By STEVEN GREENHOUSE

April 28, 1998

NEW YORK -- Clearing the way for another struggle for control of the Teamsters, a federal monitor ruled on Monday that James P. Hoffa could remain in the race for the union's presidency. However, he also found that Hoffa had engaged in some improprieties during the 1996 union election.

The decision clarifies the roiled picture in this year's Teamsters race. It appears now that it will be a face-off between Hoffa, widely considered the front-runner, and Ken Hall, a high-level Teamsters official who played a pivotal role in last year's successful strike against the United Parcel Service.

The union experienced another jolt on Monday when a federal grand jury in Manhattan indicted William Hamilton, the union's former director of government affairs, charging him with helping siphon union funds into the campaign of Ron Carey, the embattled president now on a leave of absence. Hamilton's lawyer, Robert Gage, asserted that his client was innocent.

After months of internal jockeying, the faction of the union once dominated by Carey, the self-styled reformer under investigation for his role in the embezzlement scheme, has largely lined up behind Hall. But by accusing Hoffa of improprieties, including giving false testimony, Michael Cherkasky, the federal election monitor, seems to have stripped both sides of the ability to run as untainted reform candidates.

The stage is now set for another campaign in which Hoffa will pledge to restore the union to the swaggering days when his famed father, James R. Hoffa, was its president, while Hall will try to capitalize on Carey's successes, most notably the UPS strike.

Cherkasky said that James P. Hoffa was responsible for failing to report $44,000 in campaign contributions and had not testified truthfully about receiving a $1,000 contribution from a former Teamsters president, William McCarthy.

Explaining that he was loath to disqualify candidates because it would limit union members' right to choose, Cherkasky said in an interview that while "there were serious violations, they were not sufficient in this context to disqualify Mr. Hoffa. Any disqualification is inherently anti-democratic."

But Cherkasky found serious violations by several key Hoffa aides and supporters. He barred Hoffa's chief spokesman, Richard Leebove, from working in this year's Teamsters' campaign, finding that he vastly underbilled the Hoffa campaign and thereby made $167,675 in improper campaign contributions. Cherkasky also barred one of Hoffa's running-mates, Mary Lou Salmeron, from running again, finding that she had coerced the staff of her union local to make campaign contributions.

His investigation also unearthed evidence that could lead to the expulsion of two prominent Hoffa supporters from the International Brotherhood of Teamsters, a 1.4 million-member union representing truck drivers, warehouse workers, flight attendants and other workers.

Cherkasky fined the Hoffa campaign $30,910 for improperly receiving donated services from his press spokesman and for failing to itemize more than $50,000 in contributions -- out of some $3.6 million collected by Hoffa and his support groups.

"We certainly feel vindicated," Hoffa said in a telephone interview. "As we said all along, our campaign was basically run properly. We intend to pay the fines and move on with the campaign."

Cherkasky released his report after another court-appointed monitor had barred Carey from running again, finding that he had cooperated in an illegal scheme to siphon more than $750,000 in union money into Carey's campaign coffers.

After that scheme was uncovered, federal monitors ordered a new election and overturned Carey's narrow 1996 victory over Hoffa.

In the best news for Hoffa, Cherkasky cleared him and his camp of the main charge against it, that it had failed to detail the source of $2 million in campaign contributions. The Hoffa camp insisted that those contributions came in sums of $100 or less and thus did not have to be reported, while his opponents insisted that much of that money came in large contributions, which have to be reported, or came from employers, who are barred from contributions to union candidates.

In a statement, Hoffa said, "This investigation found that I am an honest man who ran an honest campaign."

While the Hoffa and Hall camps both insist their candidates are clean, the recent rulings by federal monitors have left each side accusing the other of being sullied. Hoffa's supporters say Hall cannot claim to be Mr. Clean because they say he was a protege of the disgraced Carey.

Carey appointed Hall to be director of the union's 200,000 member small-package division, and in that role Hall, a 41 year-old West Virginian, was Carey's right-hand man throughout the strike last August by 185,000 UPS workers.

For his part, Hall called on Hoffa Monday to pull out of the race.

"In the interest of restoring integrity to the union, Hoffa should withdraw," Hall said in a telephone interview. "First of all, among these findings, Hoffa lied to the election officer. Secondly, he accepted $167,000 in illegal contributions."

During the five-month investigation, Cherkasky and his staff audited the Hoffa campaign, subpoenaed information from campaign vendors and interviewed hundreds of witnesses. He concluded that it was credible for the Hoffa campaign to have raised $2 million in sums of $100 or less after he examined hundreds of check stubs, scrutinized bank accounts, and looked into the sale of tens of thousands of Hoffa hats and T-shirtsto supporters.

"In sum, the Election Officer finds credible evidence that at least a substantial majority of the over $2 million in un-itemized contributions made to the Hoffa Slate Campaigns came from lawful sources," his report said. "While a significant dollar amount of contributions could not be traced and, therefore, could potentially have come from improper sources, there is no evidence of such improper contributions."

Cherkasky examined allegations that the leaders of a large Teamsters local in Michigan gave each of 14 officials a $2,500 raise and a large Christmas bonus that the officials were said to have contributed to the Hoffa campaign. Cherkasky found that the money did not go to Hoffa, but instead went to the re-election campaign of Larry Brennan, the local's principal officer.

Brennan, widely seen as Hoffa's chief mentor, had given Hoffa a job as an administrative assistant at the Teamsters' Michigan Joint Council, which Brennan heads.

Cherkasky said the pay raise, together with turning the money to a top Brennan fundraiser, Carlo Scalf -- also a major figure in the Hoffa campaign -- was "disturbing." Cherkasky said he would turn the evidence over to the Independent Review Board, a three-person court-appointed board that oversees the Teamsters to determine whether Brennan and Scalf should be expelled.

Several times in his decision, Cherkasky asserted that Hoffa was less than candid in his sworn testimony to the federal election officer. Discussing the failure to report the $1,000 contribution by McCarthy, the former Teamsters president, Cherkasky wrote: "Mr. Hoffa's testimony on the preparation of" his campaign-finance statements, "and the omission of the McCarthy contribution was not complete or accurate."

The report found that the Hoffa campaign had sought to hide that Kevin Currie, the director of its New York operation, was a felon convicted of grand larceny by having the campaign write paychecks in his wife's name. The report found that the Hoffa camp violated campaign expenditure and reporting rules by paying $20,184.75 to Currie's wife.

In the indictment handed up on Monday, the federal grand jury in Manhattan accused Hamilton, the union's former director of government affairs, of six counts: conspiracy, embezzling union funds, mail fraud, wire fraud, perjury in connection with grand jury testimony and making false statements to the election officer. Three Carey campaign aides have already pleaded guilty to conspiracy charges.

According to the indictment, Hamilton approved more than $750,000 in payments to Citizen Action and other liberal groups in an effort to get out the vote to help the Democrats recapture Congress in the 1996 campaign. As part of an embezzlement scheme, the indictment charged, contributors to those groups were then supposed to give money to Carey's campaign.

The indictment also accused Hamiltion of approving contributions to the Democratic Party as part of an effort to have Democratic donors give to the Carey campaign.

Robert Gage, Hamilton's attorney, said, "Bill is innocent of all charges, and we look forward to our day in court."

In the past, Hamilton has asserted that he did not knowingly do anything illegal and that the contributions advanced the Teamsters' goal to help restore Democrats to control of Congress.

On each of the six counts, Hamilton faces a maximum of five years in prison and a fine of of $250,000.

Copyright 1998 The New York Times Company