the engine in lubricated condition. When the car was sold it had 1,500 miles on
it.
21907807.
The Ferrari F40 was kept
on Viking’s premises, as well as in Coia’s personal garage, and was shown at
car exhibitions in Florida. Tr.4518-19;
5112-14.
21907808.
The F40 was ultimately
sold through a broker in New York in 1994.
Tr. 4520. By that time, the
demand for the F40 had dropped substantially.
21907809.
Coia received a total of
$380,000 on the sale of the F40, which resulted in a loss to him of
$70,000. Tr. 5097 (testifying loss of
$70,000); GEB Ex. 153 (receipt of $380,000); GEB Ex. 192. Coia also paid a total of $35,000 in
interest and carrying costs on the F40.
Tr. 5096-98; GEB Ex. 154-161.
21907810.
Carcieri earned a
$15,000 commission on the sale of the F40.
Tr. 4519-21.
21907811.
At the time of the sale
of the F40 in 1994, the Federal luxury tax was paid to the IRS by Viking, the
seller of the automobile, after collecting it from the buyer. Tr. 2777.
21907812.
Coia, on his own, could
have purchased the car on the open market from Autohaus but the joint venture
with Carcieri offered him the opportunity to buy it with the added financial
resources supplied by Carcieri’s relationship with GMAC.
21907813.
The joint venture with
Carcieri also offered Coia the opportunity to sell the car with the enhanced
value of a new vehicle which still had its MCO.
21907814.
The way in which the F40
transaction was structured between Coia and Viking permitted Coia, as a partner
of Viking, to, in essence, act as the wholesale dealer of the vehicle and avoid
the payment of the luxury tax[27] on the car.
This tax was ultimately borne by the person to whom the F40 was
transferred after Coia and Viking. This
is a one time tax. This is another
benefit presented to Coia by Viking which would not have been available to him
with any other dealership.
21907815.
Coia was given this
unique opportunity by virtue of Carcieri.
Although Carcieri was an old friend, he was also a major vendor of the
Union.
21907816.
Coia would not have been
afforded this same opportunity on the open market.
21907817.
Although no union funds
were involved, there were no kickbacks or payments, nor any direct effect on
the union, there was a definite conflict of interest and an appearance of impropriety.
21907818.
The EPC strictly
prohibits any outside transactions which create a potential conflict of
interest. EPC, Business and Financial
Practices, Section 4. It also prohibits
officers from receiving personal benefits of any kind from a business
enterprise with which the union does business.
Id.
21907819.
The spirit of the EPC
and basic fiduciary law prohibit such transactions.
21907820.
The IHO finds it was a
conflict of interest for Coia to receive the favorable opportunity to
participate in the venture.
21907821.
It is irrelevant that
Coia lost money on the deal; in point of fact, he was provided favorable terms
and had the opportunity to make a large profit from the F40. It is this opportunity, which was enhanced
by Carcieri’s financing arrangement with GMAC, the avoidance of the luxury tax
and Carcieri’s retention of the MCO, that reflected a personal benefit
prohibited by the EPC. The ethical
propriety of the venture cannot be based upon whether the participant makes a
profit.
Conclusions
21907822.
Coia’s joint venture
with Carcieri to purchase the F40 was a direct conflict of interest to his
position as General Secretary Treasurer and Carcieri’s position as a major
LIUNA vendor.
21907823.
Although there were no
union funds involved and there was no direct effect on the union as a result of
this joint venture, Coia was offered an opportunity to make a substantial
profit from the sale of the F40. This
venture was in violation of the EPC.
21907824.
The GEB Attorney has
proved Charge XIV by a preponderance of the evidence.
Evasion of Federal Luxury Tax
Charge XVI alleges:
Commission of a Felony Under Federal Law — Tax
Evasion: In or about 1991 in Rhode
Island and elsewhere, ARTHUR A. COIA committed a felony violation under federal
law, to wit: Coia did knowingly and willfully attempt to evade and defeat the
payment of approximately $42,000 in federal luxury taxes due and owing by him
to the United States of America under 26 U.S.C. § 4001 on the purchase of a
1991 Ferrari automobile bearing Vehicle Identification Number ZFFMN34A6M0089653
for $450,000, all in violation of Title 26, United States Code § 7201.
Discussion
In Charge XVI, the GEB Attorney
alleges that Coia willfully evaded the payment of $42,000 in federal luxury tax
on the purchase of the Ferrari F40 in violation of 26 U.S.C. § 4001.[28] This was an
amended charge, added months after the original charges were filed.
The LIUNA EDP permits the GEB
Attorney, in his discretion, to bring a disciplinary charge against a LIUNA
member based upon any felony conviction of the member in state or federal court. The EDP also permits the GEB Attorney to
bring a disciplinary charge based upon evidence that would indicate an
individual has committed a federal or state felony, even though that individual
has not been charged by the state or federal authorities. See EDP, Section 3, The GEB
Attorney.
In the instance where no federal
or state charges have brought against the member, the IHO has the authority to
determine whether the member has committed a felony where the application of
the criminal statute is clear and there are no peculiar executive branch
policies which must be considered before charges are brought. The IHO has found that individuals have
committed state and federal criminal violations, although the violations were
not charged by the proper authorities. See
In the Matter of Amarel, IHO Order and Memorandum, 96-45D (December 9,
1996)(assault in violation of Canadian law); In the Matter of Beck, IHO
Order and Memorandum, 98-15D (August 10, 1998)(embezzlement in violation of 29
U.S.C. § 501(c)); But see In the Matter of Proto, IHO
Order and Memorandum, 97-09D (March 26, 1998)(IHO refused to find violation of
New Jersey racketeering statute).
In the case of a violation of a
federal tax statute, whether an individual owes the federal tax, and whether the
person will be charged with a criminal violation of that tax statute, is a
decision within the initial discretion of the Internal Revenue Service
(“IRS”). Only the Commissioner of the
IRS and his delegate can decide whether a tax is due and whether the failure to
pay a tax constitutes a criminal offense.
26 U.S.C. §§ 7401, 9801. The decision is not simply a factual
determination. For example, a failure
to file a personal income tax return may not result in a criminal charge, even
for failing to file returns for several years.
The IRS has guidelines to
determine whether it will consider if a civil tax is due and owing and whether
the IRS will recommend criminal charges if there was a failure to pay the
tax. For example, the Criminal Investigation
Standards and Policies section of the IRS Practices and Procedures states that
in tax evasion cases, prosecution is recommended only if (1) the average yearly
additional tax for criminal purposes is $2,500 or more, and (2) an
uncomplicated fact pattern is involved.
See IRS Practices and
Procedures, Criminal Investigation Standards and Policies ¶ 12.03[3][a](Michael Saltzman ed., 2d ed.
1991)(emphasis added).
Moreover, the DOJ cannot bring
criminal tax charges unless the IRS first makes a recommendation. The IRS has primary jurisdiction in this
area, and it is strictly an executive function. See Pseudonym Tax Payer v. Miller, 497 F. Supp. 78,
81 (D. N.J. 1980). Even after a
recommendation is made by the IRS, the DOJ Tax Division may decline
prosecution. 28 U.S.C. § 547(a). The DOJ Tax Division also applies its own
unwritten informal guidelines.
In summary, the decision whether
circumstances indicate that tax is owing and whether the act constitutes a
criminal tax violation is not for the IHO to make. The IHO has no knowledge of
the IRS guidelines or the current policy of the IRS on criminal prosecutions,
especially in cases involving complicated statutes and fact patterns such as
those involved here. The matter is
further complicated by the fact that the luxury tax is a one time tax and has
been paid by the person who purchased the F40 from Viking.
The IHO is unpersuaded by the
testimony of GEB Attorney witness Robert Russo (“Russo”). He was never a member of the IRS Regional
Counsel staff, which make such decisions, but was a special agent field
investigator. See United
States v. LaSalle Nat’l Bank, 437 U.S. 298, 315 (1980)(“while the special
agent is an important actor in the process of referring a matter for criminal
prosecution his motivation is hardly dispositive”). The Regional Counsel of the IRS has broad discretion in
determining whether to assess a tax deficiency or prosecute a tax violation
criminally. A labor arbitrator cannot
pretend to assume the application of such discretion, especially in the very
complicated fact pattern presented in this case. Moreover, there is no precedent in this area. The IHO’s independent research has disclosed
no reported criminal cases for failure to pay luxury tax and the GEB Attorney’s
witness, Russo, testified he know of none.
Tr. 2801. Moreover, the IHO
notes that the luxury tax was paid by the person who purchased the car from
Coia.
If Coia was required to pay luxury
tax on the F40 and his failure to do so was a result of fraud, as the GEB
Attorney contends, there is no statute of limitations on civil tax fraud. Tr. 2801-02. The report of the GEB Attorney in this matter can easily be
referred to the IRS, an organization always eager to collect taxes. The IHO would be surprised if such referral
has not already been made.
Charge XVI is dismissed as not
being within the province of a labor arbitration.
VII DECISION
The GEB Attorney has voluntarily
dismissed Charged II.
The GEB Attorney has not proved
Charges I and III through XIII by a preponderance of the evidence.
The IHO has considered Charges
XIV, XV, and XVI as a group. Based upon
this grouping, the IHO finds that Charge XV has not been proved by a
preponderance of the evidence, but the evidence submitted in support of Charge
XV has been considered in support of Charge XIV. Based upon the evaluation of the evidence of both Charges XIV and
XV, the IHO finds:
The GEB Attorney has proved Charge
XIV by a preponderance of the evidence.
The GEB Attorney has not proved
Charge XV by a preponderance of evidence.
Charge XVI is dismissed as beyond
the province of a labor arbitration.
VIII PENALTY
The penalty is based on Charge
XIV.
Although Coia actually lost money
on the venture with Carcieri, he was offered the
unique
opportunity to make a large profit and received favorable terms on the purchase
of the vehicle. The conflict of interest in this matter occurred at the highest
level of the Union, between the Chief Financial Officer and a major vendor to
LIUNA.
The reform process is about more
than organized crime; it is about financial integrity in the labor
movement. The adoption of EPC was meant
to bring an awareness of financial integrity to all LIUNA officers, from the
Business Manager of a small local union with 200 members to the General
Executive Board members in Washington, D.C.
If the EPC is to have any
relevance to LIUNA officers at the local and International Union level in the
future, there should be a penalty commensurate with the benefits improperly
obtained to demonstrate that such conduct will not be tolerated in LIUNA at any
level. The penalty must be one that is
remedial and a deterrent.
Coia is assessed a fine of
$100,000. The fine may be paid over a
two year period.
This Order takes effect in ten days unless a notice of
appeal is filed with the Appellate Officer within ten days.
The Appellate Officer is:
W. Neil Eggleston, Esq.
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2402
(202) 783-0800
(202) 383-6610 (facsimile).
________________________________
PETER F. VAIRA
INDEPENDENT HEARING OFFICER
Dated: March 8, 1999
Robert Luskin, Esq.
Brendan V. Sullivan, Jr.,
Esq.
Howard Gutman, Esq.
Micheal Bearse, Esq.
Laborers for JUSTICE© 1999 as to original work. To be published on www.liuna.org because of complaints and briefs of Laborers for JUSTICE. If you have documents you want other laborers to see, call Jim McGough at 847-202-3838
[1]The language set forth here differs from the
language set forth in Appendix B of the EDP.
These differences, however, have no bearing on the present case.
[2]On September 25, 1998, in a footnote in his
post-hearing brief, the GEB Attorney withdrew Charge II against Coia. GEB Attorney Post-hearing Brief (“GEB Br.”)
at 52 n.22.
[3]Citations to the record for this chronology
will be supplied infra in the Findings of Fact.
[4]The history and structure of the LCN were
discussed at length in Fallacara, IHO 96-65D at 2-4; Chicago District
Council, IHO 97-30T at 6; and, In the Matter of Franco, IHO Order
and Memorandum, 98-04D at 10-12 (October 6, 1998).
A “made member” is an individual who has been
accepted and inducted into an LCN family.
Induction into the LCN is referred to as “getting made.” To be inducted, a member must undergo a
formal initiation ceremony, followed by all of the LCN families, in which the
proposed member swears his allegiance to the family. See Fallacara, IHO 96-65D at 4.
An
associate of the LCN is a person who is not a made member of an LCN family but
who participates in, cooperates with, or facilitates the LCN’s activities. Associates are of two types: (1) criminals
who are taken into the fold by the members or (2) persons who work at
legitimate businesses, but perform tasks, provide services, or assist members
in their illegal activities. Id.
at 3.
[5]Hillary could not remember which incident
took place first, the one at Kendall Estates or the one at the Union
House. Tr. 701.
[6]This case is frequently referred to
throughout the record as the “Hauser case,” since Joseph Hauser (“Hauser”) was
the government’s key witness.
[7]These were during the period when the joint
defense meetings occurred, the propriety of which has already been conceded by
the GEB Attorney. See GEB Br. at
58.
[8] In the Matter of Bifulco, IHO Order
and Memorandum, 96-48D (March 17, 1998); Chicago District
Counsel, IHO 97-30T.
[9]Gifts such as these must now be approved by
the IG but, at the time, were purely a matter of discretion on the part of the
local union Executive Board.
[10] Robert Connerton of the law firm of
Connerton, Ray & Simon (“the Connerton firm”) was retained by LIUNA as
attorney Robert Connerton was the General Counsel.
[11]In his deposition taken by the GEB Attorney
on February 9, 1995, Daniel Caivano stated that his main objective as the Local
66 trustee was to immediately remove Vario as the Funds Administrator. R. Ex. 103 at 92. See also R.
Ex. 56. Vario submitted his letter of
resignation upon confrontation by Daniel Caivano. R. Ex. 103 at 73.
[12]Curiously, although Fino had been a
government informant for at least 15 years inside Local 210, he had never been
called upon to testify about his activities in running that Local before
testifying before the IHO in the Bifulco case in August of 1996.
[13]During his investigation into Fino’s
allegations, Elbaor periodically copied Coia on his memoranda to Connerton or
sent memoranda directly to Coia keeping him apprised of the investigation. See R. Ex. 127, 138, 140.
[14]The GEB Attorney avers that Giardina’s father
is a made member of the LCN. GEB Ex.
94.
[15]Solano was the President and Business Manager
of Local 1 in Chicago and a delegate to the Chicago District Council from 1970
until his death in 1992. Chicago
District Council, IHO 97-30T at 61 ¶ 141.
[16]Coia first appeared as a witness against
Serpico at a hearing before the IHO on May 19, 1995 after Coia suspended him
from office pursuant to his new powers under the EDP. Tr. 5371-72. There, Coia
testified to his Chicago meeting with Solano and the struggle for the presidency
with Serpico which is related infra at pp. 65-67.
[17]Booker has since been elected the
International General Secretary-Treasurer.
[18]Matassa was the Vice President of the Chicago
District Council and the President and Business Manager of Local 2 in
Chicago. See generally Chicago
District Council, IHO 97-30T at 66 ¶¶ 172-192.
[19] Article XII, Section 1 of the Uniform Local
Union Constitution states:
An officer or member in good-standing may prefer charges against any
other officer or member of a Local Union, by filing written charges in duplicate
with the Recording Secretary of the Local Union. These charges must be signed by the person preferring the charges
and indicate the provisions of the Constitution to be relied upon, or the
agreement or rule alleged to have been violated, and must set forth the
specific violation or wrong charged and the date on which it allegedly
occurred.
Article XII, Section 3 of the Uniform Local
Union Constitution states in relevant part:
The members
of the Executive Board of the Local Union shall constitute the Trial Board;
except that neither the charging party nor the accused nor any member directly
interested or involved in the charges may sit as a member of the Trial Board.
[20]The lack of precedent is evidenced by the
fact that, prior to the Consent Decree with the IBT, none of the union trustees
who were installed by the suits filed pursuant to the RICO Act filed
disciplinary charges against officers for associating with organized
crime. See United States v.
IBT (Local 560), 581 F. Supp. 279 (D.N.J. 1984); Roofers (Local 30),
686 F. Supp. 1139 (E.D. Pa. 1988); ILA, 812 F. Supp. 1303 (S.D.N.Y.
1993).
[21]The Chicago District Council was placed under
trusteeship in 1998 for being under the influence of Organized Crime. See Chicago District Council,
IHO 97-30T.
[22]Charge XV is being dealt with prior to
Charges XIV and XVI due to the direct correlation between them and the history
which is set forth relating to them in Charge XV.
[23]Citations to the record for the items listed
in this chronology will be supplied infra in the Findings of Fact.
[24]During this same time, Coia, Sr. was LIUNA’s
General Secretary-Treasurer but Respondent Coia did not yet have a position
with the International Union.
[25]Coia and Carcieri have known one another for
many years and remain friends to this day.
Tr. 4412-13; GEB Ex. 200, Tab C at 193-94.
[26]Coia did not attend this meeting but made an
appearance to show his support for Viking.
Tr. 2511.
[27]The GEB Attorney also alleges that Coia and
Carcieri did not pay $33,750 in Rhode Island state tax on the F40, but failed
to provide any evidence to support this allegation including the tax statue
involved. The IHO, therefore, will not
reach the merits of this allegation.
The allegation appears to suffer the same effect as the charge of
failure to pay the luxury tax as alleged in Charge XVI.
[28]26 U.S.C. § 4001 states in pertinent part:
(a) Imposition of tax. -- (1) In general. There is hereby imposed on the 1st retail sale of any
passenger vehicle a tax equal to 10 percent of the price for which so sold to
the extent such price exceeds the applicable amount. (2) Applicable amount. (A) In general. Except as provided in subparagraphs (B) and (C), the applicable
amount in $30,000.
26 U.S.C. § 7201 states:
Attempt to evade or defeat tax.
Any person who willfully attempts in any manner to evade or defeat any
tax imposed by this title or the payment thereof shall, in addition to other
penalties provided by law, be guilty of a felony and, upon conviction thereof,
shall be fined not more that $100,000 ($500,000 in the case of a corporation),
or imprisoned not more than 5 years, or both, together with the costs of
prosecution.