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2 Docket Number 04-19T
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4 In the Matter of Local Union 79
5 New York, New York
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St. Vartan's Cathedral
8 630 Second Avenue
New York, New York
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September 7, 2004
10 10:05 a.m.
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15 B e f o r e:
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17 PETER F. VAIRA, ESQ.
Messrs. Vaira & Riley
18 1600 Market Street, Suite 2650
Philadelphia, Pennsylvania 19103
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20 Independent Hearing Officer.
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2 A P P E A R A N C E S:
3 Messrs. VAIRA & RILEY
1600 Market Street, Suite 2650
4 Philadelphia, Pennsylvania 19103
5 BY: KATHLEEN M. NAGLE, Esq.
6
Messrs. PATTON BOGGS LLP
2550 M Street NW
8 Washington, DC 20037-1350
9 BY: PATRICK J. SLEVIN, Esq.
10
11 ***
12 RAYMOND POCINO
Vice President and Regional Manager
13 Eastern District
Laborers' International Union of North
14 America
104 Interchange Plaza, Suite 301
15 Monroe Township, NJ 08831
16
THOMAS R. LIMBERG, Inspector
17 Laborers' International Union of North
America
18 Office of the Inspector General
905 16th Street
19 Washington, DC 2006-1765
20 JOHN R. BILLI, International Auditor
Laborers' International Union of North
21 America
30904 Lytham Circle
22 Westlake, Ohio 44145
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2 A P P E A R A N C E S (Continued):
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5 WITNESS:
6 KEITH LOSCALZO
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9 PRESENT:
10 CARMEN S. BARROS, Interpreter
39 East 20th Street, 9th Floor
11 New York, New York 10003
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16 JEAN WILM, RPR, CMRS
17 Hearing Reporter.
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2 PROCEEDINGS
3 HEARING OFFICER: Ladies and
4 gentlemen, we will call the hearing to
5 order. I am calling the hearing to
6 order.
7 Good morning, ladies and
8 gentlemen. My name is Peter Vaira. I
9 am the Independent Hearing Officer of
10 the Laborers' International Union.
11 This is a hearing to determine the
12 voluntariness of a supervision of
13 Local 79. Seated to my right is an
14 attorney from my staff, Kathleen
15 Nagle. The docket number is 04-19T in
16 the matter of Local 79 of New York.
17 For you Spanish speakers,
18 there is a translation simultaneously
19 available. If you need to hear it,
20 please pick up a headset.
21 Mr. Slevin, what about that?
22 The headset is available and passed
23 out?
24 MR. SLEVIN: I believe they
25 did pass out headsets in the back to
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2 anybody who needed it.
3 HEARING OFFICER: If any
4 Spanish speaker needs a headset, there
5 is more in the back.
6 In this particular proceeding,
7 the International Union is the moving
8 party and the International Union will
9 be represented by Mr. Slevin.
10 MR. SLEVIN: Patrick Slevin
11 from the General Executive Board
12 Attorney's Office. I am accompanied
13 here today. To my left is John Billi
14 from the Inspector General's Office
15 and to my right Inspector Thomas
16 Limberg also from the Inspector
17 General's Office.
18 HEARING OFFICER: Ladies and
19 gentlemen in the back, can you hear
20 Mr. Slevin?
21 (Chorus of "Yes.")
22 HEARING OFFICER: Mr. Slevin
23 will make his presentation. I will
24 call upon the present officers to
25 verify some facts and then as is the
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2 custom in this union, members may make
3 comment as to whether it is a good
4 idea or bad idea. Keep in mind that I
5 cannot solve the problems. I'm just
6 the judge. The trustee is here and
7 will be glad to hear from you. If you
8 have any particular problems, rather
9 than going into detail, the trustee is
10 here and you can, in fact, talk to
11 him.
12 Let's proceed. Mr. Slevin, go
13 right ahead.
14 MR. SLEVIN: The way I would
15 propose to proceed today is, rather
16 than present witnesses, to proffer
17 exhibits and make a general
18 presentation of the investigation
19 which was conducted with respect to
20 79.
21 HEARING OFFICER: Let me give
22 a comment. The International Union
23 can place a local union or a district
24 council under trusteeship or
25 supervision if it wants, but it must
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2 go through a hearing if it is
3 contested and it has to be heard by
4 the judicial officer and I am the
5 judicial officer of the union. A
6 union can agree voluntarily to render
7 supervision for many reasons, for
8 management, for assistance, for
9 whatever. The federal law recognizes
10 that.
11 LIUNA, this particular union,
12 always will not do that secretly, will
13 do it with an open hearing. If it is
14 a smaller union and it is minor, they
15 will do it by telephone. If it is a
16 large union such as this, it is done
17 in an open forum so persons can see
18 and there is a record and there are
19 reasons for the supervision. That's
20 what we are doing here this morning.
21 I'm sorry, Mr. Slevin. I wanted to
22 give that explanation.
23 MR. SLEVIN: If I can just
24 add, I think the presentation here
25 today, sir, is at least a two-fold
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2 purpose from our perspective. First
3 of all, to establish the basis for the
4 supervision, that it is well grounded.
5 The second thing also is so that the
6 membership is aware of the results of
7 this investigation.
8 Over the course of the last
9 few months, there has been
10 resignations and it's not entirely
11 clear that the membership is aware of
12 what has been investigated and what
13 has turned up in the investigation and
14 the reasons why we believe that
15 supervision is valid.
16 HEARING OFFICER: So the basis
17 of Mr. Slevin's purpose here this
18 morning is to inform the membership of
19 the reason for the supervision and
20 what underlies it and what reasons for
21 management or whatever and then I will
22 determine if the supervision is indeed
23 voluntary, if it is done with the
24 consent of the executive board.
25 Mr. Slevin, proceed.
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2 MR. SLEVIN: Mr. Vaira, the
3 story of Local 79 for our purposes
4 really begins in January of 2003. At
5 that time the accountants that were
6 hired by the local conducted their
7 year-end review of the local's
8 finances.
9 Now, to put it in historical
10 perspective, that prior year, 2002,
11 the local had just moved its offices
12 and as part of that move, there was a
13 large outlay of union funds for
14 construction, for locating space, for
15 the purchase of furniture and all
16 types of purchases that were
17 surrounding the move to the new
18 offices.
19 Given that, the accountants
20 took a fairly specific view of trying
21 to determine whether everything was
22 adequately documented with the move in
23 addition to the normal customary
24 expenditures of the local.
25 To make a long story short,
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2 after the accountants looked at the
3 financial records of the local, they
4 determined that the
5 secretary-treasurer, Mr. Daniel
6 Kearney had engaged in, for lack of a
7 better word, embezzlement of union
8 funds. Funds were spent on his
9 personal items. Funds were spent on
10 gifts for other people and there was
11 also a surprising lack of
12 documentation of expenditures.
13 That was reported immediately
14 to members of the executive board who
15 I believe at that time were in Florida
16 at a convention. When everybody
17 reconvened back in New York,
18 Mr. Kearney was confronted with the
19 evidence of his embezzlement and
20 Mr. Kearney resigned on March 11,
21 2003.
22 At that point shortly
23 thereafter, the matter was referred to
24 the Inspector General's Office. At
25 that point Mr. Billi and Mr. Limberg
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2 followed up on a very detailed
3 investigation of Local 79.
4 HEARING OFFICER: Mr. Billi is
5 an accountant, former FBI agent and
6 Mr. Limberg is a former New York
7 policeman, am I correct, and they are
8 investigators for the Inspector
9 General, correct?
10 MR. SLEVIN: That's correct,
11 sir.
12 HEARING OFFICER: Those are
13 the two men sitting beside you.
14 MR. SLEVIN: That's correct.
15 The focus of the Inspector General's
16 investigation was threefold: First of
17 all, to determine the extent of
18 Mr. Kearney's embezzlement.
19 Second of all, to determine
20 whether anyone else was involved in
21 his particular embezzlement of local's
22 funds.
23 And third of all, the attempt
24 to determine whether the Kearney
25 embezzlement was an isolated
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2 circumstance or whether it was really
3 symptomatic of larger problems of the
4 local. With those three things in
5 mind, they immediately launched an
6 investigation in approximately March
7 of 2003. They interviewed union
8 officers, union employees, union
9 vendors and scrutinized the union's
10 relationships with vendors that it
11 used for various services.
12 At the end of the day, they
13 conducted roughly 75 interviews of,
14 again, officers, employees and
15 vendors. They went through hundreds
16 of pages of financial records and that
17 resulted in ultimately us being able
18 to put a case together.
19 In the immediate future, after
20 about a month or two of investigating
21 just that first aspect, the Kearney
22 embezzlement, the matter was referred
23 to law enforcement. As you know,
24 Mr. Vaira, it is the policy of the
25 Inspector General when they develop
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2 evidence of a crime they refer that
3 matter immediately to law enforcement.
4 HEARING OFFICER: What
5 happened to Kearney? Am I getting
6 ahead of you?
7 MR. SLEVIN: Just a bit. We
8 will get to that.
9 At that point you have two
10 investigations proceeding on parallel
11 tracks. You have the United States
12 Attorney's Office who is pursuing
13 Mr. Kearney based, if not entirely,
14 primarily on the evidence that was
15 discovered by the accountants and by
16 the Inspector General's Office and
17 they pursued him.
18 On the parallel track, the
19 Inspector General's Office then went
20 into the second and third areas to see
21 if anyone else was involved in this
22 embezzlement.
23 On top of that, is this an
24 isolated problem or are there other
25 things the matter with this local and
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2 the Mason Tenders District Council.
3 The rough chronology that
4 follows is that in the summertime the
5 Inspector General's Office develops
6 information on Franklin Square Ford,
7 which is a dealership which leased
8 vehicles to the local union.
9 Shortly thereafter, they
10 started to develop information on an
11 entity by the name of Shemore
12 Construction, which was a small
13 carpentry outfit that performed
14 services for the local union and for
15 the Mason Tenders District Council
16 and, I believe, is also a contractor
17 of laborers.
18 Then in the fall of that year,
19 they continued to pursue leads that
20 they received from a number of
21 different sources.
22 In about November of 2003, we
23 sent the deposition notice to
24 Mr. Kearney. He had granted an
25 interview to the Inspector General's
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2 Office in approximately April of that
3 year. We wanted to follow up with a
4 deposition to see what information he
5 had apart from the known specific
6 embezzlement. That would have covered
7 part of the deposition but we wanted
8 to know what exactly he knew.
9 In December shortly after
10 receiving the deposition notice,
11 Mr. Kearney through his counsel
12 advi