Laborers' local facing corruption probe will get new trustees

A federal judge has removed the administrator and two trustees of a New Jersey labor union's benefit funds that are now the focus of an ongoing federal corruption probe.

Citing serious questions about possible financial misconduct within Local 734 of the Laborers' International Union of North America, U.S. District Judge Dennis Cavanaugh in Newark said he would appoint substitute trustees to oversee the local's pension and welfare funds, pending a new election.

Attorney David Grossman of Kenilworth, who represents funds administrator Peter Rizzo, said yesterday they are considering an appeal. At the same time, he urged the appointment of Edwin H. Stier as the court-appointed administrator. Stier, a former federal prosecutor, spent a decade as trustee cleaning up the pervasive mob influence within Teamsters Local 560 in northern New Jersey.

"I believe Stier to be a very independent person. I hope he won't be swayed by union trustees who are obviously just trying to take over this fund," said Grossman.

Rochelle Park-based Local 734 -- whose 3,500 members include workers in construction fields, health care, food service and custodial services in New Jersey and parts of Pennsylvania -- has been in turmoil since its parent union went to court, charging the organization was riddled with no-show jobs and ill-defined, overpaid positions.

Local 734, which has seen its membership sharply decline in recent years, has been under voluntary supervision by the Laborers' International since October 2002, although its benefit funds had remained under local control. In January, however, trustees for the international went to federal court seeking the removal of Louis Calastro and Salvatore Salerno -- the employer-selected trustees who controlled the funds -- and Rizzo, the administrator. The action came after an independent hearing officer, Peter F. Vaira -- the former U.S. attorney for the Eastern District of Pennsylvania -- concluded that some of those involved with the union local and its benefits funds had ties to organized crime.

Vaira also found that many jobs were being filled by relatives and business associates of former executive board member August "Auggie" Vergalito, who left the local after he pleaded guilty in 1997 to concealing payments he made from the benefit funds. Vergalito's wife, a daughter, three sons-in-law, a former son-in-law and two business associates were all on the payroll of the union local or its funds.

Trustees for the parent union cited more than $1 million in salaries for what they said were essentially no-show jobs.

Attorney Vincent M. Giblin of West Orange, representing the international, said their position was that the findings of Vaira "so jeopardized the existence of the local that we had to get the corrupting influence out."

Earlier this year, the U.S. Attorney's office in Newark subpoenaed records from the New Jersey local, court documents show. Grossman said at least 84 boxes of documents have been delivered to prosecutors.

 

 

Ted Sherman can be reached at tsherman@starledger.com or (973) 392-4278.