In the Matter of Joseph Abate
Laborers' International Union of North
America
Independent Hearing Officer
Docket No. 99-39D
Decided October 5, 1999
Order and Memorandum
Procedural
History
This matter comes before the Laborers' International Union of
North America ("LIUNA") Independent Hearing Officer ("IHO")
pursuant to the LIUNA Constitution and the Ethics and Disciplinary Procedure
("EDP").
On July 13, 1999, Disciplinary Charges were filed by the LIUNA General Executive Board Attorney ("GEB Attorney") against Joseph Abate ("Abate"). The charges allege that Abate committed conduct proscribed by the EDP by committing an act of racketeering as defined under 18 U.S.C. § 1961, by committing a state felony, and by breaching his fiduciary obligations to LIUNA.
The IHO held a hearing in Chicago, Illinois on August 17, 1999.
Abate was served with the charges more than 30 days prior to the hearing. Although Abate received proper notice of the August 17, 1999, hearing, he did not appear.
Findings of Fact
1.
Local 225 is located in Des Plaines, Illinois.
2.
Abate became a member of Local 225 in 1987.
3. After holding the positions of Business Agent and Recording Secretary, Abate was elected to the position of President of Local 225 in 1995. Abate held that position until he was suspended by the GEB Attorney following his arrest and indictment in Cook County, Illinois for Syndicated Gambling on April 22, 1997. On January 29, 1999, Abate was convicted of one count of Syndicated Gambling and was sentenced to two years felony probation and fined one thousand dollars.
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290 In the Matter of Joseph Abate 1999
4.
Pursuant to 3 5(a) of the LIUNA Ethics and Disciplinary Procedure
("EDP"), the GEB Attorney brought the following charges against
Abate:
Charge I -
Barred Conduct (Violation of the EDP)
In or around March 1997, while a member and the President of Laborers' Local Union 225, JOSEPH ABATE committed "barred conduct" in violation of the LIUNA EDP by committing an act of racketeering as defined under 18 U.S.C. Section 1961; additionally, and through the same acts, JOSEPH ABATE committed a state felony subjecting him to discipline under Section 3 of the EDP; to wit, JOSEPH ABATE committed the offense of Syndicated Gambling in violation of Chapter 720, Act 5, Section 28-1.1(d) of the Illinois Compiled Statutes, which is punishable by imprisonment for more than a year.
JOSEPH ABATE violated his obligation of undivided loyalty incumbent upon all members, officers and employees of LIUNA, including but not limited to those set forth in 29 U.S.C. Section 501(a) and the EPC; to wit, while he was President of Local 225 JOSEPH ABATE ran an illegal bookmaking operation under the direction of Local 225 Business Manager John Galioto.
By approving and authorizing improper
and excessive expenditures by other officers and Executive Board members or by
charging an excessive number of meals to Local 225, JOSEPH ABATE failed to
fully perform all duties, responsibilities and obligations that attached to his
position as an Executive Board member and an Officer of Local 225, all in
violation of Article IV, Section 4(H)(9) and Article VI, Sections 3(n) &
(o), of the Uniform Local Constitution. Accordingly, Mr. Abate is subject to
all applicable disciplinary provisions contained in the International Union and
Local Union Constitutions.
Racketeering Activity
5. John Galioto ("Galioto") is
the former Business Manager of Local 225 who held that office during the
relevant time of the charges ibis matter.
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In the Matter of Joseph Abate 1999
6. Local 225 was placed in trusteeship on March 17, 1998. See In the Matter of Local 225, IHO Order and Memorandum, 97-54T (March 17, 1998 ("The March 17 Order"). In the March 17 Order the IHO found that Galioto engaged in barred conduct by running an illegal bookmaking operation in violation of Illinois state law. When Abate was arrested at his apartment on April 22, 1997, 12 cell phones were confiscated from his apartment. One of those 12 cell phones had a number used by Galioto as a Local Union 225 phone.
7. Jenell Totani ("Totani") testified at the Local 225 Trusteeship hearing. Totani testified that she was romantically involved with Galioto and lived with him. She was also employed as an office secretary at Local 225 at the time of their involvement. Totani testified that while she was living at Galioto's home at least 20 individuals, including Abate, gathered in Galioto's basement on Monday nights. Totani was excluded from the meeting. At the close of the meeting, the individuals left with envelopes containing money. She further testified that when Abate was arrested for syndicated gambling by the Cook County Sheriff's Police, Galioto asked Totani to go to his house and remove the gambling paraphernalia.
8. John O'Rourke is an Inspector for the LIUNA Inspector General's ("IG") office.
9. O'Rourke interviewed four witnesses regarding Galioto's bookmaking operation and Abates role as a bookmaker. The four witnesses interviewed by O'Rourke are: 1) a confidential informant, 2) "Totani", 3) Guy Drehoble ("Drehoble"), and 4) Michael Palmieri ("Palmieri").
10. O'Rourke testified that Drehoble was one of Galioto's personal friends and that Drehoble told him that Galioto approached Drehoble and offered him a job working as a steward for Local 225. Drehoble joined the Union and, although he had no prior experience, was immediately made a steward. Drehoble told O'Rourke that Galioto approached him and asked him to act as a bookmaker and collector in his gambling operation. Drehoble told O'Rourke that he had been to Galioto's house on numerous occasions and had become acquainted with several of the bookmakers. Drehoble identified Abate as one of the principal bookmakers.
11. O'Rourke testified that Palmieri is a personal friend of Galioto who owned an asbestos removal company. Palmieri told O'Rourke that he had also been approached by Galioto and asked to participate in the bookmaking operation and act as a collector or enforcer. Palmieri identified Abate as a bookmaker for Galioto's gambling operation. O'Rourke related hearsay statements from Palmieri at the trusteeship hearing of Local 225. The IHO credited those statements.
292 In the Matter of Joseph Abate 1999
12. The unidentified informant is a certified FBI confidential informant on organized crime developed while O'Rourke was an FBI agent. Upon investigation by the FBI and other law enforcement agencies, his information was found to be reliable and accurate. The confidential informant told O'Rourke that when he called a pre-designated number to obtain the
13. Betting line' for the day on Galioto's operation, he heard Abates voice giving the recorded information regarding the betting line. The confidential informant knew Abate, knew that Abate was the president of Local 225, and knew that Abate was involved in bookmaking. The confidential informant also knew Galioto and several others were involved in the operation.
Discussion
As is the custom and practice in labor arbitrations, the IHO must conduct a thorough post hearing review to determine the probative weight and reliability of the evidence of record. Reliable hearsay evidence is admissible in labor arbitrations. Associated Cleaning Consultants and International Brotherhood of Printing and Allied Trades Local 327, 94 LA 1246 (1990); In the Matter of Joseph P. Crincoli, IHO Order and Memorandum, 97-04D (October 27, 1997); Elkouri and Elkouri, How Arbitration Works (4`1' ed. 1994). Hearsay evidence is regularly admitted in union disciplinary proceedings arising under the Teamsters Consent Decree. United States v. International Brotherhood of Teamsters (IBT), 88 Civ. 4486 (S.D.N.Y. 1988) (Consent Decree, March 14, 1989); See United States v. IBT (Cimino), 964 F.2d 1308, 1312; United States v. IBT (Senese and Telerico), 941 F.2d 1292, 1297 (2°a Cir. 1991). The test is whether the evidence is reliable. United States v. IBT (Senese and Telerico), 941 F.2d at 1298. The IHO consistently has admitted reliable hearsay in LIUNA disciplinary proceedings. See In the Matter of Bifulco, IHO Order and Memorandum, 9648D (March 17, 1998); In the Matter of Joseph P. Crincoli, IHO Order and Memorandum, 97-04D (October 27, 1997).
___________________
I The betting line
is a recording made everyday listing the odds at which the bookmaker will
accept bets.
293 In th Matter of Joseph Abate 1999
In the hearing in this matter hearsay information was related by a former FBI agent with a long career in law enforcement. His testimony has been accepted in several prior LIUNA proceedings. He relayed the statements of two identified individuals, Guy Drehoble and Michael Palmieri, who were in a position to be knowledgeable about the information described in their statements. The unnamed informant was a person known to O'Rourke from his service as an FBI agent. The informant had been qualified by the FBI as being reliable. The informant's information was corroborated by the testimony of Drehoble and Palmieri. O'Rourke also related statements by Jenielle Totani, who had originally testified at the trusteeship hearing. The IHO found her testimony to be credible at that time, and her statements in this matter, as related by O'Rourke, were corroborated by Drehoble, Palmieri, and the confidential informant. All the hearsay statements related by O'Rourke were consistent with the other independent information in the record and corroborate each other. The IHO finds the hearsay statements as related by O'Rourke are reliable and probative.
Financial Mismanagement
14. John Billi, an IG Inspector performed an audit of Local 225 prior to the trusteeship hearing.
15. Billi testified that certain members of the Local 225 Executive Board, including Abate, charged excessive amounts of money to the Union for meals which were not related to legitimate union business.
16. In the first four months of 1997, Abate ate at restaurants at which he charged the meals to the union 85 times. Abate charged $3,504 to the union for the meals, an average of $900 per month.
17. In the first four months of 1997, the total amount spent by all of the officers of Local 225 was $14,598, an average of over $3,600 per month. Billi testified at the trusteeship proceedings that this amount far exceeds the meal expenditures for similarly sized locals.
18. The practice of dining out and charging the meals to the local union became a pattern and practice for the members of the Local 225 Executive Board.
19. Dan Dumo ("Dumo"), the Secretary/Treasurer of Local 225 at the time of the trusteeship proceedings testified during those proceedings that Local 225 had a policy that the use of union credit cards and house accounts was for legitimate union related business only. According to Dumo's testimony, every officer of Local 225 signed a statement indicating that he understood this policy.
20. This policy of spending Local 225 funds on non-union related meals constitutes a violation of an officer's and a member's fiduciary duty to the Union and to the general membership. In the Matter of Local 225, IHO Order and Memorandum, 97-54T (March 17, 1998).
294 In
the Matter of Joseph Abate 1999
Discussion
In Charge III, the GEB Attorney has charged Abate with violating two general fiduciary provisions of the Uniform Local Union Constitution, ("Constitution"), Article IV, Section 4(h)(9) and Article VI, Sections (n) and (o). Article IV, Section 4(h)(9) states that "it shall be the duty of the Executive Board to see to it that the affairs and business of the Local Union are being properly conducted, in accordance with the Constitution." Article VI, Section 3(n) states that an elected official "shall fully perform all such duties, responsibilities and obligations that attach to such office or position" as the LIUNA constitutions require. Article VI, Section 3(0) states that noncompliance by an elected member shall subject the officer to all applicable disciplinary provisions of the union constitutions.
In situations where conduct is charged as a violation of a general provision of the Constitution, there is an issue whether as a matter of due process, the general provision provides sufficient notice that the conduct in question is prohibited.
The test of whether Abate should have known his conduct of mis-charging meals was prohibited and could subject him to disciplinary charges, should begin first with examining his conduct.
Abate charged his lunch almost every day for six months to the union, as well as some breakfasts during that period of time. The charges did not occur while he was working in the field, but while working out of the local union office. There was a specific union policy that Abate and all the other acknowledged by signing, that house charge accounts were to be for union business only.
A reasonable union officer should know that he cannot expect the union to pay for lunches and breakfasts while working in the home office. The IRS has ruled that such expenditures do not qualify as business deductions. See Internal Revenue Code, Section 162(a).
It is reasonable to conclude that Abate should have known such a practice was a breach of his fiduciary duty. He should have known he was misusing the union funds for his personal benefit.
The Constitution provisions alleged by the GEB Attorney as the basis for concluding that Abates conduct regarding the meals is a disciplinary violation cannot stand the test of due process. What is clear from the provisions, is that a union officer is put on notice that if he violates the LIUNA Constitution, he will be subject to disciplinary measures.
295 In the Matter of Joseph Abate 1999
In the same regard, Abate should have known as a union officer that he is subject to disciplinary measures if he violates the laws of the United States. Even if the language of Article VI, Section 3 (o) does not include the specific language that he is subject to the laws of the United States, he should reasonably be aware that he is subject to any federal law regarding union activity. The Labor Management Reporting and Disclosure Act (Title 29 U.S.C. Sections 401- 531) has been in effect for over 30 years regulating activities of union officers.
Title 29 U.S.C. § 501 (a) provides:
The officers, agents, shop stewards, and other representatives of a labor
organization occupy positions of trust in relation to such organization and its
members as a group. It is, therefore, the duty of each such person, taking into
account the special problems and functions of a labor organization, to hold its
money and property solely for the benefit of the organization and its members
and to manage, invest, and expend the same in accordance with its constitution
and bylaws . . .
The statute recognizes the fiduciary duty that union officials owed to their members even prior to the passage of the act. Puma v. Brandenburg, 324 F.Supp. 536 (S.D. N.Y. 1971). The purpose of the statute was to curb misuse of union funds. Farrington v. Benjamin, 468 F. Supp. 343 (E.D. Mich 1979). The statute simply restates the common law fiduciary responsibility of an officer of an organization who is entrusted with the expenditures of funds.
Title 29 U.S.C. § 501 (c) provides:
Any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.
Thus, Abates fiduciary duty is defined by § 501 (a), and the specific prohibition against misappropriating union funds is detailed in 3 501 (c).
Abate should have reasonably known that his conduct was in violation of his fiduciary duty, which was codified by Title 29 U.S.C. § 501 (a). The fact that the GEB Attorney has alleged a provision that merely puts Abate on notice that he may be subject to disciplinary charges, for violations of the Union Constitution should not permit Abate to escape responsibility for his actions, which violate the laws of the United States.
Under these circumstances, the IHO will exercise the power of a labor arbitrator to redefine the charge. See In the Matter of Coia, IHO Order and Memorandum, 97-52D (March 8, 1999); In the Matter of Martire, IHO Order and Memorandum, 96-54D (May 19, 1999).
296 In the Matter of
Joseph Abate 1999
The IHO concludes that the conduct of Abate, as described in Findings 14 through 20, violated Title 29 U.S.C. § 501(c).
Abate was well aware of the facts that were being alleged by the GEB Attorney in Charge III. He was put on notice that evidence of these facts would be presented at the hearing. Abate will be permitted to file exceptions to the redefined charge and present any available defense.
Conclusions
1. The EDP defines barred conduct as "committing any act of racketeering, which includes crimes such as bribery, extortion, fraud, accepting kickbacks, bookmaking and other felonies ...". There is a preponderance of the evidence that Abate committed an act of barred conduct, prohibited by the EDP, as alleged in Charge I by engaging in gambling, a felony offense under Illinois state law. There is also a preponderance of the evidence that Abate committed a state felony in Illinois, as proscribed by Section 3 of the EDP.
2. There is a preponderance of the evidence that Abate violated his duty of loyalty to LIUNA pursuant to the Ethical Practices Code by utilizing his position as President of Local 225 to run an illegal gambling operation, as alleged in Charge II. Whether 29 U.S.C. § 501 (a) applies to non-financial matters is in doubt. Compare In the Matter of Baker, IHO Order and Memorandum, 97-SSD (July 21, 1998) (limiting application of 29 U.S.C. c 501 (a) to LIUNA cases involving financial matters), with In the Matter of Baker, 1999 A.O. - (98-038-IHO, May 20, 1999) (finding no financial matter limitation where breach of duty of loyalty charges drawn to include LIUNA EPC and Constitutions in addition to 29 U.S.C. § 501 (a)). The IHO declines to find that Abates conduct of conducting an illegal gambling business violates 29 U.S.C. § 501 (a) in Charge II.
3. Charge III as alleged does not state an offense upon which a disciplinary violation may be based, except to put Abate on notice, as a LIUNA officer he was subject to disciplinary charges. The factual allegations, however, put Abate on notice as to the facts which are alleged conduct that any reasonably LIUNA officer should have known was improper.
4. The IHO has redefined the charge as stated by Charge III pursuant to his residual power as a labor arbitrator. The IHO has determined that Abate has committed a violation of 29 U.S.C. § 501 (c) based upon his overcharging of the meal expenses as alleged in Findings of Fact 14 through 20.
Decision
The GEB Attorney has proved Charges I and II, by a preponderance of the evidence.
The IHO has redefined Charge III as alleged in Findings of Fact 21 through 25 and concludes that there is a preponderance of the evidence Abate has violated 29 U.S.C. § 501(a).
29? In the
Matter of Joseph Abate 1999
Abate has until October 22, 1999, to offer objections to the Charge III as redefined by the IHO, and produce any evidence in defense thereof.
Penalty
The IHO will withhold a decision on the penalty until Abate has been given an opportunity to file objections to Charge III as redefined by the IHO.
PETER F. VAIRA
INDEPENDENT
HEARING OFFICER
Penalty Order Issued on November 8, 1999
Pursuant to the Independent Hearing Officer's ("IHO") Order and Memorandum of October 5, 1999, Respondent Joseph Abate ("Abate") was given until October 22, 1999, to file objections to Charge III as redefined by the IHO and to produce any evidence in defense to the redefined charge. The IHO withheld a decision regarding the penalty pending the receipt of any objections from Abate. Abate has not filed objections to the redefined charge.
Abates membership in LIUNA is permanently revoked. Abate is permanently barred from holding office in Local 225, or being employed by Local 225, or from being an officer or being employed by any LIUNA affiliated entity or fund.
Abate has a right to appeal this Order to the LIUNA Appellate Officer by filing a Notice of Appeal with the Appellate Officer within 10 days of the date of this Order.
This Order does not take effect until 10 days after the date of this Order, and if appealed, upon the decision of the Appellate Officer.