Independnt investigator Report on Cash payments by Boom Construction Enterprises

I began to take a preliminary look at Boom in June of 2003, after receiving a call on my dedicated Carpenter “Hot Line” advising that a business agent for one of the local District Council unions had received an anonymous call from a Carpenter saying that Boom was paying Carpenters at the Jacobi Hospital job site in cash. Donald Sobocienski, the Chief Investigator for the Independent Investigator (“II”), visited the job site along with another investigator working on the II team at the end of June, 2003. They visited the Jacboi office of the prime contractor, T. A. Ahern Contractors Corp.(“Ahern”), which had retained Boom as a subcontractor. Ahern made available records it maintained at the site pertaining to Boom’s workforce.²

The Ahern records shown to the II team consisted of “headcount” records made by Ahern’s project superintendent and a few certified payroll reports submitted by Boom, via Ahern, to the Dormitory Authority of the State of New York (“DASNY”), the overseer of the Jacobi project.³ The investigators compared the Ahern headcounts and the certified payroll reports with corresponding District Council shop steward reports, and found significant discrepancies. In comparing the documents available from Ahern to the shop steward reports, we found that Ahern’s headcount documentation and certified payroll reports showed more Boom Carpenters at the site than were reflected on the Boom shop steward reports.⁴

I made this information available to the District Council, which met with DASNY representatives and shared with them the discrepancies between the certified payroll reports that had been submitted to DASNY and the shop steward reports. At that point in my tenure as Independent Investigator (roughly six months into it), I still was of the view that the District Council and its Anti-Corruption Program should be capable of undertaking and resolving information of this kind. I therefore deferred to the union’s investigative process for some months. While Chief Investigator Sobocienski consulted with and kept himself apprized of the steps taken by the District Council (for instance, Mr. Sobocienski attended the meeting between the District Council and DASNY representatives), we did not aggressively pursue this investigation until November of 2003, when I became frustrated with the pace of the District Council’s inquiry. I noticed the deposition of Jason Flaherty (“Flaherty”), the Carpenter who had served as the shop steward for Boom at the Jacobi site from almost the beginning of the job until mid-August, 2003, when the District Council removed him as shop steward.⁵

In the interim, the District Council had taken several steps. In mid-July of 2003, the District Council interviewed Flaherty and obtained from him an affidavit in which he asserted that his shop steward reports were accurate to the best of his knowledge. In August of 2003 interns working at the District Council constructed a chart tracking those Carpenters reported in Boom’s certified payroll records for Jacobi with shop steward reports for all of Boom’s jobs, and benefit payments made by Boom to the Benefit Funds. These data confirmed that certain Carpenters Boom listed for the Jacobi site had in fact worked at Boom job sites other than Jacobi. At the end of October, the District Council interviewed three Carpenters who had worked for Boom as shop stewards on sites other than Jacobi; Mr. Sobocienski attended these interviews. Meanwhile, in August of 2003, I received an anonymous call on the Hot Line, informing me that Boom was paying Carpenters cash at a job at Macy’s in Brooklyn.

Also in August of 2003, as noted above, the District Council removed Jason Flaherty as the shop steward at Jacobi. The District Council points out in footnote 3 to Mr. Silverman's April 21, 2005 letter to the Court, that I may not have expressed sufficiently my appreciation of the efforts of Thomas McKeon, one the business agents responsible for the Jacobi site. I take this opportunity to commend him for his attention to his responsibilities. I believe that his diligence stemmed in part from the fact that he (alone, among all of the District Council business agents) was willing to meet directly with me and II staff to review evidence and exhibits that were relevant to the performance of his duties. I would encourage the next Independent Investigator to be more vigorous in forging close relationships with the business agents and to insist that they communicate directly with him concerning Hot Line matters which he refers to the union. I believe that such meetings would enhance business agents' understanding of how to detect corruption at the jobs they supervise and would underscore the agents' appreciation for the importance of this aspect of their jobs.

By November of 2003, as noted above, I decided that the II team should become more actively involved and that sworn testimony was appropriate. After a lengthy adjournment over the holidays, I deposed Jason Flaherty in early January 2004. Flaherty lied to me under oath, insisting that his shop steward reports had been accurate and that he was unaware of any improprieties on the Jacobi job site. (Flaherty Depostion, Exhibit 1, at A 91, 94, 113.) Flaherty persisted in this untruth even after he returned to give additional testimony five months later, when I gave him the opportunity to purge his false testimony (Exhibit 1 at B 214-15, 218-19, 229.)⁶ Given Flaherty’s refusal to tell the truth even after he was given a second chance to do so, I respectfully recommend that the Court refer Flaherty’s conduct to the Government for criminal prosecution.

At the end of January 2004, I subpoenaed DASNY for all documents relating to Boom’s work at Jacobi and in early May 2004, Mr. Sobocienski and I traveled to Albany to review DASNY’s documents and meet with the DASNY Inspector General. Mr. Sobocienski and I were then able to compare several months worth of headcount records submitted to DASNY by Bovis Lend Lease (“Bovis”), the construction manager for the Jacobi project; the certified payroll reports submitted to DASNY; and the shop steward reports that we had obtained from the District Council. This comparison confirmed my preliminary conclusion that the shop steward reports did not list all of the Carpenters working for Boom at the Jacobi job site.

In February of 2004 I deposed Derek McKenna (“McKenna”), the owner of Boom who oversaw the Jacobi job site.⁷ At that time McKenna, too, lied when I asked him to explain the discrepancies I found between: (a) the shop steward reports and the certified payroll forms filed with the DASNY and (b) the shop steward reports and the general contractor’s headcount. He swore that Boom did not pay Carpenters cash (Deposition of Derek McKenna, taken February 26, 2004, July 13, 2004 and December 6, 2004 [“McKenna Deposition”], submitted herewith as Exhibit 3 A, B and C, respectively, at A 78-79, 80-81)⁸ and that discrepancies between the shop steward reports and the certified payroll reports were due to “clerical errors” caused, for example, by the fact that Boom workers sometimes were sent back and forth between the Jacobi job site and the job site at the Columbia Medical Center. (Exhibit 3 at A 185, 191-93.) At this first deposition session, Mr. McKenna claimed that he could not explain how these “clerical errors” could have occurred, asserting that he simply signed the documents that were given to him and did not know how they were prepared. (Id. at 193.)

On March 12, 2004, the Hot Line received an anonymous voicemail message stating that the Boom shop steward at the Jacobi site and other Carpenters working there were “on the take.” On March 18, the OWL supervisor related the substance of a call he had received that day from a union member who provided more detailed information obtained from an unidentified Jacobi Carpenter. On March 19, the II team received from the District Council a shop steward report prepared by a substitute shop steward, Horace Kerr, for a week during which the then-shop steward, Delroy Haughton, was on vacation. Mr. Kerr’s shop steward report for the week of February 23, 2004 (the only full week he was on the job) showed 987 Carpenter hours. By comparison, Mr. Haughton’s shop steward reports for March 1 (which the II team received on April 20) showed only 735 Carpenter hours and his shop steward reports for the full week prior to his vacation, the week of February 9, showed only 695 Carpenter hours.⁹

Mr. Kerr’s shop steward reports also contained several names that had not appeared on Mr. Haughton’s previous shop steward reports. The District Council served notices to appear and began interviewing those Carpenters suspected of working for cash in late March and early April. Mr. Sobocienski participated in these interviews. I served notices of deposition on most of the same Carpenters and began taking their depositions in early April.

Just before the depositions began, on March 31, 2004, the Hot Line received an anonymous call from a union member who repeated the allegation that Boom had cash workers at Jacobi and that the shop steward was aware of this. More importantly, this caller also told us that the cash payments were made on Fridays at a bar in the Bronx and described its location. The caller further advised that the Boom Carpenters received their pay from Boom’s foreman in the back of the bar. This allowed the II team to arrange for video surveillance inside and outside the bar in question on the next Friday, April 2. The videotape of the outside of the bar (submitted herewith as Exhibit 4) shows several Boom employees entering the bar and then exiting within minutes. The videotape of the bar’s interior (submitted herewith as Exhibit 5), coupled with the observations of the investigator inside the bar, show that “Shanty Martin”¹⁰ obtained envelopes from the bartender and walked, carrying a sheet of paper, into a backroom into which he was followed, one by one, by several Boom/Jacobi workers who then quickly exited that room, sometimes clutching envelopes.

As noted above, I began taking depositions of Carpenter journeymen in early April, 2004. Between April 9 and June 22, I conducted seven depositions of Carpenter journeymen working at Boom’s Jacobi site. I selected these Carpenters because I had information leading me to believe that they had worked at the site for cash; some of them had appeared in the video made during surveillance of Shea’s Emerald Bar. During these depositions, I played the videotape that had been had made outside O’Shea’s Emerald Bar on April 2, showing Boom Carpenters entering and then quickly leaving the bar.

Just as there had been an increase in the number of Carpenter hours on the Boom/Jacobi shop steward reports during the full week for which Horace Kerr was the temporary shop steward, once Carpenters were shown this videotape, the shop steward reports started to become more complete. The number of names on the shop steward reports continued to increase as more Boom Carpenters were called in to testify.

Also during this period, I deposed shop steward Delroy Haughton (and, as noted above, former shop steward Jason Flaherty); Mark McMorrow, the Boom foreman at the Jacobi site (and a District Council member); and “Shanty Martin”, the non-union Boom employee who worked in the Jacobi “shanty” from which he dispensed and collected tools.

It was my hope that these witnesses, or at least some of them, when confronted with the warnings I gave with respect to perjury and obstruction of justice, would testify truthfully about cash payments by Boom. However, to a person, these witnesses lied under oath. They each said that they had been paid their proper wages and benefits, denied having been paid in cash (or, in the case of Mark McMorrow and Shanty Martin, denied having delivered any cash payments), and denied having any reason to suspect that anyone else on this job was kept off the shop steward reports and paid cash. Even when confronted with the videotape showing themselves and/or co-workers entering and exiting the bar we surveilled within time spans as short as ninety seconds, these witnesses denied that there had been cash payments made at the bar. Rather, they maintained that they or their colleagues had been at the bar purely for social reasons. (See, Depositions of Jeremiah Casey, [“Casey Deposition”] submitted herewith as Exhibit 9, at A 35, 60, 79; Alex Frederick Deposition, [“Frederick Deposition”] submitted herewith as Exhibit 10, at A 67,96-100; C. Simon Deposition, Exhibit 7, at A 65-60, 117-21; Glensworth Culzac, [“Culzac Deposition”] herewith submitted as Exhibit 11, at A 39, 71; “Carpenter” Martin Murray Deposition, [“Carpenter Murray Deposition”] herewith submitted as Exhibit 12, at A 100, 133, 136; and Recaldo Joseph, [“Joseph Deposition”] herewith submitted as Exhibit 13, at A 93, 130-31, 139; see also, Mark McMorrow Deposition, Exhibit 6, at A122.)

I am pleased to report that eventually each of these witnesses, with the exception of Delroy Haughton and Jason Flaherty, returned and purged their perjury.¹¹ It is clear to me that the only reason these workers were finally willing to admit the truth was that their employer, Boom co-owner Derek McKenna, had already done so and then advised them to the same.¹²

Although Mr. Haughton did not accept my invitation to return to my office to give truthful testimony, he did submit to an interview with the District Council on January 17, 2004. The District Council’s summary of that interview is submitted as Exhibit 16. In that interview, Haughton admits to have taken cash in exchange for keeping Carpenters off the shop steward reports. Not surprisingly, there are discrepancies between McKenna and Haughton as to who initiated the subject of money and how much money was paid.¹³

McKenna returned to my office to correct his testimony in mid-July, 2004, several weeks after I telephoned the attorney who had represented him at the time of his initial testimony. I had explained to McKenna’s attorney that I intended to recommend to the Court that it make a criminal referral of this matter because I believed there to be substantial evidence that McKenna had committed perjury, obstruction of justice and perhaps other criminal acts. At this point, McKenna retained a criminal defense attorney and came in to revise his testimony.

When McKenna came back to testify in July of 2004,¹⁴ he admitted that there had been a cash payroll at Jacobi. He testified that there were as many as two to five Carpenters omitted from the shop steward report each day. (McKenna Deposition at B 350-51.) Three weeks into Flaherty’s tenure as shop steward, in November of 2002 (shortly after the Jacobi job began), McKenna approached him with the request that “Shanty Martin,” the non-union worker who gave out and collected tools and did paperwork, be allowed to get the Carpenters’ coffee sometimes and to help unload trucks when there were deliveries, contrary to the CBA. (Id. at 278, 280.) Flaherty agreed. Within two weeks he asked for money in exchange for permitting these deviations from the CBA. McKenna began to give Flaherty an additional $300 per week. (Id. at 279.)

McKenna then hired five or six Carpenters to be paid in cash, based on an understanding with Flaherty that these workers’ names would not appear on the shop steward reports. Flaherty demanded more money for this additional deception and began to receive between $500 and $700 per week. These payments were made in cash and sometimes were made off-site, usually on Fridays. (Id. at 279-83, 348-39.) McKenna testified that he believes that he paid Flaherty a total of approximately $7000 in exchange for keeping two to five Carpenters per day off the shop steward reports each week and allowing “Shanty Martin” to perform Carpenters’ work.¹⁵ (Id. at 347-351.)

Delroy Haughton, the shop steward assigned to Boom’s Jacobi site after Flaherty was removed, was paid substantial cash bribes to keep Carpenter journeymen off the shop steward reports. (Id. at 346.) McKenna testified that three or four weeks after Haughton began as shop steward, Boom’s foreman at Jacobi, Mark McMorrow, told McKenna that Haughton was not working, interfering with other Carpenters’ work, and leaving early. (Id. at 362-63.) When McKenna confronted Haughton about this, Haughton said “you help me, I’ll help you.”

McKenna told Haughton that he knew two Carpenters whom he wanted to hire and keep off the shop steward reports. Haughton’s initial demand, McKenna testified, was half the money that Boom would save by not paying benefits and full wages for these workers. Ultimately, McKenna paid Haughton $300 to $500 per week for each Carpenter kept off the shop steward reports. (Id. At 366.) Haughton began to maintain two sets of shop steward reports: an accurate one to serve as a payroll sheet for McKenna and an inaccurate, abridged, version for the District Council, omitting the names of Carpenters who were getting paid cash, lower wages and no benefits. (Id. at 369.) In addition to the cash he received, Haughton took the liberty of doing little work and often arriving late and leaving early. (Id. at 370-71.)¹⁶ McKenna testified that he paid Haughton a total of more than $60,000. (Id. at 448.)

Indeed, Haughton apparently was so aggressive and persistent in his demands upon McKenna that he was charged by the United States Attorney’s Office with accepting bribes from an employer in exchange for permitting the employer to contravene the CBA, in violation of 29 U.S.C. § 186. A copy of the criminal complaint, sworn on October 15, 2004, is submitted as Exhibit 20.¹⁷ Because of his unpurged perjury and obstruction of justice, I respectfully recommend that the Court refer this matter to the United States Attorney’s office for consideration of possible criminal charges in addition to those with which Haugton has thus far been charged.

Aggressive conduct toward McKenna aside, the most egregious aspect of Haughton’s conduct was his betrayal of the Carpenters on the job site. Haughton made a mockery of his shop steward’s obligation to report to the District Council the names of all Carpenters on the job site so that they would be paid their proper wages and benefits. In fact, according to McKenna, there were occasions when Haughton left off even more Carpenters than McKenna had requested so that he could demand a larger cash pay-off. (Id. at 368.) Several Carpenters testified that when they asked Haughton to include them on the shop steward reports, Haughton either gave them an evasive answer or told them that they would have to get McKenna’s approval first. (Pink Deposition, Exhibit 17, at 96-97; Frederick Deposition, Exhibit 10, at B 163,166-67; C. Simon Deposition, Exhibit 7 at B107-08.) One Carpenter journeyman testified that Haughton laughed in his face when confronted about the issue. (Deposition of Recaldo Joseph [“Joseph Deposition”] at C 223-24.) Haughton’s conduct is a disgrace to good Carpenter shop stewards and deserves the harshest form of Carpenter justice.

Consistent with McKenna’s testimony that he had also paid off Haughton’s predecessor, Jason Flaherty, one journeyman testified that when he asked Flaherty if he could be listed on the shop steward reports, Flaherty told him that only McKenna could make that decision. (Pink Deposition, Exhibit 17, at 88-89.) Similarly, Hank Simon testified that he knew it was pointless to talk to Flaherty about being listed on the shop steward reports because that decision rested with McKenna. (H. Simon Deposition, Exhibit 8 at 51-53.)

Clearly, it is outrageous for a Carpenter to have to obtain his employer’s permission to obtain his basic CBA right to proper wages and benefits. And sadly, as I discuss in more detail below, the fact that Carpenters accepted this perversion or rather, evisceration, of the CBA and did not demand the union protection to which they were entitled, speaks volumes about the problems with the OWL as it is impacted by the request system discussed at length in my report entitled, “Independent Investigator’s Report on the “50/50" Rule and the Referral System” (“Request Report”). As journeyman Carpenter Jeremiah Casey testified during his return appearance, he believes that he would have lost his job with Boom if he had insisted on being listed on the shop steward reports and being paid the proper union wage and benefits. (Casey Deposition, Exhibit 9, at B 199-200.) In fact, he believes that he has been able to get as much work as he has because he is willing to work for cash, off the books. (Id. at 201.) Similarly, other journeyman testified that although it was not explicitly stated, they knew that if they insisted on being listed on the shop steward reports they would be laid off. (H. Simon Deposition, Exhibit 8, at 35-36); Frederick Deposition, Exhibit 10, at B 196; Casey Deposition, Exhibit 9, at B 125; C. Simon Deposition, Exhibit 8, at B 22-23.)

Carpenters cannot afford to take lightly the threat of losing a job – particularly a large, long-term job such as Boom’s jobs at Jacobi, Columbia Medical Center and Brooklyn Tabernacle. Because contractors are permitted to select the journeymen they want from the OWL, the waits on the OWL are many months long. (H. Simon Deposition, Exhibit 8, at 92, 95; C. Simon Deposition, Exhibit 7, at B 41-42; Culzac Deposition, Exhibit 11, at B228; Shorn Deposition, Exhibit 17, at 134; see also, Frederick Deposition, Exhibit 10, at B 185-86.) Recaldo Joseph testified that he had never obtained a job from the OWL, adding that “ [t]he way the union is structured, they will keep you on that list for God knows how long.” (Joseph Deposition, Exhibit 13, at C 41-42.)

These workers cannot afford to be idle for such long periods of time. Thus, without a shop steward who will stand up for their rights under the CBA, the journeymen are powerless. As one Carpenter put it:

. . . I never wanted to take cash in the first place. But if you didn’t take cash, then you could just sit home. And I sat home plenty of times . . . . It’s easy to have high moral character when you don’t have to worry about bills.” (Carpenter Murray Deposition at B 100.) . . . The 50/50 used to be 50 from the hall and 50 company men. [Now, coupled with the request system] . . . the list doesn’t move because you just request everybody so you don’t go off the list.

Mr. Casey asked the disturbing rhetorical question, “. . . if the shop steward is going to let it go on, you as a member, what can you do?” (Casey Deposition, Exhibit 9 at B 207.) Two other Carpenters expressed similar views. Alex Frederick asked, “[s]hoppie is there; where’s the circle around me to protect me? . . . If he is not, who will?” (Frederick Deposition, Exhibit 10 at B 170), and Recaldo Joseph said, “[h]ere I go watching my representative, the shop steward, being the one that is basically . . . [n]ot just ignoring me. Where’s my representation. Who do I complain to?” (Joseph Deposition, Exhibit 13, at C 224). (See below Section V, “Oversight by the District Council and its Business Agents.)

At least one journeymen, who asked McKenna directly, rather than through the shop steward, whether he could be listed on the shop steward reports was rebuffed. (H. Simon Deposition, Exhibit 8 at 35.) Rohan Farquhar, another Carpenter who complained to the shop steward about being paid cash, was told that it was McKenna’s decision. (Deposition of Rohan Farquhar [“Farquhar Deposition”], submitted herewith as Exhibit 21 at 16-17.) (Eventually, however, after complaining directly to McKenna about being kept off the shop steward reports, Mr. Farquhar was paid properly. Id. at 18-19.) Others testified that McKenna had told them that they would have to accept non-union wages in cash, without benefits, at least for some period of time. (Pink Deposition, Exhibit 17, at 69-70; Frederick Deposition, Exhibit 10, at B 161-62; Casey Deposition, Exhibit 9, at B 126-27; C. Simon Deposition, Exhibit 7, at B 22, 106; Culzac Deposition, Exhibit 11at B 188-89.)¹⁸

Typically, Boom Carpenters who were omitted from the Jacobi shop steward reports were paid on Fridays rather than on Wednesdays, when those on the payroll were given checks. Sometimes the “cash” Carpenters were given envelopes of cash at the Jacobi job site. But more often they were instructed to visit the nearby O’Shea’s Emerald Bar, where they would be given an envelope by the bartender or by the job foreman, Mark McMorrow, with either cash or a check in a fictitious name, which the bartender would then cash.¹⁹ (Culzac Deposition, Exhibit 11, at 31, 32; C. Simon Deposition, Exhibit 7, at B 28-32; Carpenter Murray Deposition, Exhibit 12, at B 16-17; Duhig Deposition, Exhibit 18, at B 258; Mark McMorrow Deposition, Exhibit 6, at B 277-79; Shanty Murray Deposition, Exhibit 19, at B 190-94.) There was some testimony that the bartender took a small percentage of the check for performing this service. (Culzac Deposition, Exhibit 11, at B 27; C. Simon Deposition, Exhibit 7, at B 27.) Some Carpenters were unwilling to go the bar and contrived to obtain their cash wages some other way. (Casey Deposition, Exhibit 9, at B 168-69; Joseph Deposition, Exhibit 13, at C 208-09.)

Boom also had Carpenters working off the books regularly at another large project: the Columbia Medical Center. Some of the Carpenters who worked regularly at Jacobi also worked at Columbia.²⁰ According to McKenna, only one shop steward at this site (which was a large site with several buildings and several shop stewards) took cash and kept Carpenters off the shop steward reports (McKenna Deposition, Exhibit 3, at C 593.) That shop steward was Noel Creaney (“Creaney”). (Id. at C 595-96.) According to McKenna, he paid Creaney a total of approximately $5,000 – between $200 and $800 per week, depending on how many Carpenters were kept off the shop steward reports. The work at Columbia was stop-and-go and Creaney would keep one or two entire days of Carpenters’ hours off the reports each week. (Id. at 596-97.)²¹

Carpenters whose names had been kept off Creaney’s shop steward reports confirmed this. Glensworth Culzac testified that he was always paid cash for the overtime he worked at Columbia. Creaney was clearly aware of his presence because Creaney was the one to tell Culzac what work he was expected to perform after hours. (Culzac Deposition, Exhibit 11, at 190-194.) Hank Simon testified that he worked at the Columbia Medical Center on-and-off (because he was intermittently assigned to other Boom locations) for approximately four months and that he was never paid his proper union wage and benefits, despite the fact that Creaney was aware of his presence. (H. Simon Deposition, Exhibit 8, at 55-56, 61.) Similar testimony was given by other journeymen Carpenters. (“Carpenter” Martin Murray Deposition, Exhibit 12, at B 51-53, 59; Pink Deposition, Exhibit 17, at 79, 80, 83; Deposition of Michael McMorrow [“Michael McMorrow Deposition”], submitted herewith as Exhibit 22, at B 147, 149, 150; C. Simon Deposition, Exhibit 7, at 78, 84.)

Creaney, like Flaherty and Haughton at Jacobi, disregarded Carpenters’ requests that he honor their right to work on the books and be paid a union wage and benefits. Like Flaherty and Haughton, when told that a Carpenter wanted to be listed on the shop steward reports that it was his obligation to maintain, Creaney replied that the Carpenter would have to ask the boss. (Pink Deposition, Exhibit 17, at 83.) In furtherance of his deal with the Boom owners, Creaney would tell Carpenters not on the shop steward reports to hide when a business agent visited the site. (Duhig Deposition, Exhibit 18, at B 215, 216-17.) And, as at Jacobi, after business agents had visited the job site and discovered Carpenters who typically worked off the books, Creaney would include those Carpenters on the shop steward reports for a few days. (Michael McMorrow Deposition, Exhibit 22, at 150.)

Although Creaney began his testimony by lying, he eventually admitted that he had kept Carpenters at the Columbia Medical Center off his shop steward reports in exchange for cash payments totaling approximately $5,000. (Deposition of Noel Creaney [“Creaney Deposition”], submitted herewith as Exhibit 23, at 45-48, 53.) Creaney explained that he had been approached by Sean Moran (“Moran”), a Boom management employee, about keeping Carpenters off the shop steward reports after he had confided in Moran that he was going through a contentious divorce. According to Creaney, Moran explained that some of the other Carpenters were also in situations in which it was helpful for them to be able to understate their reported income. (Id. at 51.) In addition to the cash he received, Creaney was allowed to come in half an hour late, take a long lunch hour and leave half an hour early without being docked any pay. (Id. at 61-62.)

While Creaney initially testified that he kept Carpenters off the shop steward reports only if they did not object (id. at 47), he subsequently conceded that it was McKenna, via Moran, who decided which Carpenters would be listed on the shop steward reports. Creaney related how McKenna had refused him permission to include Chester Simon, who wanted to be listed, on the reports. (Id. at 74-76, 106.) Creaney echoed the testimony of many other Carpenters that anyone who insisted on being on the shop steward reports would be out of a job. (Id. at 75.) The consequences of losing a job – especially a large job that could mean lengthy employment – were serious because being on the out-of-work list is likely to mean six months of unemployment. (See id.)

McKenna testified about three Carpenter shop stewards at the Brooklyn Tabernacle job site who accepted cash in exchange for keeping names off their shop steward reports. Shop steward John Thompson (“Thompson”) was paid approximately $2,000; shop steward Eric Lynch was paid between $3,000 and $5,000 and allowed to have his father, who was probably not a union member, hired (McKenna Deposition, Exhibit 3 at C. 578-86.); and shop steward Dwayne Horsely was paid for days he did not work in addition to a cash bribe of approximately $1,000 (Id. at C 588-590).

McKenna testified that Thompson initially refused to keep names off the shop steward reports but finally did so once Boom agreed to hire a friend of his who was not a union member. Additionally, Boom brought on another two or three men whom Thompson agreed to keep off the sheets in exchange for $300 per week. (Id. at C 581.) When I deposed Thompson, he conceded that he had compromised his obligations to the union by leaving names off the shop steward reports, but insisted that he never had taken cash. Instead, he testified, Boom hired his friend (who, he said, is a union member) and paid Thompson for overtime work that he did not actually perform. He said that he insisted on receiving a proper payroll check for this. (Deposition of John Thompson [“Thompson Deposition”], submitted herewith as Exhibit 24, at 55, 57-58.²²

Some Carpenter journeymen I deposed confirmed that they had worked off the books at least part of the time they worked at Brooklyn Tabernacle. (C. Simon Deposition, Exhibit 7, at 53-54, 65-66, 73; Culzac Deposition, Exhibit 11, at 203; “Carpenter” Martin Murray Deposition, Exhibit 12, at B 54; Frederick Deposition, Exhibit 10, at B 180-81; Michael McMorrow Deposition, Exhibit 22, at B 147.) Carpenter journeyman Feanny testified that he worked at the Brooklyn Tabernacle site daily for approximately nine months and was always paid cash, even after receiving his union card. (He had worked there for several months without a union card, notwithstanding the presence of a shop steward who as aware of his presence.) (Deposition of Feanny Smith ["Smith Deposition"], submitted herewith as Exhibit 29, at 15, 18, 30.)

McKenna admitted that he had paid several shop stewards at other job sites to keep Carpenters off shop steward reports. Those shop stewards included: Raymond Demarest, a shop steward at the Cambridge House in Brooklyn, who took cash five or six times (C. 622-23);²³ Joseph Cacioppo, the shop steward at P.S. 129, who would not work and took bribes of approximately $5,000; and Tommy Robinson, the shop steward at an MTA job on Ninth Avenue (C. 612-15).²⁴

Beyond those McKenna admitted to, there was testimony about additional “cash” job sites. Chester Simon testified that he was paid cash at several small jobs: Verizon in Elmhurst Queens (though he was put on the shop steward reports for the last two or three weeks of this four or five week job); Verizon on 125^th Street in Manhattan; Verizon on Sixth Avenue in the 60s; a Brooklyn Public Library site in early 2004 and a CVS store near Pelham Parkway. (C. Simon Deposition, Exhibit 7, B at 86-95.) There were no shop stewards at most of these jobs, at which two or more Carpenters were employed, even though the CBA requires a shop steward for jobs employing at least two Carpenters. (Id.) “Carpenter” Martin Murray testified that he was paid cash for his work at the Boom job at One Park Avenue and for Boom work at two Verizon locations (two weeks in Flushing Meadows and two weeks in Long Island City). There were no shop stewards on the two Verizon jobs and Murray never saw a business agent while he worked at these sites. (“Carpenter” Murray Deposition, Exhibit 12, at B 55-56, 62.)

McKenna testified that he has never paid money to a District Council business agent or to a District Council Benefit Fund auditor. (McKenna Deposition, Exhibit 3, at C 654, 536.) And I have no evidence that District Council business agents or other union representatives took bribes from Boom or any other contractor. However, I do have substantial evidence that business agents failed adequately to supervise Boom job sites and the assigned shop stewards. Because of business agents’ critical supervisory role, these failures are significant.

There was some Carpenter testimony that business agents who visited the Boom sites did not ask for their union cards. (“Carpenter” Martin Murray Deposition, Exhibit 12, at B 51; see also, Thompson Deposition, Exhibit 24, at 62.) Taking the names of union members at a job site and comparing them to the shop steward reports would have been a good way of verifying the reports’ accuracy. This, it seems to me, is a task that is fundamental to a business agent’s supervisory responsibilities, particularly for those jobs lasting months and even years.

In any event, even a casual walk-through of a job site should give a business agent an idea of how many journeymen are on the job (“cash” Carpenters do not always hide when a business agent inspects the site. [Farquhar Deposition, Exhibit 21, at 30-31; see Casey Deposition, Exhibit 9, at 178-79; Duhig Deposition, Exhibit 18, at B 250].) At least one Carpenter testified that he could not understand how the business agents who observed him and other cash Carpenters at Jacobi could have failed to notice the discrepancy between the number of journeymen at the site and the number that appeared on the shop steward reports. (C. Simon Deposition, Exhibit 7, at B 121-22.) And, as his brother Hank Simon explained, business agents should be able to know that more than the reported number of Carpenters are working on a job when they see the work progress much faster than it would with the number of workers reported. (H. Simon Deposition, Exhibit 8, at 102.)

As discussed above, several Carpenters testified that they were put on the Jacobi shop steward reports for just a few days or a week after a business agent discovered them on a job site. I find it striking that business agents, who are charged with reviewing shop steward reports weekly, apparently did not, for the job sites I have investigated, probed the dramatic surges in the reported number of Carpenters on shop steward reports for the days or weeks in which the business agent visited a job site. It seems to me that even a semi-alert business agent would notice these spikes and the fact that they coincide with the business agent’s visit to the job.²⁵

The evidence points to the conclusion that at least in some cases business agents’ examinations of job sites are infrequent and superficial. Rohan Farquhar testified that during the approximately two years he worked at the Jacobi site (less a total of six to eight weeks vacation weeks per year), he saw a business agent at the site only two or three times. (Farquhar Deposition, Exhibit 21, at 28-29.) Brooklyn Tabernacle shop steward John Thompson testified that the business agent responsible for that job did not come to that job site as often as Thompson requested, giving the excuse that parking near the job site (which was accessible by public transportation and located near parking garages) was difficult. (Thompson Deposition, Exhibit 24, at 86-87.) When business agents did come, Thompson testified, they did not walk the site, but rather asked him if everything was all right. (Id. at 62.)

My interview of George Memon (“Memon”) confirmed that his supervision of the Brooklyn Tabernacle site was less than rigorous. First of all, Memon typically visited the job site only on notice to the shop steward. This allowed him to have the shop steward bring his reports down to the sidewalk for Memon to collect. (April 4, 2005 Memorandum of George Memon interview [“Memon Interview”], herewith submitted as Exhibit 26 at 4-5.) Unfortunately, giving the shop steward advance notice of his site visits is not an effective means of detecting unreported, cash workers. Although Memon stated that he walked the site (Memon Interview at 5), he apparently did not do so on those occasions when he had Thompson bring the shop steward reports to the outside of the site (id.). Additionally, Thompson testified that he does not recall a business agent walking the site or checking union cards. (Thompson Deposition, Exhibit 24, at 62, 89.)

Consistent with Farquhar’s testimony that he seldom saw a business agent at the Jacobi job site, foreman Mark McMorrow testified that he did not think that business agents were at the Jacobi site often enough to do their jobs properly. (Mark McMorrow Deposition, Exhibit 6, at B 258.)

It appears to me that the journeymen who are unhappy about being paid in cash either do not have confidence in or are uncomfortable with the business agents’ role. If they did, they would report shop steward misconduct. Carpenter journeymen testified that they were afraid of losing their jobs if they went to a business agent. (See Joseph Deposition, Exhibit 13, at C 71-72; Frederick Deposition, Exhibit 10 at B 84-85.) Indeed, one shop steward reported in an interview conducted by the District Council that while working for Boom in March or April of 2003, he reported to his business agents that one of the journeymen had complained to him that he was being paid cash. Instead of expressing interest in this information, or referring it to my office, the business agents chastised this shop steward for making unsubstantiated accusations against a contractor.

In my discussions with the District Council’s Anti-Corruption Committee, I have been offered several arguments as to why the business agents cannot shoulder the anti-corruption responsibilities I believe that they owe the membership:

(A) Business agents are not criminal investigators, but union officials whose primary duty is to represent members, not be fact-gatherers; corruption work should be left to law enforcement authorities.

My response: Business agents must be the guardians of the District Council’s integrity and the rights of their members. They must therefore learn to be hands-on, keen observers and accurate record-keepers so that they can uncover and take or recommend enforcement action against corrupt contractors and Carpenters. Law enforcement authorities have their own priorities and cannot be relied upon to combat every instance of union corruption.

(B) Business agents are too busy to follow up on allegations of wrongdoing at specific job sites and, in any event, lack the resources to do so.

My response: Business agents should never be too busy to uncover and defeat corruption. My experience has demonstrated that the identities of the dishonest contractors are generally known. And, since the District Council espouses the view that the vast majority of contractors are honest, those contractors requiring special scrutiny should be easy to identify and focus upon.

(C) Business agents will not be able to discover wrongdoing on job sites because those Carpenter journeymen and shop stewards committing or permitting it will hide from or mislead union representatives.

My response: The II team’s experience demonstrates that information relating to wrongdoing is readily available from journeymen willing, and often eager, to expose corruption. Our Hot Line callers have provided us with information that permitted us to discover the wrongdoing described in this report. And, as will be demonstrated in my report on Tri-Built Construction, Hot Line callers, often anonymous, provide adequate information to enable a diligent observer to get onto the job site at a propitious time and in the manner necessary to observe wrongful conduct. Sadly, when our Hot Line “minders” have asked callers whether they have provided their information to a District Council official, we have been told either that: (a) the information was provided and disregarded, or (b) the caller fears that such information, if conveyed to a union official, would be disregarded or would be “leaked” and therefore compromised or, (c) the callers fear that making a complaint to the District Council would have an adverse impact on their careers.

(D) As Independent Investigator, I am a court officer with special powers and authority which enhanced my ability to discover the truth about Boom and Tri-Built.

My response: It is not necessary to be a court officer to uncover the corruption discussed in this and in my next (Tri-Built Construction) report. Given the fact that the District Council has been under this Court’s supervision for more than a decade, it is difficult to believe that the Court would not have issued subpoenas or other orders aimed at unearthing corruption, had they been requested. Indeed, given the legal and investigative resources available to the District Council throughout the life of the Consent Decree, I am confident that the District Council could have and should have identified both the Boom and Tri-Built corruption before the II staff conducted or participated in the investigations leading to these reports.

Apart from informal reports I have received indicating that the District Council had identified Boom as a corrupt contractor, there were numerous tangible indicia of Boom’s corrupt conduct, most of which pre-date my appointment. These were ignored or forgotten by the District Council. Indeed, the District Council squandered at least five opportunities to address Boom Construction’s job site wrongdoing.

(1) In or about January of 2003, at the time of my appointment, Barry Security, the District Council’s then-investigator, provided me with a memorandum it had written to an Assistant District Attorney, dated October 23, 2001, describing, inter alia, allegations provided by a shop steward working for Boom at P.S. 178. (A copy of the first three pages of that memorandum, those relating to Boom, is submitted herewith as Exhibit 27.) The shop steward had reported that Boom was paying cash on the job and working without him on a weekend. The information about cash payments was corroborated by another Boom worker at that site. Despite the fact that the District Council had this information as far back as October of 2001, I found no record of any District Council follow-up. Apparently, the District Council thought it sufficient to refer the matter to the District Attorney’s office and take no steps on behalf of the union’s membership.

(2) In early 2002, a union Carpenter complained to Local 926 that Boom was paying him in cash for work at its Brooklyn Tabernacle job site. Although a Local 926 business agent filed a grievance on his behalf, when, according to the business agent, the Carpenter-witness failed to appear at the grievance hearing, the District Council took no further action against Boom.²⁶ This is particularly disturbing in light of the business agent’s statements to me that he was convinced that Boom was a corrupt contractor. (Memorandum of Interview of Paul Tyzner, Exhibit 28, pp. 4,5.) I am also concerned about the fact that neither the Local, the District Council, or the business agent himself have been able to produce any daily activity reports or other paperwork regarding the business agent’s visits to this site. (Id. at 2-3, 6.)

(3) There is union documentation showing that Boom’s Brooklyn Tabernacle shop steward was disciplined by the District Council in 2002 for omitting names from his shop steward reports. Although the shop steward did receive three months’ suspension of his steward credentials, I found no record of the evidence against him and, most disturbingly, no evidence that there was any investigative or enforcement follow-up with respect to Boom.

(4) In November of 2003, a Local 926 business agent filed another grievance against Boom for failure to notify the Local that Boom had resumed work, which had assuredly been discontinued, at the Brooklyn Tabernacle job site. The grievance also alleged that the job had no shop steward and that the 50/50 requirement was not being met. Although the business agent estimated that the shop steward had been wrongfully

laid off for 210 hours, the grievance was settled, in January of 2004, for wages and benefits for only 21 hours. I have not been able to obtain an explanation for why the union compromised at such a drastically reduced amount. In any event, Boom has not paid even this reduced amount; it was only recently, by notice dated March 22, 2005, that the District Council demanded arbitration in order to collect the funds owed. Even more disturbing is the apparent absence of any documentation showing an investigation or other follow-up activity regarding this CBA violation by Boom.

Additionally, Brooklyn Tabernacle shop steward John Thompson testified that he regularly complained to the Local 926 business agents about Boom’s misconduct. Yet the union has been unable to produce for me any documentation either of Mr. Thompson’s complaints or any related investigation. I believe that this shop steward testified truthfully and, once again, am concerned about the District Council’s failure to take any investigative or enforcement action against Boom prior to the time I was appointed II.²⁷

(5) Noel Creaney testified that after a business agent found an unreported Carpenter, one Miloc Ochtebec, at Boom’s Columbia job site, Creaney listed Mr. Ochtebec on the shop steward for just that one day. (Id. at 65.) When the business agent reviewed the shop steward report for that week, Mr. Ochtebec’s one-day appearance should have been noteworthy and indeed striking. Even Creaney had to admit that these circumstances were suspicious. In fact, the business agent apparently did make some inquiry about Ochtebec because he ascertained that although Ochtebec had been a union member for a year, there was no record of any benefit payments made for him. (Id. at 56.) Evidently, however, the matter was dropped there because there is no record of the District Council having delved into this matter any further or taking any action against either the shop steward or Boom. In a similar vein, Feanny Smith testified that when business agent Dunbar discovered him working at the Brooklyn Tabernacle job site without a union card, he did not ask questions about how Smith came to be working at the site or for how long he had worked there.²⁸ (Smith Deposition, Exhibit 29, at 23-25.) Rather, Dunbar simply told him to speak to someone at Local 926 (id. at 24-25); as related above in n. 26, the information Smith provided to union officials did not lead to any significant investigative or enforcement measures with respect to Boom.

My own review of shop steward reports submitted for the Columbia job show that for the week that Noel Creaney was on vacation, the shop steward reports list four times as many Carpenters as were included on Creaney’s reports for the weeks immediately before and after his vacation. (See Creaney Deposition, Exhibit 23, at 63.) This should have been a bright red flag to anyone reviewing the shop steward reports. Similarly, the situation at Jacobi Hospital, discussed above, where there was a dramatic rise in the number of Carpenter hours for the one full week during which Horace Kerr was shop steward, should have alerted someone at the District Council to the possibility that something was seriously amiss, especially after the Hot Line calls regarding Boom, notes of which my office promptly telefaxed to the union.

In sum, inexplicably, on several occasions, despite its possession of information that should have led to aggressive investigations and proceedings to enforce members’ rights under the CBA, the District Council simply dropped the ball.

VI. The Impact of the Request System on Contractors’ Ability to Violate the CBA and the Law by Paying Cash

I believe that the situation presented by Boom (and by other contractors, about whom I have yet to report) cannot be fully understood without reference to the request system’s debilitating impact on the OWL. As I discussed in my Request Report, the impact of the request system, whereby a contractor can choose anyone he wishes from the OWL even if the Carpenter has been on the list for no more than five minutes, is to permit the contractor to hand-select all of the Carpenters on the site. (Request Report at 2-5.) (The only exception is the shop steward assignment, a subject addressed in my June 29, 2004 report titled “Independent Investigator’s Report Concerning Shop Steward Assignments Obtained by Local 608 Member John Corrigan.”) As I stated in the Request Report, contractors’ routine practice of jumping their selectees over the names of journeyman who have been on the list for lengthy periods of time renders the term “out-of-work” list a misnomer. (Id. at 2.)

I believe this to be a situation of the utmost seriousness because it eviscerates the job referral provisions of the 1994 Consent Decree. And, as I understand it, the purpose of the job referral provisions was not only to eliminate simple unfairness, but also to minimize the potential for abuse and corruption. Yet the request system as it currently operates nurtures abuse because lengthy waits for jobs that are often short-term (as contrasted with the choice jobs offered to contractors’ selectees), makes it extremely difficult if not impossible for Carpenters to fend off violations of the CBA. In particular, Carpenters often do not have a realistic choice to refuse contractors’ demands that they be paid off the books – at least not if their shop steward (who, as contrasted with journeymen, cannot be easily terminated under the terms of the CBA) chooses to be corrupted by the contractor.

Clearly, the shop steward is the Carpenter’s first line of defense on the job site. The evidence I have thus far obtained, primarily through depositions of shop stewards, contractors and journeymen, demonstrates that shop stewards who do not appear receptive to bribes typically are not approached by contractors. Or, if an approach is made and rebuffed, the contractor has no choice but to abide by the CBA.

In sum, the bribery of shop stewards and off-the-books compensation of Carpenter journeymen documented in this report are made possible because the union has allowed the out-of-work list to be rendered meaningless. The result is fear and desperation on the part of many Carpenters. This, in turn, causes them to participate in their own victimhood by accepting their wages (usually below the union wage) in cash.²⁹ I urge, in the strongest terms, that the OWL procedures (and any CBA provisions that support the request system as it currently operates) be reviewed by the Court.³⁰

¹ The shop steward reports are filed with the Local Union and transmitted to the District Council for record-keeping purposes. They are used to account for the identity and hours of Carpenters on a job site, to determine whether Carpenters are being paid the wages and benefits to which they are entitled under the CBA, and to monitor whether the “50/50" requirement is being met. Because of the significance of shop steward reports to the job referral system, the subject of how they are maintained and accounted for – a subject about which serious questions have arisen during my investigation of Tri-Built Construction – should be addressed in a separate report, whether written by me or a successor.

² I serve as Monitor of Ahern and the investigative team has a good working relationship with Ahern personnel.

³ Because DASNY is a state agency, it requires contractors and sub-contractors it retains to submit all payroll rosters, certified as to accuracy. The primary purpose of this is to insure that the contractors are complying with the prevailing wage statute.

⁴ By contrast, the certified payroll reports showed more Carpenters on the site than Ahern had counted. Because DASNY pays its contractors and subcontractors on a flat fee basis, regardless of the number of workers employed, it is not clear to me why Boom padded the certified payroll reports. However, it is possible that the Boom owners needed more names on the payroll reports in order to camouflage the discrepancy between the headcounts and the number of Carpenters listed on the shop steward reports. (The additional names on the payroll reports were those of Boom workers at other sites. Therefore, an auditor might be satisfied in confirming that the workers listed on the headcount reports worked for Boom, without identifying the specific Boom job site at which those workers had been employed.) The DASNY Inspector General provided another possible explanation for Boom’s padding of its certified payroll. He explained that dishonest contractors may do this in anticipation of claiming, at the end of a job, additional compensation for hiring “extra” workers who assertedly were forced to sit idle while another trade delayed the contractor’s work. Or, he theorized, the additional expense of the extra workers on the certified payroll report might have been an attempt to generate false additional business expenses for tax purposes.

Contrary to the comment in n.3 of Gary Silverman's April 21 letter to the Court, we do not say here that the Ahern headcounts contained names. But the headcount reports do show numbers of Carpenters and those numbers can be compared to the numbers of names listed on the shop steward reports. In any event, some of the Ahern headcount reports did contain names. And where they did not, our interviews of the Ahern foreman allowed us to obtain names.

⁵ The District Council is unclear concerning the precise basis upon which it removed Flaherty from the shop steward position. Mr. Flaherty testified that he was told that the reasons for his removal were that: (1) he did not maintain a written daily headcount and (2) he permitted a non-union Boom employee to be present in the shanty used by the Carpenters to store their tools. (Deposition of Jason Flaherty, taken January 8, 2004 and June 9, 2004 [“Flaherty Deposition”], submitted herewith as Exhibit 1 A and B, respectively, at A 140, 146.) The District Council has not provided me with any paperwork associated with this action and has conceded that it did not have any written (or oral) criteria or procedures for removing a shop steward. With input from me, the District Council is in the process of drafting a procedural protocol. In any event, as detailed below, I have no doubt that Jason Flaherty was submitting fraudulent shop steward reports by omitting the names of Boom Carpenters working at Jacobi.

⁶ Once I had irrefutable proof that Carpenters had been working for Boom at Jacobi off the shop steward reports, I gave each of the witnesses who I believed had committed perjury and obstruction of justice in their initial depositions an opportunity to return for another deposition session at which they might correct their testimony. I did so in a letter explaining my conclusions about their testimony, my intention to recommend a criminal referral and an invitation to return to my office for another deposition. A sample of this form letter is submitted herewith as Exhibit 2.

⁷ Boom’s other 50% owner, Sean Doherty, appears not to have had a substantial presence at the Jacobi job site.

⁸ I am providing the last two instalments of McKenna’s deposition (Exhibit 3 B and C) only to the Court and to McKenna’s counsel, pending the Court’s review of this report and counsel’s opportunity to be heard, before the Court determines what, if any, action it wishes to take with respect to McKenna. I am treating these transcripts in this fashion because of my representation to McKenna and his counsel that, although I cannot commit either the Court or the Government, I would recommend that McKenna not be prosecuted for perjury or obstruction of justice as long as he testified truthfully in his second and third deposition instalments. I believe that McKenna’s subsequent testimony was substantially truthful (see n. 18, below) and I respectfully request that the Court hear from McKenna’s counsel and from me before permitting these transcripts to be used for criminal prosecution of McKenna.

⁹ McKenna testified, on his second visit to my office when he decided to admit that he paid cash at Jacobi, that Horace Kerr performed his job diligently and attempted to list all of the Carpenters on his shop steward report but that he missed two or three workers because he did not see them. (McKenna Deposition, Exhibit 3, at B 306-07.) Other honest District Council shop stewards whose names were mentioned by Boom foreman Mark McMorrow or other Carpenters are: Vincent Ciaramella at a Boom job at P.S. 129; Mark Landesberg at P.S. 128; Edward Ortega at Brooklyn Tabernacle (Deposition of Mark McMorrow, [“Mark McMorrow Deposition”] submitted herewith as Exhibit 6, at B 251-53, 288-89); Eldridge Brown at the Verizon job on 125^th Street (Deposition of C. Simon, [“C. Simon Deposition”] submitted herewith as Exhibit 7, at B 91-92); and an unidentified African-American shop steward at a Verizon job in Brooklyn (Deposition of Hank Simon, [“H. Simon Deposition”] submitted herewith as Exhibit 8, at 57-58).

¹⁰ “Shanty Martin” was the nickname assigned to a non-union Boom worker named Martin Murray, to distinguish him from the Martin Murray who was a Carpenter working for Boom (frequently off the shop steward reports) at Jacobi.

¹¹ The depositions of Delroy Haughton and Jason Flaherty are submitted as Exhibits 14 A and B, and 1 A and B, respectively. On October 27, 2004, the District Council filed charges against Flaherty, alleging that he had violated the union’s constitution by submitting fraudulent shop steward reports and lying to me. I submit a copy of those charges as Exhibit 15.

¹² In fact, McKenna met with each of the Carpenter journeymen who had worked at Jacobi and been deposed by me, in an attempt to reconstruct the number of hours they had worked off the books.

¹³ Haughton told the District Council that he had lied in his testimony before me because of a hostile attitude on my part and because he did not like the way I asked him questions. Gary Rothman, counsel for the District Council, who was present at the deposition and at the interview, stated that I had treated Haughton professionally and like a gentleman. Haughton responded that he was unhappy with the way I had spoken with him outside Mr. Rothman’s presence prior to the deposition. (Exhibit 16 at 3.)

¹⁴ Contrary to my usual practice of inviting representatives of the Government and the District Council to attend the depositions I take in this matter, I did not invite either of the parties to be present when Mr. McKenna returned on July 13 (and again on December 6). Experience in the II position has taught me that there are occasions on which, in order to get at the truth, I need to limit a witness’ direct exposure to other parties in order to alleviate the witness’ fears or feelings of intimidation and/or to protect the confidentiality of the investigative process. I take full responsibility for these decisions and am prepared to discuss them further at the Court’s convenience and in whatever setting the Court deems appropriate.

¹⁵ Sometimes Carpenters were on the shop steward reports and therefore paid proper wages and benefits for some days of the week but not others. This typically occurred after a business agent had been to the job site and was aware how many Carpenters had been there. Casey Deposition, Exhibit 9, at B 178-79; Deposition of Shorn Pink [“Pink Deposition”], herewith submitted as Exhibit 17, at 89-90; Deposition of Greg Duhig [“Duhig Deposition”], herewith submitted as Exhibit 18 at B 250.)

¹⁶ Haughton’s casual attitude about work irritated other Carpenters on the job site (Id. at 363,] and even led to a physical confrontation between Haughton and Shanty Martin when Haughton, trying to leave early one day, tried forcibly to take from Shanty Martin the key to the shanty in which Haughton’s personal belongings were locked. Duhig Deposition, Exhibit 18, at B 252-53, 255-56; Deposition of “Shanty” Martin Murray [“Shanty Martin Murray Deposition”], herewith submitted as Exhibit 19, at B 178-81.)

¹⁷ Flaherty, too, was no shrinking violet. He continued to demand cash from McKenna even after he had been removed as shop steward. (Id. at 405-07; C at 502-06.)

¹⁸ This testimony squarely contradicts the testimony Derek McKenna gave during his second deposition session. At this second session, in July of 2004, McKenna testified that with one exception, everyone who wanted to be on the shop steward reports was permitted to be listed. McKenna Deposition, Exhibit 3, at B 440-41. I also believe, based on the testimony of several Carpenters, that McKenna was not candid when he testified, also in July of 2004, that he did not suggest to the Carpenters how to testify when they first were subpoenaed, except to tell them that they were all in this mess together. Id. at B 403-04. Journeymen Carpenters testified differently. Chester Simon testified that McKenna told him that if he told the truth about having received cash he would lose his union card and that McKenna would let other contractors know that he had “ratted [him]out” (C. Simon Deposition, Exhibit 7 at B 36-37). Jeremiah Casey testified that McKenna had cautioned him that if he told the truth he would be kicked out of the union; that the job would be closed down and all the Carpenters would lose their jobs; that he should testify that he did not know Jason Flaherty, the first Jacobi shop steward; and that he had not been at work for the days he was off the shop steward reports because he had taken time off to spend with his parents (Casey Deposition, Exhibit 9, at B 101-93, 195-96). Hank Simon testified that McKenna had coerced and coached the other Carpenters about their testimony (H. Simon Deposition, Exhibit 8 at 89-92). Martin Murray testified that McKenna had asked him not to testify truthfully and implied, though not stated, that he would lose his job if he did. (“Carpenter” Martin Murray Deposition, Exhibit 12, at B 29-30.) See also, Pink Deposition, Exhibit 17, at 89-91 (McKenna coached and coerced Carpenters to lie under oath to me).

While I believe that McKenna was not fully honest even in his revised testimony, it is my view that he told the truth regarding the most critical issues and that without his testimony and cooperation this investigation would never have got as far as it did. Additionally, I believe that the civil consequences of McKenna’s conduct are substantial and appropriately punitive. Moreover, I know that at some risk to himself he has assisted the criminal authorities in their endeavors. Therefore, I do not recommend that McKenna be criminally prosecuted for perjury.

¹⁹ On April 2, 2004, the day of the videotaping, Shanty Martin distributed the envelopes at O’Shea’s; but it appears that he performed this function on only one occasion. (McKenna Deposition, Exhibit 3 at B 323, 326, 389-90; “Shanty” Martin Murray Deposition, Exhibit 19, at B 189; Mark McMorrow Deposition, Exhibit 6, at B 279-80.)

²⁰ There were times that Jacobi workers were sent back and forth between Jacobi and Columbia or between other sites. (Culzac Deposition, Exhibit 11, at B 187-88; Casey Deposition, Exhibit 9, at B 142, 144, 146; H. Simon Deposition, Exhibit 8, at 61) When this was done, the Carpenter was instructed to put his name on the OWL so that he could be requested the following day for the other site. (Duhig Deposition, Exhibit 18, at A 126; H. Simon Deposition, Exhibit 8, at 67, 111) This enabled Boom to have these workers, already in its employ, deemed dispatched from the union hall for purposes of the 50/50 rule. (Duhig Deposition, Exhibit 18, at A 114-15, 119; H. Simon Deposition, Exhibit 8, at 69; see also Request Report at 5-9.)

²¹ This may well have been an understatement because there was testimony from Carpenters working at the Columbia job site to the effect that they were never or almost never on the shop steward reports. (Culzac Deposition, Exhibit 11, at B 194; Casey Deposition, Exhibit 9, at B 163; “Carpenter” Martin Murray Deposition, Exhibit 12, at B 53.)

²² I did not depose either of the other two Brooklyn Tabernacle shop stewards identified by McKenna as corrupt. Mr. Lynch has relocated to Florida and Mr. Horsely, I am informed, is incarcerated.

²³ Mr. Demarest recently testified that he did not omit any names from the shop steward reports or receive any cash while at Cambridge House. (Deposition of Raymond Demarest [“Demarest Deposition”], submitted herewith as Exhibit 25, at 28, 36.) I was unable to determine definitively whether Mr. Demarest lied, because he evidenced very poor recollection throughout his deposition. However, given McKenna’s admissions and their corroboration by other witnesses, I am disinclined to accept Mr. Demarest’s denials as truthful.

²⁴ An additionally disturbing aspect of the Tommy Robinson pay-off was not only that he was often a no-show, but he also was known to show up at work drunk. Indeed, McKenna testified, the construction manager on that job wanted Robinson removed for drinking. As McKenna, himself, testified, “He is a liability for us because he could fall on top of someone else, or fall.” (McKenna Deposition, Exhibit 3, at C 614.) Apparently McKenna was willing to accept this risk in order to have a corrupt shop steward.

²⁵ Because I have yet not scrutinized the business agents’ activity records (and may never be able to, given the District Council’s record-keeping practices), I have not been able to document how often business agents’ visits to a job site coincided with spikes in reported Carpenter hours. So far the evidence of this phenomenon is anecdotal. I have only begun recently to focus on the business agents’ activities and, if I have the opportunity, intend to submit a supplemental report once I have completed this task.

²⁶ The Carpenter-witness, Feanny Smith, tells a somewhat different version of this story. According to Mr. Smith, he arrived late for the hearing and was told by a District Council executive whom he identified to me that McKenna had come and gone, after claiming that Smith had worked at the Brooklyn Tabernacle site for only one day. (Smith Deposition, Exhibit 29, at 61-62, 66-67.) Smith testified that he sat in the office of a District Council executive and told him that he had been working for Boom for cash for several months and even provided copies of the paperwork given to him by Boom, showing some of the amounts he was paid. (Id. at 45-47, 49, 69 and Exhibit FS-2 thereto.) Smith was told to come back on a later date. When he did, expecting a continuation of the grievance hearing against Boom, it turned out to be a disciplinary hearing against him. (He was told, however, that he would receive no punishment because he told the truth.) At this hearing, Smith admitted to eight District Council representatives, including business agents Tyzner and Dunbar, that he had worked for Boom for cash as a union member for six months; he had already provided some corroborating documentation. (Id. at 53, 57-59.) Although the disciplinary hearing lasted for an hour to an hour and a half, and a stenographer was present, the only transcript produced (submitted herewith as Exhibit 30) is barely four pages long and consists solely of Smith's admission of guilt. I suppose that, given the fact that no action appears to have been taken against Boom for failing to pay Smith a union wage (Smith Deposition at 84-85, 87), and the District Council seems to have been concerned solely with Smith's wrongdoing, it was not necessary to transcribe the facts that Smith offered relating to Boom's practice of paying him off the books. I hope that now that this has come to the fore, the new Independent Investigator will work with the District Council to see that discipline against its members does not overshadow its enforcement efforts against contractors who exploit union members and violate the CBAs.

Despite this evidence, obtained in early 2002, the District Council took no investigative or enforcement action, prior to my appointment, against Boom.

²⁷ In his April 21, 2005 letter to the Court, at page 3, Mr. Rothman takes issue with my having credited Thompson's testimony that he had regularly complained about Boom's misconduct to Local 926 business agents, despite the proven violation of his shop steward obligations. First of all, there was no direct contrast between Thomas' testimony and the statement of the supervising business agent, George Memon. Memon said that he did not recall Thompson making complaints other than the two he had addressed; he did not deny that Thompson had made such complaints. (Memon Interview at 8.) Second of all, based on the fact that Thompson kept a daily diary, or "book," containing an accurate list of Carpenters on the site (Exhibit JTH-1 to Thompson Deposition), and on his demeanor while testifying, I believe that I had good reason to credit his testimony that he had made detailed complaints in an attempt to alert the local union to problems on this job site. In my view, had this job site been monitored more carefully, and had Thompson's daily shop steward book been reviewed before I saw it on February 4, 2005, Boom's wrongdoing would have been identified at a much earlier date.

²⁸ Smith testified that he had worked at the site for five or six months before being discovered. He said that he and as many as fourteen to sixteen other "cash" workers would hide on the roof or in a dark room when the business agent made routine site visits. (Smith Deposition, Exhibit 29, at 16-17, 20- 21, 97.)

²⁹ I acknowledge that some Carpenters are pleased to accept cash even if it is less than their union wage and unaccompanied by benefits. However, I believe that the majority of Carpenters want and need the medical and other insurance benefits they obtain when paid in accordance with the CBA.

³⁰ I do not accept the District Council’s recently articulated arguments that IRO Conboy approved the request system as it currently operates or that changes in the construction marketplace permitted the District Council to alter the job referral rules without the consent of the Government or the approval of the Court.

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