Volume 44 Number 2201
Wednesday, October 28, 1998
CHICAGO--One
of the most notoriously mob-dominated locals of the Laborers'
International Union of North America has been placed under the
control of a supervisor, the international union's internal investigators
told BNA Oct 15.
LIUNA Local 5, based in Chicago Heights,
Ill., has been placed under supervision by the international union
through a cooperative agreement reached between the local's officers
and LIUNA's Office of the General Executive Board Attorney. The
local, which has 739 members, primarily supplies labor to the
construction industry.
The agreement, dated Oct. 6, accuses the
local of financial malpractice, improper recordkeeping, undemocratic
practices, and withholding meeting minutes and financial reports
for review by members. The agreement also pointed to former Local
5 officers' "strong ties to organized crime" as a factor
in the imposition of the supervision.
Local 5 is infamous for its associations
with the Mafia in Chicago, locally known as "The Outfit."
Several senior officers of the local have been accused of mob-related
crimes over the last 25 years, including a recent secretary treasurer
who is awaiting trial for murdering a businessman who failed to
make payments on a "juice" loan--one made at exorbitant
interest. Alfred Pilotto, a former Local 5 president, did time
in federal prison for racketeering and was reputed by law enforcement
authorities to be boss of the Outfit's notorious Southside gang
based in Chicago Heights.
"This local has really had a long and
colorful history of associations with the mob," said Wayne
Johnson, chief investigator for the Chicago Crime Commission.
"It was part of the Chicago Heights crew and that group has
been as notorious as any in Chicago. Al Pilotto's role in Local
5 alone tells you something. He is one of the hallmark members
of the Chicago mob going back to the Capone era."
Robert D. Luskin, LIUNA's GEB attorney, said
William Clancey, a former FBI agent and an investigator within
LIUNA's Office of the Inspector General had been named supervisor
of the local. He said that Clancey currently is conducting a detailed
audit of Local 5 with the cooperation of its officers and staff.
Luskin said his office may exercise a stronger degree of control
over the local depending on the outcome of the audit. The audit
will likely be completed within three weeks.
Luskin described "supervision"
as a less severe tool for imposing reform on corrupt union locals
than "trusteeship," which permits an international union
to remove the local's officers and business personnel and hire
a new team to administer its activities for up to 18 months. In
the case of Local 5, Luskin said his office chose supervision
because the local officers agreed to cooperate with the investigation
and reform process. Supervision also saves the Office of the GEB
Attorney considerable time and money over a full-blown trusteeship.
"In circumstances where the local has
expressed a willingness to work with us, we've imposed a supervision
agreement," Luskin said. "With supervision, they are
essentially writing us a blank check."
Luskin noted, however, that the supervision
agreement does not preclude his staff from imposing a trusteeship
on Local 5 or some other disciplinary action. The result of the
audit and the local's willingness to continue to cooperate with
Clancey will determine how the GEB Attorney will proceed with
its reform effort, Luskin said.
The supervision agreement gives only a broad
description of the charges pending against Local 5. But Jim McGough,
leader of a reform group called "Laborers for Justice"
and a former member of Local 5, accused the local's leadership
of mob ties and corruption practices.
Among other things, McGough said members
were forced to pay hundreds of dollars to business agents for
their union cards. He also alleged the union leaders negotiated
"sweetheart deals" with employers, permitting them to
avoid paying union scale in some cases and avoid payments into
LIUNA pension and welfare funds in others. McGough doubted the
local conducted a contested election in the last 20 years and
noted that union officers rarely, if ever, reported their activities
or the local's finances to the membership.
A federal source who has monitored Local
5 corroborated many of McGough's allegations relative to uncontested
elections and mob connections. He also questioned the financial
practices and personal integrity of Local 5's officers. Despite
a very small membership base, the investigator said officers drew
exorbitant salaries.
A 1996 Labor Department LM-2 report shows
Frank Zeuberis, Local 5's president and business agent, received
$137,908 in total compensation. James DiForti, who was Local 5's
secretary-treasurer until last year, drew a compensation package
totaling $94,525. Zeuberis' wife Joan, who performed clerical
duties for the local, received a salary of $38,500.
"When you see things like this, you
really have to wonder about the people running the local,"
the federal source said.
Even more shocking, the source said, is Local
5's lengthy relationship with organized crime.
The most recent example was the arrest of
DiForti in July 1997 for a 1988 murder. Cook County prosecutors
have alleged that DiForti, acting as a juice loan collector for
the Outfit, went to a businessman's office to collect on an outstanding
$100,000 debt. When the man refused to pay, a gun battle erupted,
killing the businessman and wounding DiForti. Blood found at the
crime scene was matched to DiForti nine years later. DiForti,
who stepped down from Local 5 after his arrest, is awaiting trial
on the murder charge.
Johnson said Pilotto was the most renowned
mobster to operate from Local 5. Pilotto, who served as president
between 1970 and 1982, had a long career as a crime boss on the
south side of Chicago stretching back to the era of Al Capone.
He was even the target of a botched mob-instigated assassination
attempt in 1981 on the eighth tee of a golf course in suburban
Chicago. He left the local in 1982 to serve a 20-year sentence
in federal prison after being convicted in Florida on RICO conspiracy
charges associated with accepting kickbacks from an insurance
company seeking to do business with LIUNA-related pension and
benefit funds.
Other Local 5 officials convicted on mob
related activities include Dominick "Tootsie" Palermo
and Nicholas Guzzino, who a federal judge found managed a "Mafia
fiefdom" in northwest Indiana. Guzzino, a member of the Local
5 executive board, and Palermo, a field representative for Local
5, were convicted in 1991 of substantive RICO charges relating
to their operation of an illegal gambling operation. Guzzino was
sentenced to a 40-year prison term and received a $185,000 fine.
Palermo received a 32-year sentence and a $250,000 fine.
Considering this history of corruption and
criminal behavior, McGough said Local 5 should have been disciplined
by LIUNA years ago. At the same time, he conceded that actions
aimed at Local 5 had to take a back seat to the GEB's reform activities
against LIUNA's Chicago District Council, a regional body which
oversees the operations of 21 Chicago locals and their pension
and health and welfare funds. In February, the union's independent
hearing officer supported the GEB Attorney's case for trusteeship
over the District Council after a lengthy hearing process (33
CLR 1221, 2/11/98).
"I've waited for 11 years for this to
happen, I guess I can wait a little longer," McGough said.
Copyright © 1998 by The Bureau
of National Affairs, Inc., Washington D.C.