In the Matter of Local Union 734
Laborers’ International Union of
Independent
Hearing Officer
Docket No. 04-26T
Decided: December 30, 2004
FINAL ORDER AND MEMORANDUM
PROCEDURAL HISTORY
This Final Order and Memorandum addresses the Emergency Trusteeship LIUNA General President Terence M. O’Sullivan (General President) imposed over Laborers’ International Union of North America (LIUNA) Local Union 734 (Local 734) in Newark, New Jersey, on October 28, 2004.
Local 734 had
previously been under the supervision of the International Union pursuant to
the terms of a Voluntary Supervision Agreement executed between the parties on
October 28, 2002. See GEB Ex. 2 (In re Supervision Proceedings, LIUNA
Local 734,
The Voluntary
Supervision began on October 28, 2002, and was scheduled to run 18
months. See GEB Ex. 2, (Voluntary Supervision Agreement). However,
under the terms of the Supervision Agreement, “the General President and GEB
Attorney shall have the discretion to extend the term of the supervision for a
period of up to six months if they conclude that an extension is necessary to accomplish
the purposes of the supervision.”
On October 28,
2004, the General President properly informed Local 734 members and officers
and the Emergency Trusteeship at issue here had been imposed because of various
administrative problems within the Local’s benefit funds. See
General Executive Board (GEB) Exhibit (Ex.) 36 (Letter from General President
Terence M. O’Sullivan to Local
The IHO held the Emergency Trusteeship hearing in
LEGAL STANDARDS
Trusteeship Requirements
The Labor Management Reporting and Disclosure Act (LMRDA) gives a governing body, in the case LIUNA, discretion in placing its member organizations under trusteeship to correct certain problems. See 29 U.S.C. §§ 461-466. A governing body seeking to impose a trusteeship upon its subsidiary must give the targeted entity a full and fair hearing. See 29 U.S.C. § 464(c). Under Article IX, Section 7 of the International Constitution, the LIUNA General President may appoint a Trustee when:
[t]he General President finds, in his opinion, that action by him is necessary for the purpose of correcting corruption or financial malpractice, assuring the performance of collective bargaining agreements or other duties of a bargaining representative, restoring democratic procedures or otherwise carrying out legitimate objects of such subordinate body or
______________________________
1
The IHO later determined
that a translator was unnecessary for the remaining days of the hearing.
the International Union, or to protect the organization as an institution …
International Constitution, Article IX, Section 7.
In addition, LIUNA may impose a
trusteeship over a subordinate body to correct officers’ mismanagement and
corruption.
Under the “Health Welfare and Retirement Funds” section of the Ethical Practices Code (EPC), “[c]omplete records of the financial operations of all health, welfare and retirement funds and programs shall be maintained in accordance with the best accounting practice. Each Union trustee shall require that each such Find be audited regularly.” EPC p.20, ¶3.
Relevant Provisions of Local 734 Trust Agreements
Local 734 has two benefit plans relevant to this matter: the Pension Fund and the Welfare and Educational Fund. See GEB Ex. 73 (Restated. Supplemental and Amended Agreement of Trust of the Local 734 Welfare and Educational Fund); GEB Ex. 74 (Restated. Supplemental and Amended Agreement of Trust of the Local 734 Pension Fund) (collectively, Trust Agreements). Under the terms of the Trust Agreements, “Employee Trustees…shall be designated by the Executive Board of Local 734 of the Laborers’ International Union of North America , AFL-CIO, with the approval of the International Union.”2 See GEB Ex. 74, Article IV, Section 2(a), p. 41 (Pension Agreement); GEB Ex. 73 at pp. 38-39 (Welfare Agreement).
The Trust Agreements further state:
The respective Trustees shall serve at the will of the
_______________________________
2 The IHO refers to “Employee Trustees” as
“Union Trustees” for ease of identification of the parties.
vacancies occur within their respective appointments. A
vacancy shall be deemed to have occurred whenever a Trustee
resigns or when a Trustee is removed by the party which
appointed him, or by reason of death or incapacity of a
Trustee.
GEB Ex. 74,
Article IV, Section 2(c), p. 41 ((Pension Agreement); GEB Ex. 73 at
p.39 (Welfare Agreement).
Under the terms of the Trust Agreements:
The Executive Board of the Union shall designate the Union Trustees and shall have the right at all times, with or without cause, to remove and replace such Trustee so designated by or for them and to fill any vacancy or vacancies caused by the death, removal, incapability to act under this Trust Agreement, or resignation of such Trustee.
GEB Ex. 74, Article 74, IV, Section 2(e), p. 42 (Pension
Agreement); GEB Ex.
73 at p.40 (Welfare Agreement.)
Relevant Portions of the October 28, 2002 Supervision Agreement
The terms of the Voluntary Supervision Agreement include that,
[p]ursuant to Article IX, Section 7 of the Constitution of The Laborers’ International Union of North America (LIUNA), Local Union 734 consents to the appointment of a Supervisor who shall be authorized to exercise all of the powers and responsibilities set forth in that Section. The Supervisor shall be authorized to take full charge of the affairs of Local Union 734 during the period of supervision and to take any and all action that, in the Supervisor’s judgment, is necessary to preserve or manage the subordinate body and to protect its interests consistent with this Agreement. Such authority shall include but will not be limited to, the power (a) to appoint, terminate or replace any employees; (b) to appoint and supervise stewards; (c) to retain lawyers, accountants, other professionals, and service providers on behalf of Local Union 734; and (d) to retain persons to assist him in the exercise of his responsibilities. The General President and GEB Attorney shall have complete authority to select the Supervisor and, if necessary, to replace the Supervisor during the period of supervision.
GEB Ex. 2, ¶ 1 (Voluntary Supervision Agreement).
The Voluntary Supervision Agreement clearly delineated that,
[d]uring the period of supervision, one or more of the Constitutional officers of Local Union 734 may be removed from office at the direction of the Supervisor in his sole discretion. While in office, the officers may exercise such authority as shall be delegated to them by the Supervisor, who shall have unfettered discretion to exercise the powers granted in paragraphs one, above.
GEB Ex. 2 ¶ 2 (Voluntary Supervision Agreement).
The Voluntary Supervision Agreement further provided that deliberate violations of the agreement would constitute obstruction of the General President and the GEB Attorney, and could be charged as a violation of LIUNA Ethics and Disciplinary Procedure (EDP). See GEB Ex. 2, ¶ 3 (Voluntary Supervision Agreement).
WITNESSES TESTIFYING ON BEHALF OF THE GEB ATTORNEY
Raymond Maria
Raymond Maria (Maria)
is a Certified Public Accountant (CPA), former Supervisor agent of the Federal
Bureau of Investigation (FBI), and former Deputy Inspector General of the U.S.
Department of Labor. Tr. 287 – 292 (MARIA). For several years Maria
has operated his own company engaged in detection of fraud, fiduciary abuse,
and conflicts of interest in union, pension and government contracts.
Jack Elko
Jack Elko (Elko) is
employed as a private contractor with the LIUNA Office of Inspector General.
Tr. 239:13-15 (ELKO). Elko was previously employed for ten years by the
Morris County Prosecutor’s Office in
FINDINGS OF FACT
1. Local 734 is located in Rochelle Park, New Jersey. Tr. 43:14-15 (BYRNE).
2. The Local 734
Pension Fund and Welfare and Educational Fund (collectively, the Funds) office
is also located in Rochelle Park, New Jersey, although an ancillary office for
the Funds was located in Brick,
3. Michael A. Rosado (Rosado) was Local 734’s Business Manager and a Union Trustee to the Funds when the Emergency Trusteeship was imposed. Tr. 20:11-12 (BYRNE).
4. Joseph Gambardella (Gambardella) was Local 734’s Vice President and a Union Trustee to the Funds at the time the Emergency Trusteeship was imposed. Tr. 36:7-8 (BYRNE).
5. Louis
Calastro (Calastro) is the Chairman of the Funds Trustee Committee and an
Employer Trustee to the Funds. Tr. 686:12-25 (CALASTRO). Calastro has
been an Employer Trustee to the Funds since in or about 1998.
6. Salvatore
Salerno (
7. John Fritzsch (Fritzsch) was the Administrator of the Funds from 1995 to September 2004. Tr. 32:13-14 (BYRNE).
8. Peter Rizzo (Rizzo) was the Assistant Administrator of the Funds until September 2004.
9. Frank Pernice (Pernice) was a Local 734 business agent until August 2003 when he became a Pension Investigator for the Funds. Tr. 27:18-20 (BYRNE).
Background Regarding Voluntary Supervision of Local 734
10. After the
Supervision was imposed in October 2002, Supervisor Pocino replaced the Funds’
legal counsel with the law firm of Kroll, Heineman Giblin, LLC (the Kroll Law
Firm). Tr. 155-56 (BYRNE). Albert Kroll, a principal of the firm,
handled the Funds’ matters.
11. During 2003,
Byrne received complaints about Local 734 business agent Pernice. Tr. 29
(BYRNE). Consequently, Byrne fired Pernice on August 22, 2003.
12. Byrne
discovered that Pernice’s salary was greater than most welfare Fund
administrators’ salaries. Tr. 30:2 – 32:6 (BYRNE). When Byrne protested that
Pernice’s compensation was excessive, the Administrator of the Funds cut his
salary in half.
13. In November 2003, some Local 734 members confidentially informed Pocino and Byrne that a law enforcement agency was investigating the Funds for no-show employees and misuse of funds. Tr. 32:16 – 33:6 (BYRNE).
14. Taking a proactive approach to determining the credibility of this information, Pocino and Byrne decided to have Byrne added to the Board of Trustees and commissioned a review of procedures. Tr. 33:21 – 34:4 (BYRNE).
Attempts to Appoint Byrne as Funds’ Union Trustee
15. In or about
late November 2003, Byrne asked one of the Funds’ two Union Trustees, Rosado,
to have Byrne appointed as a third Union Trustee.3 Rosado said he
would “handle it.” Tr. 34:7-19 (BYRNE).
17. On May 26, 2004, Pocino had lunch with Calastro, the Chairman of the Board of Trustees and an Employer Trustee. Tr. 37:7-8 (BYRNE). Calastro
___________________
3 Appointment of a third Union Trustee would
also have required appointment of a third Employer Trustee. Tr. (BRYNE)
agreed that the number of Trustees would remain the same, but Byrne should be a Union Trustee. Tr. 37:22-25 (BYRNE).
18. Thereafter, Byrne informed Rosado that he (Byrne) would become a Union Trustee at the June meeting. Tr. 38:5-7 (BYRNE). Rosado was well aware that Byrne would replace Gambardella as a Union Trustee.
19. Byrne had the June meeting scheduled on his calendar for June 8, 2004. Tr. 38:10-11 (BYRNE). When he attempted to confirm the date, Rosado told him that he had the wrong date and the next Trustees’ meeting was June 15, 2004. Tr. 38:10-14 (BYRNE). Byrne changed the date on his calendar, but the Funds’ Trustees’ meeting was actually held on June 8, 2004. Tr. 38:10-16 (BYRNE). When Byrne inquired how he was given the wrong date, Rosado said that he had made a mistake. Tr. 40:14-15 (BYRNE).
20. Byrne brought the incident to Pocino’s attention and, as a result, a meeting between Pocino, Byrne, and Rosado was held on June 29, 2004, at the Foresgate Country Club. Tr. 40:17-24 (BYRNE). At the meeting, Pocino and Byrne instructed Rosado to remove Gambardella as a Union Trustee and designate Byrne a new Trustee. Tr. 42:2-8 (BYRNE). Pocino further directed Rosado to arrange an emergency trustees meeting so that an operational review could be authorized. Id. Rosado agreed to comply with these directions. Tr. 42:11-12 (BYRNE).
21. On July 27, 2004, Rosado, Funds’ Administrator Fritzsch, Byrne, Attorney Kroll, and Employer Trustee Salerno attended a meeting at the union hall. Tr. 43:10-18 (BYRNE). Gambardella was not present. Tr. 44:24-25 (BYRNE).
22. At that meeting, Byrne introduced himself and informed those present he was replacing Gambardella as Union Trustee. According to Byrne, nothing indicated that this was not a meeting of the Funds’ Trustees. Tr. 45:20-24 (BYRNE).
23. During the meeting, Byrne recommended engaging the accounting firm Schultheis & Panettieri, LLP (Schultheis Accounting Firm) to perform an operational review of the Funds.4 Tr. 43:24 – 44:3 (BYRNE). Byrne had
____________________________
4 The firm was retained
to perform an “agreed upon procedures engagement” (engagement). This
accounting procedure was not an audit, although the witnesses often generically
refer to it as an audit. The engagement agreement reads as follows:
drafted an engagement letter which
Attorney Kroll reviewed and approved. Tr. 44:4-5 (BYRNE). Byrne
made a motion that hiring the Schultheis Accounting Firm be approved, which was
unanimously accepted. Tr. 44:4-8 (BYRNE). In addition, Byrne
requested to be added to the fiduciary policy and to be given permission to
sign the retainer agreement. Tr. 44:8-15 (BYRNE). The group agreed to his
proposals.
24. No one at the meeting objected to Byrne’s presence at the meeting. Tr. 45:8 (BYRNE). Curiously, no minutes were taken at this meeting. Tr. 707:18-20 (CALASTRO).
25. The Funds’ Trust Agreements require Union Executive Board approval for the appointment or removal of a Union Trustee. See GEB Ex. 74, Article IV, Section 2(e), p. 42 (Pension Agreement); GEB Ex. 73 at p.40 (Welfare Agreement). Notice of the appointment or removal must be delivered in writing to the Funds’ Trustees. See GEB Ex. 74, Article IV, Section 2(f), p. 42 (Pension Agreement); GEB Ex. 73 at p.40 (Welfare Agreement).
26. Under the Voluntary Supervision Agreement in effect on July 27, 2004, the Supervisor was authorized to exercise all powers granted by Article IX, Section 7, including removal and replacement of the Funds’ Union trustees. See GEB Ex. 2 (Voluntary Supervision Agreement). Since the Supervisor had the power to remove any officer or override any Executive Board decision, it was unnecessary for the Supervisor to submit his nomination of Byrne for an Executive Board vote. See infra, Discussion.
27. While written notice would have been preferable, Byrne’s appearance at the July 27, 2004 meeting, and the Trustees’ agreement to place Byrne on the fidelity policy and engage the Schultheis Accounting Firm provided actual notice of Byrne’s appointment as a Union Trustee.
We will obtain job descriptions of the Funds’ employees and
interview them to ensure that job descriptions are accurate. We will
then perform walk-through tests of transactions pertaining to their
individual jobs. We will also review timekeeping and payroll
records. If we observe opportunities for streamlining your
operations, we will point them out to you in the report we will issue
at the conclusion of our engagement.
GEB Ex. 6 (Letter from Patrick Byrne to Vincent
Panettieri of 7/29/04
(Schultheis Engagement Letter)).
28. Gambardella’s absence at the meeting was further evidence that he was no longer a Union Trustee.
29. During the
hearing on December 6, 2004, Calastro denied that the July 27, 2004 meeting was
an actual Trustee meeting, despite the actions of the Trustees at that meeting,
and further denied that Byrne announced that he was a Union Trustee. Tr.
706:2-6, 709:17-19 (CALASTRO). The other Employer Trustee,
Engagement of the Schultheis Accounting Firm
30. On July 29, 2004, Byrne sent an engagement letter to the Schultheis Accounting Firm, which he copied to Fritzsch, the Funds’ Administrator. See GEB Ex. 6 (Letter from Patrick C. Byrne to Schultheis & Panettieri, LLP of 7/29/04 (Schultheis Engagement Letter)).
31. When Byrne arranged for the Schultheis Accounting Firm to begin its document review, the firm requested copies of various documents in advance of going to the site. Tr. 48:12-16 (BYRNE); see also GEB Ex. 7 (E-Mail from Michael Van Sertima to Patrick Byrne of 8/11/04).
32. Byrne faxed
the document request to Rosado on August 12, 2004. See GEB Ex. 8
(Facsimile from Patrick C. Byrne to Mike Rosado of 8/12/04).
see also GEB
Ex. 9 (Letter from John Fritzsch to M. Van Sertima of 8/13/04).
34. Byrne was puzzled by the delay because all
of the Trustees at the July 27, 2004 meeting had agreed to begin the
engagement. Tr. 51:2-7 (BYRNE).
35. Byrne was anxious to have the
operational review completed and begin taking corrective measures before the
Supervision ended on October 28, 2004, when the Supervisor would lose all power
to conduct the engagement or make changes based upon the findings. Tr.
51:12 – 52:15 (BYRNE).
37. When Byrne spoke with Rizzo, Rizzo
agreed to produce the documents by September 1, 2004. Tr. 56:8-11
(BYRNE). However, by September 10, 2004, no documents had been produced.
Resignation of
the Funds’ Administrator
38. A meeting of the Funds’ Trustees was
scheduled for September 14, 2004. Byrne could not attend the meeting because he
was scheduled to leave for a two week vacation in
39. A few days before the September 14, 2004
meeting, Byrne learned that Funds Administrator Fritzsch intended to announce
his resignation at that meeting.5 Tr. 59:9-14
(BYRNE). Byrne did not want the Trustees to vote on Fritsch’s replacement
until the engagement with the accountants was completed. Tr. 59:23 – 60:8
(BYRNE).
40. Byrne informed Rosado that there should
not be a vote on Fritzsch’s replacement until Byrne returned.
41. Byrne also told Calastro that he did not
want Assistant Administrator Rizzo appointed to replace Fritzsch. Tr.
60:19 – 61:24 (BYRNE). Byrne testified that Calastro agreed that there should
not be a vote on Rizzo and that Calastro told Byrne he believed Rizzo was
controlled by the “man down south,” who was understood to be Auggie Vergalito,
a former Local 734 Assistant Business Manager.
42. According to Byrne, Employer Trustee
Salerno told Byrne he would support Byrne’s motion to prevent Rizzo from
becoming Funds Administrator. Tr. 62:6-8 (BYRNE).
_______________________
5 Fritzsch was resigning for health
reasons. Tr. 49:12-14 (BRYNE)
44. When he returned from vacation, Byrne
discovered that the Funds’ Trustees had voted to give Rizzo the position as
Funds’ Administrator at the September 14, 2004 meeting. Tr. 65:19-24 (BYRNE).
45. Byrne immediately confronted Rosado, who
said that he had abstained from voting. Tr. 68:12 – 69:16 (BYRNE).
Byrne testified that he learned that Rosado had, in fact, voted in favor of
appointing Rizzo, but, later in the meeting, had the minutes altered so that it
would appear that he had not voted. Tr. 66:10-18 (BYRNE).
46. Rosado testified that he was in favor of
Rizzo, but changed his vote to an abstention before the vote was final.
Tr. 980:5-13 (ROSADO). Rosado told Byrne the Employer Trustees had recognized
Gambardella as the proper Union Trustee and, thereafter, Gambardella voted to
appoint Rizzo as the Funds’ Administrator. Tr. 69:4-16 (BYRNE).
47. When Byrne asked Rosado whether he
recognized Byrne as a Union Trustee, Rosado admitted Byrne was a Trustee.
Tr. 69:19-21 (BYRNE).
48. Upon Byrne’s request that Rosado confirm
in writing that Byrne was Trustee, Rosado wrote Byrne a letter on September 30,
2004. See GEB Ex. 15 (Letter from Michael Rosado to Patrick Byrne of
9/30/04). Rosado’s September 30, 2004 letter is vague and evasive; Rosado
did not state that Byrne was a Trustee and deliberately attempted to evade the
Supervisor’s request for information. Rosado was well aware of Byrne’s position
at the September 14, 2004 meeting and his purported abstention from voting,
which allowed Gambardella to vote for Rizzo, was a further attempt to thwart
the Supervisor’s intentions.
49. Thereafter Byrne sent Rosado a draft
letter, which clearly set out that Byrne was a Union Trustee, that Byrne
directed Rosado send to Rizzo on Local 734 letterhead. See GEB Ex. 16
(Letter from Patrick Byrne to Michael Rosado of 10/1/04). Rosado said he
wanted to put the letter in his own words. Tr. 73:2-3 (BYRNE).
Rosado never sent a letter. Tr. 73:23 (BYRNE). Rosado’s refusal to
send the letter complying with Byrne’s request was a deliberate obstruction of
the Supervisor.
50. Calastro, Chairman of the Funds’ Trustee
Committee, received a copy of the draft letter and became infuriated. Tr.
721:22-24 (CALASTRO). Calastro testified it was totally false and threatened
Rosado with legal action if he signed it. Tr. 722:3-12 (CALASTRO).
The
Accountants’ Findings and Resulting Circumstances
51. The Schultheis Accounting Firm conducted
an on-site document review at the Rochelle Park office starting on September
23, 2004. Tr. 86:24 – 87:2 (BYRNE). On October 5, 2004, Byrne had a
conversation with a member of the accounting firm. The firm’s preliminary
findings indicated that there were several very highly compensated individuals
on the payroll with virtually no responsibilities; the administrative costs of
the Welfare and Educational Fund were in excess of 20 percent of the
contributions; and the administrative costs of the Pension Fund ran as high as
40 percent of the contributions. Tr. 89:2-13 (BYRNE).
52. On October 4, 2004, Rizzo,
53. Rizzo informed Byrne that Rosado was not
at meeting, but was reached later by telephone and concurred in the
results. Tr. 80:22-25 (BYRNE). Gambardella told Byrne that Rosado was at
the meeting and agreed to terminate the Kroll Law Firm. Tr. 83:16 – 84:9
(BYRNE).
54. The Kroll Law Firm had continued to
support the engagement of the Schultheis Accounting Firm and substituting Byrne
for Gambardella as Union Trustee. Tr. 81:15-19 (BYRNE).
55. The IHO finds that the Kroll Law Firm
was dismissed for its support of engaging an independent accounting firm and
substituting Byrne as a Union Trustee.
56. On October 18, 2004, Angelo R. Bisceglie
Jr. (Bisceglie), from the Bisceglie & Friedman, LLC law firm (Bisceglie Law
Firm), sent a letter to the Schultheis Accounting Firm that stated the
Bisceglie Law Firm had been retained as counsel to the Funds. See GEB Ex.
24 (Letter from Angelo R. Bisceglie Jr. to Schultheis & Panettieri, LLP of
10/18/04). In that letter, Bisceglie informed the Schultheis Accounting
Firm that “the Trustees have directed that the release of [recent audit] information
be made” solely to the Bisceglie Law Firm. Id. Byrne was never consulted
on the matter. Tr. 90:22 (BYRNE).
57. The IHO finds that this October 18, 2004
letter was an attempt on the part of the Trustees to suppress the engagement
findings until the Supervision expired on October 28, 2004. If the delay
had occurred, the Trustees could have suppressed the report and membership
would be unaware of the gross misuse of Funds.
58. By letter of October 6, 2004, Pocino
removed Gambardella as a Union Trustee to the Funds, with a copy to Rosado and
Rizzo. See GEB Ex. 17 (Letter from Raymond Pocino to Michael Rosado of
10/6/04).
59. On October 20, 2004, Pocino called a
meeting of the Funds’ Trustees. Tr. 92:3-6 (BYRNE). Calastro and
60. When they heard the findings, Rosado and
Gambardella said they were too busy with Union business to know what goes on in
the Funds and they relied on the Funds’ Administrator to keep them
informed. Tr. 98:12-15 (BYRNE).
61. At that meeting, Pocino removed Rosado
as Union Trustee of the Funds, replacing Rosado with himself (Pocino). Tr.
97:17-23 (BYRNE); see also GEB Ex. 26 (Letter from Raymond Pocino to Board of
Trustees of 10/21/04).
62. On October 21, 2004, Pocino sent a
letter to the Employer Trustees confirming that he had removed Rosado and had
replaced Rosado with himself. See GEB Ex. 26 (Letter from Raymond Pocino to
Board of Trustees of 10/21/04). In that letter Pocino also indicated he had
appointed Byrne as Union Trustee on July 27, 2004, and had reappointed him on
October 6, 2004 to clarify any confusion that may have existed. Id.
Pocino stated that Rosado was removed to resolve serious issues related to
Funds’ administration revealed by the operational review by the Schultheis
Accounting Firm.
63. On October 21, 2004, the Schultheis
Accounting Firm presented a draft engagement report to Pocino in his rule as
Supervisor. See GEB Ex. 28 (Schultheis Draft Report). It cited numerous
instances of overpayment of employees, unnecessary employee positions, and
mismanagement.
64. Calastro testified he believed that the
Schultheis Accounting Firm breached the confidentiality clause contained in the
engagement agreement by
____________________________
6 Gambardella was
invited to the meeting to the meeting to contribute his past knowledge.
disclosing
the engagement findings to Pocino and Byrne. Tr. 776:24 – 777:3 (CALASTRO).
65. The Bisceglie Law Firm sent a letter to
the Schultheis Accounting Firm on October 22, 2004, informing the firm that it
was “in material breach” of the confidentiality clause in the retainer
agreement, the firm was terminated, and “any monies paid for [the] audit were
deemed forfeit.”7 GEB Ex. 29 (Letter from Angelo R.
Bisceglie Jr. to Vincent Panettieri of 10/22/04).
66. Notwithstanding the Bisceglie Law Firm’s
position, Pocino and Byrne, as the Funds’ Union Trustees and by virtue of their
positions as Supervisor and Deputy Supervisor, were entitled to see the
Schultheis Accounting Firm report.
67. On October 22, 2004, Employer Trustee
Calastro wrote a scathing letter to Pocino accusing him of making false
accusations and questioning whether he could remove Rosado and Gambardella as
Union Trustees. See GEB Ex. 30 (Letter from Louis Calastro to Raymond M.
Pocino of 10/22/04).
68. The Local 734 Executive Board sent a
letter to Pocino on October 25, 2004 protesting Pocino’s prior statements about
the integrity of Rosado and Gambardella. The Executive Board urged Pocino
to terminate the Supervision. See GEB Ex. 33 (Letter from the Executive Board
of Local 734 to Raymond Pocino of 10/25/04).
_______________________________________
7 The
confidentially clause read as follows:
The
results of the audit, i.e., any report prepared or any findings
or recommendations, will be given to the Fund Administrator
and the Trustees of the Funds only. Any documents prepared by
Schultheis & Panettieri, LLP cannot be released to any other
party except for the Fund Administrator and the Trustees of the
Funds. Schultheis & Panettieri, LLP agree that should they
release any information from the operational audit to any third
party other than the Fund Administrator and Trustees of the
Funds, that will be deemed a material breach of this
confidentiality agreement and a breach of this agreement in total
and subject them to forfeit of all monies paid for this audit and
other damages.
GEB Ex. 29 (Letter from Angelo R. Bisceglie Jr. to Vincent Panettieri
of 10/22/04).
69. On October 26, 2004, the Executive Board
sent a letter to all Local 734 members requesting petitions be sent to the
International Union in an effort to keep Rosado and Gambardella as Union
Trustees.
Imposition of the Emergency
Trusteeship
70. On October 28, 2004, the LIUNA General
President placed Local 734 in emergency trusteeship, appointing Pocino as
Trustee and Byrne as Deputy Trustee.
71. When Pocino took over as Emergency
Trustee on October 28, 2004, Pocino immediately dispatched investigators and
accountants to review the books and records of Local 734 and Funds.
Employees of the Funds were interviewed.
72. Pocino discovered a series of Rosado’s
handwritten notes in Rosado’s desk. See GEB Ex. 34 (Rosado Handwritten
Notes Recovered From His Desk 10/29/04). The handwritten notes indicated
that Rosado wrote a draft of the items to be included in the October 25, 2004
letter to Pocino.
I
need a draft letter from our Executive Board to Pocino (cc: Wash D.C.) making
reference that they are ‘confused’ why me and Joey [Gambardella] would be
removed. All we (Executive Board and me) have done is cooperate with his
request for past 2 yrs of supervision. And that me and Joey always have
been the best trustees etc. and that (Pocino) his problem is with the Employer
trustees – we (Executive Board) feel Mike and Joe have done nothing wrong, and
have been more than cooperative etc., etc., etc. (We need to make
reference to Pocino ltr and his language).
Pts
• All (Pocino) request have been met (chg of our attorneys etc.).
• Hire an organizer as a new Bus. Rep. to replace one of our own.
• Contribute to LEROF and PAC Funds.
• We’ve all accepted pay cuts and the loss of our DCF.
• M.R. also had P&W trustees agree to Audit etc.
Pocino comment in ltr:
“Reason for removal is to expedite the resolution of serious
issues related to Fund Administration.”Mike does not administrate the Funds. He is our Bus. Mgr.
and leader for the past 8 years. He ran this year for office
and was unopposed.*Our Exec. Bd. is made up of all variations of ethnicity
to meet our memberships needs and various shop stds. who keep
the members informed.
GEB Ex. 34 (Rosado
Handwritten Notes Recovered From His Desk 10/29/04).
73. Rosado caused the Executive Board to
send the October 25, 2004 letter to Pocino and then to the membership.
74. Rosado’s use of the Executive Board and
causing letters to be mailed at Union expense is a personal expenditure in
violation of 29 U.S.C 501(a). The Executive Board reacting to Rosado’s
suggestions without any independent inquiry is also a reflection of
malfeasance.
75. On October 29, 2004, Calastro wrote a
critical letter to Pocino on behalf of the Funds, expressing his surprise and
dismay that the
76. On November 4, 2004, Rizzo, purporting
to act on behalf of the Funds’ Trustees, sent a letter to all Local 734
members. See GEB Ex. 38 (Letter from Peter Rizzo to Local 734 of 11/4/04).
The Union Trustees did not authorize this letter. Tr. 623:2-4
(POCINO). Calastro was not aware of anyone other than Rizzo being
involved in drafting the letter. Tr. 828:14-17 (CALASTRO).
77. In the letter, Rizzo contended that the
International Supervisors hired an accounting firm to review the operation of
the Funds. See GEB Ex. 38 (Letter from Peter Rizzo to Local 734 of
11/4/04). Rizzo complained that this engagement was not put out for bid.
78. Rizzo’s letter was an attempt to thwart
the publication of the gross misuse of the Funds to the membership. It
was an attempt to lull the membership into a false sense of security about the
operation of the Funds. The motive behind the a letter is better
understood in light of the findings, infra, regarding Rizzo’s relationship with
Auggie Vergalito, the former Local 734 Assistant Business Manager.
79. Pocino requested an immediate meeting of
the Funds’ Trustees on November 5, 2004. The Employer Trustees refused to
meet. See Ex. 41 (Letter from Patrick Byrne to Louis Calastro of
11/10/04).
Inspector General Findings
Regarding the Operation of the Funds
80.
Upon reviewing the Funds’ documents, investigators from the Office of the LIUNA
Inspector General uncovered information regarding the operation of the Funds,
detailed infra.
Auggie Vergalito
81. Auggie Vergalito held various positions
with Local 734 as Organizer, Assistant Business Manager, and Executive Board
member, from 1995 through 1996.
82. He also held some positions with the
Funds, but the records are unclear regarding how he was employed. See GEB
Ex. 68 (Local 734 Executive Board Meeting Minutes of 9/30/96) (“August
Vergalito will no longer be a Confidential Officer. He has been hired by
the Welfare Fund as an Outside Field Supervisor and Manager of the Bricktown
Office, but will still hold his title as Assistant Business Manager and be paid
10% by the Local.”)
83. The IHO cannot verify if he occupied
these positions with the Funds. .
Rhoda Vergalito – wife
Jamie Dolan – daughter r
Edward Dolan – son-in-law
John Fritzsch – son-in-law
Edward Dwyer – son-in-law
Peter Rizzo – associate
Isaac Barocus – business associate
Daniel Castiglione – former son-in-law
86. As demonstrated infra, most of the jobs
held by the Vergalito family and friends were of little value to the operation
of the Funds or Local 734, and were grossly overpaid.
887. Auggie Vergalito’s daughter Jamie Dolan
is married to Edward Dolan (Dolan), who was the Funds’ Administrator until
1995. Dolan was convicted of a federal labor violation on June 14,
1995. See Ex. 48 (Donald Warshaw, Union Chief, Ex-Official Guilty of
Embezzlement, Newark Star Ledger, June 16, 1995). Dolan conspired with Joseph
DeMaio, the administrator of a painters’ union fund, to create the no-show
“Benefits Coordinator” job for Dolan, which paid Dolan $40,000
annually.
88. Auggie Vergalito’s daughter Stacy
Vergalito is married to Fritzsch, who was the Funds’ Administrator from 1995 to
September 2004. Fritzsch became the Administrator of the Fund when Auggie
Vergalito’s other son-in-law, Dolan, was removed from the job after being
convicted in federal court in 1995. Fritzsch was paid $165,000 from 1995
to 2003, when his salary was raised to $182,000. According to Maria, jobs
of similar responsibility in similar sized benefit Funds are $100,000 to
$120,000 per year. When Rizzo assumed the job in 2004, his salary was
immediately raised to $150,000 per year.
89. Auggie Vergalito’s daughter Kim was
married to former Local 734 Business Manager Daniel Castiglione; they were
divorced in or about 2000. Kim married Bernard Dwyer (Dwyer) in 2002 and
shortly thereafter he was employed by the Funds and by Local 911, an
independent Local in Brick,
_________________________
8
Auggie Vergalito and his wife Rhoda have three daughters: Stacey
Vergalito, Jamie Dolan, and Kim Vergalito.
The Funds’ Satellite Office in Brick,
90. The Funds maintained a satellite office
in Brick,
91. In May 2000, Funds’ Administrator
Fritzsch hired Isaac Barocus (Barocus) as office manager of the Funds’
satellite office in Brick,
92. In contrast, Betty Brown, manager of the
main office at Rochelle Park, managed 15 people and was paid approximately
$65,000.
93. As part of his duties Barocus was a
Pension Investigator. The ostensible purpose of this position was to make
random calls to persons receiving pensions to determine if they were still
alive, to prevent families of the deceased members from continuing to cash the
checks after the person died.
94. Byrne testified that he had never seen
such a position in any other pension Fund. Tr. 30 (BYRNE).
95. Prior Pension Investigators included
Pernice and Rizzo, at salaries in excess of $100,000. See Ex. 28
(Schultheis Draft Report); GEB Ex. 57 (Completed Pension Investigation Reports
of 11/16/04).
96. Other labor union pension Funds normally
use an independent service for the same purposes. According to Maria, an
independent source contacted for a comparison price would perform the same
service for the Funds for $340 a year. Tr. 319 (MARIA). The accounting
firm suggested another simple procedure, requiring pensioners to send in an annual
notarized letter. See GEB Ex. 28 (Schultheis Draft Report). Thus, the
Fund was wasting well over $100,000 or more every year paid to Auggie
Vergalito’s relative and associates.
97. Shortly after Dwyer married Kim
Vergalito in 2002, Fritzsch hired his new brother-in-law as Director of the
Scholarship Fund in the Brick,
98. Kim Vergalito is listed on the 2003 LM-2
Report of Local 911, an independent local in Brick,
Confidential Officers/Organizers
99. Following her husband’s conviction in
1995, Jamie Dolan was employed as Confidential Officer for Local 734. Jamie
Dolan’s job as Confidential Officer required her to be on twenty-four hour call
from Friday through Monday, and listen to voice mail messages from members and
try to resolve issues. See GEB Ex. 64 (Local 734 Executive Board Meeting
Minutes of 12/16/95). In reality she came into the office and took the
messages off the voice mail two days a week. See
100.Rhoda Vergalito, Auggie Vergalito’s
wife, was employed as a Local 734 Confidential Officer to replace her husband
when he left the position in 1996. See e GEB Ex. 68 (Local 734 Executive
Board Meeting Minutes of 9/30/96). She was hired at a starting salary of
$1,000 a week plus benefits for working from 5:30 p.m. to midnight, Tuesday
through Friday.
1996 $ 35,000
1997 $131,000
1998 $152,250
1999 $162,376
2000 $127,749
2001 $ 98,567
2002 $117,199
2003 $146,989
2004 $ 62,400
102.Auggie Vergalito also collected $108,294
as a confidential officer in 1995.
103.The position of confidential officer was
a ruse to employ Auggie Vergalito, his daughter, and his wife. If such a
position was necessary, and there is serious doubt that it was, the duties of
confidential officer could have been handled by a contract employee for a small
fraction of the cost. The Schultheis firm accountants could find no
description of Rhoda Vergalito’s duties while she was employed at the Funds.
See GEB Ex. 28 (Schultheis Draft Report).
104.Both Jamie Dolan’s and Rhoda Vergalito’s
salaries were transferred from Local 734 to the Funds in early October
2002. Tr. 353 (MARIA); see also GEB Ex. 28 (Schultheis Draft
Report). The IHO has independently determined that this was accomplished
just prior to the imposition of the Supervision.
105.These transfers were for the purpose of
attempting to conceal their salaries, as the Supervisor had no direct
employment control over Fund employees. These transfers reflect a
conscious knowledge on the part of the then officers of Local 734 and the
trustees of the Fund that Dolan’s and Rhoda Vergalito’s salaries were grossly excessive.
106.The following schedules reflect the
salaries of the Vergalito family and associates, as taken from the L-M2
reports of Local 734 and 5500 reports of the Funds.9
|
Local Union
734 |
||
|
1995 |
Auggie Vergalito, Organizer |
$108,294.00 |
|
|
Member of Executive Board |
$22,229.00 |
|
|
Daniel Castiglione, Business
Manager |
$111,666.00 |
________________________________
9 Rosado and Gambardella are
included to demonstrate
their positions in the organizations and their knowledge of the employment
of the Vergalito family and associates.
|
|
Local
Union 734 |
|
|
|
Fiscal
Year Ends August 31 |
|
|
1996 |
Daniel Castiglione, Business
Manager |
$139,082.00 |
|
Jamie Dolan, Organizer and Confidential
Officer |
$35,000.00
|
|
|
Auggie Vergalito, Organizer
and Assistant Business Manager |
$77,950.00 |
|
|
1997 |
Rhoda Vergalito, Organizer
and Confidential Officer (Since September 1, 1996) Jamie Dolan, Organizer and
Confidential Officer Daniel Castiglione, Business
Manager Michael Rosado, President |
$64,200.00 $66,800.00 $147,336.00 $61,589.00 |
|
1998 |
Daniel Castiglione, Business
Manager Michael Rosado, President Jamie Dolan, Organizer and
Confidential Officer Rhoda Vergalito, Organizer
and Confidential Officer |
$151,756.00 $79,588.00 $75,865.00 $76,385.00 |
|
1999 |
Jamie Dolan, Organizer and
Confidential Officer Rhoda Vergalito, Organizer
and Confidential Officer Daniel Castiglione,
Business Manager Michael Rosado, President and
Business Manager Joseph Gambardella, Executive
Board Member and Vice President |
$81,188.00 $81,188.00 $41,534.00 $133,660.00 $59,941.00 |
|
2000 |
Jamie Dolan, Organizer and
Confidential Officer Rhoda Vergalito, Clerk Michael Rosado, Business
Manager |
$83,624.00 $44,125.00 $160,863.00 |
|
2001 |
Jamie Dolan, Organizer and
Confidential Officer Rhoda Vergalito, Clerk Michael Rosado, Business
Manager Joseph Gambardella, Vice
President |
$87,171.00 $11,396.00 $167,686.00 $100,808.00 |
|
2002 |
Jamie Dolan, Organizer and
Confidential Officer Rhoda Vergalito, Clerk Michael Rosado, Business
Manager Joseph Gambardella, Vice
President |
$87,008.00 $11,284.00 $168,569.00 $101,338.00 |
|
Local Union 734 |
||
|
Fiscal Year Ends August 31 |
||
|
2003
|
Jamie Dolan, Organizer,
Confidential Officer Michael Rosado, Business
Manager Joseph Gambardella, Vice
President |
$20,749.00 $151,012.00 $92,473.00 |
|
Funds |
||
|
Calendar Year |
||
|
2002
|
Jamie Dolan, Confidential
Officer Rhoda Vergalito, Confidential
Officer Bernard Dwyer, Scholarship
Fund Director Frank Pernice, Pension
Investigator Isaac Barocus, Brick Office
Manager |
$11,847.00 $7,060.00 $13,535.00 $137,612.00 $94,974.00 |
|
2003
|
Jamie Dolan, Confidential
Officer Rhoda Vergalito, Confidential
Officer Bernard Dwyer, Scholarship
Fund Director Frank Pernice, Pension
Investigator Isaac Barocus, Brick Office
Manager |
$91,218.00 $35,022.00 $22,829.00 $68,897.00 $96,819.00 |
|
2004
|
Jamie Dolan, Confidential
Officer Bernard Dwyer, Scholarship
Fund Director Isaac Barocus, Brick Office
Manager |
$62,400.00 $119,600.00 $123,500.00 |
107.
It is disturbing that such positions could have been maintained with
acquiescence of the Local 734 Executive Board and the Funds’ Trustees without
someone raising a question as to their propriety.10
Other Employees of the Local 734 Funds
108. The Funds have an internal bookkeeping service provided by Charles
J. Purcell; that service employs one bookkeeper who works 20 hours a week. That
employee is paid $650 per week by Purcell. Purcell charges the Fund
_________________
10
Rosado testified that he was aware of all the Funds’ employees’ salaries
as he signed the paychecks. Tr. 1081 (ROSADO).
$3,500
a week or $182,000 a year. Purcell makes a 67percent profit margin.
According to Maria a similar service by an independent vendor can be obtained
for $30,000 to $40,000 per year for a full-time bookkeeper. Tr. 377
(MARIA).
109. The Funds employ two women who work 10
hours per week at $47 per hour for clerical duties. This is an excessive pay
rate. If annualized at 40 hours a week, they each would earn over $97,000
per year.
110. The Funds pay a dentist, Dr.
Jastrzebski, $123,000 per year for one or two afternoons a week in the Fund
reviewing dental claims to determine which should be paid. The accounting
firm is of the opinion that this fee arrangement is well above market rate. See
GEB Ex. 28 (Schultheis Draft Report).
Auggie Vergalito’s Ties to Organized Crime
111. The GEB Attorney presented additional
evidence regarding Auggie Vergalito through the affidavit of FBI agent Daniel
P. Conlon. See GEB Ex. 75 (Affidavit of Daniel P. Conlon of 12/3/04.
112. On March 24, 1999 at 2:15 p.m. an FBI
surveillance team identified the acting Boss of the Genovese Family, Don
Cirillo, enter the Soho Grand Hotel, 310 West Broadway, New York, accompanied
by Genovese soldier, Paul Rogina.
113. On that same day, Auggie Vergalito was
observed by an FBI surveillance team exiting the Soho Grand Hotel with Rizzo at
2:40 p.m. The two were photographed. They were identified in the
photo by witnesses at the hearing.
114. The FBI observed Auggie Vergalito
entering the same hotel while Cirillo and other members of the Genovese family
were present on 12 other occasions in 1999 on March 3, 11, 17 and 31; April 7;
May 12; June 2, 9, 16, 30; July 14, 21. All these days, with the
exception of one, were on Wednesday. See Ex. 75.
115.
Agent Conlan recalls seeing Vergalito seated in the hotel bar on one occasion
in March or April 1999 in the company of Cirillo. (Dec 6 Tr. 9-11) Ex.
75.
116.
The IHO finds that the information supplied by the FBI is credible, and proves
that Auggie Vergalito is an associate of the Genovese crime family.11 One
does not meet on a regular basis with high ranking members of a major crime
family by accident or for purely social purposes. In Re: Bruno Caruso, IHO
Order and Memorandum, 99-12D (January 10, 2001)
(finding that a three hour dinner the Local Union’s Secretary-Treasurer had
with the head of organized crime family was not a casual meeting).
117. The IHO further finds that Rizzo’s
accompaniment with Vergalito on March 24, 1999, places him in a position to
know of Vergalito’s relationship with the crime family.
118. The IHO finds that the other
information supplied by the GEB Attorney regarding Auggie Vergalito’s possible
association with the Genovese family lacks sufficient specificity to be
probative and will not be considered.
119. On November 12, 2004, the Funds’
Chairman Calastro announced that the following actions had been taken; the
Brick office of the Funds was closed; the employment of Bernard Dwyer, Isaac
Barocus, Jamie Dolan, Dr. Jastrzebski was terminated; the services of the
accounting firm of Charles J. Purcell was terminated. See GEB Ex. 72
(Letter from Louis Calastro to Raymond M. Pocino of 11/12/04).
120. Rosado testified on his own behalf at
the Emergency Trusteeship hearing. The IHO finds that Rosado’s
explanations of the events was purposely evasive and misleading and not
credible on material issues.
DISCUSSION
This
Emergency Trusteeship raises issues regarding the jurisdiction of the EDP and
EPC over the actions of a Union trustee’s fiduciary duties as a trustee for a
benefit funds. The EPC provides the following directives regarding a Union
trustee’s duties of a Health and Welfare Retirement Fund:
_____________________________
11
An associate is an individual who works on behalf of members of a crime family
and facilities organized crime activities. Associates may run day to day
illegal operations or are employed in some form of legitimate business, and are
under the control of organized crime. In the Matter of Salvatore Franco,
IHO Order and Memorandum, 98-04D (October 6, 1998).
Health, Welfare and Retirement Funds
3. Complete records of the financial operations of all health, welfare
and retirement Funds and programs shall be maintained in accordance with the
best accounting practice. Each Union trustee shall require that each such Fund
be audited regularly.
4. All such audit reports shall be provided to the International Union
and shall be available to the members of the
5. The Union trustees or administrators of such Funds shall make a full
disclosure and report to the members covered by the Fund at least once each
year.
LIUNA
EPC, Health, Welfare and Retirement Funds, p.19.
The IHO has previously held that the conduct
of a Union officer acting as a benefit fund trustee is subject to the scrutiny
of the Inspector General and the GEB Attorney. See Clemenza, 03-29D. A
breach of fiduciary duty or misuse or embezzlement of benefit funds by a
trustee is subject to disciplinary charges pursuant to the EDP. Id.
Misuse of benefit funds is also subject of a complaint for trusteeship over a
local union. See Local 1175, IHO Order and Memorandum, 03-10T (June 11, 2003).
The record raises the issue of the degree of
diligence required of the Union Trustees regarding the conditions of the
Funds. ERISA imposes upon trustees a fiduciary duty to the funds to act
solely in the interest of their participants and beneficiaries to defray the
reasonable expenses of administering the plans with the care, skill, prudence and
diligence, under the circumstances then prevailing, that a prudent person would
use. Dole v. Anthony Formica, 1991
In this matter the relationship of the
employees and the excessive salaries for non-essential jobs is more than
evident. The administrative costs of over 20 percent for the Welfare
& Educational Fund and 40 percent of costs for the Pension Fund are far
beyond the norm of seven to ten percent. The attorney for Rosado argued
that the GEB Attorney offered no evidence regarding a standard for determining
the appropriate level of administrative costs. However, the GEB Attorney
presented testimony from Raymond Maria, former Deputy Inspector General of the
U.S. Department of Labor, that the industry average is between seven and ten
percent of contributions. The IHO accepts Maria’s testimony. Under
any standard of review, administrative costs of 20 percent to 40 percent of
contributions are excessive. See Whitfield v. Tomasso, 682 F. Supp 1287 (
The payment of excess salary for employees
or vendors of a fund may be a fraud upon the fund. In
“We are fully
satisfied from an examination of the tremendous record here that substantial
evidence supports the jury finding that there was an overall conspiracy to
defraud and to obtain money from the Sister Kenny Foundation, and its donors,
that each of the … [defendants] cooperated with the others and each knowingly
joined in this conspiracy . . . .”
Koolish,
340 F.2d 513.
The facts in this matter are far more
egregious than those in Koolish. The record reveals that Auggie Vergalito and
his close family and friends systematically caused family members to be hired
as employees of the Funds and Local 734 for non-essential and/or part-time jobs
at grossly excessive salaries. The conduct of Auggie Vergalito, his family
members, and cohorts is a possible violation of 18 U.S.C. 1341, the mail fraud
statute. The IHO directs the Inspector General to send the record of
these proceedings to the United States Attorney, the FBI and also the Attorney
General of New Jersey.
The conduct of Auggie Vergalito, his family,
and cohorts may also constitute a civil fraud which is actionable in a lawsuit
by the Funds. Where persons knowingly receive grossly excessive salaries
for non-essential jobs, those persons, and those who appointed them, may commit
a fraud upon the Funds and may be liable for repayment to the Funds. See Dole
v. Formica, supra.
The Trustees owed a fiduciary duty to
examine the operation of the Funds and to be on guard to detect indications of
wrong doing. The IHO holds that the signs of fraudulent activity in this
matter were so continuous and so notorious that a reasonable trustee should
have become aware of them, and proceeded to an immediate audit and
inquiry. Rosado and Gambardella, in addition to acting as Fund Trustees,
served on the Local 734 Executive Board and knew Jamie Dolan and her mother
were employed as Confidential Officers to the
The gross extremes of this factual situation
are further aggravated by the deliberate refusal of the Funds’ Trustees to
agree to the engagement of the Schultheis Accounting Firm. The IHO cannot
accept the dubious reasoning given by the Union Trustees for failing to
recognize Byrne and Pocino as Trustees of the Funds and refusing to agree to
the engagement. Rosado through his attorney contends that Byrne was never
formally appointed as a Funds’ Trustee until Pocino did so in a letter of
October 21, 2004. Both Rosado and Calastro made similar statements in
their testimony. The Trust Agreements state that the
A Supervisor has the power of a trustee appointed pursuant to Article IX, Section 7, of the International Constitution. He may remove any or all of the officers of a union, but is not required to do so. In the Matter of Local Union 43, IHO Order and Memorandum, 03-07T, (March 31, 2003). As the Supervisor has the power to overrule or remove the Executive Board, it would place form over substance to require the Supervisor to submit his person nominated to be a