Chicago Laborers Trusteeship Transcripts 09-15-1997
p1946
1 OFFICE OF THE INDEPENDENT HEARING OFFICER
2 LABORERS' INTERNATIONAL UNION OF NORTH AMERICA
3
4
5 IN RE: )
6 TRUSTEESHIP PROCEEDINGS ) No. 97-30T
7 CHICAGO DISTRICT COUNCIL )
8
9
10 TRANSCRIPT OF PROCEEDINGS had in the
11 above-entitled cause at the Days Inn, Erie Room,
12 644 North Lake Shore Drive, Chicago, Illinois, on
13 the 15th day of September, A.D. 1997, at
14 approximately 1:10 p.m.
15
16
17 BEFORE: MR. PETER F. VAIRA, Hearing Officer
18
19
20
21
22
23
24
1947
1 PRESENT:
2 COMEY, BOYD & LUSKIN,
3 (1025 Thomas Jefferson Street, N.W.,
4 Washington, D.C. 20007-5243), by:
5 MR. ROBERT M. THOMAS, JR.,
6 MR. DWIGHT P. BOSTWICK,
7 appeared on behalf of the GEB Attorney;
8
9 CARMELL, CHARONE, WIDMER, MATHEWS & MOSS, LTD.,
10 (225 West Washington Street, Suite 1000,
11 Chicago, Illinois 60606), by:
12 MR. SHERMAN CARMELL,
13 appeared on behalf of the Chicago
14 District Council of Laborers.
15
16 ALSO PRESENT:
17 MS. LORI HARTMAN;
18 MS. COLLEEN RAE MASON, Legal Assistant,
19 Barack, Ferrazzano, Kirschbaum,
20 Perlman & Nagelberg.
21
22
23 REPORTED BY: JULIANA F. ZAJICEK, CSR 84-2604
24 CORINNE T. MARUT, CSR 84-1968
1948
1 THE HEARING OFFICER: Okay. Ladies and
2 gentlemen, can you hear me? I guess it works.
3 Okay.
4 The hearing will come to order. This
5 is a continuation of the hearing for the
6 trusteeship for the Chicago District Council. I
7 believe it is now Mr. Carmell's case.
8 Mr. Carmell, you may proceed.
9 MR. CARMELL: Thank you. The District
10 Council had intended to file -- present a motion
11 to dismiss at the close of the GEB Attorney's
12 case. In light of the agreement that we have
13 with the GEB Attorney which the Hearing Officer
14 accepted, the GEB Attorney has the right -- has
15 left its case open with respect to
16 cross-examination of officers who are on the
17 list.
18 Under those circumstances, it seems
19 inappropriate and not of much value to discuss a
20 motion to dismiss now because effectively their
21 case is not closed, so I would not want -- I just
22 want the Hearing Officer to note that we are not
23 prejudiced by not having filed it at this time,
24 and when it comes the appropriate point, we may
1949
1 renew -- make a motion both to be considered both
2 at the close of their case and the close of our
3 case.
4 Having heard nothing from the other --
5 from the GEB Attorney, I assume that that's
6 acceptable, so I will just go on.
7 Now it is time for the District
8 Council, and I would like to give a short opening
9 statement that we had reserved.
10 THE HEARING OFFICER: Okay. We look forward
11 to hearing your opening statement.
12 MR. CARMELL: Well, then we may quit after
13 that. All right.
14 I want to refer to the case that the
15 General Executive Board attorney presented in an
16 opening statement and need to reprise this in
17 order for the Independent Hearing Officer to
18 understand the District Council's defense.
19 The General Executive Board attorney
20 began his opening statement with the statement,
21 "This hearing is all about the connections
22 between what became General Executive Board
23 Attorney Exhibit 145 and Exhibit 163, the two
24 charts." He went on to say that the Chicago
1950
1 District Council leaders who owe their allegiance
2 to members, who bargain collectively for locals
3 and who also as fund trustees, quote, "actually
4 owe their prime allegiance to the Chicago
5 Outfit," unquote.
6 Through this opening statement, the
7 General Executive Board attorney has placed the
8 issue as to whether the officers of the Chicago
9 District Council are performing their fiduciary
10 responsibilities as set forth both in the
11 international constitution and in the LMRDA
12 trusteeship provision.
13 And it is here, Mr. Hearing Officer,
14 and before I get into certain specifics, that I
15 would like to set the perimeters of the District
16 Council's position.
17 This is a trusteeship proceeding.
18 This is not a history lesson, nor is it a place
19 in which to simply roam through a long 20-year
20 history. The question that is presented to the
21 Hearing Officer by Title 3 of the Landrum-Griffin
22 and the constitution is simply whether the
23 District Council is now being operated in a
24 manner which is consistent with the international
1951
1 constitution and Landrum-Griffin, namely, without
2 financial corruption, with -- consistent to
3 performance of collective bargaining agreements
4 and with respect to democratic procedures.
5 In the testimony before the House
6 Committee in July of 1996, the General Executive
7 Board attorney was asked about his position with
8 respect to allegations in the first draft RICO
9 complaint and, as the evidence will show, he
10 testified that he -- it was his opinion that
11 where the person was dead or where the person was
12 in prison or where the complaint had occurred,
13 the alleged impropriety occurred years and years
14 ago that those were, quote, "stale claims,"
15 unquote.
16 We, therefore, ask the Hearing Officer
17 to focus not on the stale claims but on the
18 viable claims, which is how is the District
19 Council being run now and how has it been run
20 over a reasonable period of time before today.
21 THE HEARING OFFICER: Mr. Carmell, was that
22 Mr. Luskin?
23 MR. CARMELL: Mr. Luskin's.
24 THE HEARING OFFICER: Mr. Luskin testified
1952
1 before that subcommittee last --
2 MR. CARMELL: We are going to put it into
3 the record, but this is the opening statement
4 related to that.
5 THE HEARING OFFICER: Okay.
6 MR. CARMELL: Accordingly, we are going to
7 focus, the District Council is going to focus, on
8 the matters that have been raised by the General
9 Executive Board Attorney and that, again, is
10 whether it has demonstrably shown that the
11 officers of the District Council have in fact
12 bargained collectively for their locals in their
13 best interests and who as fund trustees actually
14 owe their allegiance to the beneficiaries and not
15 to the Chicago Outfit.
16 It is in this framework and only this
17 framework that several witnesses will be called
18 to talk about the funds, the health and welfare
19 fund and the pension fund.
20 There is as the Hearing Officer is
21 well aware a juridical difference between the
22 funds, the trustees of the funds and the officers
23 of the District Council.
24 However, because the General Executive
1953
1 Board Attorney has put the stewardship of the
2 funds into issue by saying that the fund trustees
3 actually owe their prime allegiance to the
4 Chicago Outfit, not to the beneficiaries, that
5 there will be witnesses who will testify on what
6 I would like to refer to as basically as public
7 documents, that is, material which is filed with
8 the 5500s or readily available to the public
9 except possibly in one immaterial instance and,
10 that is, when they get into procedures within the
11 fund of how a claim is handled. Although that is
12 not public information, it is certainly not
13 private trustee information.
14 The General Executive Board Attorney
15 in its opening statement has said that one of the
16 indicia of Organized Crime's control over the
17 existing officers is silence by the delegates and
18 Clyde Summers testified concerning the inference
19 or the only inference which he would permit to be
20 drawn from uncontested elections, namely, that
21 they were, quote, "deathly afraid," unquote.
22 And the District Council is prepared
23 and will present testimony from the delegates
24 concerning these matters, their relationships
1954
1 with the District Council, their stewardships of
2 the local unions and what these officers are
3 doing and have done with respect to the business
4 of the members, which is the business of the
5 locals and the Chicago District Council.
6 The testimony of the General Executive
7 Board Attorney began with that the reason for LCN
8 infiltration is financial. The District Council
9 will show that all that has been done with
10 respect to the finances of the District Council,
11 its administration and its relationships with the
12 local unions involve no financial improprieties,
13 nor, as the Hearing Officer is well aware from
14 that chronology chart, has there ever been an
15 arrest or an indictment, let alone a conviction
16 obviously, for any financial impropriety with
17 respect to the Chicago District Council or any of
18 its affiliated local unions.
19 And I don't say that with an
20 exception. The one case involved the health and
21 welfare fund and Mr. Caporale and Mr. Pilotto.
22 The sequence that we will follow in
23 this, Mr. Hearing Officer, is to present a
24 detailed rebuttal of the General Executive Board
1955
1 Attorney's case and also to present to you within
2 that something broader, the general overview and
3 specifics of how the Chicago District Council is
4 operated, who these people are, what they do and
5 how they do it.
6 There is nothing going to be in this
7 testimony concerning any apologies. There is
8 nothing to apologize for. The evidence will show
9 that the contracts are the best, the benefits are
10 the best, the administration of the District
11 Council is at the highest point and that the
12 present officers and those within the reasonable
13 period before them, because they may change, have
14 at all times not only, as a negative, not
15 operated in a manner which would result in a
16 trusteeship or in a trusteeship under the
17 constitution or Title III of Landrum-Griffin, but
18 have performed their duties in a most exemplary
19 manner.
20 I want to make one comment that is
21 more editorial than it is a testimonial. I find
22 it personally elitist and appalling that people
23 who have graduated from law school and have
24 probably never worked in their life or been a
1956
1 member of a union have the temerity to put in
2 their Complaint that certain people are
3 marginally qualified to either be union officers
4 or trustees of funds.
5 It is true, not only in the District
6 Council, but in every labor organization that I
7 have known, and that I would trust the
8 independent Hearing Officer can take judicial
9 notice of his experience outside, that the
10 rank-and-file person is a trustee -- appointed as
11 a trustee of a fund.
12 I know of no union that the labor
13 trustees are graduates of economic school or are
14 other than that and as a matter of fact the
15 Taft-Hartley Act says -- that 302(c)(5) says that
16 these shall be composed of this fund of an equal
17 number of employer representatives and employee
18 representatives. The representatives are the
19 officers, sometimes the rank-and-file.
20 And no one, let alone Congress, has
21 ever set qualifications for trustees. Not just
22 for labor trustees, but for management trustees.
23 Management trustees are not college graduates.
24 They are working men and women who know, as do
1957
1 the labor trustees, their businesses and their
2 employees.
3 And so, with that final comment, we
4 are ready to present our case, which will
5 basically flow this way, Mr. Hearing Officer.
6 We will begin with Hugh Arnold who is
7 attorney for the Welfare Fund, Pension Fund, give
8 an overview of the fund, how the labor trustees
9 are appointed, why they are basically appointed,
10 they come from certain funds that were
11 amalgamated into these funds and there
12 historically have been certain territorial and
13 jurisdictional appointments.
14 He will address the so-called
15 amendments to the Welfare Fund regarding the
16 appointment of trustees. He will deal with this
17 provision the General Executive Board attorney
18 has raised concerning -- we can call this joint
19 trustee. That's in the provision.
20 THE HEARING OFFICER: There was a
21 recommendation to appoint a joint trustee that
22 didn't get appointed, yes.
23 MR. CARMELL: Right, that's correct. He
24 will address that.
1958
1 He will address with respect to Joseph
2 Lombardo, Junior who was not a delegate at the
3 time of his appointment as secretary/treasurer in
4 the District Council, how that came about and the
5 legal basis upon which Mr. Lombardo did that
6 appointment.
7 He will cover the Caporale
8 reinstatement in October of 1982. And he will
9 discuss the minutes that he produced for the
10 August 1986 nomination and election of officers.
11 He will deal with the United States
12 versus Palumbo indictment and what the funds have
13 done before Palumbo was indicted, what they have
14 done and the District Council has done since the
15 indictment.
16 Finally, he will also discuss the C&A
17 case and the litigation that followed the C&A
18 case, and we will have documents, exhibits which
19 we will put in during the course of his
20 testimony.
21 Following him will come the fund
22 personnel beginning with hopefully the actuary to
23 the Pension Fund following with the Health and
24 Welfare and Pension Fund consultant and followed
1959
1 by three of the major investment managers of the
2 Pension Fund.
3 We will then proceed to address
4 through exhibits and through testimony each one
5 of the matters and to substantively, we trust and
6 believe, impeach the credibility of primarily
7 John O'Rourke as to many of his statements which
8 he attributed to be factual.
9 We are then going to proceed to
10 address through witnesses including the officers,
11 again, their stewardship and the ability to
12 determine through the help of the membership the
13 course which the membership has taken.
14 And on that basis, Mr. Hearing
15 Officer, we are ready to bring Mr. Arnold to the
16 stand.
17 THE HEARING OFFICER: So one thing I honed
18 in on was the fact that you say if it were not
19 for the LCN allegations that the -- this union --
20 District Council operates efficiently in a sound
21 manner that you -- it would not be the grounds of
22 a trusteeship, and LCN is doing it, the LCN
23 allegations?
24 MR. CARMELL: Let me quote -- let me give
1960
1 you the page numbers of the transcript when you
2 get to it. It is pages really 19 through 22 of
3 the General Executive Board attorney's opening.
4 Quote, "This hearing is all about the connections
5 between charts 145," I put the 145 in, "and
6 163." That's the LCN officers. Quote, "The
7 Chicago District Council leaders who owe their
8 allegiance to members, who bargain collectively
9 for locals and who sit as fund trustees," quote,
10 "actually owe their primary allegiance to the
11 Chicago Outfit," unquote.
12 As I understand it, all of the matters
13 which are classified under rubrics in the
14 complaint of undemocratic procedures, transfers,
15 et cetera, all hinge upon that this was the
16 furtherance of the LCN, the Chicago Outfit
17 connections, as opposed to being matters which
18 are appropriate and not a breach of fiduciary
19 responsibility.
20 To this, sir, when Mr. Gow was asked
21 whether uncontested elections in and of
22 themselves are a problem, he said, no, it is not
23 that. It is the circumstances. So I am taking
24 the GEB Attorney's case that it is the LCN
1961
1 allegations which are the heart of this complaint
2 and going to follow up with that. You will also
3 be able to judge for yourself whether those
4 allegations have been met.
5 I didn't set this corruption status.
6 That's how I understand the table has been set,
7 and we are going to address it.
8 THE HEARING OFFICER: Okay. Proceed.
9 MR. CARMELL: I call Hugh Arnold.
10 THE WITNESS: Everybody smile. I am the guy
11 sitting here.
12 THE HEARING OFFICER: I think the court
13 reporter can administer the oath to Mr. Arnold.
14(WHEREUPON, the witness was duly
15sworn.)
16HUGH ARNOLD,
17 called as a witness herein, having been first
18 duly sworn, was examined and testified as
19 follows:
20DIRECT EXAMINATION
21 BY MR. CARMELL:
22 Q. Would you spell your last name,
23 please, for the record?
24 A. A-r-n-o-l-d.
1962
1 Q. Mr. Arnold, you are an attorney
2 licensed to practice in the State of Illinois, is
3 that correct?
4 A. Yes, sir.
5 Q. And at present are you an attorney for
6 the Laborers' Construction Health and Welfare
7 Fund?
8 A. I am, sir.
9 Q. And the Pension Fund?
10 A. I am, sir.
11 Q. And how long have you been attorney
12 for the funds?
13 A. I think I came to the funds at the
14 invitation of the lawyer then Mr. Sam Shapiro in
15 1970. I became fund counsel with Mr. Shapiro in
16 1979.
17 Q. And are you an attorney for the
18 Chicago District Council Laborers'?
19 A. I do work for the Chicago District
20 Council at times, yes, sir.
21 Q. And how long have you done work for
22 the Chicago District Council Laborers'?
23 A. Probably for the same period of time
24 as assignments were given me by Mr. Shapiro
1963
1 through the '80s and then by the District Council
2 as they chose to from then on up to the present
3 date.
4 Q. Now, with respect to the District
5 Council funds, can you tell me were there other
6 smaller funds at some point merged into what we
7 now know as the Health and Welfare Fund/Pension
8 Fund?
9 A. There were back before I got there. I
10 had occasion to look at documents that told me
11 that there had been a Health and Welfare and I
12 think a Pension Fund in DuPage County, there had
13 been a Health, Welfare and I think a Pension Fund
14 in Will and Grundy County. I think Lake County.
15 I am not entirely positive about Lake County, but
16 I think Lake County too, and there may have been
17 others.
18 What happened back in those years
19 traditionally is the different locals would start
20 fringe benefit funds when they became empowered
21 to by law and then it was more efficient to bring
22 them altogether and so they did that.
23 Q. And following these amalgams into the
24 larger funds, with respect to the representation
1964
1 on the fund of management and labor, could you
2 tell the Hearing Officer what criteria were often
3 used in the selection of the fund trustees?
4 A. Yes. In those instances in which
5 there had been benefit funds outside of the
6 District Council, when they amalgamated them,
7 those funds were promised trustees.
8 Lake County, for instance, Lake County
9 has always had a union trustee and there is a
10 Lake County Contractor. The Lake County
11 Contractors are a separate body in Lake County,
12 Illinois. And so there's always been a
13 management trustee from Lake County on the funds
14 and always been a union trustee.
15 Same thing is true with DuPage
16 County. There used to be association in DuPage
17 County, DuPage County Contractor Association. I
18 think they are really in the builders association
19 now. But there has always been a DuPage County
20 trustee, DuPage County management trustee.
21 Will and Grundy County has always had
22 at least a union trustee. Management is not an
23 issue because those -- again, those are in the
24 larger funds. The management trustees all come
1965
1 from the different associations so that there is
2 a representation.
3 Union trustees are appointed, A,
4 because of these different funds that were
5 brought together and so that was kind of a
6 promise made or because of the type of work.
7 For instance, there always been an
8 underground contractor. There is an underground
9 contractors association. So there has always
10 been an underground Local 2 trustee, which is the
11 underground. That is a different segment of the
12 industry that would not otherwise -- might not
13 otherwise be heard from and all their issues.
14 They might have a benefit fund need
15 that is different than a benefit fund need in
16 another part of the jurisdiction, all the unions'
17 jurisdictions.
18 There has always been -- the
19 Secretary-Treasurer and the Business Manager to
20 my knowledge have always been a trustee.
21 Q. The Secretary-Treasurer and Business
22 Manager of the District Council?
23 A. Right.
24 THE HEARING OFFICER: That's industry-wide I
1966
1 think.
2 THE WITNESS: Yes. That is exactly right.
3 BY THE WITNESS:
4 A. Because like Mr. Caruso, he doesn't --
5 his local doesn't have any members in the health
6 and welfare or pension fund, but in his capacity
7 as president, he represents everybody. So, he is
8 there because he represents all of the people who
9 are in the funds.
10 I mean it's just a -- really
11 everything is based upon an attempt to make as
12 much representation possible so that these people
13 can voice their needs.
14 Of recent date Randy Dalton, who is
15 681, has been appointed a welfare fund because he
16 has got people who are like the quarries and pipe
17 plants and others who would not otherwise --
18 weren't otherwise heard from in the welfare fund
19 before.
20 Q. Mr. Arnold.
21 A. I'm sorry.
22 Q. No. Can you give -- because you begun
23 it and sort of flesh it out, the various work
24 jurisdictions that are covered within locals that
1967
1 are affiliated with the District Council.
2 There were a myriad of them I should
3 think?
4 A. In the Chicagoland area it's a lot.
5 The whole District Council, when you have the
6 city workers, which are -- might be somebody
7 sitting at a desk doing clerk's work to street
8 worker, sanitation worker.
9 Then you have got underground
10 contracts, guys that are laying the utilities,
11 underground pipes for utilities.
12 You have got bricklayers. The
13 Laborers tend the bricklayer. Brick won't go up
14 on a wall without an experienced laborer because
15 the stacking of the brick is safety. He has to
16 know how to do the work.
17 Concrete, concrete forms are done by
18 Laborers. You might be able to build a house
19 without Laborers, but you couldn't do a
20 high-rise.
21 They have all the pipe plants. They
22 got -- the roadwork primarily is done by
23 Laborers. I mean I can go on for a long time.
24 I just finished a contract over Labor
1968
1 Day weekend with Northwestern University. We
2 negotiate the landscapers there.
3 Q. Let me go to --
4 A. Everything.
5 Q. All right. Let me now go to the role
6 of the Chicago District Council in negotiating
7 collective bargaining agreements for local
8 unions.
9 Could you tell the Hearing Officer
10 about that?
11 A. The District Council isn't really
12 overseer of the unions or the locals. They
13 bargain for them. They -- their primary goal is
14 collective bargaining and they disburse the dues
15 and the dues are disbursed under a specific
16 formula to the various locals, most of which goes
17 to the local in which the man is a member.
18 But basically that what the District
19 Council is is a negotiating body. It's a body
20 where they -- men get together, tell their
21 grievance, their problems. They do appoint
22 other -- complete power to appoint for the trust
23 funds and those appointments of trust funds are
24 at will appointments.
1969
1 Q. Let me get to another point.
2 A. But they bargain.
3 Q. Does the District Council sign
4 collective bargaining agreements?
5 A. Absolutely.
6 Q. They sign them with the local union
7 that would have the jurisdiction?
8 A. Absolutely.
9 Q. And they are signed by the
10 president -- by the Business Manager and the
11 Secretary-Treasurer of the District Council?
12 A. Right. And the locals sign where
13 there is a local agreement necessary for
14 signature. But generally it's signed by
15 Mr. Lombardo or Mr. Caruso.
16 Q. Now --
17 THE HEARING OFFICER: Specific jurisdiction,
18 for example, you take the contract for -- of
19 course, the city contractors are always
20 separate. City workers. But you have
21 underground, you have -- some unions have a
22 particular contract for underground.
23 THE WITNESS: Local 2.
24 THE HEARING OFFICER: You would negotiate --
1970
1 District Council would negotiate that particular
2 underground contract.
3 THE WITNESS: Not quite. But the answer is
4 yes and no. First thing that happens is the main
5 contract that is bargained is a contract with the
6 major -- for the major trades. Brick masons
7 association, underground contractors, builders,
8 road builders, and then you have -- concrete
9 contractors and then you have peripheral
10 agreements, wall and ceiling.
11 THE HEARING OFFICER: Okay.
12 THE WITNESS: So on. Then you have
13 contracts outside of the construction like the
14 pipe plants or quarries.
15 BY MR. CARMELL:
16 Q. Let's take as an example that in the
17 core agreements or we would call them sometimes
18 the major agreements.
19 A. The bargaining agreement.
20 Q. Yes, the bargaining agreement. That a
21 sum of money, let's say a dollar an hour
22 increase, is negotiated. Now, what happens with
23 that increase? How is that allocated or
24 apportioned and who does it?
1971
1 A. Going into bargaining you have to know
2 a couple of things besides the economy at the
3 time, which judges what you are going to get.
4 But you have to know what the health
5 and welfare plan needs either to maintain
6 benefits or to improve benefits. You have to
7 know what the pension fund needs either to
8 maintain a level of benefits or to improve
9 benefits.
10 So, what happens is the union has
11 sessions with their -- with their experts, with
12 the experts of these funds and they say, well,
13 you know, for years they'd say what do we need to
14 maintain benefits in the health and welfare
15 plan.
16 They'd tell them. If the health and
17 welfare fund is doing good, they might say if we
18 want to improve this benefit, how much money
19 would that take, what do we need.
20 A pension plan, if we put another
21 quarter in, what would we get for it because we
22 don't have to put it in. What could we do for
23 these people? We are taking the money out of the
24 paycheck. It's only for one or two reasons.
1972
1 One, to pension benefits, which their plans are
2 very, very solid; or, two, to improve benefits.
3 In these years it's been improvement
4 of benefits type of thing.
5 Q. So that a sum of money -- the District
6 Council --
7 A. Divides it up.
8 Q. -- divides it up?
9 A. With the vote of the delegates.
10 Q. And says so many, let's just say cents
11 per hour for it, will go to the funds, so much
12 will go on wages?
13 A. Right.
14 Q. And is there anything else that would
15 be subject to that apportionment?
16 A. Well, if they have political action
17 fund. But that is really out of the dues.
18 Pretty much that's it. They haven't agreed --
19 well, the training fund. They train about 1,400
20 people around here a year.
21 Q. Just to give some sort of a number.
22 There is a dollar an hour and the District
23 Council would notify the members subject to their
24 ratification, is that correct?
1973
1 A. Well, collective bargaining agreements
2 are ratified in some instances by membership and
3 in some instances by the District Council, by the
4 delegates, depends on which contract it is, what
5 the authority is under the constitution.
6 Q. So that of the dollar, if the District
7 Council had allocated 40 cents to the fund and 60
8 cents to wages, then that's the way it would be
9 presented to the delegates or to the members
10 depending on the type of agreement?
11 A. Right.
12 Q. And they, the members or the delegates
13 depending on the agreement, would vote on that
14 allocation?
15 A. Right.
16 Q. All right. Now, with respect to the
17 welfare fund and the pension fund, we have in
18 evidence a series of exhibits, Mr. Arnold, called
19 General Executive Board Exhibits 126 through 134,
20 which are the various trust agreements and others
21 of the funds and there has been discussion here
22 concerning the amendment of the welfare fund with
23 respect to the term -- let me use my phrase --
24 the term of appointment of the labor trustees.
1974
1 Could you shed any light on the
2 history of that and what caused the amendment and
3 anything else you'd like to feel is relevant to
4 the Hearing Officer.
5 A. On a term of trustee what really
6 happened, Mr. Vaira --
7 THE HEARING OFFICER: You are talking about
8 terms.
9 THE WITNESS: The term of employment.
10 THE HEARING OFFICER: The terms.
11 MR. CARMELL: The terms.
12 BY THE WITNESS:
13 A. For years and years and years the
14 welfare fund would always get a letter from the
15 administrator. The administrator I was with all
16 those years was Jim Murphy who is now ill and
17 retired.
18 But the administrator would send a
19 letter to the District Council and to the
20 employer association saying the three-year term
21 is up. Do you want to -- are you reappointing or
22 do you have another appointment and they send
23 back a letter making appointment.
24 For the pension fund he never sent
1975
1 such a letter. The pension fund just simply
2 continued forward.
3 And what happened really is Joey
4 Lombardo came to me with it. You got to
5 understand Joey Lombardo. He is fastidious.
6 There isn't anything -- if this pencil on this
7 desk, and I mean this in a complimentary fashion,
8 but if this pencil on this desk isn't exactly
9 straight, Joey will have to straighten that
10 before he goes any further.
11 Well, it -- that troubled his
12 sensibilities when he realized it. So he came to
13 me and said what should I do? I said it really
14 doesn't matter. It's no issue because these are
15 really appointments at will.
16 Q. How do you derive that opinion that
17 they are appointments at will?
18 A. Well, if you go to removal of
19 trustees --
20 Q. Excuse me. Which booklet are you
21 looking at?
22 A. I have the pension book. I wrote
23 these documents and they are pretty much the
24 same.
1976
1 Q. We just need it for the record. You
2 are now looking at the Pension Fund Trust
3 Agreement?
4 A. Yes.
5 Q. And what article and what section are
6 you looking at?
7 A. I am looking at Article 10, Section
8 2. It is entitled Removal of Trustees and
9 Appointment of Successor Trustees. It says both
10 the same thing for management and labor. It
11 says, "A council appointed trustee may be removed
12 by the council effective upon receipt by the
13 board of trustees of written notice of removal
14 from the secretary/treasurer of the council." It
15 says the same thing about management.
16 So if you have -- I don't care if you
17 make them a hundred-year appointment or a
18 five-year appointment. If you have a provision
19 in the same document that says it can be removed
20 at any time, that's an appointment at will. That
21 is no different than an employment for an
22 indeterminable period. It is an employment at
23 will or it is an appointment at will.
24 So I said to him it doesn't matter
1977
1 what you do. These people are appointed by you
2 and they are removed by you as you please. If
3 you want to do more work, then send a letter for
4 both funds. If you want to do less work, just
5 tell them that's what you want to do. He could
6 have really just let it alone, but he never would
7 do that, I am telling you. It all has to fit in
8 an appropriate pattern or he can't live with it.
9 That's his nature. He is very fastidious. So I
10 said, "Joey, whichever one you want to do."
11 He, therefore, determined that he
12 would simply not send the letters anymore. I
13 find it to be of a non-event. I mean, there
14 isn't any big deal. You wouldn't -- by the way,
15 you would never just remove trustees or change
16 trustees because of three years. It takes time
17 to -- the trustees really have to follow the
18 advice of the people who they hire, the actuaries
19 and consultants and money managers, and to remove
20 somebody who is experienced to run a term is not
21 very smart.
22 Q. In your opinion --
23 A. You don't do that.
24 Q. -- the amendment that was made to the
1978
1 Health and Welfare Fund Trust Agreement, did that
2 in any way prevent the Chicago District Council
3 Laborers' Executive Board from removing a
4 trustee, labor trustee as it saw fit?
5 A. No. You could appoint him today and
6 remove him tomorrow. I don't think it was -- if
7 it says amendment or was meant to be amendment,
8 that wasn't my idea. He just said, "I am going
9 to follow this process rather than that."
10 Nothing changed. They generally appointed him
11 and they stayed -- I mean, the best thing in the
12 world is they stay a long time.
13 Some local unions have elections for
14 trustees. They tend to get elected over and over
15 too, but I never saw anybody just remove them.
16 That's just not smart. In fact, a lot of
17 funds -- and this fund originally had it set up
18 so there would never be an absence of an
19 experienced trustee, never.
20 Q. Now, I wanted to talk to you, since we
21 are on the subject of Mr. Lombardo, Mr. Lombardo
22 became secretary/treasurer in July of 1987. At
23 that time Mr. Lombardo was not a delegate to the
24 Chicago District Council. Were you aware of
1979
1 that?
2 A. I was.
3 Q. And could you tell the Hearing Officer
4 the circumstances surrounding that?
5 A. What should have happened and what
6 they were going to do was they were going to take
7 a delegate and that local which I think was Local
8 1 and that delegate was going to resign.
9 Lombardo would have been appointed and he would
10 have been eligible. That was a simple thing to
11 do.
12 Angelo Fosco who is the general
13 president -- and he used to go to the District
14 Council on Fridays all of the time. I didn't
15 really go to the District Council very often, but
16 I did go on this occasion, and I said --
17 THE HEARING OFFICER: You are saying Fosco
18 used to come back from Washington?
19 THE WITNESS: And visit.
20 THE HEARING OFFICER: And come back and make
21 an official visit, hit the District Council on
22 Friday?
23 THE WITNESS: I am not going to say it was
24 an official visit.
1980
1 BY THE WITNESS:
2 A. He used to go in and say hello. He
3 was the regional manager for Chicago for years
4 and years. He knew these people for all his
5 life. He'd come by, he'd say hello, he'd walk
6 around and he would leave. I don't think he
7 really lived that far away. I don't know for
8 sure, but he would come on occasion.
9 I told Mr. Fosco that that's what they
10 were going to do, and he said, "You don't really
11 have to do that." I don't agree with him to be
12 honest. I thought that that's what they should
13 have done. He should have been a delegate, but
14 if the general president of the union said -- he
15 said it in front of other people. He says, "You
16 don't need to do that," nobody is going to listen
17 to me after that. I mean, he is the general
18 president of the union. If that's what he says
19 he is going to do, okay. Then I am -- my advice
20 is out the door.
21 Q. Did you pass on that opinion from the
22 general president to Joe Lombardo?
23 A. Yeah. I think he was there even. I
24 don't know for sure if he was standing there or
1981
1 not, but I told him. He might have been standing
2 there. I don't recall that.
3 THE HEARING OFFICER: I take it from what
4 you are saying, there was some sort of a need
5 that Mr. Lombardo be a delegate. There was some
6 sort of a movement, some need to make him the
7 secretary/treasurer?
8 THE WITNESS: There was vacancy as far as I
9 recall. Mr. Caporale had stepped down.
10 THE HEARING OFFICER: And Mr. Lombardo was
11 the --
12 THE WITNESS: Delegates' choice.
13 THE HEARING OFFICER: In what fashion?
14 THE WITNESS: He was -- I think it was clear
15 that if he would run for that job, he would get
16 that job. Everybody liked Joey and Joey is very
17 capable. I mean, he really works. I call there
18 at 7 o'clock in the morning, 7:30 in the morning
19 on my way down to talk business and Joey Lombardo
20 was there 90 percent of the time.
21 BY MR. CARMELL:
22 Q. Let me follow up with the Hearing
23 Officer. At the time you made this inquiry, the
24 District Council Executive Board was intending to
1982
1 appoint Joseph Lombardo to fill the vacancy in
2 the secretary/treasurer spot, is that correct?
3 A. Yeah. I was not privy to those
4 conversations, but I was told that and I believe
5 that, yes.
6 Q. And it was on that basis that the
7 concept was that Joseph Lombardo would be
8 appointed a delegate from his local?
9 A. Right.
10 MR. BOSTWICK: I am just going to object to
11 the last couple of questions have been leading.
12 If you could please just ask the questions.
13 MR. CARMELL: I thought this was recapping.
14 THE HEARING OFFICER: Okay. Mr. Carmell,
15 let him recap. Give him some room and let him
16 explain how that came about, not that I think you
17 were leading him. Sometimes a lawyer has to
18 pinpoint it, but I think if you give him the
19 right direction, he can follow up now.
20 BY MR. CARMELL:
21 Q. You were given -- all right. You now
22 have testified as to what Angelo Fosco had told
23 you and that that was communicated somehow to
24 Mr. Lombardo, is that correct?
1983
1 A. Yeah. I was told -- yes, and beyond
2 that, I was -- I didn't really know that he
3 wasn't a delegate. I was told that I think by
4 Joey. He said, "I am not a delegate. What can
5 we do?" I looked at the constitution and said,
6 "Well, this is what you can do." The next thing
7 is somebody says, "Ask Angelo. Angelo is in the
8 door." I asked Angelo and I really said it to
9 Angelo like, "That's what they are going to do,
10 right? That's what they are going to do?" The
11 next thing he says, "Don't bother," but it was
12 such a simple thing. It was such a simple thing
13 to do, but he is the general president of the
14 union. He decides.
15 Q. Now, I want to go back for one moment
16 to the Health and Welfare Fund and the Pension
17 Fund. There is a provision in the Trust
18 Agreement, Exhibit 126 through 134, that refers
19 to a joint trustee or a jointly appointed
20 trustee. You are familiar with that provision?
21 A. Yes, I am.
22 Q. Would you tell he the Hearing Officer
23 about that provision as you knew it and your
24 understanding of it?
1984
1 A. First let me explain why you would --
2 why such a thing -- what the germ is for such a
3 thing.
4 The Taft-Hartley Act says, I think it
5 is 302C, that if these people have a -- that is
6 the trustees, both management and labor always
7 vote equally. If one management trustee shows up
8 and six labor trustees and you have a quorum
9 under the agreement, they vote equally. One
10 management trustee has an equal quote. There is
11 always an equal vote. Numbers don't make it. It
12 is sides. Each side has to have an equal vote.
13 When you have equal votes, you can have a tie
14 vote. How do you break a tie vote?
15 The Taft-Hartley Act says that you are
16 supposed to petition -- first of all, the
17 trustees can -- the trustees can employ somebody
18 to decide this. Otherwise you go to the United
19 States District Court. It is supposed to be the
20 chief judge. You petition the chief judge of the
21 court. We know, Mr. Vaira, it is whoever the
22 judge is sitting that day for -- as an emergency
23 judge or a judge to hear motions is going to get
24 it. I don't think it goes to the chief judge.
1985
1 THE HEARING OFFICER: It depends what the
2 rules are. Anyway, the provision is it is
3 supposed to go to the District Court?
4 THE WITNESS: Right. And then he appoints
5 an impartial umpire or arbitrator. I don't
6 remember. I think they used an umpire, but
7 somebody resolves the dispute.
8 And then he hears the matter. It
9 resolves the dispute and he goes away. His job
10 is over.
11 This document was originally -- one of
12 these documents was written in 1958. Don't
13 forget the Taft-Hartley Act came into existence
14 in 1947. So, one of these documents is written
15 in 1958 and the other document was written in
16 1963. I believe these documents were written by
17 Marty Siegel of the Siegel Company. Not a
18 lawyer.
19 The document is archaic. Nobody, and
20 believe me when I tell you, nobody on God's earth
21 would appoint some guy to sit in a room in case
22 he is needed if there is a dispute. If he had
23 done that here, he wouldn't be used to this day
24 because there has never been a deadlock.
1986
1 So, what happens is this person then,
2 when I redrafted these trust documents --
3 Q. Would you stop for a moment on
4 redrafting.
5 From the time that you first became
6 aware of the provision in the trust documents, to
7 your knowledge, has a joint trustee ever been
8 appointed?
9 A. No.
10 Q. To your knowledge had one ever been
11 appointed before that time?
12 A. No.
13 Q. Go ahead.
14 A. Now, what happens is the document
15 should really follow the Taft-Hartley Act that
16 says if you need somebody, you decide on somebody
17 or you go and get someone.
18 I saw this document and all this
19 document was redone by me in '76 under limited
20 authority. My authority was to take the document
21 and redraft it to comply with the Employee
22 Retirement Income Securities Act. The document
23 could not exist as it was originally drafted.
24 Some of the language I put in, like
1987
1 definitions of employee and an employer. That's
2 because of an old case called Moglia, an old
3 Teamster case that created some problems about
4 collective bargaining agreements.
5 So, this document was drafted by me
6 and I took all that stuff out. Sam Shapiro was
7 maybe 80 years old by then. He said you can only
8 take out -- you can only change what you have to
9 change. Everything else you have to leave
10 alone. So I left it alone. But nobody ever used
11 the thing.
12 As an example, when I drafted -- and
13 there is nothing else about it, son, nothing.
14 Now, when I drafted the training fund
15 agreement -- all that stuff is out there, because
16 then I was doing my own work. So in '86 I
17 drafted the training fund document. There isn't
18 any impartial trustee.
19 And because when I heard of this and
20 realized that somebody is talking how onerous
21 this was, I am telling you there is nothing to
22 that at all.
23 THE HEARING OFFICER: Let me see if I
24 understand. The Taft-Hartley Act requires a --
1988
1 THE WITNESS: A resolution of dispute
2 through an impartial umpire, if need be, when he
3 is needed.
4 THE HEARING OFFICER: Okay. Are you telling
5 me that it is the custom and practice of either
6 this union or other unions not to have such a
7 trustee or do they exist in other industries?
8 THE WITNESS: They exist nowhere that I know
9 of and I know of a lot, a lot of places. I got a
10 lot of clients and nobody does this.
11 I have got -- and you have got a
12 couple of people back there who represent their
13 company, probably represents 2 or 300
14 Taft-Hartley funds; and without ever talking to
15 them about it, I venture to say they don't have
16 any impartial trustees sitting or waiting in the
17 wings. That just doesn't happen.
18 When you have a need -- even if you
19 read this document, it says he can't change,
20 amend or modify the agreement and all he can do
21 is resolve a dispute.
22 God forbid you had a situation where
23 these people were battling every day and not
24 resolving disputes, then you'd have to have
1989
1 somebody like that.
2 But if they are getting along, if they
3 are doing business, if they are really
4 representing the beneficiaries of the fund, what
5 would you do, pay somebody to sit there all these
6 years in case he was needed? So far it's been 40
7 odd years, he's never been needed.
8 THE HEARING OFFICER: Regardless of the pay,
9 the question is is it peculiar to the
10 construction industry that you don't have it? Is
11 it common to all industries similar to this?
12 THE WITNESS: All benefit funds. I
13 represent other people besides industry funds.
14 And I mean ask the people from the Seigel
15 Company. See what they tell you. They are going
16 to tell you the same thing I did. You just don't
17 do business that way.
18 You have to have this dispute
19 resolution, but you don't have somebody sitting
20 there on a throne waiting to make decisions.
21 Now, to further that, it is no longer
22 a provision of these trust documents.
23 THE HEARING OFFICER: The basis of your --
24 really your testimony is that the industry
1990
1 doesn't need it, hasn't had it, so it became an
2 oddball type of a provision that was not
3 necessary to be enforced or to use.
4 THE WITNESS: Absolutely, sir, and they
5 never used it. I got there in 1970. I didn't
6 have anything to say until '79 really other than
7 just to work as assigned. From 1958 to 1963,
8 depending on which fund, nobody ever did that.
9 THE HEARING OFFICER: There was never any
10 need to have one because there were never any
11 disputes that split one and one or six and six.
12 THE WITNESS: To my knowledge -- since I
13 have been there and at least until 1970 and prior
14 to that, I heard of none, there has never been a
15 dispute that had to go to arbitration.
16 They had one -- once on the -- one of
17 the funds, I don't remember which one, there was
18 an issue. They deadlocked. They met. They
19 undeadlocked. They resolved it.
20 And, in fact, I had told them I would
21 petition the U.S. District Court and I prepared
22 such a petition. Then I was told they resolved
23 the matter and it was never filed.
24 BY MR. CARMELL:
1991
1 Q. Let me try and hone in on the --
2 A. And it's no longer a provision of the
3 trust.
4 Q. I will get to that in a moment.
5 In the direct testimony of certain
6 witnesses the General Executive Board Attorney
7 brought out the language of the trust agreement
8 that said the joint trustee shall be appointed.
9 And was a joint trustee ever appointed?
10 A. No.
11 Q. Now, you have said that that provision
12 is no longer in effect. Was there an amendment
13 to the agreements?
14 A. I went before the trustees at the last
15 trust meeting on Monday and Tuesday past and told
16 them about this and suggested that they just put
17 in a simple resolution, disputes to the United
18 States District Court, call them an umpire
19 instead of a trustee. Remove any other
20 language. And such a resolution was passed
21 unanimously by each board.
22 There is no violation in the law to
23 have that provision in the trust agreement and
24 then have -- and then not do it.
1992
1 Q. All right.
2 A. If anybody had ever attempted to do
3 it, they would have removed it years ago and I
4 would have removed it had Sam let me.
5 If you look at all these old trust
6 agreements for all of these funds, you will find
7 archaic language in there. Don't forget this --
8 when these original trust agreements were
9 started, there were just maybe just a matter of
10 thousands of dollars in there. The industry was
11 an infant. They were evolving and resolving how
12 to do business and they did that.
13 THE HEARING OFFICER: Right now there is a
14 couple of bucks in there now.
15 THE WITNESS: There is a couple of bucks in
16 there, yes, sir, and well tended to.
17 BY MR. CARMELL:
18 Q. I want to turn your attention to James
19 Caporale and the minutes of the meeting on
20 October 5, 1982, which is General Executive Board
21 Exhibit 116. Do you have a copy of those
22 minutes?
23 A. I don't know if I have a copy. I
24 should have a copy in front of me because you
1993
1 asked me. So somewhere in this pile there
2 probably is, but go ahead with your question.
3 Q. Let me show you the minutes. All
4 right.
5 I first would like you to look at the
6 minutes for a moment.
7 THE HEARING OFFICER: That's a Group
8 Exhibit, is it not?
9 MR. CARMELL: Group Exhibit and this
10 particular document has a Bates of D, as in
11 David, 001022. It's behind the 1982 folder.
12 These are select minutes.
13 THE HEARING OFFICER: What is the number?
14 MR. CARMELL: 116.
15 THE HEARING OFFICER: Is that your exhibit?
16 MR. BOSTWICK: Yes.
17 BY MR. CARMELL:
18 Q. Would you take a moment to look at
19 those minutes.
20 THE HEARING OFFICER: You are at 1982,
21 right?
22 MR. CARMELL: Correct. October 5, 1982.
23 THE HEARING OFFICER: All right.
24 BY THE WITNESS:
1994
1 A. I don't have an October 5 minutes
2 here. I got February.
3 THE HEARING OFFICER: He has got a Bates
4 stamp number, Mr. Arnold.
5 What is it again, Mr. Carmell? Bates
6 stamp number.
7 MR. CARMELL: 001022.
8 THE WITNESS: I don't have such a document
9 in front of me.
10 MS. BARR: I took these out of the witness
11 box.
12 BY THE WITNESS:
13 A. Okay.
14 THE HEARING OFFICER: How are we doing, the
15 gentlemen on the other table? Are you on board?
16 MR. BOSTWICK: Yes.
17 THE HEARING OFFICER: We are not. I have to
18 read over your shoulder. Go ahead.
19 I saw that. That's in there.
20 BY MR. CARMELL:
21 Q. Did you attend the meeting of October
22 5, 1982?
23 A. I bet I did. I don't know that it
24 says that on here.
1995
1 Q. If you look down at the --
2 A. Yes, sir. I did, sir.
3 Q. All right.
4 A. I believe this to be correct. It says
5 I was there. I believe I was there.
6 Q. Would you tell the Hearing Officer,
7 explain, it says in the minutes, "At this point
8 Mr. Arnold, attorney at law, explained the law to
9 reinstate-the Constitutional rights and statutes
10 pertaining to this," unquote, regarding a James
11 Caporale as acting Secretary-Treasurer and
12 Business Manager.
13 A. Yes, sir. Where do you want me to
14 begin? I sure would like to give you some
15 background first.
16 Q. If you would.
17 THE HEARING OFFICER: The paragraph before
18 is, "Motion made by Brother O'Brien to suspend
19 the order of business and the special meeting was
20 called to support Brother Caporale as acting
21 Secretary-Treasurer and Business Manager."
22 So that is the motion, right?
23 MR. CARMELL: That is correct.
24 THE HEARING OFFICER: Okay. Go ahead.
1996
1 BY THE WITNESS:
2 A. Mr. Vaira, Caporale and Pilotto were
3 convicted of a crime involving the health and
4 welfare fund. They appealed. Caporale
5 particularly appealed. He was both the trustee
6 of the pension and welfare funds and he was
7 Secretary-Treasurer of the District Council.
8 We have to go back, take our minds,
9 view back to what the law was at the time and
10 what the state of the -- and what the law was at
11 the time is also a snapshot of the view of the --
12 those who enforce the law in my opinion and the
13 public at large and, that is, that a conviction
14 appealed stayed the results of the conviction.
15 So that now that's not true. But back
16 in 1982 and for some period of time thereafter,
17 at least for what Caporale was convicted of, the
18 appeal stayed the results of the conviction until
19 after the appeal.
20 THE HEARING OFFICER: Changed it in '84 or
21 something like that.
22 THE WITNESS: I think later than that. For
23 this provision of the act I think in '87 it was
24 changed. I got an article here I dug up.
1997
1 MR. CARMELL: We have exhibits that are
2 going to come in during this testimony hopefully.
3 BY THE WITNESS:
4 A. That was his right. If he was
5 convicted of a crime and he appealed, it was as
6 if he was not convicted until the appeal was
7 heard.
8 The judge in the case, Judge Kehoe,
9 who I have never been in his courtroom, but Judge
10 Kehoe's position was he had entered an order of
11 forfeiture.
12 It is my professional opinion that
13 Judge Kehoe should have accepted the fact that
14 Mr. Caporale had appealed. When he appealed,
15 that should have stayed everything involving his
16 conviction. And that's not the law today, but it
17 certainly was then.
18 And so that there was an order of
19 forfeiture. I didn't accept that, but there was
20 the order out there. That order was signed and I
21 didn't want to take any chance of a local or
22 District Council or of anyone being held in
23 contempt by that judge because he had entered
24 that order.
1998
1 So, I asked the attorneys in the
2 matter to go back before the judge and clarify
3 the judge's position. I think what the judge
4 should have done to follow the law at the time
5 was simply to say there is an appeal, my order is
6 stayed pending an appeal. He didn't do that.
7 What Judge Kehoe said was he wanted
8 the union to have an opportunity to be done with
9 Caporale and that Caporale had to resign. If the
10 union wanted to reappoint Caporale then, that was
11 up till after the appeal was heard, that was the
12 union's business. He certainly didn't recommend
13 it, but that's what he said.
14 Q. I'd like to stop your testimony at
15 this point because I now want to do this in some
16 sort of chronological order.
17 A. Okay.
18 MR. CARMELL: Mr. Hearing Officer and
19 Mr. Bostwick, we have what is CDC Exhibit 5,
20 which you have, everybody has there, which is a
21 partial portion of the transcript of the
22 proceedings before Judge Kehoe on September 15,
23 1982.
24 THE HEARING OFFICER: What am I looking at?
1999
1 MR. CARMELL: CDC Exhibit 5. I think we
2 gave you the full transcript, Mr. Bostwick.
3 MR. BOSTWICK: Yes.
4 MR. CARMELL: And following my professional
5 friend's lead, what we have incorporated here is
6 page 44 -- pages 44 and 45 of that transcript,
7 Mr. Vaira, which deal with the issue of the
8 judge's forfeiture order and it also carries the
9 front page, which shows the players here, that
10 is, 44 begins Ms. Rogers and Ms. Rogers is the
11 AUSA as the front shows.
12 THE HEARING OFFICER: I know her. A lady
13 who practices in D.C.
14 MR. CARMELL: Yes. I'd like to offer CDC
15 Exhibit 5 at this time because this is the -- in
16 our view is the portion of the transcript in
17 which Mr. Arnold is testifying about in which the
18 judge says that -- it is on page 45:
19 "The Court: The community that I
20 would worry about under this is the union and the
21 union will have to do a little protecting of
22 itself if they want to put these people back in
23 after what I think they have done to them, that
24 is their business. I do not need to hear any
2000
1 more argument. I will not make it a condition
2 for a bond under the authority as I now
3 understand it. It is severed as of this
4 instance, as soon as I can sign this order, and
5 what the union does, they will have to protect
6 themselves. That is the way we stand on that."
7 End of quote.
8 So, I'd like to offer this at this
9 time.
10 THE HEARING OFFICER: We will accept that.
11(WHEREUPON, said document,
12previously marked DCD
13Exhibit No. 5, for
14identification, was offered
15and received in evidence.)
16 THE HEARING OFFICER: Your testimony,
17 Mr. Arnold, you were aware of this?
18 THE WITNESS: Yes, sir.
19 BY MR. CARMELL:
20 Q. Now, Mr. Arnold, would you continue.
21 Hold on.
22 A. Well, what happened then is that --
23 MR. BOSTWICK: I am going to object. There
24 is no question pending.
2001
1 BY MR. CARMELL:
2 Q. Mr. Arnold, you have been testifying
3 as to your understanding of what Judge Kehoe --
4 you wanted Judge Kehoe to do before you could
5 give any further advice and that you understood
6 that Judge Kehoe had said that this was a matter
7 for the union.
8 Okay. Would you proceed from there.
9 A. What I wanted to know was what the
10 judge's position was one way or the other.
11 Whether as I brought it forward to counsel or
12 whether that is the reason they asked the
13 question or they asked the question, I don't
14 honestly remember. But I do know that I wanted
15 to know the answer.
16 And the answer was, as I understood
17 it, the forfeiture was lifted subject -- if he
18 resigned, if he resigned, subject to the outcome
19 of the appeal.
20 And Caporale did resign and then the
21 question was did the union want to reappoint
22 him. They had a right to do that and, again, I
23 ask you to go back to see --
24 Q. Stop before you ask to go back. Let
2002
1 me get you to the delegates.
2 A. Okay.
3 Q. To the best of your recollection, what
4 did you tell the delegates concerning the matter
5 of Caporale's legal right or the delegates' legal
6 right to have Caporale as the District Council's
7 Business Manager and Secretary-Treasurer?
8 A. I told him they didn't have to do it.
9 Q. Did you tell them they could legally
10 do it if they want?
11 A. I told them they could legally do it,
12 but they didn't have to. It was clear that's
13 what the judge wanted everybody to understand.
14 That's what my understanding of the proceedings
15 were then and I made that very clear. They did
16 not have to reappoint him. It was up to them.
17 THE HEARING OFFICER: So he would be the --
18 we are talking about which funds?
19 THE WITNESS: No. This is talking about the
20 District Council itself, the secretary/treasurer
21 of the District Council.
22 To answer your question, Mr. --
23 BY MR. CARMELL:
24 Q. Just a minute. Don't answer the
2003
1 question. Let me try and --
2 MR. CARMELL: I am going to try and do the
3 funds now. I have Exhibits 9 -- CDC Exhibits 9
4 and 10, Mr. Vaira, which are resignations by
5 Pilotto and Caporale from the funds. We are now
6 talking here about the District Council only.
7 I'd like to offer at this time the CDC Exhibit 9
8 which is the resignation dated September 17, 1982
9 by James Caporale and CDC Exhibit 10 which is the
10 resignation of Alfred Pilotto from the -- their
11 funds.
12 MR. BOSTWICK: What's the date on that last
13 one?
14 MR. CARMELL: Oh, thank you. October 1,
15 1982.
16 MR. BOSTWICK: No objection.
17 THE HEARING OFFICER: They will both,
18 Exhibits 9 and 10, be admitted.
19(WHEREUPON, said documents,
20previously marked CDC
21Exhibit Nos. 9 and 10, for
22identification, were offered and
23received in evidence as CDC
24Exhibit Nos. 9 and 10.)
2004
1 BY MR. CARMELL:
2 Q. So now Mr. Caporale has resigned from
3 the funds and what we are dealing with here in
4 this particular meeting of October 5, 1982 is
5 Mr. Caporale's status as an officer of the
6 Chicago District Council, is that correct?
7 A. Yes, sir.
8 Q. All right. And you have testified
9 concerning what you have said then. And to your
10 recollection, what was the action of the
11 delegates to the District Council at that time?
12 A. They unanimously reappointed him.
13 Caporale and Pilotto resigned from the trust
14 funds. I asked them to. They were never asked
15 to come back.
16 THE HEARING OFFICER: Any difference there?
17 Is there any particular difference with the funds
18 and the District Council?
19 THE WITNESS: In my eyes -- in my view I
20 didn't have anything to say about one, but in my
21 view for the benefit funds it was necessary and
22 they complied.
23 THE HEARING OFFICER: Is that because of
24 the --
2005
1 THE WITNESS: Because that's where the issue
2 was involving the money and they had to be
3 fiduciaries to the plan. They shouldn't have
4 been sitting on the Trust Fund.
5 THE HEARING OFFICER: But it also had to do
6 with the bonding?
7 THE WITNESS: The fiduciary policy?
8 THE HEARING OFFICER: Yeah.
9 THE WITNESS: I don't know. The policy was
10 in place. They were in place for years. Would a
11 fiduciary say no policy? I don't know the
12 answer.
13 THE HEARING OFFICER: I think they might.
14 They are funny about that.
15 THE WITNESS: But that's not why it
16 occurred. It occurred because they were asked
17 not to and they didn't.
18 THE HEARING OFFICER: Okay.
19 MR. CARMELL: What I'd like to do now is to
20 finish up this particular issue and then have a
21 break if we could.
22 THE HEARING OFFICER: I was just going to
23 suggest a break. It is about that time.
24 MR. CARMELL: All right. Do you want --
2006
1 THE HEARING OFFICER: What's your pleasure?
2 MR. CARMELL: Why don't we take the break
3 now.
4 THE HEARING OFFICER: At least ten minutes,
5 okay.
6(WHEREUPON, a recess was had.)
7 THE HEARING OFFICER: Back on the record.
8 At the recess I got a request. It is
9 reasonable. The Midland Hotel was big enough,
10 but here it is a little tight and cigarette smoke
11 I think bothers some of the folks, so if you need
12 a smoke break, step outside and have your
13 cigarette and come back in. Midland was okay.
14 It was big enough. We could do it, but here it
15 is a little more difficult. Some of the folks
16 get affected by it, so if you want to have a cig,
17 take your smoke outside. We don't mind you going
18 in and out.
19 All right. Mr. Carmell, go right
20 ahead.
21 MR. CARMELL: Before resuming the
22 examination, Mr. Hearing Officer, I want to
23 follow with a couple of exhibits. Following
24 Exhibit 5 which was the transcript before Judge
2007
1 Kehoe in the U.S. versus Accardo --
2 THE HEARING OFFICER: Didn't we put that in
3 already?
4 MR. CARMELL: I wanted to follow now with
5 CDC Exhibit 6 which is -- the important part of
6 it is -- it is a hearing before the subcommittee
7 on labor and the senate on March 15th, 1983, but
8 the significant part of it is a letter that
9 became part of the record that appears at the
10 last two pages of this document, Pages 148
11 through 150 of the document, which is a letter
12 from the Department of Justice concerning willful
13 violation of 504 and that they would have to send
14 a notice for willfulness. I'd just like to offer
15 this CDC Exhibit 6 at this time.
16 THE HEARING OFFICER: Okay. What --
17 MR. CARMELL: Let me follow it. It is going
18 to come followed by 7 which is the form notice
19 that the DOL sends and followed by 504, the
20 various provisions of 504.
21 The purpose of all of this is to show
22 that no -- the record does not show that any
23 notice came from the Department of Justice or
24 anyone else to Mr. Caporale or to the union that
2008
1 Mr. Caporale was holding his office after October
2 of 1982 in violation of 504. That's the purpose
3 of getting in Exhibits 5, 6 and 7. So I'd like
4 to offer 6 at this time.
5 THE HEARING OFFICER: I'll admit that. How
6 long did he hold office?
7 MR. CARMELL: He held office until
8 approximately 1986, I believe.
9 MR. THOMAS: Summer of '87.
10 MR. CARMELL: Summer of '87.
11 THE HEARING OFFICER: Then he got the
12 notice?
13 MR. CARMELL: No. Then his appeal was
14 denied and he immediately resigned, but I'll get
15 to that. So I'd like to offer Exhibit 6 at this
16 time.
17 THE HEARING OFFICER: Okay. Admitted.
18(WHEREUPON, said document,
19previously marked CDC
20Exhibit No. 6, for
21identification, was offered and
22received in evidence as CDC
23Exhibit No. 6.)
24 MR. CARMELL: And CDC Exhibit 7 is a form
2009
1 notice. I just want you to know that,
2 Mr. Hearing Officer. It is not meant to be a
3 particular notice. This is the form notice that
4 the Department of Labor would send to a person
5 who is disqualified or going to be debarred and
6 that follows the Department of Justice's
7 statement on -- in Exhibit 6. So I'd offer
8 Exhibit 7 at this time.
9 MR. BOSTWICK: On Exhibit 7, can I ask for a
10 clarification on that?
11 MR. CARMELL: Sure.
12 MR. BOSTWICK: Can we lay some foundation?
13 Where did we get it, did they issue those, did
14 they issue those before that time, after that
15 time?
16 MR. CARMELL: Okay. That's a good
17 question. I had gotten this as being -- since I
18 have been in practice and since Landrum-Griffin
19 came in as the form of notice that the Department
20 of Labor has sent at least after 1983 to anybody
21 who has been debarred. The name has been taken
22 off obviously of the particular one.
23 MR. BOSTWICK: Okay. After 1983 though?
24 MR. CARMELL: That's to the best of my
2010
1 knowledge, '83, correct.
2 THE HEARING OFFICER: It has been your
3 experience at some time the Labor Department
4 missed them? I have just sitting in this
5 particular office seen a number of fellows who
6 were -- had been convicted and serving,
7 re-elected four or five times and the Labor
8 Department sort of missed them?
9 MR. CARMELL: It may be. All I am saying is
10 that in line with what is Exhibit 6, the Attorney
11 General statement, that we should send a notice
12 to advise the person in the union that it is a
13 willful violation, that this is the notice that
14 has followed as far as I know.
15 MR. BOSTWICK: I am sorry. I just want to
16 clarify. Is there any representation that that
17 was or was not -- what is that offered to prove?
18 Is there a representation that that was or was
19 not sent to the Chicago District Council?
20 MR. CARMELL: We have no record of it being
21 sent. We have nothing in the record that the
22 General Executive Board Attorney provided that it
23 was ever sent and we have no knowledge that it
24 was ever sent.
2011
1 MR. BOSTWICK: I guess as to those
2 representations -- I don't have an objection to
3 the exhibit being admitted.
4 As to the representations that
5 Mr. Carmell just made, I think if those are going
6 to be made, we ought to get those from a
7 particular witness.
8 MR. CARMELL: Well, I only answer because he
9 asked me. I wasn't intending to put anything in
10 other than this.
11 But I can bring out through a
12 witness -- I will bring out through a witness
13 that an examination of the records does not show
14 any of these letters.
15 THE HEARING OFFICER: Okay. Mr. Carmell, we
16 trust if you say I represent the District Council
17 and I certify my search has shown that there is
18 no such notice has been received.
19 MR. CARMELL: Right.
20 THE HEARING OFFICER: It would be the same
21 as you bringing in the witness. We will trust
22 you to do that.
23 MR. CARMELL: Thank you.
24(WHEREUPON, said document,
2012
1previously marked CDC
2Exhibit No. 7, for
3identification, was offered
4and received in evidence.)
5 MR. CARMELL: I'd now like to offer CDC
6 Exhibits 8-A, B and C, which are together in one
7 exhibit.
8 8-A is Section 504 -- the opening on
9 Section 504 of LMRDA as passed originally in
10 1959.
11 Exhibit 8-B is the amendment to, among
12 others, Section 504, Public Law 98-473 dated
13 October 12, 1984 and that in Section 235(a)(1)
14 had an effective date of 24 months after its
15 enactment.
16 The next document, 8-C, is a very
17 short amendment that was made by Public Law
18 99-217, which you would see, Mr. Hearing Officer,
19 under Section 2 that there were technical
20 amendment B that Section 235(a)(1), (b)(1) and
21 the ones up above -- I'm sorry. Excuse me.
22 Section 3, conforming changes in Title
23 28, it talks about -- well, hold that. I am
24 really sorry.
2013
1 It's the last section, the 235(a)(1)
2 is changed from 24 to 36 months. I finally got
3 to it. That's the amendment that changed it from
4 we -- which would have been 1986 to 1987.
5 So, the effective date of Section
6 235(a)(1), which says the chapter shall take
7 effect on the first day of the calendar month
8 beginning 24 months after the date of enactment,
9 was changed to 36 months after the date of
10 enactment.
11 THE HEARING OFFICER: So, the old law, 0504,
12 permitted you to -- a person convicted in that
13 certain category to have his appeal exhausted
14 before it became effective.
15 MR. CARMELL: Correct.
16 THE HEARING OFFICER: Then this came in.
17 The new act was amended, put in longer
18 prohibitions, but also once the person was
19 convicted, he or she were out. But the effective
20 date of that was postponed from 24 then to 36
21 months.
22 MR. CARMELL: Not only that, it said this
23 would not apply to convictions, right, that
24 occurred on or before. That became the 36
2014
1 months.
2 MR. BOSTWICK: We don't object to the
3 admission of the document. We absolutely
4 disagree with the reading of those statutes.
5 THE HEARING OFFICER: Okay. I am going to
6 ask. Let's --
7 MR. BOSTWICK: But as to the documents I
8 don't have any --
9 THE HEARING OFFICER: The statutes are what
10 they are. We will together look at them and see
11 if they say that.
12(WHEREUPON, said documents,
13previously marked CDC
14Exhibit Nos. 8-A, 8-B and 8-C, for
15identification, were offered
16and received in evidence.)
17 BY MR. CARMELL:
18 Q. Back to the witness and staying with
19 what was -- we have referred to as
20 U.S. vs. Accardo or I refer to as the C & A
21 case.
22 Following the convictions were there
23 civil litigation which arose out of the C & A
24 case?
2015
1 A. Yes, sir, there was.
2 Q. And with respect to the Laborers
3 Health and Welfare Fund, would you state what
4 that litigation or those pieces of litigation
5 were?
6 A. There were two lawsuits. One was a
7 suit filed by the Secretary of Labor versus the
8 trustees of the benefit fund and the -- and the
9 principals of C & A were Defendants in that
10 lawsuit also. The trust fund was a nominal
11 Defendant for form only. And there was a lawsuit
12 filed by me as counsel against C & A people.
13 Q. What was the result -- the end result
14 of those pieces of litigation?
15 A. The funds got $500,000.
16 Q. I want to show you what has been
17 marked as CDC Exhibit 11, which is a certified
18 copy of the minute order in the case of Reich,
19 who then was Secretary of Labor, versus
20 Consultants and Administrators, Inc., 87 C 4059,
21 dated July 22, 1993 and a settlement agreement
22 and consent order, and ask you whether this is
23 the order and settlement agreement and order that
24 were entered in the C & A litigation.
2016
1 A. Without having to read it all, I
2 recognize the form, the judge, and the document
3 and I'm sure it is. It's not signed by me. But
4 there is one somewhere. If this is the same
5 exact document, it was signed by me.
6 MR. CARMELL: I'd like to offer CDC Exhibit
7 11.
8 THE HEARING OFFICER: 11? As soon as I see
9 it. Here we go.
10 MR. BOSTWICK: No objection from our
11 standpoint.
12 THE HEARING OFFICER: It's an '87 case but
13 it was -- the settlement was '93.
14 MR. CARMELL: Correct.
15 THE HEARING OFFICER: Okay. It will be
16 admitted.
17(WHEREUPON, said document,
18previously marked CDC
19Exhibit No. 11, for
20identification, was offered
21and received in evidence.)
22 BY MR. CARMELL:
23 Q. Mr. Arnold, I now want to turn your
24 attention to an employer, contributing employer
2017
1 to the funds by the name of Palumbo Brothers.
2 Are you familiar with that company?
3 A. I am.
4 Q. Now, before 1997, did the funds have
5 any collection either proceedings internally or
6 through litigation concerning Palumbo Brothers?
7 A. Yes, sir, they did.
8 Q. Now, I notice that you have a note in
9 front of you. Is that a note from your files as
10 to the various types of collection procedures
11 that were performed?
12 A. It was prepared by somebody in my
13 office from my files for me.
14 MR. CARMELL: Do you have any problem with
15 him looking at those as -- for dates and periods
16 and money?
17 MR. BOSTWICK: Could I take a look at it
18 quickly first?
19 MR. CARMELL: Sure.
20 MR. BOSTWICK: No problem.
21 THE HEARING OFFICER: Is this to refresh his
22 recollection?
23 MR. CARMELL: Yes.
24 THE WITNESS: Yes, I can't remember these
2018
1 things.
2 BY MR. CARMELL:
3 Q. Would you tell the Hearing Officer
4 before 1997 what proceedings and how much was
5 collected for the funds?
6 A. These take two forms. One involving
7 my firm and one involving just the fund office
8 itself.
9 The first time was April 1st, '78
10 through November 30, '79, a period of an audit.
11 My records would tell me that the fund collected
12 without me $110.53.
13 But there was an audit then prepared
14 for 1982 to 1987. Suit was filed before Judge
15 Zagel in 87 C 10267. It was dismissed October
16 31, 1988. We collected $460,055.56. All late
17 payment charges, audit costs, everything was
18 paid. No compromise.
19 An audit from January 1, '82 through
20 December 31, 1990, the audit was performed in
21 '91. The fund collected without counsel
22 $245,388.80. He had a six-month note. My
23 recollection is he paid it.
24 The fund collected from January 1, '91
2019
1 through December 31st, '91, $70.48.
2 I then sued him again before Judge
3 Holderman for the period November, '95. I don't
4 have the whole dates of it. But I dismissed the
5 case in March, '96. The audit was performed from
6 August 25, '94 to March 18, '96 and collected
7 $1,000.
8 We also collected for January, '94, to
9 December 31st, '95, $3,500. There was no
10 lawsuit.
11 In addition to that there is something
12 that is not on here that I know occurred. The
13 local unions went to the Illinois Department of
14 Labor about Palumbo based upon some complaints.
15 There was about $200,000 in wages and benefits
16 recovered through the Illinois Secretary of
17 Labor.
18 In addition to that, there were from
19 time to time complaints by men in which the
20 business agents went out and recovered money.
21 In addition to that, I filed a
22 petition after this lawsuit was -- after the
23 indictment came down. I filed a petition in the
24 United States District Court.
2020
1 Q. Well, let me get to that. Up to
2 1997 --
3 A. I am sorry. I did that in 1997.
4 Q. Okay. Now, did you become aware that
5 Palumbo Brothers and others were indicted in a
6 case U.S. versus Palumbo which is in the Northern
7 District of Illinois, 96 CR 613?
8 A. Yes, sir. I am sure that's the
9 number.
10 MR. CARMELL: Mr. Hearing Officer, at this
11 time I'd like to introduce CDC Exhibit 12 which
12 is a minute order dated August 15, 1997 and part
13 of a memorandum and opinion and order by Judge
14 Bucklo. The purpose of these pages is simply to
15 summarize for the judge -- from the judge the
16 labor fraud schemes that involved Palumbo. The
17 indictment as you remember it was talked about,
18 it is hundreds and hundreds of counts, and this
19 is the judge's summary of it and that's for the
20 purpose of being introduced.
21 THE HEARING OFFICER: Mr. Carmell, this a
22 pretrial order?
23 MR. CARMELL: Well, actually what this is,
24 Judge, is the order. The judge dismissed all of
2021
1 the labor fraud counts based on preemption, but
2 that's not an issue here. We are not raising
3 it. It is only for the purpose of showing a
4 summarization of what those labor counts were.
5 The GEB Attorney if I remember right put in most
6 of the indictment which is a huge document.
7 MR. BOSTWICK: We put in the indictment. I
8 don't mind stipulating to the document itself
9 coming in. I am not prepared at this moment to
10 say that it is a completely accurate
11 summarization of the case. I am not sure if
12 that's what was intended in that order by the
13 judge, but we can argue about that at a later
14 time.
15 THE HEARING OFFICER: It is somewhat of a
16 summary of it, let's put it that way, and if it
17 really gets down to what it was about, we can
18 certainly take other steps to figure it out, but
19 we will admit Exhibit 12.
20(WHEREUPON, said document,
21previously marked CDC
22Exhibit No. 12, for
23identification, was offered and
24received in evidence as CDC
2022
1Exhibit No. 12.)
2 BY MR. CARMELL:
3 Q. Now --
4 THE HEARING OFFICER: These audits that you
5 conducted, this has nothing to do with this
6 case --
7 MR. CARMELL: Now we are coming to that.
8 THE HEARING OFFICER: The audits that were
9 conducted, this is -- the Palumbo Brothers is a
10 contractor, is that right, sir?
11 THE WITNESS: Yes, sir.
12 THE HEARING OFFICER: As part of the
13 collective bargaining agreement, there is a right
14 of audit, is there not, to look at the -- their
15 contributions?
16 THE WITNESS: I believe, sir, a union always
17 has a right to look at records if it is for the
18 purpose of serving the contract, serving the
19 membership, but this is for the benefit funds.
20 THE HEARING OFFICER: Benefit funds?
21 THE WITNESS: And the trust documents that
22 the employers become bound to require the
23 employers to turn over their records for the
24 purpose of these audits.
2023
1 THE HEARING OFFICER: Nothing to do with
2 this case. I need that for another matter and I
3 am aware of that. I am aware of it. I know the
4 answer. It was a rhetorical question. Thank
5 you.
6 BY MR. CARMELL:
7 Q. After becoming aware of the
8 indictment, I want to show you what has been
9 marked as CDC Exhibit 13 which is a notice of
10 filing, service list and verified petition to
11 adjudicate interest in forfeited property and ask
12 you whether your office prepared that and filed
13 it in the Palumbo Brothers criminal case?
14 A. Yes, sir.
15 Q. And would you explain to the Hearing
16 Officer what that document is and why it was
17 filed by your office?
18 A. They are allegations that Palumbo owes
19 the benefit funds additional money. Something I
20 doubt, frankly, but if he does and the government
21 obtains a judgment or a criminal -- and has a
22 finding in a criminal case and there is a
23 forfeiture, we have a right to -- we have a right
24 to go to the stakeholder, which is the United
2024
1 States Government, and say that's really our
2 money and so we file such a petition. I have
3 done that in the past and you can get your money
4 that way.
5 Q. All right. And that was filed on
6 behalf of the funds, is that correct?
7 A. Yes, sir.
8 MR. CARMELL: I'd like to offer CDC Exhibit
9 13 at this time.
10 THE HEARING OFFICER: Yes, that's admitted.
11 That's a normal procedure.
12(WHEREUPON, said document,
13previously marked CDC
14Exhibit No. 13, for
15identification, was offered and
16received in evidence as CDC
17Exhibit No. 13.)
18 BY MR. CARMELL:
19 Q. I want to show you what's been marked
20 as CDC Exhibit 14 which is likewise a verified
21 petition to adjudicate and forfeit property filed
22 on or about September 5, 1997, and was that one
23 filed on behalf of the Chicago District Council?
24 A. Yes, sir.
2025
1 Q. Now, the Exhibit 13 was filed in April
2 of '97. How is it that this one was not filed
3 until September of 1997?
4 A. I forgot. I goofed. Without
5 prejudice to my client, I might add, but I should
6 have filed them both at the same time. I
7 realized I didn't when I prepared for this, so I
8 did it.
9 Q. Is there any prejudice to the CDC for
10 not filing it before this date?
11 A. No. I think the statutory period runs
12 after the judgment or after the conviction and
13 the seizure, not before.
14 MR. CARMELL: I'd like to offer CDC Exhibit
15 14.
16 THE HEARING OFFICER: Thank you. We'll
17 admit it.
18(WHEREUPON, said document,
19previously marked CDC
20Exhibit No. 14, for
21identification, was offered and
22received in evidence as CDC
23Exhibit No. 14.).
24 THE HEARING OFFICER: Is there any money
2026
1 there?
2 THE WITNESS: I think there is money. I
3 don't know whether I should comment, but it was a
4 very successful company. I think the real issue
5 here is whether or not monies are due. I suspect
6 for men who didn't get overtime payments and
7 didn't complain about it, yes. For the benefit
8 funds, I don't think so. I think our audits
9 reached it.
10 You see, there is double time -- I
11 think you pay -- I worked with the U.S.
12 Attorney -- with the FBI agents on this, gave
13 them documents, reviewed the trust documents, the
14 funds have cooperated fully and I think what the
15 issue really for us is that Palumbo may have not
16 paid double-time like on a Sunday, but that's
17 only one hour of contribution. I got the hour of
18 contribution.
19 Now, if he had another set of books
20 that our audits wouldn't reach, there is nothing
21 we can do about that. Unless somebody comes
22 forward or the books show it, we can't do
23 anything, but I think we got all of our money.
24 The trust funds have their money. That's what I
2027
1 believe from what I have seen in the records, but
2 I am not privy to everything the government has,
3 but that's what I think.
4 BY MR. CARMELL:
5 Q. Mr. Arnold, in the fall and winter of
6 1994, did you know Ernie Kumerow?
7 A. Yes, sir.
8 Q. And what was Ernie Kumerow's physical
9 condition at that time?
10 A. Poor.
11 Q. What was it about it that led you to
12 the conclusion that it was -- the opinion that it
13 was poor?
14 A. The way he walked, the way he sweated,
15 the way he couldn't breath. He is an asthmatic,
16 he had an hip operation -- he had a hip
17 replacement, he had back surgery. That happened
18 either then or shortly thereafter or during.
19 Kumerow went through a lot of surgeries, was a
20 serious asthmatic and all and all went through a
21 very hard time.
22 MR. CARMELL: I have nothing further.
23 THE HEARING OFFICER: How long was Kumerow
24 in the District Council?
2028
1 THE WITNESS: About twelve years, I think.
2 THE HEARING OFFICER: What did he do before
3 he came to the District Council?
4 THE WITNESS: He was -- I don't recall
5 entirely. He was a field representative I think
6 for the benefit funds and I think he worked for
7 the union, but to tell you, at that point I am
8 guessing. I don't recall. As I sit here, I just
9 don't recall.
10 MR. CARMELL: You mean before he became
11 president of the District Council?
12 THE HEARING OFFICER: Yes.
13 THE WITNESS: I don't really recall.
14CROSS EXAMINATION
15 BY MR. BOSTWICK:
16 Q. Good afternoon, Mr. Arnold. My name
17 is Dwight Bostwick. I am with the GEB Attorney's
18 office.
19 A. Yes, sir.
20 Q. I just want to ask you one question
21 about this Palumbo matter. It is on Exhibit 39
22 and I'll have to show it to you. This is a
23 lengthy indictment. Well, I can do it even
24 without showing you the document.
2029
1 Were you aware that as part of that
2 indictment there is allegations that people from
3 the Chicago District Council or at least under
4 that umbrella did work for Joseph Palumbo
5 including excavating earth to build a small lake,
6 creating an island in the middle of a lake,
7 constructing a sand beach around a portion of the
8 lake, painting a small building and barn, putting
9 a roof on a small structure, installing drainage,
10 landscaping property, baby-sitting, other
11 construction and general maintenance duties?
12 A. I'd like to see it.
13 THE HEARING OFFICER: For whom? Who did
14 they do the work for?
15 MR. BOSTWICK: Joseph Palumbo, the
16 contractor that is indicted.
17 MR. CARMELL: What page is that?
18 MR. BOSTWICK: It's referenced at page 30
19 and 31 of Exhibit 39.
20 BY THE WITNESS:
21 A. I've seen this, but this refers to his
22 workers. It doesn't mean them. This refers to
23 the workers. If he tells a guy go cut my grass,
24 he pays him. He goes and cuts his grass.
2030
1 BY MR. BOSTWICK:
2 Q. Is it possible in your experience that
3 that would have been a form of a kickback to that
4 contractor?
5 A. No, sir. Absolutely not. That's not
6 what that is talking about at all.
7 Q. Absolutely not possible that people
8 would send work or workers out to do personal
9 work and not charge them as part of a kickback
10 scheme?
11 A. These are his workers they are talking
12 about. That's my understanding of this. He's
13 got -- he had huge work crews.
14 I think the problem here was --
15 listen, maybe I am wrong, but my understanding --
16 you are asking for my understanding of this.
17 Q. I am not asking you if it did happen.
18 A. My understanding of this is Palumbo
19 uses his workers. May have charged the State for
20 that work. I think that's what it's saying.
21 That's got nothing to do with the union. That is
22 Palumbo doing something wrong.
23 If he takes -- you think that is
24 uncommon, you're wrong. Some contractor decides
2031
1 he wants to pave his driveway. He takes those
2 people and he uses them for personal purposes and
3 he takes it off his income tax as a business
4 deduction. Ridiculous? It's not.
5 Or if Palumbo takes these people and
6 he has them do a lake for him and he charges the
7 State of Illinois, shame on him. But that's got
8 nothing to do with the union. He pays these
9 people for that work and I make sure he pays the
10 benefits.
11 I don't know what he is doing with
12 these people. I would think if he is paying
13 these people and he is paying the benefits, that
14 he is using them for legitimate purposes.
15 From our standpoint, every hour worked
16 is a benefit contribution. Not double hours,
17 single hours. Every hour is a benefit
18 contribution.
19 If he wants to take these Laborers and
20 go build a lake somewhere and he charges the
21 State of Illinois with this, is what this is
22 saying.
23 This guy, to disguise this fact from
24 the Laborers Unions as well as IDOT and federal
2032
1 government, to insure whatever it is, PBI's
2 practice of fraudulently failing to pay for wages
3 earned.
4 If he did things like that, he didn't
5 do that with the consent of the union or some
6 kickback by the union. He is just a thief right
7 there. That's all.
8 Q. Did you -- the question is could it
9 be. I am not asking you what happened. I
10 assume --
11 A. It cannot be, no.
12 Q. There is no way that that could have
13 been part of a kickback scheme?
14 A. Involving the union? Absolutely not.
15 Q. Okay.
16 A. Absolutely not. And that doesn't say
17 that. It doesn't begin to say that. That's not
18 what that is saying at all.
19 Q. Let's --
20 A. That's not fair to do that to these
21 people. That's not what that is saying.
22 Q. I think you answered the question.
23 THE HEARING OFFICER: He is allowed to ask
24 you.
2033
1 THE WITNESS: He's got some professional
2 bombs here. That is not what that is saying.
3 MR. CARMELL: All right.
4 THE HEARING OFFICER: You answered the
5 question. He is allowed to ask it.
6 THE WITNESS: Okay.
7 BY MR. BOSTWICK:
8 Q. Let's establish the entities and the
9 time periods you worked for those entities that
10 are affiliated with the Chicago District
11 Council.
12 Chicago District Council 1979 to the
13 present, you do still do some work for them?
14 A. I do work when I am asked to do work.
15 I always did.
16 Q. Legal work?
17 A. Yes. If they have bargain contracts
18 for the council or for locals.
19 Q. That's a correct time period, '79 to
20 the present?
21 A. Even before. If I got an assignment.
22 If they gave me an assignment I did the work. I
23 have been around --
24 Q. How about the pension area?
2034
1 A. I did work for them since 1970 or '71
2 and became counsel in '79.
3 Q. Health and welfare fund?
4 A. Yes, sir.
5 Q. How about the time period there?
6 A. Same period.
7 Q. Early '70s and then became counsel in
8 '79?
9 A. Yes, sir.
10 Q. And then to the present you still do
11 work for them?
12 A. Yes, sir.
13 Q. Any other fund like the PAC fund or
14 the training fund?
15 A. No, sir.
16 Q. So, you have done work for these
17 entities during a time spanning almost three
18 decades?
19 A. Thanks for reminding me.
20 Q. And you and your firm have been giving
21 legal advice to the Chicago District Council and
22 these funds during that period of time as asked?
23 A. Yes, as asked.
24 Q. How many lawyers in your firm?
2035
1 A. About 10, 11 now. Ten now. One just
2 left.
3 Q. Has that remained pretty constant over
4 the years?
5 A. It's been as much as 12 or 14, as
6 little as maybe seven or eight.
7 Q. I'm going to show you an exhibit,
8 Exhibit 186. This shows --
9 MR. CARMELL: Is this a new exhibit?
10 MR. BOSTWICK: This is a new exhibit.
11 BY MR. BOSTWICK:
12 Q. This is prepared for federal -- from
13 federal forms and the minutes of the Chicago
14 District Council.
15 It covers a six-year period of the
16 salary of you and of your firm during that
17 six-year period.
18 Does that total, the six-year total,
19 of 4.8 million look about right to you?
20 A. I don't really know but it could be.
21 Q. Well, the federal forms wouldn't be
22 wrong, would they?
23 A. I don't know whether they are right or
24 wrong. But if you would say to me could this be
2036
1 a correct number, I'd say yes, it could be.
2 Q. You handled some private legal matters
3 for some of the officers over this three-decade
4 period like Al Pilotto and James Caporale?
5 A. Nothing that I got a fee for, I don't
6 think. I don't do any work for Pilotto and --
7 Q. Did you handle Al Pilotto's will?
8 A. I might have drafted a will for him.
9 Q. Didn't charge him, though?
10 A. I don't recall. It's not a very big
11 item. I was -- if I did it.
12 Q. Have you done personal work for the --
13 personal legal work for other officers over time?
14 A. I must have. I don't really recall.
15 Q. Are you aware at the time that you
16 prepared or helped with Mr. Pilotto's will that
17 he was reported to be a mob boss?
18 A. I had certainly heard that, but I
19 guess he is still entitled to a will. Probably
20 needed one more than most people.
21 Q. In fact, he was shot in the face a
22 number of times, wasn't he?
23 A. I don't know. I don't think he was
24 shot in the face.
2037
1 Q. Was he shot on a golf course?
2 A. That's what I heard.
3 Q. Was that before or after you prepared
4 the will?
5 A. I don't recall, sir. I don't even
6 recall if that will was executed or he used it.
7 Q. Victor Ciardelli, C-i --
8 A. Ciardelli.
9 Q. I'm sorry?
10 A. Ciardelli.
11 Q. C --
12 A. C-i-a-r-d-e-l-l-i.
13 Q. Is he a part of your firm?
14 A. No, sir.
15 Q. Does he share space in your office?
16 A. No, sir.
17 Q. He's never been located in your office
18 building?
19 A. No, sir. In the building. That's
20 different. We own the building. My partner and
21 I own two-thirds and Ciardelli owns one-third.
22 We bought that building and he has his offices on
23 his side of the building. We have our offices on
24 our side of the building. Completely separate
2038
1 law firms.
2 Q. You refer criminal work to him over
3 time?
4 A. I don't, no. I did once. I did -- I
5 did recommend him to Caporale. I did.
6 Q. You recommended Mr. Caporale to him?
7 A. I did. But I gave him, Caporale, a
8 list of several lawyers. Caporale interviewed
9 them and chose who he wanted.
10 Q. Now, he represented Mr. Caporale in
11 the U.S. v. Accardo, Caporale, Pilotto?
12 A. Yes, he did.
13 Q. That would be Mr. -- I'm sorry -- the
14 pronunciation?
15 A. Ciardelli.
16 THE HEARING OFFICER: Is he still
17 practicing?
18 THE WITNESS: He is, sir.
19 THE HEARING OFFICER: Okay. Confusing him
20 with someone else. Okay.
21 BY MR. BOSTWICK:
22 Q. Now, you're paid an hourly fee by the
23 District Council for services?
24 A. For the District Council, yes, sir.
2039
1 Q. And the rate is 125 or $150 an hour?
2 What is the rate on that?
3 A. $150 an hour.
4 Q. Do you have associates who do some of
5 that work for you?
6 A. Yes.
7 Q. Paralegals?
8 A. No.
9 Q. No paralegals?
10 A. No.
11 Q. In an average bill that would go out,
12 would you say that it would be fair to put a tab
13 of 100 or $125 as an average hourly rate of all
14 the work that goes out?
15 A. It would be fair to put a tab of $150
16 an hour as an hourly rate.
17 Q. For all your lawyers?
18 A. Right. But at least the lawyers that
19 work for the Council. I don't -- they are all
20 experienced labor lawyers.
21 Q. Is it same for the funds?
22 A. Yes, sir.
23 Q. Do you also have an arrangement with
24 the funds where you collect, not an hourly rate,
2040
1 but a percentage of the collections?
2 A. Yes, sir.
3 Q. What is the percentage rate, 20, 25
4 percent?
5 A. It's 20 percent. If -- 25 percent --
6 20 percent without litigation. 25 percent if
7 there is litigation. A third if it goes into the
8 litigation. I've gone to the U.S. Supreme Court
9 on petition for $5,000, $1,600 fee, and I've been
10 paid substantial sums of money on a contingency
11 basis for less work.
12 Q. If you look at Exhibit 186, you'll see
13 on the Health and Welfare Fund there are two
14 indications, one, if you look at 1995 as an
15 example, it says personally you were made
16 payments, directly to Hugh Arnold, of over
17 $155,000.
18 A. That's my retainer.
19 Q. That's a retainer?
20 A. That's a retainer. I attend a lot of
21 meetings plus I don't bill them except for
22 certain specific items, so everything I do for
23 that retainer, I do.
24 Q. So that money -- but that money goes
2041
1 to you, not to the firm?
2 A. It goes to me.
3 Q. And then the $980,000 goes to you and
4 your firm?
5 A. It would. I didn't -- I don't think
6 it is that much that year, but if it is, that's
7 what it would be.
8 THE HEARING OFFICER: Do you have partners?
9 THE WITNESS: I have partners, yes, sir. I
10 had one for 36 years.
11 THE HEARING OFFICER: So the arrangement of
12 you getting the payment, not the firm, that's
13 between you and the partners?
14 THE WITNESS: Right. My fee -- if he really
15 wants to know, I started the firm with a partner
16 36 years ago. He never really brought in any
17 business, so the adjustment made was that that
18 retainer was mine, the rest went -- that specific
19 retainer, the rest went to the firm. It was
20 divvied up. But he was -- you know, it could
21 have been the other way. He might have been the
22 guy to get the business and I wasn't, so I never
23 changed it. That was an adjustment we made. It
24 wasn't -- that was some years into the
2042
1 representation.
2 BY MR. BOSTWICK:
3 Q. I'd like to look at a couple of items
4 relating to the Accardo trial.
5 THE HEARING OFFICER: This union is
6 obviously a big, big client. It takes up pretty
7 much of your time, does it not?
8 THE WITNESS: My time personally, yeah, a
9 lot of my time. There are two fee arrangements.
10 One is collections or a contingency fee. They do
11 not want it -- and it costs the client -- about
12 22-1/2 percent is the average for the dollars
13 recovered. That is our fee which is less than
14 collection firms. Would I like to be paid by the
15 hour, yeah, I would. I'd like to get paid and
16 I'd like to get paid a fair rate. $150 is not a
17 boom rate in this town.
18 THE HEARING OFFICER: My only question, my
19 simple question, I didn't want to delve into your
20 personal matters, I assume this union is a
21 fair-size client?
22 THE WITNESS: Yes, sir.
23 BY MR. BOSTWICK:
24 Q. Have you done other free legal work
2043
1 for the officers of the Chicago District Council,
2 like free wills for --
3 A. I don't really recall that. I don't
4 think so. They generally pay me for what I do.
5 Q. How about any of the current officers,
6 Mr. Matassa, Mr. Lombardo, the Carusos?
7 A. No.
8 Q. You have never done any work for them?
9 A. No, I don't think so. No, never. I
10 don't think so, no.
11 Q. Going to the Accardo matter --
12 A. And I don't know for sure that Pilotto
13 didn't pay me for that will. I did a will. I
14 don't know if he ever used it or not. He was
15 going away and he asked my to draft a will.
16 Whether he used it or not, I don't know. And I
17 don't remember if I was paid or not. I think
18 I -- you know, he might have paid me. I just
19 don't remember. I certainly wanted to be paid.
20 THE HEARING OFFICER: If you draft a will
21 for an individual, doesn't the lawyer usually see
22 that it is executed, you keep a copy in case the
23 fellow goes down at sea or something like that?
24 THE WITNESS: It depends on the client. If
2044
1 the client -- the client does what the client
2 wants to do. If the client wants to take that
3 will home with you, you say this is how you would
4 execute the will. You have to be careful about
5 this, you have to be careful that the witnesses
6 are in the presence of the testator, that the
7 testator signs in the presence of the witnesses,
8 the witnesses sign in the presence of the
9 testator, don't induce your family relatives to
10 sign that will, use strangers, don't use old
11 people, use young people. He is not the only
12 person that said, "Give it to me. I'll take care
13 of it myself." If they do that, you do that.
14 You try and tell them what they should do and
15 hope they do it.
16 But, you know, you can't control -- if
17 he doesn't want to do that, he doesn't want to do
18 that. I don't think I ever executed a will. I
19 don't recall, but I don't think so. I don't even
20 remember the will.
21 BY MR. BOSTWICK:
22 Q. Well, isn't there a problem in
23 accepting large sums of money from a corporation
24 or an institution while doing free legal work for
2045
1 the officers?
2 A. I didn't say I did free legal work.
3 You said that. I didn't say that.
4 Q. No. If that happened, isn't there a
5 problem with that?
6 A. No.
7 MR. CARMELL: I am going to object to that.
8 BY MR. BOSTWICK:
9 Q. Not a problem with that?
10 A. No.
11 THE HEARING OFFICER: Let's hear the
12 objection.
13 MR. CARMELL: The objection is it is a
14 hypothetical question. If he has the document
15 here that he can show he did the personal work
16 and if he remembers whether he was paid or not,
17 then the answer is whether or not he believes
18 this to be a conflict. Saying to him as a matter
19 and getting it into the record of what do you
20 think would be a conflict if what happened, I
21 just don't think it is proper at this point.
22 THE HEARING OFFICER: I think you asked him
23 the question. I think you did ask him.
24 MR. BOSTWICK: If it occurred.
2046
1 THE HEARING OFFICER: If it occurred was
2 that a conflict.
3 BY THE WITNESS:
4 A. Why don't you show me what you have
5 here?
6 MR. CARMELL: That's a basic if this were a
7 size nine, would I run through. That's just not
8 fair right now. Let's get a document out there
9 and then he can ask him about it.
10 THE HEARING OFFICER: I think we have a
11 question. The answer I think was fair.
12 BY MR. BOSTWICK:
13 Q. Let me show you what's been marked and
14 entered into the record as GEB Attorney Exhibit
15 11 which is the indictment United States versus
16 Accardo, et al.
17 THE HEARING OFFICER: Mr. Carmell, I have
18 not heard that example since the first year of
19 law school.
20 MR. CARMELL: Right.
21 THE HEARING OFFICER: That's the first year
22 of law school. I have never heard that example
23 since that long ago and that was the example used
24 by the professor of torts.
2047
1 MR. CARMELL: When you get to my age you
2 forget the new things and remember the old.
3 BY MR. BOSTWICK:
4 Q. You were the attorney for the Chicago
5 District Council at the time this indictment was
6 filed, that's correct, right?
7 A. No. The attorney for the Chicago -- I
8 said I did work on assignment, if they gave me
9 work to do. The attorney for the Chicago
10 District Council was Samuel Shapiro. I was not
11 the attorney for the Chicago District Council.
12 Q. I thought earlier in your testimony
13 you said as of 1979 you became the attorney for
14 the Chicago District Council?
15 A. Benefit funds I said. I was co -- in
16 fact, I was co-counsel with Sam Shapiro. Sam
17 Shapiro lived for years after this. I don't
18 remember how many, but he was definitely the
19 attorney.
20 Q. You did legal work for the Chicago
21 District Council at the time that this indictment
22 was filed, is that correct?
23 A. As assigned by Mr. Shapiro. If he
24 gave me some work to do, I did it.
2048
1 Q. You did legal work for the Health and
2 Welfare Trust Fund as well at the same time?
3 A. Oh, yes, sir.
4 Q. Let's take a look at this, indicted in
5 this case, Anthony Accardo, James Caporale,
6 Alfred Pilotto and James Pinckard. Those are a
7 few of them, right?
8 A. Yes, sir.
9 Q. On Page 2, the Health and Welfare
10 Department of Construction and General Laborers
11 District Council of Chicago and Vicinity Trust
12 Fund?
13 A. Yes, sir.
14 Q. That's an institution you were the
15 attorney for or an attorney for?
16 A. Yes, sir.
17 Q. And down at the bottom of the page
18 under "e", Subsection (2), the Chicago District
19 Council is listed as a Construction and General
20 Laborers District Council of Chicago and
21 Vicinity. You have done legal work for -- you
22 were doing legal work then as well?
23 A. If assigned.
24 THE HEARING OFFICER: But when you say "if
2049
1 assigned," I mean, you were assigned, you did
2 work for them during that particular year?
3 THE WITNESS: Yes, sir, I think so. I don't
4 know for sure if I did work for them that year or
5 not.
6 THE HEARING OFFICER: When you say
7 "assigned," they were giving you work and if
8 they had some, they would give it to you, so it
9 was not like each -- it was a new thing, a new
10 engagement, they would call you up and send you
11 some work over?
12 THE WITNESS: I don't recall whether I did
13 work for the District Council or I did work for
14 the locals. I might have did the locals. I
15 don't recall if I did work for the District
16 Council. If he has a document that says I did, I
17 did. But I know I did work for locals.
18 BY MR. BOSTWICK:
19 Q. In other words, the testimony you have
20 just given is different from the testimony
21 earlier, you said earlier that you definitely did
22 work for the Chicago District Council?
23 A. I said I did work if given an
24 assignment. Do I recall as I sit here now
2050
1 whether in 1981 I did work? I might have
2 bargained the contract that year, I might not
3 have, but if I did work, I did.
4 Q. So now you are not sure about that.
5 How about on page 3?
6 A. What is the point?
7 Q. Under F. Consultants and
8 Administrators, Inc. of Chicago. That's also a
9 major player in this scheme that's identified in
10 the indictment.
11 Consultants and Administrators, Inc.
12 of Chicago, a corporation which provided benefit
13 plan services including dental, vision and
14 related medical services to members of the
15 Laborers union through the Chicago dental plan.
16 A. Yes, sir.
17 Q. You recall that that entity,
18 Consultants and Administrators, was supposed to
19 have generated kickbacks and that Angelo Fosco,
20 the individual you just testified about, was
21 supposed to have a secret ownership in that
22 institution, in that entity?
23 A. He was acquitted. Angelo Fosco was
24 acquitted.
2051
1 Q. What I am asking is --
2 MR. BOSTWICK: Could you read the question
3 back.
4(WHEREUPON, the record was read
5by the reporter as requested.)
6 BY THE WITNESS:
7 A. If that's what it says, that's what
8 that said. I don't think I ever knew that. I
9 may have read this document or may not have. I
10 don't recall somebody saying Angelo Fosco had a
11 secret ownership.
12 BY MR. BOSTWICK:
13 Q. On page 4, Pinkert & Associates under
14 subsection J, an Illinois corporation,
15 purportedly engaged in verifying the eligibility
16 of members of the Laborers union for Consultants
17 and Administrators but which in actuality served
18 as a conduit for kickback moneys from Consultants
19 and Administrators.
20 You recall that entity?
21 A. I recall that entity.
22 Q. This is something on your radar screen
23 as the attorney for both the fund and as someone
24 who did work around that time period for both the
2052
1 fund and the Chicago District Council, right, you
2 were paying attention to this stuff?
3 A. I don't understand your question. I
4 don't understand your question.
5 Q. This was important to you as the
6 attorney -- as somebody who did legal work for
7 these two entities to understand a little bit
8 about this indictment and what the scheme was
9 supposed to be about, isn't that right?
10 A. I did not know of a scheme until the
11 indictments were filed. I never had any contact
12 with or dealt with Consultants and
13 Administrators. That was the administrator of
14 the fund or the administrator of the health care
15 plan that would do that. That's not -- was not
16 my job or my work.
17 I prepared a contract between
18 Consultants and Administrators and the funds.
19 When I finally got my position, the contract that
20 existed was two pages long and the administrator
21 was fighting with these people.
22 I prepared a document that I thought
23 was a working document with them. I never dealt
24 with this Pinkert & Associates, didn't really
2053
1 know they existed, did not. I had nothing to do
2 with them and nobody ever discussed them with
3 me.
4 I had dealt with the dental contract
5 with C & A, the contract document itself I
6 prepared, and after that the administrator of the
7 funds dealt with them, not me.
8 Q. So, you were familiar with Al Pilotto
9 and James Caporale around this time, weren't you?
10 A. I did know them. Pilotto was -- they
11 were both trustees of the fund.
12 Q. They were both trustees of the fund?
13 A. Yes.
14 Q. And they were both major officers of
15 the Chicago District Council, right?
16 A. Well, Pilotto -- I don't know what
17 Pilotto held in the District Council. But
18 Caporale was definitely Secretary-Treasurer.
19 Q. And you became aware that Pinkert &
20 Associates was run by Al Pilotto's son-in-law?
21 A. Not until this document hit.
22 Q. As of this document -- so, as of this
23 document you became aware that Al Pilotto's
24 son-in-law was the conduit for the kickbacks, is
2054
1 that right?
2 A. When -- sometime after this, I became
3 aware of that allegation, yes, sir.
4 THE HEARING OFFICER: What does --
5 THE WITNESS: I don't know -- pardon?
6 THE HEARING OFFICER: I was going to ask a
7 question. What does -- what do you have to do to
8 determine the -- verify the eligibility?
9 THE WITNESS: People are -- people are --
10 become eligible -- not everybody who is
11 contributed for is eligible for benefits.
12 THE HEARING OFFICER: I understand.
13 THE WITNESS: It's based upon how many --
14 they work enough hours, they are eligible and
15 then the question is the dependents, are they
16 really a dependent.
17 THE HEARING OFFICER: The question is here
18 it looks like Consultants and Administrators are
19 the administrators and they administer the fund.
20 And it looks to me like they hired a separate
21 group of persons called Pinkert & Associates to
22 determine who was eligible.
23 THE WITNESS: Whether the people that came
24 in the door were eligible for benefits or not.
2055
1 THE HEARING OFFICER: That was too big of a
2 job for Consultants and Administrators to do even
3 though they are the administrators of the fund?
4 THE WITNESS: These people were all
5 convicted of a crime.
6 THE HEARING OFFICER: Either they are
7 eligible or not.
8 THE WITNESS: The fact that somebody has to
9 be -- that somebody would use a service to
10 determine eligibility, that is, these dentists
11 would use a service to determine eligibility,
12 that in itself I would not find unusual, if they
13 are paying a reasonable fee.
14 The fact that he is Pilotto's
15 son-in-law, I did not know. That's different.
16 That's different.
17 BY MR. BOSTWICK:
18 Q. Now, Al Pilotto and James Caporale
19 were convicted in the scheme to defraud your
20 clients in essence of approximately $2 million,
21 is that right?
22 A. Yes, sir. For periods before I was
23 counsel. The periods involved in the indictment
24 I was not counsel for. They were there since the
2056
1 '60s.
2 Q. But you were doing -- you are not
3 backtracking from the earlier testimony about
4 1970 you had done contract work and work for the
5 Chicago District Council, the funds?
6 A. No, sir. But then you have to ask me
7 what I did. I did delinquency work, somebody
8 didn't pay the plan. If there was a change in
9 ERISA, Mr. Shapiro would come to me and say what
10 kind of document do I need for this statute, what
11 should I do.
12 Q. Why don't I ask the questions?
13 I mean I think the relevant question
14 is they were your client, right?
15 A. What I have just responded.
16 Q. They were your client?
17 A. You want to paint a broad brush. That
18 is not the truth. The truth --
19 Q. Were they your client or weren't they
20 your client?
21 A. For what purpose? Did I do this? Did
22 I do this for then, the answer is no.
23 Q. I didn't ask that.
24 A. That's what you are alluding to. I
2057
1 didn't have anything to do with this. That's
2 what I am telling you.
3 MR. BOSTWICK: I'd request that he simply
4 answer the question.
5 THE WITNESS: If you are not going to be
6 polite, I am going to leave.
7 THE HEARING OFFICER: Gentlemen.
8 THE WITNESS: I am not compelled to sit
9 here.
10 THE HEARING OFFICER: Ask the questions and
11 you ask the questions and you answer the
12 questions and let's leave off the editorial
13 comments. Either yes or no, I did or I didn't
14 and go on.
15 THE WITNESS: You have to ask me fair
16 questions or I am out the door.
17 THE HEARING OFFICER: Let me decide what is
18 fair.
19 THE WITNESS: I will.
20 BY MR. BOSTWICK:
21 Q. This was interesting earlier when you
22 testified about how it was that Mr. Caporale
23 retained his Secretary-Treasurer position and got
24 promoted to Business Manager after he was
2058
1 convicted of this $2 million fraud and, as I
2 recall, you said that you asked an attorney or
3 someone went back to the judge to get
4 clarification on an order, is that right?
5 A. Right, right.
6 Q. And so there was an order entered as
7 you understand it, a written order?
8 A. I don't recall. I think there was. I
9 don't recall. I don't know that I ever saw a
10 document.
11 Q. There was some order --
12 A. What I saw was a record that said what
13 the judge said. I thought he said if they
14 want -- he's got to -- what I saw was a record.
15 Whether I saw an order, I don't remember. But I
16 know the record said that the judge said he's got
17 to resign. That's what I want.
18 After that if they want to reappoint,
19 quote, "after what he did," then they'll do it.
20 Q. Didn't you say earlier in your
21 testimony that you saw an order and you asked
22 somebody to go back and clarify that order?
23 A. I don't know if I saw the order. But
24 I was aware of the order. I might have --
2059
1 listen, I honestly don't remember. That's the
2 best answer I could give you. Whether I actually
3 saw that order or not, I don't recall. Small
4 point in my mind.
5 Q. Okay. This is a small point in
6 your --
7 A. Yes.
8 Q. This can't be a small point in your
9 mind as an attorney.
10 A. That is my opinion. I am not
11 interested in yours.
12 THE HEARING OFFICER: Gentlemen, two lawyers
13 here. Let's play by the rules here. Go ahead.
14 BY MR. BOSTWICK:
15 Q. Chicago District Council Exhibit No.
16 5. This is the document that you all referred
17 to, is that right, as the document that you are
18 referring to?
19 THE HEARING OFFICER: What is that?
20 BY MR. BOSTWICK:
21 Q. It indicates -- it's a partial -- it's
22 a portion of the transcript on September 15,
23 1982, and it's that document that you referred to
24 to indicate that the judge left some wiggle room,
2060
1 so to speak?
2 A. I didn't say -- wait. Wait a minute.
3 MR. CARMELL: Just a minute. He didn't
4 testify to that. He testified his understanding
5 and I introduced this document without him.
6 BY MR. BOSTWICK:
7 Q. Can you show me where in this
8 document?
9 THE HEARING OFFICER: Okay. Why don't you
10 ask him what he said and what his understanding
11 was, even if you have to retrace it. Go ahead.
12 BY MR. BOSTWICK:
13 Q. Tell me what your understanding is of
14 why it is that legally according to the judge and
15 the judge's order about Mr. Caporale, how it was
16 that Mr. Caporale could hold any office in the
17 Chicago District Council?
18 A. I have the transcript in my office as
19 we speak today. I have that transcript. It
20 is -- let me -- nobody showed me this document at
21 this moment. I have the actual transcript in my
22 office. Probably the only one that is left. I
23 have it. It is 15 years old. I read it. I read
24 it again when I was asked the question.
2061
1 And it says in that document that
2 Caporale was required to resign and thereafter
3 the judge did -- admonished the union but said
4 they had a right to reappoint him. And that
5 document appears and if Mr. Vaira wants a copy of
6 that transcript, I will give it to him.
7 Q. Okay. I will tell you what. I have
8 got a copy of that. In fact, your copy isn't the
9 only copy that exists. Why don't we take a look
10 at it and we can go through it.
11 MR. BOSTWICK: This is the extended.
12 THE HEARING OFFICER: This is -- you are
13 referring to 187, go ahead.
14 MR. BOSTWICK: That's correct. This is GEB
15 Attorney's Exhibit 187.
16 BY MR. BOSTWICK:
17 Q. And this is the full transcript of the
18 hearing before the judge relating to the issue of
19 whether or not Mr. Caporale can hold office. Is
20 it not?
21 A. I'm going to look. I don't know
22 whether it's the only one. But I believe what I
23 testified to is correct and I don't think
24 anything here is going to change my position.
2062
1 Q. This is September 15, 1982,
2 approximately two months after Mr. Caporale is
3 convicted of stealing approximately $2 million
4 from the fund. That's correct?
5 A. I'm reading. I didn't hear your
6 question. I'm sorry.
7 MR. BOSTWICK: Read the question back.
8 THE WITNESS: I would like to read, then --
9 THE HEARING OFFICER: Let's hear the
10 question.
11 MR. BOSTWICK: Why don't we read the
12 question back?
13(WHEREUPON, the record was read
14by the reporter as requested.)
15 THE WITNESS: You got to read it again.
16 I am reading this.
17 THE HEARING OFFICER: Let's listen to the
18 question.
19(WHEREUPON, the record was read
20by the reporter as requested as
21follows: Q. This is September
2215, 1982, approximately two months
23after Mr. Caporale is convicted of
24stealing approximately $2 million
2063
1from the fund. That's correct?)
2 A. The period of the conviction, I'd have
3 to accept your position. I don't recall the
4 date.
5 Q. But this is the transcript you were
6 talking about, right?
7 A. I don't know. I know I have a
8 transcript. If this is the transcript, I don't
9 know, but I have a transcript. Is there more
10 than one transcript? Was there more than one
11 date of hearing? I don't know, bu