By STEVEN GREENHOUSE

January 25, 1998

WASHINGTON -- After months of complaining that he was being railroaded out of office, Ron Carey, the Teamsters president, had his day in court this week and presented an impassioned, point-by-point defense to accusations that he had approved an illegal campaign-finance scheme.

But the court-appointed review board considering whether to expel him from the International Brotherhood of Teamsters remained skeptical.

In an effort to rescue his reputation and his presidency, Carey -- long considered a hero for fighting union corruption -- insisted that he knew nothing about the fund-raising scheme and, in doing so, he directly contradicted testimony by his secretary and his former campaign manager.

Carey asked the Independent Review Board, which oversees the Teamsters, to believe that he was a victim, rather than an author, of the fund-raising scheme, and that several campaign aides who funneled Teamster money into his campaign did so not to help his re-election, but to enrich themselves.

In three days of hearings at a federal courthouse, it became clear that Carey's effort to clear his name has become a test of his word against the word of his campaign manager, Jere Nash. Nash and two other Carey campaign aides have pleaded guilty to taking part in a web of improper fund-raising schemes in Carey's 1996 campaign.

Nash has told federal investigators that he talked with Carey about one of those schemes, in which the Teamsters made four donations, totaling $735,000, to three liberal groups and in return contributors to those groups donated money to Carey's nearly depleted campaign coffers.

Carey flatly denied having discussed this with Nash, asserting that if Nash had proposed such a scheme, Carey would have dismissed him immediately.

"If Jere Nash had said to me, 'Look, if we rub someone's back, they'll massage our backs,' I would have known something was wrong," said Carey, who has taken a leave from the union presidency.

Carey's lawyer, Reid Weingarten, repeatedly told the board that Nash pressed ahead with the $735,000 swap scheme in order to siphon Teamster money to a direct-mail and consulting firm run by Martin Davis, an adviser to Carey and one of the aides who pleaded guilty. Several of the liberal groups that received the Teamster donations later gave money to Davis' firm, the November Group.

The Carey side pointed out that while running Carey's campaign, Nash was also working for Davis' firm, without Carey's knowing about it. Davis paid Nash $10,000 a month plus a $50,000 bonus for steering business to the November Group, Weingarten noted. Alluding to Nash and Davis, Weingarten said, "We believe what was really at play was a design by these two guys to line their pockets."

The Carey camp has repeatedly contended that it would be a denial of due process to remove Carey based on Nash's assertions unless Carey's lawyers first got the chance to confront Nash through cross-examination. The Carey side insisted that Nash was not credible, because he had confessed to lying to federal investigators and had an incentive to incriminate Carey to obtain a shorter prison sentence.

Responding to these pleas, the review board said it would seek to get Nash to testify.

Throughout the hearings, Carey sought to show his innocence by stating that as soon as his lawyers told him of the improper fund-raising schemes, he began cooperating with investigators and ordered his subordinates and lawyers to do so too.

With accusations piling up against Carey in recent months, many Carey supporters acknowledged that he faced an uphill battle in convincing the review board of his innocence.

Last August, federal officials invalidated his 1996 victory over James P. Hoffa for the union presidency, and in November they barred him from running in a new election. A U.S. district judge in New York has upheld the disqualification, and Carey is appealing that decision.

For Carey, the stakes are huge in the review board's hearing because if he convinces the board of his innocence, that will allow him to stay in office and will go far to salvage his reputation.

The review board was created to oversee the Teamsters as part of a 1989 consent decree that settled a federal racketeering suit against the union.

Carey's supporters say that if the review board finds him not guilty, that should help persuade the federal courts to overturn the decision barring him from running again. And a not-guilty ruling might help persuade federal prosecutors not to pursue an indictment against him.

But if the review board finds Carey guilty, that is expected to end his run as one of the United States' best-known union leaders.

Hoffa, now the front-runner in the Teamsters election scheduled for next spring, might also face disqualification because his campaign finances are also under investigation.

When the review board's chief investigator filed charges against Carey last November, the charges questioned the truthfulness of Carey's assertions that he knew nothing about the $735,000 contributed to liberal groups for get-out-the-vote efforts in the 1996 congressional elections.

Those donations included $475,000 to Citizen Action, and at the hearing Carey was asked how he could not have known about that unusually large contribution, especially since it was opposed by some top Teamster officials.

Frederick Lacey, a former federal judge who is the review board's chairman, said, "With the heat that was generated in that building about these monies, it's beyond my comprehension -- you heard none of this?"

Carey's defense sought to demonstrate that it was totally plausible that he did not know about such contributions. Carey testified that he was traveling when the contributions were approved and that he delegated much of the union's day-to-day business to subordinates, especially in 1996 when he was campaigning around the country.

Carey's assertions that he delegated many decisions to others were intended to explain his lack of knowledge about the contributions, but those admissions worked against him by buttressing a second set of charges that the review board was considering: that Carey had breached his fiduciary duties by not adequately supervising the union's finances.

Indeed, some Carey supporters came away from the hearings suggesting that the board would remove him, not for taking part in an improper fund-raising scheme, but for failing to oversee the union properly.

In a tense moment, Carey contradicted an affidavit from his executive secretary, Monie Simpkins, who said she had talked with him and got his approval for the $735,000 in contributions. She has changed her testimony over the past year, first saying he did not authorize any of the payments, then saying he had approved all of them.

But Ms. Simpkins' testimony was undercut by another secretary in Carey's office and by a mail clerk who testified that Ms. Simpkins broke down sobbing one day and told them that she had signed Carey's initials to approve the donations without getting his approval.

As the hearings concluded, Lacey seemed at a loss about who was telling the truth: Carey or Nash and Ms. Simpkins.

"I'm indicating to you this is an enigma," Lacey told Carey. "It is a difficult thing to resolve."

Copyright 1998 The New York Times Company