Robert D.Luskin
GEB Attorney
Office of the GEB Attorney
Laborers International Union of North America
1025 Thomas Jefferson Street, N. W.
Suite 420 East
Washington, D.C. 20007-5423
Phone: (202) 625-1200
Fax: (202) 625-1230
Construction & General Laborers'
Additional copies of the trusteeship Complaint
are available to all union members of Locals affiliated with the
Construction & General Laborers' District Council of Chicago
and Vicinity upon request by contacting the Inspector General's
Office at (202) 942-2315.
To the Officers and Delegates of the Construction
& General
Laborers District Council of Chicago and
Vicinity:
Pursuant to the LIUNA Ethics
and Disciplinary Procedure, Section 3, the GEB Attorney is delegated
all of the powers of the LIUNA General President "to impose
and review the imposition of trusteeships, over any district council,
local or other entity within the union." Article IX, Section
7 of the International Constitution provides that the General
President may appoint a trustee to take charge and control over
the affairs of a district council when such action is necessary
"for the purpose of correcting corruption or financial malpractice,
assuring the performance of collective bargaining agreements or
other duties of a bargaining representative, restoring democratic
procedures, otherwise carrying out the legitimate objects of such
subordinate body or the International Union, or to protect
the organization as an institution." Under this provision
of LIUNA's Constitution, before a trustee may be appointed, a
hearing must be conducted for the purpose of determining whether
such a trustee shall be appointed.
By this letter and the enclosed
trusteeship Complaint, I advise you that I have concluded that
the imposition of a trusteeship over the Construction & General
Laborers' District Council of Chicago and Vicinity is necessary
to correct corruption and financial malpractice, to restore democratic
procedures and to carry out the legitimate objects of the International.
The grounds for trusteeship are more specifically set forth in
the accompanying Complaint, which is being filed with LIUNA's
Independent Hearing Officer.
This letter also provides notice
that a hearing will be held beginning on Wednesday, July 16, 1997
at 9:00 a.m. subject to further order of the Independent Hearing
Officer who will control the scheduling of the hearing. Officers
and delegates of the District Council will be offered an opportunity
to attend and participate in the hearing. You will be further
advised regarding the time ,location and procedures of the hearing.
After the hearing has been
concluded, the Independent Hearing Officer will rule on whether
trusteeship is warranted and advise you of his ruling.
In addition, pursuant to Article
IX, Section 6 of the L.I.U.N.A .Constitution, and Paragraph 3
of the LIUNA Ethics and Disciplinary Procedure, you are hereby
ordered by the GEB Attorney not to dispose of any record referring
or relating to the allegations set forth in the accompanying Complaint,
or the individuals named therein, effective immediately, until
further order of the GEB Attorney. Failure to comply with this
order shall constitute a basis for disciplinary action under the
Ethics and Disciplinary Procedure.
Robert D. Luskin
Peter F. Vaira, Independent Hearing Officer
Arthur A. Coia, General President
Michael Bearse, General Counsel
Terrence Healy, Regional Manger
W. Douglas Gow, Inspector General
OFFICE OF THE INDEPENDENT HEARING OFFICER
LABORERS'INTERNATIONAL UNION OF NORTH AMERICA
In Re: Trusteeship Proceedings,
No.
Pursuant to Section 3 of the
LIUNA Ethics and Disciplinary Procedure and Article IX, Section
7 of the LIUNA Constitution, the GEB Attorney has determined that
a trusteeship of the Construction & General Laborers' District
Council of Chicago and Vicinity ("Chicago District Council")
is necessary to rid that entity of corruption, to restore democratic
procedures, to correct financial malpractice and to carry out
the legitimate objects of LIUNA and its affiliates.. In support
of the imposition of a trusteeship, the GEB Attorney alleges as
follows:
For at least the past twenty-five
years, the leadership of the Chicago District Council has had
strong, discernable ties to the leadership of organized crime
in Chicago.Organized crime has exerted influence over the Chicago
District Council by placing and retaining mob members, mob associates
and relatives of mob members in positions of leadership in the
Chicago District Council and a number of its affiliated locals
and funds. Control over leadership positions in the Chicago District
Council benefits organized crime in Chicago by providing mob members,
mob associates and relatives of mob members with:
1.significant sources of income and the appearance of legitimate jobs;
2.political and economic power;
3.control and influence over the finances of the Chicago District Council and its affiliated locals; and
4.influence over affiliated union
pension, health ~ welfare, training and political action funds
through power of appointment.
Evidence of organized crime's influence over the Chicago District Council includes:
(1) leadership of the Chicago District Council by mob members, mob associates and relatives of mob members;
(2) a pattern of abuse in transferring leadership positions within the Chicago District Council demonstrated, in part, by the failure to hold a single contested election for any official position within the District Council for over twenty-five years;
(3) a pattern
of unauthorized "dual salary" payments to Chicago District
Council officials with ties to the mob;
(4) the appointment of mob members, mob associates and relatives of mob members to positions of authority over the affiliated funds of the Chicago District Council; and
(5) a failure
to challenge mob influence or to examine allegations of mob control
within the Chicago District Council and its affiliated entities.
As further described below, a trusteeship is necessary to rid the Chicago District Council of the corrupting influence of organized crime, to end the undemocratic
practices that have allowed corruption to
flourish, to correct financial malpractice, and to carry out the
legitimate objects of LIUNA and its affiliates.
1 . The Chicago Outfit.
La Cosa Nostra (the "LCN"), also referred to as the
mob, the Mafia or the "Outfit," is a criminal organization
that operates in various cities throughout the United States.
The LCN is comprised of groups of men who are organized into units
referred to as "families."
The Chicago family of the LCN is commonly
referred to as " the Outfit". LCN families such as
the Chicago Outfit are generally headed by a "boss"
who is assisted by an "underboss" and a counselor called
a "consigliere". Leadership positions within the Chicago
Outfit have changed over time due to criminal convictions, death
and other circumstances.
2. Chicago Outfit Crews.
LCN families such as the Chicago Outfit generally conduct criminal
activities through entities known as "crews." Each crew
is headed and supervised by a person generally referred to as
a "crew boss" or "capo." Each crew consists
of individuals inducted into membership in the LCN who are thereafter
referred to as "soldiers" or "made members".
Crews also consist of LCN "associates",
individuals who are not "made members" but who knowingly
participate and cooperate in the activities of the family. While
each crew in the Chicago area tends to operate certain types of
criminal activity within certain geographical areas, the types
of criminal activity and the geographical boundaries of these
crews have varied over time due to criminal convictions, death
and other circumstances. Over the past twenty-five years, the
Chicago District Council has had strong ties to a number of crews,
including the North Side Crew, the 26th Street Crew and the Chicago
Heights Crew.
3. The Chicago District-Council.
The Chicago District Council is an affiliate of LIUNA operated
pursuant to the LIUNA International Constitution, the Uniform
District Council Constitution, and the Uniform Local Union Constitution.
The Chicago District Council is the central representative body
for twenty-one affiliated local unions in the Chicago area (collectively
referred to as the
"Affiliated Locals""). Pursuant
to Article I, Section 2 of the LIUNA Uniform District Council
Constitution ( "UDCC"), the members of the Chicago District
Council consist of delegates from the Affiliated Locals.
4. Leadership of the Chicago District Council. The leadership of the Chicago District Council includes the Business Manager, Secretary-Treasurer, President, Vice President and Sergeant-at-Arms. The Chicago District Council is required to list its officers and the salaries of its officers on "LM-2 Reports" filed with the Labor Department in accordance with the provisions of Title 29, United States Code, Section 431. The Chicago District Council is also required to memorialize nominations, elections and salary approval in meeting minutes in accordance with the provisions
of Articles VI and VII of the UDCC. Over the past twenty-five years, as reflected in its minutes and LM-2s, the most important leadership positions at the Chicago District Council have been held by and transferred to mob members, mob
associates or relatives of mob members through
uncontested nominations or appointments.
5. Affiliated Locals of
the Chicago District Council. The members of the Chicago District
Council consist of delegates from its Affiliated Locals pursuant
to Article I, Section 2 of the UDCC. Officers in the Chicago District
Council must be properly appointed delegates to the Chicago District
Council from the Affiliated Locals pursuant to Article VI, Section
1 of the UDCC. Over the past twenty-five years, a large number
of the delegates and officers of the Chicago District Council
have been mob members, mob associates or relatives of mob members
from the following Affiliated Locals: Local 1, Local 2, Local
5, Local 225, Local 1001 or local 1006.
6. Affiliated Funds of the
Chicago District Council. Members of the Chicago District
Council, and members of the Affiliated Locals of the Chicago District
Council participate in the following funds (collectively referred
to as the "Affiliated Funds"):
( 1 ) The Laborers Pension Fund; (2) Pension
Plan for the Funds' Office Staff of the Chicago District Council
of Laborers' Health and Welfare and Pension Funds; (3) Health
and Welfare Department of the Construction and General Laborers'
District Council of Chicago and Vicinity; (4) The Construction
and General Laborers' District Council of Chicago and Vicinity
Training Trust Fund; and
(5) the Laborers' Political League, a political
action fund. The Chicago District Council has the authority and
responsibility to appoint individuals to certain positions on
the Affiliated Funds pursuant to the governing documents of the
Affiliated Funds, and through such appointments exercises influence
over the selection of employees and service providers of these
funds. The leadership of the Chicago District Council has appointed
a number of mob members, mob associates, and relatives of mob
members as trustees of the Affiliated Funds and used its influence
to secure for such persons contracts with and employment by these
funds. In its appointment and retention of trustees to the Affiliated
Funds, the Chicago District Council has failed to act as a reasonable
fiduciary consistent with governing law, and has failed to properly
appoint and retain Affiliated Fund trustees consistent with the
governing documents of these funds.
7 Individual Ties to the
Chicago Outfit. The following individuals who are serving,
or have served, as officers or delegates to the Chicago District
Council, or as trustees, officers or employees of the Affiliated
Funds, are members of the Chicago Outfit, associates of the Chicago
Outfit or relatives of Chicago Outfit members:
Joseph Abate
Frank Caruso
Leo Caruso
Dominick DiMaggio
Joe Lombardo, Jr.
Michael Palermo
Anthony Solano
8. Arrests Indictments and
Convictions. The following individuals who are serving, or
have served, as officers or delegates to the Chicago District
Council, or as trustees, officers or employees of the Affiliated
Funds, have been arrested, indicted and/or convicted of criminal
activity relating to organized crime and/or the affairs of the
union:
Joseph Abate
Salvatore Gruttadauro
Dominick Palermo
9. Threats of Violence and
Use of Bribes. Since the inception of LIUNA's reform effort
in early 1995, threats of violence and attempted bribery have
been used to discourage inquiry regarding organized crime's ties
to the union in the Chicago area and/or to control positions of
union leadership in the Chicago area.
10. Failure of Democratic
Process. For at least twenty-five years, corruption within
the Chicago District Council has manifested itself in the failure
of democratic process. Decisions regarding the transfer of official
positions are made by corrupt officials and often reflect changes
in the power structure of the Chicago Outfit. Democratic elections
are circumvented through repeated reliance on constitutional provisions
designed for limited application. Corruption is perpetuated and
democratic selection of officers is prevented through a pattern
of abuse, including:
1.the avoidance of
elections through uncontested nominations;
2.repeated transfer
of power through the filling of vacancies between elections;
3.appointments or uncontested
nominations of unqualified or marginally qualified individuals;
and
4.the longstanding
failure to address allegations of organized crime connections,
no show jobs, or criminal arrests, indictments or convictions.
Due to this pattern of abuse, not a single
contested election has occurred at the Chicago District Council
or in Affiliated Locals I, 2, 5, 225, 1001 or 1006 in the past
twenty-five years.
11. Retention and Promotion of Convicted Felon as an Officer. Following a felony conviction in or around 1982 involving kickbacks received from the Chicago District Council's affiliated health and welfare fund, James Caporale retained his position as Secretary-Treasurer of the Chicago District Council and was promoted to the additional position of Business Manager of the Chicago District Council. From approximately l982 - 1987, delegates and officers of the
Chicago District Council, including Ernest
Kumerow, Frank Caruso, Bruno Caruso and John Matassa, Jr. permitted
James Caporale to retain the highest positions of authority within
the Chicago District Council and to receive over * million dollars
in salary in direct violation of a court order and the" good
standing" provisions of Article VI, Section l of the UDCC.
In addition, from approximately 1984, this conduct violated Title
29, United States Code, Section 504.
12. Rapid Promotion of
Unqualified Individuals or Individuals with Minimum Qualifications.
Mob members, mob associates and relatives of mob members have
been promoted within the Chicago District Council, the Affiliated
Locals and the Affiliated Funds without proper qualifications
or with only minimum qualifications for office. As one example,
in approximately l 987, Joe Lombardo, Jr. was appointed to the
position of Secretary-Treasurer of the Chicago District Council
yet was not a delegate from an Affiliated Local in violation of
Article VI, Section 1 of the UDCC.
13. Failure to Properly
Hold Scheduled Election of 1987. Officers of the Chicago District
Council are elected to four-year terms pursuant to the provisions
of Article VI, Section 2 (g) of the UDCC. The Chicago District
Council nomination and election process scheduled for August of
1987 did not occur consistent with this four year election cycle.
The failure to properly hold an election in 1987 allowed official
positions within the Chicago District Council to continue to be
transferred through uncontested appointments up to the time of
James Caporale's ultimate resignation. Between James Caporale's
indictment on felony charges in approximately 1981 and his resignation
caused by his incarceration for these charges in approximately
1987, James Caporale participated in the selection of a number
of high ranking officials at the Chicago District Council.
During this period, the following individuals,
who are mob members, mob associates or relatives of mob members,
took positions in the Chicago District Council: Ernest Kumerow,
Frank Caruso, Joe Lombardo, Jr. and Dominick DiMaggio.
14. Subsequent Transfers
of Power to Individuals with Ties to the Chicago Outfit.From
1987 to 1997, the following individuals, who are mob members,
mob associates or relatives of mob members, have taken over official
positions in the Chicago District Council consistent with the
longstanding pattern of abuse of democratic procedures referenced
in paragraph 10: Bruno Caruso, Leo Caruso, John Matassa, Jr.,
James DiForti.
I5. Unauthorized Union
Salary Payments. The following individuals who are serving,
or have served, as officers or employees of the Chicago District
Council have held office in, or have been employed by, another
body of the Union and have received salary and other compensation
for such positions without proper approval of the General President
as required under Article V, Section 3 of the UDCC and/or Article
IV, Section 3 of the Uniform Local Constitution:
James Caporale
Leo Caruso
Ernest Kumerow
16. City of Chicago "No
Show" Investigation. An investigation of "no show"
jobs conducted by the Inspector General's Office for the City
of Chicago, in approximately 1991,resulted in the suspension and
demotion of Nicholas Gironda and the resignation of Leo and Frank
Caruso from their City of Chicago jobs. Following this investigation,
delegates and officials from Local 1001, who also held positions
of responsibility within the Chicago District Council, significantly
increased Nicholas Gironda's salary. Delegates and officials from
Local 1006, who also held positions of responsibility within the
Chicago District Council, retained Frank Caruso, and retained
and ultimately promoted Leo Caruso.
17. Appointment of Corrupt
Individuals to Affiliated Funds. Control of official positions
within the Chicago District Council provides the Chicago Outfit
with influence over the selection of trustees of the Affiliated
Funds of the Chicago District Council. The following individuals
are among the mob members, mob associates or relatives of mob
members who have been placed in positions in the Affiliated Funds
by the Chicago District Council: Alfred Pilotto,James Caporale,
Vincent Solano, Ernest Kumerow, Joe Lombardo, Jr., John Matassa,
Jr., Bruno Caruso, Frank Caruso, and Leo Caruso. Appointments
to trustee positions in certain Affiliated Funds by the Chicago
District Council have been, and are being, made for "unexpiring
terms" in direct conflict with the governing documents of
these Affiliated Funds.
18. Failure to take step
to Investigate or Eradicate Mob Influence. Despite proceedings
by the President's Commission on Organized Crime and Congressional
Committees concluding that various officers of the Chicago District
Council and/or certain affiliated entities were mob members, mob
associates or relatives of mob members, despite widespread reporting
of similar allegations by local news media, and despite a series
of prosecutions establishing the accuracy of many of these allegations,
the leadership of the Chicago District Council has failed to take
steps to investigate or eradicate mob influence in derogation
of their
fiduciary and constitutional duties.
19. In light of the evidence
developed by LIUNA's Inspector General and the facts set forth
in paragraphs 1 through 18, the GEB Attorney has determined that
it is necessary to place the Chicago District Council under trusteeship
in order to correct corruption and to eradicate the influence
of organized crime. Given the demonstrable associations between
the leadership of the Chicago District Council and the leadership
of the Chicago Outfit; the actions taken by current and former
Chicago District Council leadership to place and retain mob members,
mob associates and relatives of mob members in positions of power;
the failure to hold a single democratic election for any official
position in over twenty-five years; the failure to properly appoint
trustees to Affiliated Funds; and the failure to engage in meaningful
efforts to acknowledge or address the issue of organized crime
corruption within the jurisdiction of the Chicago District Council,
the imposition of a trusteeship over this entity is necessary
to eradicate the influence of organized crime within the Chicago
District Council, as well as its Affiliated Locals and Affiliated
Funds.
20. By placing the Chicago
District Council under trusteeship, LIUNA will be able to
correct the corrupt abuses of that entity's leadership, assure
proper appointment of trustees to the Affiliated Funds, more closely
monitor activities of Affiliated Locals, and take informed additional
steps to rid the Chicago District Council and its affiliated entities
of organized crime corruption.
RESTORING DEMOCRATIC PROCEDURES
21. In light of evidence
developed by LIUNA's Inspector General and the facts set forth
in paragraphs 1 through 18, the GEB Attorney has determined that
it is necessary to place the Chicago District Council under trusteeship
to restore democratic procedures. Given the associations between
the leadership of the Chicago District Council and the leadership
of the Chicago Outfit; the actions taken by current and former
Chicago District Council leadership to place and retain mob members,
mob associates and relatives of mob members in positions of power;
the failure to hold a single democratic election for any official
position in over twenty five years; the failure to properly appoint
trustees to Affiliated Funds; and the failure to engage in any
meaningful, open and democratic efforts to acknowledge or address
the issue of organized crime corruption within the jurisdiction
of the Chicago District Council, the imposition of a trusteeship
is necessary to restore democratic procedures.
22. By placing the Chicago
District Council under trusteeship, LIUNA will be able to
foster open and democratic practices within the Chicago District
Council and to assure the proper, democratic appointment and removal
of Chicago District Council officers and Affiliated Fund trustees.
23. In light of the evidence
developed by LIUNA's Inspector General and the facts set forth
in paragraphs 1 through 18, the GEB Attorney has determined that
it is necessary to place the Chicago District Council under trusteeship
to correct financial malpractice. Given the unauthorized "dual"
salary payments from the Chicago District Council and its affiliated
entities as well as other financial abuses that have benefitted
or are benefitting mob members, mob associates or relatives of
mob members, the imposition of a trusteeship is necessary to correct
financial malpractice.
24. By placing the Chicago
District Council under trusteeship, LIUNA will be able to
correct financial abuses that exist within the Chicago District
Council and achieve sound and ethical management for the benefit
of its membership.
25. Certain "objects"
of the International Union are set forth in Article II, Section
1 of the LIUNA Constitution. The "objects" of District
Councils are set forth in Article II, Section l of the UDCC and
include the responsibility "to fulfill the objects of the
International Union as specified in Article II, Section I of the
International Union Constitution." UDCC, Art. II, Section
I (a). Thus, the Chicago District Council is obligated to pursue
the International's objects in addition to those enumerated in
the UDCC.
26. Additional objects of the International and its affiliated entities are set forth in the LIUNA Ethical Practices Code ("EPC") and the LIUNA Ethics and Disciplinary Procedure ("EDP"),which form part of the International Constitution. The EPC sets forth certain specific ethical practices that "shall apply to the International Union, all District Councils, every Local Union, all subordinate bodies, and to every employee, member and officer thereof, and to every union trustee and employee of any benefit fund or political action committee." The EPC and the EDP set forth and reinforce standards of conduct in the following areas:
Democratic Practices, Financial Practices,
Health, Welfare and Retirement Funds, Business and Financial Activities
of Union Officials and Barred Conduct.
27. In light of the evidence
developed by the Inspector General and the facts set forth in
paragraphs 1 through 18, the GEB Attorney has determined that
it is necessary to place the Chicago District Council under trusteeship
to carry out the legitimate objects of LIUNA and its affiliates
as expressed in the LIUNA International Constitution, the UDCC,
the EPC and the EDP. Given the associations between the leadership
of the Chicago District Council and the leadership of the Chicago
Outfit; the actions taken by current and former Chicago District
Council leadership to place and retain mob members, mob associates
and relatives of mob members in positions of power in the Chicago
District Council and its affiliated entities; the longstanding
abuse of democratic processes; the longstanding failure to investigate
mob influence or examine allegations of mob control; and the ongoing
financial malpractice, the Chicago District Council is currently
unable to carry out the legitimate, constitutional objectives
of a LIUNA affiliate. Specifically, the Chicago District Council
has failed:
. a. To promote and foster respect for and compliance with the Constitution of the International Union, the Uniform Local Union Constitution and this Constitution and all of the rules, regulations, policies, practices and lawful and decisions adopted and promulgated in the furtherance and administration of said Constitutions. UDCC, Art. [I, Sec.1(h):
b. To promote
respect for, compliance with, and observance of all of the provisions
of agreements by it and its affiliated Local Unions and the members
thereof. UDCC, Art. 11, Sec. l( i );
c. To unite under [LIUNA's] banner all persons engaged in work within its jurisdiction... for their mutual benefit, aid and protection. LIUNA Constitution, Art. II, Sec. I (a);
d. To promote
a better understanding by government and the public of the aims
and objects of this Organization and the Labor Movement as a whole.
LIUNA Constitution, Art. II, Sec. l ( j );
e. To take all
such other action as may tend to conserve and promote the welfare
and interest of this International Union, its affiliates and members.LIUNA
Constitution, Art. II, Sec. l ( r );
f. To protect the democratic rights of LIUNA's members to participate fully, without fear, abuse, or intimidation in all Union affairs; to ensure that each member shall have the right to run for office, to nominate through duly established constitutional procedures, and to vote in free, fair and honest elections; to ensure that the union's operations shall be conducted in a democratic and fair manner; and to ensure that corruption, discrimination or anti-democratic procedures shall not be permitted under any circumstances. EPC, Democratic Practices Section.
g. To make meaningful
efforts to eradicate corruption and prohibit barred conduct, which
is defined to include:committing any act of racketeering; knowingly
associating with any member or associate of organized crime; knowingly
permitting any member or associate of the LCN to exercise control
or influence over the affairs of the Union; or obstructing or
interfering with the LIUNA Inspector General.. EPC and EDP, Barred
Conduct Sections.
WHEREFORE, the GEB respectfully
requests that a trusteeship be imposed upon the Chicago District
Council.
GEB Attorney
Date: June 13,1997