By STEVEN GREENHOUSE

March 10, 1999

An in-house hearing officer Tuesday cleared Arthur Coia, president of the Laborers union, of associating with members of organized crime, but fined him $100,000 for buying a $450,000 Ferrari with help from a supplier to the union. The ruling was immediately attacked by the Justice Department as flawed and by conservative groups who said the investigation by union-appointed officials, to which the department had agreed, was half-hearted because Coia is friendly with President Clinton.

After a three-year investigation, Peter Vaira, the hearing officer, who used to be U.S. Attorney in Philadelphia, found that there was not enough evidence to prove charges that Coia associated with a New England mob boss and that he appointed a known mob associate to an important union position. In his 108-page ruling, Vaira ruled against Coia on only one of 16 charges, finding that he was guilty of a conflict of interest and of receiving improper financial benefits when a Rhode Island car-leasing company helped him finance the purchase of the Ferrari.

Union officials said that the U.S. Attorney in Boston was investigating the transaction, in which Coia bought the car while the car-leasing company held the title, letting Coia avoid more than $40,000 in luxury taxes on the vehicle. This also enabled Coia to resell the limited edition car three years later as a new vehicle.

The union's in-house prosecution of Coia has faced repeated attacks from Republican officials because the Clinton administration in 1995 dropped a planned civil racketeering suit against the Laborers, long considered one of the nation's most corrupt unions, and instead allowed the union to investigate itself. Republicans have repeatedly maintained that Coia has benefited from a sweetheart deal because the Laborers union has donated millions of dollars to the Democratic Party in recent years and because Coia and the president are so friendly that they have swapped golf clubs as gifts.

Until Tuesday, Justice Department officials repeatedly defended the in-house investigation, saying it was a model because it saved the government money and manpower. But Tuesday, Justice Department officials issued an unusually strong criticism of Vaira's ruling. In a joint statement, James K. Robinson, assistant attorney general for the department's criminal division, and Scott R. Lassar, the U.S. Attorney in Chicago -- which conducted the original eight-year civil racketeering investigation -- said they believed "the opinion contains serious factual and legal errors" for clearing Coia of mob ties.

The two officials said while they believed the case "was thoroughly investigated" and "vigorously prosecuted," they would urge Robert Luskin, the union prosecutor who brought the charges before Vaira, to appeal.

Coia's lawyer, Howard Gutman, welcomed the decision. "The evidence demonstrated overwhelmingly that Arthur Coia has never been controlled by the mob and that the mob actually despises Arthur," Gutman said. In a statement, Coia said that while the investigative process "may have been personally painful, it was necessary to preserve the integrity of our reform."

Kenneth Boehm, director of the National Legal and Policy Center, a conservative research group, called the ruling a "slap on the wrist" that shows the Justice Department was wrong to put its faith in the idea that the union could reform itself. "The Department needs to admit its mistake, take over the union and institute real reforms -- especially ousting Coia," Boehm said.

Coia's union, the Laborers International Union of North America, claims to have 750,000 members, most of them construction workers.

The central charges in the case asserted that Coia violated union rules by associating with mobsters. Specifically, Luskin asserted that Coia associated with Raymond Patriarca Jr., head of New England's powerful Patriarca crime family. Federal prosecutors have long said that Coia's late father, Arthur E. Coia, who headed the Laborers union in Rhode Island, was a close associate of Patriarca's late father, Raymond Patriarca Sr., a legendary New England crime boss.

Coia acknowledged knowing the younger Patriarca, saying they met when they were planning the defense in a case, later dismissed, in which, Coia, his father and the elder Patriarca were charged with racketeering. But Luskin charged that Coia had repeatedly met with the younger Patriarca after that case was dismissed, noting that Patriarca had sought to breed his Rottweiler with dogs from Coia's prize-winning kennel. Vaira noted that the two key witnesses Luskin used did not provide the definitive evidence that he had indicated they would. Thomas Hillary, an unofficial stepson of the elder Patriarca, failed to link Coia meaningfully with Patriarca, Vaira said, while he found that Nino Cucinotta, the younger Patriarca's driver who testified that Coia and Patriarca met frequently, was not a credible witness. As for the Rottweiler breeding, Vaira found that this did not constitute the type of association prohibited by union rules.

But Vaira lashed into Coia's buying the Ferrari with the help of Viking Oldsmobile, which leased cars to the union and was run by a long-time friend. Even though Vaira said Coia did not receive a kickback and lost money when he sold the car for $380,000, Vaira said Coia violated union rules by engaging in a conflict of interest in buying the car. Coia purchased the car by providing some cash and trading in two Ferraris as a down payment and using a $300,000 loan that Viking made available. "He was offered the unique opportunity to make a large profit and receive favorable terms on the purchase of the vehicle," Vaira wrote. "The conflict of interest in this matter occurred at the highest level of the union."