THE COSA NOSTRA AND
LABOR RACKETEERING
by Ron Fino
PROLOGUE
Even though I have taken every step to maintain accuracy, some
errors and omissions may be found. The applicable law that appears throughout this
document is in many cases simplified and expressed as I perceive it.
Interpretations and opinions appearing in this instrument are mine alone and may not reflect the depiction's and decisions of Federal regulatory agencies and courts of law. Before
implementing remedies contained herein please consult with the General council for
explanations about their use and other available laws.
GENERALLY
In order to fully understand the Cosa Nostra's
direct and indirect control of Labor Organizations and regional offices,
district councils and locals of the Laborers International Union, one must appreciate the
laborers place in the building trades and its history.
BUILDING TRADES AND THE CONSTRUCTION INDUSTRY
The Building Trades are traditionally those labor
organizations involved in the construction industry which is to say: Road and Bridge
building and repair, construction, repairing and demolishing of any
structure, including tunnel's, subways, electrical and transmission lines, etc.,
In the 1970's, the building trades were subject to sister union's
such as the UAW, United Mine Workers Atomic, Oil and Gas Workers, United
Steel Workers, etc., invading its domain and performing the construction, repair and
demolition at the facilities it represented as the bargaining agent.
The building trades attempted to stem the loss of its work by
having the American Federation of Labor, Congress of Industrial
Organizations (AFL-CIO) mediates and enforces the no raid clauses that were in existence.
Some successes were made but a new enemy arose and the building trades were forced to
refocus its energies.
The rise of non-union companies and union companies operating
under the guise of setting up a new company to circumvent the Collective Bargaining
Agreement (alter-ego's) started taking advantage of the
building trades weaknesses.
This included show-up time, hiring restrictions,
paid holidays, inflexibility of workers (carpenters must do carpenters work, only
engineers can operating rolling machinery, etc.) hiring of unneeded workers, higher wages
on non federal and state required projects.
With even innovative concepts such as financing its projects,
easement of work and hiring rules, lower wages on housing and non posted
projects, individual unions could not bring about the change needed to ebb the ever
increasing non-union worker.
Visionary labor leaders realized that the problem
of an individual union was tied to all the other trades that performed work on the same
project. To this day, the building trades as a whole have not been capable of coming up
with a design and the necessary bylaws for its membership.
In the 1980's because of the clamor and concern
with the environment, some trades including the Laborers noticed that skilled workers
would be needed to perform the services necessary for cleaning up our years of negligence.
Taking a lesson from other trades, (Operating
Engineers, with the crane and the electricians and plumbers) the lobbying of the Federal
and State government for licensing of asbestos and other waste cleanup, workers did not
pose a problem. Of course, if the trade was capable of having its own training and
licensing ability, it could control to a large measure who was trained and narrow down the
ability for the non-union worker and his employer.
LABORERS INTERNATIONAL UNION, HISTORICALLY
The Laborer's Union (through years of amalgamations and absorbing
work that when work was plentiful other trades did not want it or felt it was below the
dignity of a plumber to lay and plumb a pipe outside of a building subject to the elements
or a carpenter to carry away his debris.) has become one of the largest
trade unions in the building trades and is quite capable of addressing
the manpower needs and ever changing technology of the future.
Even though the laborer was at the bottom rung of the ladder of
skill in the building trades, some of its more talented officials
expanded craft jurisdiction by organizing landscaping, utilization of the laser in
surveying, blasting, racetrack workers, golf course employees and the
above mentioned hazardous waste cleanup. Of all the unions affiliated with the building
trades, the laborers are diverse and adaptable and very seldom will you
find a union construction project that does not start with a laborer nor finish without
one.
Some of the job functions of the laborer's is to
provide the carpenters with lumber drywall, scaffolding and all necessary supplies. The
operating engineer's equipment is directed on how deep to dig or where to place its crane
load. Brick, block, mortar and masonry supplies are delivered to the bricklayer. Concrete
is poured, then leveled and prepared for the cement finisher's trowel.
Outside the building the laborers are even more present. On road construction, you will find laborers utilizing
jackhammers to bust and remove concrete, directing heavy equipment and trucks, guiding and
maintaining traffic control, grubbing, cutting and discarding of trees and underbrush,
distributing traffic cones, barrels and lights, guardrail, and curbs.
On utility line installation the laborers handle, install and
align all sewer, sanitary, transmission and water lines up to the
building. On hazardous waste projects they are (just about dominant) the only trade
involved in waste removal loading and unloading toxins including spent and radioactive
fuel and it's by products.
On tunnel work, the only other trade that is
normally found working in the tunnel area would be the operating engineer who runs the
boring machine and the surface equipment.
The same holds true on most demolition projects where the
structure is to be discarded. The laborer's cut, torch, lance and size
all the ferrous and non ferrous materials, all hazardous waste is bagged, barreled, and
packed as well as located when it is submerged in creek beds or rivers
by scuba clad laborers.
In many areas the laborers have organized municipal employees,
convention and trade show centers, and together with the teamsters
provide transportation for celebrities, traffic control, and props for the motion picture
industry.
COSA NOSTRA, ITALIAN-AMERICAN ORGANIZED
CRIME
Even though the first recognized Italian-American organized
criminal activity was the Black Hand Society of New Orleans, organized in the late 1800's,
it was New York City that hosted the fledging arcane movement. Ellis Island and other U.S.
ports of entry were considered the portals to freedom, an escape from oppression for many
of our ancestors.
Italian immigrants were no different. One major
problem arose that was perplexing, the ability to communicate with other nationalities. Anglo-Saxon immigrants spoke fluent English and
were better equipped to find and procure employment.
Also, the Italian-Americans, fearing the Irish-American police
were forced to rely on each other for safety. They eventually developed the Cosa Nostra to
combat and protect their community from Anglo-American interference.
The Cosa Nostra, modeled after the Italian Mafia became a force to be reckoned
with. Its beginnings were due in part to the resistance of many Italians against the
French who were in control of many of the peninsulas Italian City States. Limited success
for the Italian-American movement turned altruism into apathy.
The very people it was supposed to protect became the victim. The
shoemaker or the corner grocer were forced to pay homage and the hard earned wages were
turned over to the shadowy figure that would pop in the place of business from time to
time.
By the 20's, with prohibition a reality and the realization that organization and
discipline would be necessary to prevent the numerous gangsters from making forays onto
already claimed territory and killing each other off.
As we know it, the modern day Cosa Nostra was born and with it
what has become probably the most powerful and ever present secret society to menace the
world.
Based largely on the structure of Roman Legions, the at first
Sicilian-American sons, organized New York City, then spread north to
Boston, south to Philadelphia and west to Chicago. Hijacking trucks, peddling home brew or
smuggled alcohol from Canada and Britain spreading fear and terror in
its wake. These were the talons of corruption of the
Cosa Nostra.
Ironically, at the same time, the Cosa Nostra was spreading its
wings, so was another group, Organized Labor. This group armed with the teachings of
Mother Jones, Samuel Gompers and Eugene Debbs preached and rallied, the wanting toilers
and workers of United States. Better wages and work conditions was the cry heard in the
sweatshops and employment lines of America.
The Cosa Nostra made its services available to
the business leaders that beckoned the mobsters to become strike breakers and head
busters. Acting on their behalf, the mob dished out punishment and fear
throughout the rank and file of the wanting strikers.
Many legitimate business' were required to maintain a life long
association and contribute company assets to the Cosa Nostra as the price for
strike-breaking. By 1935, with the creation of the National Labor
Relations Act (Wagner Act), labor finally had the vehicle that was needed to make a
significant impact on America.
Little by little the Cosa Nostra started realizing the importance
of the labor movement and by the end of World War II, it realized that
its future lay with the now peaking contrivance of American workers .
The rise of union problems also increased with
the blossoming memberships.To assist in stopping other unions from raiding territory and
potential insurrectionist from making waves and winning support with the rank and file.
The Union Leader turned to his past enemy the
Cosa Nostra for help. Little did the union official know, the price for help would be a
life long control of the local union. The eventual replacement of his position and direct
control to a Cosa Nostra associate or relative would be the next step in
the takeover process.
By the late 1940's, it became so paramount to the mob that
advisers such as John Dio Guardi of the New York city Luchesee family, would visit other
Cosa Nostra bastions around the country and explain how a takeover can be accomplished.
Realizing that by controlling the Teamsters, Longshoreman and the Laborers, (who were then known as the International Hod Carriers and Common Laborers) many
other unions would automatically come indirectly under Cosa Nostra influence.
Cosa Nostra leaders were also subject to
insurrection and the control of union activity would prove to be most
helpful in maintaining authority over Cosa Nostra members.
Unions and the employers provided the Don and his Capo's with
plush jobs for the family soldiers. Millions of dollars of membership
dues and benefit fund contributions were siphoned off for personal gain, and the ability
to manipulate Collective Bargaining Agreements so that favored employers were not bound by
the same regulations as the other signatory companies.
Political influence, the ability to elect the vote and financial
asset wanting politician to office became commonplace. Influencing legislation at all
levels of government and in many areas, even deciding who will be placed in Federal judgeships, and United States Attorneys was quite the norm.
This unseen government within a government was and is so powerful;
the American public still remains skeptical on how much of their life is controlled and
the financial burden that it carries because of its existence.
Even armed with the revelations of Joe Valachi
and other surfaced Cosa Nostra members and RICO statues, the extraction of mob influence
remains quite difficult. Evolution and change has also changed the Cosa Nostra.
Knowing that direct exposure
on influence peddling and criminal activity will lead to a life of incarceration and place
its membership in a position of capture and possible cooperation with investigative
authorities, the Cosa Nostra membership has burrowed itself into communicating and
exercising control through well paid attorneys and legal business
representatives, fully cognizant of the difficulty in implementing investigations and
prying into everyday businessmen and legal council.
LABORER'S INTERNATIONAL UNION OF NORTH AMERICA
The Laborers International Union is controlled
by an Executive Board that consists of a President, General Secretary Treasurer, and Vice
President.
General President
The General President is the Chief Executive
Officer and spokesman of the Laborers International Union. According to the constitution,
he is responsible for almost all general activity. He recommends to the General Executive
Board the filling of vacancies, the appointment of
international representatives and organizers, supervises the activities of regional
office's and its officers.
This hiring and utilization of this position was the exclusive
domain of the Chicago Cosa Nostra (Outfit) and any requests of the
General President and all of his activity had to go through the Chicago Family.
The control of this position did not give the
Chicago family exclusive authority over LIUNA activity. The General
President could not implement more than general policy over other family dominated
regions, such as New York state and New Jersey or Cleveland, Ohio. In order for a national
agreement to be utilized in another controlled area, the union official
or regional manager would send word to the local Cosa Nostra and then convey the approval
or denial.
This, of course, caused factions within the
international and national policies such as the National Political Action Committee
operated by Jack Curran, until recently off limits in New England, New York and New
Jersey. The same held true with the national pipeline agreements.
General Secretary Treasurer
The General Secretary Treasurer is the Chief
Financial Officer. He is responsible for the finances. His position is not supposed to be
subject to Cosa Nostra approval, but it is important for the Secretary Treasurer to not
cause problems with the Cosa Nostra, such as the one caused by Terrence
O'Sullivan at the wake of Peter Fosco in Chicago, when he echoed his wanting
to be the next General President. This action led to his ousting and
Vernie Reed becoming his successor.
Vice Presidents
Up until the middle 1980's, there were eight
Vice Presidents regionally located through out the United States and Canada. The major
function of the Vice President is that they together with the General President and
Secretary Treasurer comprise the General Executive Board which is the
ruling body of the Laborer's International Union.
Normally, a rubber stamp for LCN policy and somewhat titular in
nature, this position can become quite powerful when the Vice President is also a regional
manager. Case in point would be Michael Lorello and his successor, Sam Coivano and the
ever present behind the scene power of the New York City LCN families.
Others, like the now deceased Ugo Rossini had
extremely limited say so any were installed for purely political reasons.
The 1980's brought a split in the hierarchy of the Laborers
International Union into two camps. One supporting the then General President, Angelo
Fosco and the other supporting the late Arthur Coia Sr.
Even though the Chicago Cosa Nostra supported Fosco, their were
many in the family that thought he was weak and didn't like him. They also felt Coia was
more capable than Fosco. Coia, on the other hand was a more proficient earner and a close
associate of his late mentor Raymond Patricaccia,
Tampa, Florida boss Santo Traffacante, the New York City families and Anthony Accardo of the Chicago family.
When Coia made a decision he kept in mind all the families and
even on the smallest policy making decisions informed the various LCN families prior.
In an effort to quell a potential uprising by the black minority
membership over the discharge of Robert Powell, who was the 1st Vice President, it was
decided to increase the membership of the Vice Presidents to ten.
In an effort
to keep harmony, the ruling body of the Cosa Nostra, the Commission decided to allow Fosco
to select one Vice President and Coia the other.
Fosco chose Louis Bravo, a California based Latin American. Coia
opted for Verrie O Haynes, a Caribbean born black American.
Coia would berate Fosco for not addressing the Powell replacement
problem by stating that Fosco was supposed to choose a black person not a Hispanic.
Fosco would counter by stating
that American blacks do not like and respect Caribbean born and English accented blacks.
Coia joined by Mike Lorello would publicly voice
their disapproval of Fosco and his associates. The bitterness became so public that the
LCN commission decided to put an end to the bickering. Arthur Coia and Mike Lorello were
told to cease and desist their remarks about Fosco and that only the Chicago family can
decide who is the General President.
Even though favoring Coia over Fosco, Chicago
was worried about the future and letting an outsider succeed to the
position, plus John Serpico was being groomed to become the next president. Within months
of the commission decision, Arthur Coia had a massive stroke that left him incapable of
resuming his duties. He requested that his son be placed in his
position.
The early 1990's brought the Federal Investigation of LIUNA and
its control by the Cosa Nostra. With the Chicago Cosa Nostra in disarray over Federal
convictions and investigations and New York City still reeling from the
commission case, better heads in the Cosa Nostra decided to change policy and place less
suspicious and more qualified associates in leadership roles.
With the death of Angelo
Fosco, Arthur Coia Jr. became the General President and James Norwood, the brother in law
of St. Louis LCN crime boss, and an LCN associate became the General Secretary Treasurer.
Circling the wagons and preparing for the Federal onslaught was the order of the day.
The LCN was not about to give up control, but it
was attempting to insulate itself and maybe this change in policy could save the day.
Learning from the Teamsters and its leaderships ouster would be necessary in order to
prevent the International Union falling into unwanted hands and the vehicle where by
regional offices, district councils and local unions would be attacked
by a hell bent on cleaning up its image International Union.
REGIONAL OFFICES AND OFFICERS
Regional offices and officers are the people who
handle problems in their geographic areas and usually have international representatives
making sure that the district councils and local unions in their area are adhering to
International Union policy and conforming with inter-trade agreements.
In some areas, the regional manager is also a Vice President.
The Chicago regional manager has the largest geographic area and
that region may still encompass vast tracks of Canada, as well as
stretching over most of the mid-west. Besides encapsulating all of New England, the
regional manager authority takes in the Maritime states of Canada and the province of
Quebec.
This, of course, caused problems for the
Canadian membership of the International who wanted a regional office of
their own. Until recently, Ugo Rossini was the Vice President representing the Canadian
provinces, but without a regional managers position.
At a loss on how to address this problem to the Canadian membership, eventually he was given the title of dupe and
fell out of favor with his American sponsors.
Sub-Regional Offices
Some regions may establish satellite officials
to expedite and handle problems more readily.
The local union elected officials and members of
its Executive Board consist of the President, Vice President, Recording Secretary,
Business Manager, Secretary Treasurer, and two additional Board Members.
President
The President together with the Secretary
Treasurer signs all checks and presides over all membership meetings. Because the position
is titular, the President is in many cases appointed
by the Business Manager with Executive Board approval as a field representative (business
agent).
Vice President
The Vice President signs checks and presides
over meetings in the absence of the President.
The Recording Secretary drafts and maintains a
record of the union meetings and Executive Board sessions.
Business Manager
The Business Manager is the most important
position in the local union structure. He is the spokes man and Chief Operating Official.
The Business Manager is responsible for recommending
and overseeing field representatives who are selected by him and are then approved by the
Executive Board.
All shop stewards are selected by the Business
Manager. He is responsible for all negotiations and enforces all Collective Bargaining
Agreements.
The Secretary Treasurer is
also a very important position. He handles the finances and together with the President
signs all checks.
Two additional Executive Board Members
Two additional Board Members are elected to meet the seven member
board requirement. They meet with the other members to
approve or disapprove pending matters that are to be presented to the
membership for approval.
In some locals, they may also be appointed as field
representatives or as shop stewards.
ELECTED OFFICIALS WHO ARE NOT MEMBERS OF
THE EXECUTIVE BOARD
Sergeant of Arms
The person elected as Sergeant of Arms is responsible for making
sure that only union members enter the union meeting (unless the non member has been
invited) and in keeping order. This position is not part of the Executive Board.
The Auditors are elected by the rank and file. They are only
utilized in the smallest of locals to audit the financial books and records of the local
union.
Field Representatives (Business Agents)
Even though Field Representatives are not elected, next to the
Business Manager and Secretary Treasurer, they are the most sought after position.
They are directed by the Business Manager to visit job sites and
report back on jurisdictional problems (craft jurisdiction)
noncompliance by the employer with the Collective Bargaining Agreement and sometimes
unsafe working conditions.
Shop Stewards are the on the job union representative, handling
craft jurisdiction, safety, hours of work, noncompliance with the Collective Bargaining
Agreement and reporting to the union the hours of work of the laborers working for the
general contractor and the sub-contractors.
DISTRICT COUNCILS
A district council is a consortium of more than
one local union uniting and acting in concert to take advantage of the combination in
negotiations and to increase the benefit funds paid to the membership.
It can prove to be quite beneficial when
operated properly. Unfortunately many district councils are formed purely as a ploy to
wrest control from locals not controlled by the LCN.
It is comprised of delegates from local unions who become
executive members of its board. They elect a President, Vice President, Secretary
Treasurer, Recording Secretary, Business Manager and additional members
of the Executive Board.
Similar in responsibility to the local union, the Business Manager becomes the Chief Representing
Official of the council, appointing field representatives and overseeing all business in
the realm of the council.
COLLECTIVE BARGAINING AGREEMENTS
International Agreements
An International Agreement is an agreement reached between an International Union and an employer group or an
individual employer. The advantages to the employer are that normally
the contractor has the ability to bring key employees to work in local union jurisdiction
and grievances are handled at the international level.
The advantage to the local union is that the
employer is already signatory to the Laborers and bound by the local wage and benefits
distributions protected by language in the agreement. The agreements also generate
stability for the International and its affiliates.
Association Agreements are considered the
cornerstone for the local union, binding a large number of employers to a Collective
Bargaining Agreement.They become the vehicle for the posting of wage rates and benefit
contributions and many outline the work jurisdiction of the signatory
trade.
On Federal and most State and Municipal funded
projects, contractors are required to pay its workers what is known as the prevailing
scale.
The Labor Organization-Contractor Association pays a major role in
making sure that the posted rate and the increments for job classifications are the rate
that the governments utilize when funding projects. This is known as the
Davis Bacon Act and its continuance is paramount to union survival.
One problem that the associations and unions are
encountering is that when the Davis Bacon Rates are utilized on a project. The rates apply
for the duration of the project.
The Union Signatory Contractor is bound by wage
and benefit fund increases that may occur during the life of the Collective Bargaining
Agreement.
The non-union employer is not
and takes full advantage of this loop hole. Recently, some creative unions have introduced what is known as a carry over clause, which means the Union
Employer has the right to complete the project not having to pay any wage and benefit fund
increases that may occur during the life of that project.
Independent Employer Agreements
An Independent Employer Agreement is reached between the union and
a single employer. This opens the door for a lot of abuse by the
employer and the union. Some legitimate reasons for
this type of agreement are that the employer may not want to employ some of the union
trades that may be required if he became signatory to the association agreement.
The contractor may not like a controlling segment of the
contractor association because he feels there representation is more favorable to a given
segment. He doesn't want to be locked in to the time restraints and
other possible sections of the association agreement.
The union may enjoy additional
benefits, such as spelled out craft jurisdiction, flexibility in hiring and of course more
ability to get its way. The mischievous union and employer can use this
agreement to create better conditions, less restrictions and flexibility under its guise.
A One-liner type of agreement is normally reach for a given
project and is limited to wages and benefits for union
members. When a union official and an employer cannot agree on work rules and other
contract conditions this approach is enacted. For the local union or district council this
approach is quite disastrous and self defeating.
The union has lost the ability to organize and as a last ditch
effort to collect union dues and benefit funds agrees to the one-liner. Other union
contractors who have been bound by the more stringent contract, approach this procedure
with a "what a about me" feeling and enter the next contract
negotiation session armed with the union's acquiescence to this concept.
These type of agreements are self defeating for the union and
their existence is quite telling on a local unions future. Of course, they are also
utilized by the wayward to allow a pet employer normally through an alter ego to take
advantage of this agreements flexibility.
Legally A union cannot accept dues withheld from an employee by an
employer without contractual language. This holds true with benefit fund withholdings.
The union must have the employee sign a dues withhold form
acknowledging that the employee has given permission for the union to accept a percentage
of his wages or a fixed amount as union dues and the same with the benefit funds. The
employer must also receive a copy.
THE COLLECTIVE BARGAINING AGREEMENT
STRUCTURE
The agreement is the result of
collective bargaining and the local or district council subject to the constitution of the
International, its agreements, enactment's and inter-trade pacts. It is also subject to
governmental laws and regulations.
Normally, an agreement commences with stating its affiliation with
the Laborers International Union and the geographic area covered by the agreement.
Definitions are usually incorporated in the opening section
outline the definition of an employer. the union and
the employees covered by the agreement. This section or later on you will find the
definition of the sub-contractor and contractual language binding any contractor operating
as a sub-contractor and performing work and craft jurisdiction.
The sub-contractor will be bound by the terms and conditions of the signatory contractor. This is known in the industry as a down clause.
In many Collective Bargaining Agreements you will find language
that bins the employer to not accept a contract and work form an
employer who is acting as a General Contractor unless that employer is
also signatory to the Collective bargaining agreement. This is commonly
referred to an up-clause.
Foreman's clauses when needed, how many and the pay differential
are also included.
Steward clauses when needed, how appointed by the Business Manager
and that they normally are first craft employee hired and the last to be
laid off.
Many agreements will state that the steward will be given time
from his employer to check the project for safety violations, to see that other trades or
non-union employees are performing work that is the work of the union he or she is representing. Call the business agent if contractual violations are taking
place etc.
This position is subject to abuse by both the
union and the employer. The contractor does not want the shop steward making waves and
usually awards him with a plush work assignment and in some cases allows him to leave the
project and even become a no show.
The specious union official will use this position to place
friends, relatives and schemers in this position as a reward or in a
no-work position with an un-objecting employer who is utilizing cost saving remedies on
the project.
Union Dues and Benefit Fund Withholding Language
Each agreement contains some language defining the dues and
withhold process including how much is to be withheld and that those payments are made by
the employer in a timely manner.
Contractual Contract Violation Remedies.
Most Collective Bargaining Agreements usually establish five part
remedies for violations.
Step 1. Between the Employer Representative
(project superintendent) and the Shop Steward.
Step 2. The Union Field
Representative and the Employer Representative or the owner of the company.
Step 3. The Union Business
Manager and the employer or his representative.
Step 4. A grievance meeting
between the Employer Association and the Union officials.
Step 5. Normally, arbitration. In some agreements
where arbitration is not listed as a remedy, Federal Court or other
governmental remedies are included or available.
In many agreements, unions are allowed to strike
or pull its employees off of a project for violations of the employer by not paying
benefit fund contributions in a timely manner or emergency safety
violations without wildcating.
(A wildcat strike is when a Union is signatory to a collective
bargaining with an employer and pulls its employees off of a project.)
If a union or an employer does not adhere to the remedies
available, when it comes to contract violations and either attempts to
bring the matter to a governmental agency or other remedies available
under law, the matter is usually rejected because the charging party has
not exhausted all remedies.
(This is known in the business as Collerization, or the Collier
Wire Products Case.) The same holds true for union members, even when the charge is filed
against the union or one of its officials or representatives. (This language will be found
in the Uniform Local Union Constitution.)
Craft Wage Classification tells the employer how much he has to
pay for a tradesman when that individual is performing that type of work, (such as burning
may be an additional fifty cents and hour, or asbestos removal workers may be paid an
additional 50 cents an hours).
Special conditions and wages may apply to
hazardous work and many specialized areas of construction, such as sandhogs working in
compressed air requiring recovery time necessary to recover and adjust to the respiratory
problems of compression.
Favored Nations Clause
Favored Nations clause, commonly referred to as "the me
too" clause, which means that if the union grants or concludes an agreement with
another employer or group of employers performing the same type of work that contains more
favorable or beneficial conditions. The contractor can enact and enjoy
those more favorable conditions.
Savings Clauses
Savings clauses protect the integrity of the
contract if any portion of the agreement is found to conflict with governmental laws and
regulations then only that section of the agreement shall be null and void.
Many unions and employers utilize different procedures when
concluding language and processes for procuring employees. Some procedures commonly used
are Seniority, Geographic Seniority, Union Seniority, and Past Seniority.
By law when an employer who has not been signatory to a Collective
Bargaining Agreement wants his current employees to remain and not discharge them, then
the union must accept them as members.
As a condition of there union membership and a
condition of employment, they must accept reasonable rules established by the union, and
refrain from conduct detrimental to the union.
There have been numerous cases involving unions and reluctant dues
and benefit fund paying employees over that being a condition of
employment.
In the construction industry, most states allow for what is
commonly referred to as "closed shop operations",
However, 13 states do operate under what is commonly referred to as "right to
work" laws banning dues, benefit paying and union membership as a condition of
employment.
Seniorityy
You will find at least some seniority language in most Collective Bargaining Agreements. Total seniority is when the
employer must recall those workers who have been previously employed by his company as the
first employees called when starting a project and the last to be laid off.
In many of the Building Trades, this is not feasible because many
workers float from employer to employer.
The employer must give preference to those
employees living in a geographic area. This is called Geographic
Seniority.
Union Seniority
The employer must employ employees of the local
union in which the project is located, unless the union has reached full employment and
has exhausted all hiring remedies.
Past Employee
Seniority (Recall List)
The employer must recall and place to work those employees (if
capable of performing the work available) that previously worked for the
company before the employer asks the union to submit new employees.
This is commonly referred to as the recall list and many union
officials and employers violate this section of an agreement when it is included in a
Collective Bargaining Agreement.
A case in point is when a contractor has a plush
project and the opportunity for better conditions and overtime may be
available. The union official may refer favored employees to the project instead of past
employees.
Hiring Hall Arrangements
Many local unions utilize what is referred to as a hiring hall for
the selection and placement of employees for the filling of jobs.
Normally they include classes of workers who are categorized in groups such as:
Group 1
Union members who have worked for the employer in the past and are
not working for another employer and have registered with the union that they are
unemployed and available for work.
All union members who are currently unemployed
and available for work
Group 3
All applicants who have filled out an application for employment
with the union who are seeking employment through the union.
When an employer, who is already signatory to
the union Collective Bargaining Agreement, needs employees and calls the union hall for
employees. the union representative looks into the employers recall list book.
This book is maintained by the local and contains the names of
employees who previously worked for that employer. He or she then cross references the
name or names with the out-of-work list in Group 1 and then reaches out for that worker.
If the employee refuses to accept the job, the
union can remove that person from the out-of-work list unless the employee is incapable of
performing the work for some valid reason. This procedure continues until Group 1 is
exhausted, then Group 2 and onto Group 3.
When an employer, who is signatory to the
Collective Bargaining Agreement and has never worked in the geographic area needs
employees, the union must refer those members who have registered for unemployment and
have been unemployed the longest.
Starting with Group 1, the union official starts with the longest
unemployed member and exhaust that list before turning to the Group 2 list and so on.
Many Collective Bargaining Agreements contain
language covering the selection and submitting of shop stewards and foreman's.
This language usually states
that the union may refer stewards and foreman's to any given job without having to utilize
the out-of-work list and their standing in the out-of-work list.
Some hiring hall procedures include language that spell out
ability for employees to hire workers without regard to their standing in the out-of-work
list.
This language usually is referred to specialized skill needs and
the employer may, in writing, request a certain employee because the employee has special
skills, such as burning, blasting,
welding, etc.
Hiring halls procedures are routinely violated by LCN controlled
unions.Favored employees and relatives are given slips out the back door instead of
through the established hiring procedures.
The term back door originated with the Seafarers
International Union and the Seafarers Union Pacific who for practical purposes maintain
and operated hiring halls. When a ship needed a deck hand or another ship working member,
the union who maintained a large chalk board listing the ship, its
destination, cargo and its needs those seaman who were unemployed the longest
and capable of filling the request would have the first opportunity to
fill the job.
When a plush job request came into the mischievous union official,
he would not post it on the board and give the slip for a financial reward or as a favor
to a friend or to the highest bidder outside the view of the wanting workers.
Many union officials are reluctant to allow to
many people into the union because of flooding the union with members at times of good
employment and subjecting themselves to potential members who may become
uncontrollable and potential opponents.
The non-union workers are allowed to work on the union project by
stipulating and signing dues and benefit fund withholding authorization forms. This is
referred to an adobe fee. Most International Unions shun this practice and list it as a
violation of the International Constitution, but many
local unions continue to practice it.
Apprentice employees.
Some Union-Employer Contracts allow for the
hiring of apprentices at lower wages and limited where they do not overwhelm the project
work force.
Because Federal and State rules may come into
play, especially if a Taft Hartley jointly administered training fund,
allows for apprenticeship programs and its minority placement
requirements. Many locals and district council training funds are established as
retraining programs greatly narrowing governmental scrutiny and exposing the union to an
influx of unwanted potential members and troublemakers.
An employer may become a party to another association, or have
more than one contract or a special arrangement with a local union. A Superseding clause
is implemented and states that this agreement
supersedes any and all other agreements that have been reached.
Duration and Contract Re-opener Language
Duration and Contract language states the duration of the contract and what procedures come into play as far as
future bargaining and Taft Hartley requirements for future contracts.
You may find additional
sections and sub-sections to fit the needs of the employers and the union.
COSA NOSTRA-LABOR UNION ACTIVITY
The first and foremost rule of the Cosa Nostra
is the perpetuation of the family and the labor union is the perfect vehicle for achieving
this.
The controlled union official makes sure that
LCN members, relatives and associates are rewarded with plush jobs
either in the union hall itself by creating field representative positions, clerical and
secretarial appointments and even janitorial situations for the recipients.
The best stewardships, foreman positions and
plus little or no-work positions are the reward on the job site.
Benefits are subjected to administrators,
training directors and instructors, collectors of delinquent accounts,
legal, investment advisors and health insurance providers who have an agenda that does not
benefit the membership.
Contractors who kick-back wages, and allow no
show employees are given preferential treatment.
Demolition and hazardous waste removal employers are allowed to
illegally remove and dump toxins and debris and contaminate our eco system. Some of this
activity is unrecognizable to an investigator or examiner because of not knowing what to
look for.
In attempting to list common practices and
violations that you can find in most LCN controlled unions, keep in
mind that the investigator is limited to what he or she can discover on his own because of
the lack of cooperation that will be given by the membership.
It is important that you understand that the traditional LCN
controlled union local and district council have been subjected to years of Cosa Nostra
dominance and the years of failure on the part of justice to correct the problem have
galvanized the good non-LCN connected member against cooperating.
The membership of a union
have had to go along with hiring practices. Knowledge of his or her benefits may be
lacking and having to watch LCN favored employees receive the best jobs and stewards who
are more interested in collecting last nights bookmaking receipts then staying on the job
and looking after the workers needs and safety.
To speak or take any action against these practices would leave
the outspoken worker without a job and incapable of finding one or at
the bottom of a river.
Many investigators will find the lack of cooperation and ability to generate violations quite
difficult and lacking success. Federal Investigators who have been indoctrinated into the
utilization of Title 18 violations, will be limited and success may be placed out of
reach. Title 29 (Federal Labor law) and State Labor laws are necessary, as well as Title
42 and its environmental laws and rules to achieve in the cleansing.
It is also essential that the investigator have
a working knowledge of the local Collective Bargaining Agreement and utilize its
violations as an instrument of achieving success.
Many violations are taking place in front of the investigators' eyes. It's in knowing what to look for. How can you
remedy a problem if you do not know what the problems are.
Hiring Violations
Cooperating witnesses or informants, that are known to the
investigator, are a good source and can assist in locating employers and some workers
willing to talk off the record. Visit the job site and ask the steward for the workers on the job list, or just ask the workers their name.
Then compare the list with their standing in the out-of-work list
located in the union hall or its seniority list. You will also find relatives of LCN
members and union officials on some of the projects
who were brought into the union and placed to work over long time workers who are
unemployed.
Union employers operating as alter egos or allowed to engage the
services of non-union employees.
This is quite common especially in the
demolition industry. The union company is allowed to utilize non-union workers to aid in keeping the cost of the project down. Very often they work on a
different shift and illegally remove asbestos and other toxins when no one is looking and
discard the waste in dumpsters. This practice is
prevalent in New York City.
These workers are referred to as the sneaker brigade.
Wage and hour violations are quite commonplace, even when Federal and State inspectors are present on prevailing work rate projects. An employer full knowing that the hourly work rate is
subject to scrutiny and the reporting requirements, lists the proper hourly wage scale,
just less hours for the employee then what was really worked. An example of this is a
worker puts in 52 hours and his paycheck reflects that he worked 30 hours.
Benefit Fund Remittance Violations
Benefit fund remittance violations amongst LCN
favored employers and is an ever present tactic by favored employers in
the construction industry. The employer tells an employee or a group of favored employees
that the hours of work needed to cover his or their insurance needs have already been fulfilled and that the necessary hours and hourly
contributions needed to achieve the full credit for his or their pension fund have peaked
and any more contributions well not aid or improve the coverage, so, how about working
under the table with a portion of your time.
This means the employee may work 40 hours and the remittance forms
and necessary payments may be for only 24 hours. The employer than pays in cash or other
remuneration half or a portion of the saved moneys
to the employee.
A phantom employee is normally a non-working employee that never
or very seldom visit the job. This is practiced in LCN controlled areas where a LCN member
or associate needs hours of work to aid in achieving a pension or needed other benefits.
The contractor is normally rewarded by the union allowing non-union employees and or less
compliance with the Collective Bargaining Agreement.
INSURANCE FRAUD
Union Officials and Fiduciaries
As a matter of law, Union officials are required to maintain an
insurance bond that is necessary in case the official is charged and
found guilty of illegal practices and fiduciary responsibility violations.
In many LCN dominated union locals and district
councils, the insurance agent is a relative or an associate and is allowed to inflate the
bond costs.
The money either remains with the agent as a
favor, or is kicked-back to the LCN or favored LCN associate. Normally, the insurance is
awarded to the agent without allowing the insurance to be bid
competitively.
In many locals, this expenditure is not brought before the
Executive Board for approval and the membership of
the local for ratification. (When this mistake is exposed by the Dept. of Labor, the
normal defense is that the matter was approved and that in the financial report is read
before the local membership for approval, it mentions the payment to XYZ Insurance.)
In the Construction Industry, the person, group or entity looking
to have worked competitively bid by a contractor, require that the employer that is
bidding the work is a stable and competent business.
To make sure of this, the developer or letter of work in the
bidding process notifies all interest contractors that a bid bond equal to a portion of
the bidding contractors bid or equal to the whole amount is required.
When a contractor is successful in the bidding
process, the bid bond is turned over to what is known as a performance bond, whereby the
insurance company guarantees that the contractor will finish the job at the bid rate.
(There are some variations of this process,
such as cash bonds for contractors not capable of securing insurance, but because they can
tie up large amounts of cash are very seldom implemented except on small projects.)
The ability to find an insurance company to bond an employer is
quite restrictive. Only those employers with a long history of successful business or vast
cash and asset resources are eligible for the insurance and the better rates that follow
success and asset gain.
With these restrictions, if someone wants to
start a construction company they normally start out as a sub-contractor and work on only
a portion of the project. Their work is guaranteed by the general
contractor's insurance bond.
The LCN and its captive local know how to circumvent this problem
and reach out for a scheming insurance agent and company. This by the way, includes some
of Americas largest companies.
In concert with the direct
or indirect controlled trustees of the benefit fund, they offer to either loan the
insurance company through what is known as bullet contracts, bonds or stock
purchases at needed times or, of course, higher commission rates.
In return, they may only require that the insurance company take
care of the insurance bonding requirements for a favored company or a start up fledging
LCN company equal to or even lower then major companies.
In many cases, the insurance company does not
have to kick-back any moneys, just take care of the wanting LCN
employer. The LCN will then reap its reward out of the requesting
company or just use it as a job creator.
Another scheme that the LCN is using to alleviate the bonding
requirements is through the establishment of offshore insurance companies or utilizing
foreign companies.
This procedure may not work on federally funded projects and most
state funded projects, but it is used for industrial in plant work and
corporate let projects.
The LCN and its cohorts will travel to the
Cayman Islands or another less restrictive country to establish their own insurance
company. Utilizing assets from drug operations for laundered moneys and even fraudulent
bonds, they set up a business. The company establishes an American subsidiary, hires a
good printer and a blossoming business or bust out operation is a reality.
Corporate blackmail comes in all shapes and forms. Everything from a corporate cheating, physical threats, having OSHA
fire, and other regulatory agency inspectors breathing down the back of unwilling
employers to exposure of sexual compromise.
Salting and Windy Day Operations
Salting is the method where carbon and graphite dust is placed
into the hydraulic system and the engines of a non-union contractors equipment by a
evening foray by local union loyalists.
Windy day operations are
when a building is in the erection stage and the support bolts of the steel beans are
removed or loosened and lumber support braces are removed. If properly done, a strong
breeze will bring down the structure.
Purchasing and supplies
Automobiles
The automobiles are purchased from a favored
dealer at higher costs or when traded in at a lower than value price.
Sometimes, the cars after being traded are made available to family members or associates
at less than value costs.
Normally, they are purchased without
competitive bidding, or if put up for bid less stringent bidding requirements are
implemented to make sure that the favored dealer is successful.
Supplies
Everything from computers to toilet paper are
purchased from LCN favored suppliers at inflated rates.
The soda and the cigarette machine located in some union halls,
are in many LCN captive locals, are the property of a favored vendor and the cleaning
service that enters after hours are also recipients of this relationship.
Building and Repair Construction
When the local union decides to move to new facilities, build a new officer or make repairs when necessary, the
contractors hired are in many LCN dominated locals hand picked.
Normally, if the project is a major project a phony bidding
process will be implemented. Plans and specifications will be sent to a number of
employers and the favored employer will not have to adhere to the requirements that are
listed.
Such as the specs may call for certain products to be installed
and the LCN or its representative tells the favored employer
"don't worry about it, you can use cheaper products or just paint
the existing walls or you don't have to remove the existing one and install a new one.
When painting is required, just use one coat not two or skip the upstairs painting
needs." In some cases, no-work may be required at all.
Front companies are established to take
advantage of Federal and State laws. Requirements that state a certain percentage of a
given project that has Federal or State funding must sub-contract a
certain portion of that project to a minority owned company or supplier.
The LCN has the local union promote the use of this company to
general contractors who have a Collective Bargaining Agreement with the local.
By law, in order to qualify the minority business must have 51% of the company and its corporate assets beneficially owned and controlled by a minority or a group of minorities.
Minorities do not have to be of Afro-American, American Indian or
Latino decent.
This can also include women and many LCN
dominated union officials have been involved in this practice
Worker Transfers
In some small locals and
when faced with opposition, local union leaders have turned to the Cosa Nostra or
controlled union officials for help. A larger local may tell a number of loyalist to
transfer their union book to another local to assist the local union official who has
asked for help.
They convince many potential
negative voters and turn them into supporters or just keep them away from the polling
area. In many cases these votes carry the day and another local falls victim to the LCN
and its relentless pursuit of controll.
Political Action Committees
Political Action Committees
are necessary and a legal vehicle for the LCN and its dominated locals and district
councils. The PAC funds are used to support favored candidates and even where spending
caps are regulated, creative circumvention is introduced.
If it becomes vital that a certain political
candidate be elected, the LCN and or the local union will reach out for sister locals in
other states or regions to get money for the candidate. They will also send PAC money to
another controlled PAC and have that PAC send money to the candidate.
Even though stock purchasing is legal, many
union officials purchase stock in a company that is listed in some exchange and is
signatory to the Collective Bargaining Agreement or whose performed services are the same
as covered under the craft jurisdiction of the union, in many instances this is illegal.
This automatically gives them an advantage over other investors
and the controllers of the gain or loss of the giving value of the
stock. If the company is uncontrolled they may play the down side option game. That is to
say that they are wagering their money that the stock goes down.
The company and its affiliates are subjected to all kinds of
mischief and the losses result in the stock value plummeting. They could also have inside
knowledge on future profits or losses of the company and other insider corporate
information. Of course, the companies stock value can benefit tremendously from the union
granting favored working and turning its head when it comes to the Collective Bargaining
Agreement.
Another stock scheme you may not see, but happens quite often, is
when a stock is normally purchased it is purchased
by the trading firm. A brokerage company that enjoys and benefits from its representation
of benefit funds and wants to keep the relationship may illegally get involved.
Many purchasers of stocks and bonds have a couple of weeks in
which to pay for their purchase and if the value of the stock or bond goes down over that
period one of the benefit funds is the purchaser. However, if the stock goes up in value,
the cousin or best friend of the union official is the owner of the stock.
Another scheme, that is quite difficult to
discover and can happen with any unknowing company, is the union official and his LCN
backers finds a stock not that costly and in need of funds.
The LCN and or the union official arrange for a cousin or best
friend to purchase a number of shares in that company. After a couple of weeks or months
go by LCN controlled unions through the benefit funds purchases stock in the given
company.
After the benefit fund purchases have been
completed the cousin or friend sells his stock at a profit.
Legal Defense Funds
Legal Defense Funds have been around for a number of years now and
remain a pet of the LCN and controlled union. At first they were established as a means of
keeping the LCN members legal costs down, Today, they still do that, but also take care of relatives and associates of the LCN.
Normally, they provide the union member with house closings, wills, and general
representation. With regard to the high cost criminal defenses that may be required or
potential unrewarding civil suits they may only provide for, a small portion
of the costs. In too many cases, accident and good civil suits still require that a
percentage of the claim receipts be turned over to the attorney and his
or her firm. Besides creating substantial funds for the attorneys and LCN sponsors, it
also acts as a steering vehicle for the union membership and members relatives.
Hazardous Waste
Today, hazardous waste has
become one of the largest money makers for the LCN. The local union is relied upon to make
sure that the favored waste remover and transporter is capable of completing its projects
and avoiding detection.
Toxic waste removal is taking place in every corner of America and
the paper trail and the availability of potential witnesses needed in the pursuit of
LCN-labor complicity is there.
I believe that each and every investigator
should include this area in any investigation. The results will not only prove rewarding
but a service to mankind.
In-Plant Demolition
In-plant demolition is a
type of work very seldom publicly advertised. Steel plants, refineries, chemical plants
etc., know of the toxins present inside the property line of their
facilities and they are aware of the burdensome cost of pubic scrutiny.
Normally, contractors with proven records are allowed to bid on
the project. When bidding the project, some unwanted bidder usually slips into the bidding
process but almost always unsuccessful. The ferrous and non-ferrous steel and other metal
and its value are included in the bid.
You may see a contractor actually pay the plant owner for the project. The structures being
demolished are normally quite old and when erected did not come under environment laws and
regulations.
In order to protect process lines from heat, they were covered
with asbestos. Today's methods of heating the oils in electrical transformers were not and
place so PCB's were added. Solvents, Benzene's and waste was regularly discarded on plant
property and so on.
The successful LCN employer starts by having a reliable foreman or superintendent tear a placard off the transformers
so that no one can read its contents.
The workers come in to remove the transformers and send them to a
preparation area where steel is cut into sizes and ready for shipping to a steel
processing plant by ship, truck or rail.
The steel contains PCB's, Redlead (a toxic paint used to prevent
corrosion) or asbestos laden steel is either shipped to China, Korean, an American or a
Canadian company willing to over look its contamination.
Ironically, because many of these jobs are labor intensive, almost every employer reaches out to ex-plant workers or
anyone that is willing to take a crack at lighting a torch and cutting steel.
The wages are normally not above the minimum scale for many of the
workers and when asked why they did the work when they know it was dangerous to their
health. Almost everyone will answer with the need for employment or
that this is the only type of work they know. The turnover rate for many of these
employers is usually quite large.
The next step is to remove the asbestos from
the steel. By law the employer is supposed to be licensed to remove
asbestos and the employees involved in the removal and bagging operations are also
required to be licensed,
One way of avoiding scrutiny is to hire a
licensed company for a small portion of the asbestos removal and that contractor may or
may not file the required notification to State and Federal authorities.
The contractor does attempt to remove the small portion of the project by encapsulating the removal work area, then
set up a containment measures including negative air to prevent the asbestos fibers entry
to non-capsulated areas.
The asbestos is removed and the work area is
vacuumed and scrubbed to make sure all asbestos is removed. Air monitors check to see if
any air transmitted fibers are present and the asbestos is securely bagged and shipped to
a certified landfill.
The remainder of the
ubiquitous asbestos is illegally stripped off of the steel and illegally discarded into
rivers, or buried some where near the removal area. The steel is then cut and moved over
to the preparation where it is also sized and prepared for shipping.
Copper, brass, stainless steel and other valuable metals are
closely watched and are sold to what is commonly known as the Jewish Mafia. These
operators are willing to pay cash for the valuable product and the cash is used to pay off
the operation letting union officials and their LCN sponsors. The funds received from the
steel that is shipped overseas usually ends up in an offshore bank account that can be
tapped if additional funds are needed as kick-backs.
As an investigator looking into these illegal
practices, they are not hard to find. You can start with any plant in any town. Ask a
cooperating witness or worker about the plant and recent demolition work that may have
taken place there.
Find a friendly demolition company or legitimate asbestos removal
company about the project. Soon, you will find a disgruntled company or worker that may be
aware of what companies may have bid on a demolition project or a
discharged employee willing to tell all.
Each company that bids on a project that
contains hazardous waste is required to maintain and preserve the companies bid for each
and every project, even if the bid was unsuccessful. Check the amount of hazardous waste
that was present and designated for removal, then cross check those records with the State
and Federal records for how much asbestos and other waste was actually removed and
manifested.
You will probably find major discrepancies in
the recorded amounts. Armed with this information, check with the unemployment office to
find out workers who were discharged by the employer
or laid off. Many of those workers will be willing to talk about the illegal practices and
union complicity.
Check to see if the company has a signed Collective Bargaining
Agreement with the union, or are working under an alter-ego. On many of these projects,
you will find union employees or even there relatives working and business agents stopping
by to collect their kick-backs. Most favored companies do have
agreements with the union to take advantage of the all union employee required projects.
It has always proved successful and the contractor or employees almost always implicate some union official and
LCN member when the FBI followed this method of investigation. The case of Chester
Liberatore of Cleveland Ohio, Cuyahoga Wrecking and Republic Steel is a good example.
Even though the investigator is not armed with the legal remedies
available to the FBI and the Subpoena power, it will still prove quite successful. Many
employers would rather talk than losing there livelihood and ability to make a living. The same holds true for employees because many
of them have worked for cash and do not want to become a victim of the
IRS.
Building Demolition
Many of the same practices taking place in plants also takes place
in buildings though some asbestos discarding procedures may differ. One common removal
scheme is that after successfully bidding on a building scheduled for demolition or
gutting and before the job is awarded. The low bidder well send in a sneaker brigade to
illegally remove as much asbestos as possible and either discard it in dumpsters or wash it into the sewer system.
Then once the project is awarded the contractor
does not have as much asbestos to remove legally. The second way is after receiving the
award for the demolition, the contractor legally starts removing asbestos on one floor and
having the sneaker brigade come in at night then illegally remove and discard asbestos on
another.
Investigating this area is easier than in plant work because of
the availability of public records. Find a building that was demolished and is owned by a
credible owner and check with him or his
representative about the job.
The engineering department or construction
department will have documentation listing the contractors who bid on
the project and may even have their own estimates of how much asbestos was present. Cross
check with the State and you will find the discrepancies.
The same holds true for the employees and you will find many
willing to talk. The job of extracting the LCN controlled union
official will be a lot easier, even if the fiduciary violations of
allowing union employers to employ non-union workers were added to existing or stand alone
charges. With all the clamor over the environment, the State regulatory agencies will
probably start their own investigations.
Purchase of Union Books
In many LCN controlled unions, the purchasing
of union books still continues and wanting workers are will willing to pay the union
official for the right to become a member. This, of course, is quite
difficult to prove unless the person is willing to comfort and cooperate.
Excess Travel Expenses and Reimbursements
Legally, this is quite difficult to prove but from a fiduciary
violation standpoint it can be added to charges for misuse of union
funds. Many LCN dominated officials will pick up the tab of LCN members dinners and
expenses.
This is quite difficult to prove and the only witnesses available
are those LCN members and Union officials who because of being caught in some criminal
activity have become informants.
One area worthy of exploration is the use of first class travel to
and from destinations and excess hotel
expense. By itself, this would nor be enough to remove someone from office, but coupled
with numerous other fiduciary violations a total disregard for the unions coffers can be
proved.
Membership Approval for Expenses, Disbursements, Travel
and Cost Related Activity
By law, union officials are required to pre-approve, except in
cases where it is absolutely necessary to attend a meeting or other membership beneficial
requirement, any and all expenses.
The matter is first presented before the
Executive Board which meets once a month and then the membership meeting which also meets
one a month for approval of the expense.
Some expenses may not require prior approval, such as the purchase
of tires, or travel to meet with the International Union or another union for business
matters. It is required, however, that those expenses be presented or at least approved at
the next regular meeting. This is normally done under the financial report when it is read
and then approved.
In the examination of the unions disbursements,
the investigator may find exorbitant expenses for dinners, golf outings
and so on.
Even though they may be legal and proper expenses, a thorough
examination may also reveal abuse. I have seen union officials charge gambling losses to
union credit cards and home expenses and purchases billed to the union.
Personal Use of Union Employees
Personal use of union employees is quite
common. Many union officials have used union workers to work around his
home or property for littler or no money. Concrete trucks destined for a project may find
itself changing course and becoming a union officials new driveway.
In many LCN controlled locals, the union official is required to
find employment for bookmakers, so that they can take advantage of the number of workers
present on a given job. Normally, they are coffee men or placed in jobs
that allow them to canvas the job site.
Benefit funds are comprised of programs established to meet the
retirement and health and welfare needs of the union employee. They may also include
unemployment, vacation and training programs. The creation of these funds are a result of
collective bargaining and by law must be jointly administered by the union and employer.
Each fund stands alone. is separate and distinct. The funds can never be commingled and
transferred from one fund to another.
Trustees are appointed or elected by the union and the employer to
establish written trust agreements procedures for
the employer's contributions, finances and guidelines that are necessary to fund a program
and disburse benefits to the participating member are included.
By law, a trustee who is receiving a pay check from their
respective union or employer cannot be financially reimbursed or paid by the fund(s.)
A trustee can be reimbursed or compensated by the fund(s) for
travel, meals, entertainment and other fund related activity, provided
that the activity was performed for the betterment of the funds.
Benefit fund programs may have separate trustees or group of
trustees may represent all the funds in the program. In LCN captivated locals and district
councils, the union and employer trustees, invest and disburse the funds in a manner that
generates finances for the LCN and its membership.
Many employers who are not controlled by the LCN or the union may not know that the misuse is taking place. Some
acquiesce to the illegal practices and avoid union retaliation, others take advantage of
better conditions that they may be the recipient of.
The very nature of the construction industry plays a major role in
how a union member becomes eligible for a pension fund. The change of
seasons, the nature of the work and the constant moving from company to company by many
workers creates a different process from that of a
factory worker who spends his whole career for the same employer.
Even though there may be some flexibility, most unions follow
similar guidelines and the worker receives a quarter of a credit for 250-500 hours of
contributed work in a year, a half a credit for 500-750 hours of contributed work, three quarters of a credit for 750-1000 of contributed work and a full
credit for 1000 or more hours of credited work.
In some unions, those members that work 1500
hours or 2000 hours of work may also receive additional credit. In
most, however, they don't and the excess moneys are used at the desecration of the fund
and the trustees.
The ERISA amendments only establish minimum standard guidelines
and substantial fraud takes place in the excess funding of a pension plan.
There are a couple of procedures that ERISA allows in credited years and the percentages of the
members contributions that qualify him or her for a partial or full pension. This process
is called vesting.
Some plans are allowed to establish 5 year vesting plans, but most
have established 10 year fully vested plans.
What this means is, if a given worker stays with the union or a
sister union where a reciprocity agreement exists and works for 10 years and contributions
were made on his or her behalf for the ten years, then this worker becomes fully vested.
That is to say that in case of death or taking
work outside the scope of the Collective Bargaining Agreement, that worker or the
beneficiary will be entitled to the contributions made on his or her behalf to the pension
fund.
Most collective bargaining pension funds are based on twenty years
of service and 62 years of age for a normal retirement plan. Some allow for a reduced
pension payment if the worker has twenty years of service and not 62
years of age. Some even have what is known as 25 and out plans.
That is the member has worker for twenty five years and the age
requirement has been lifted and the pension payment remains whole.
Break in Service Rule
A loop hole in the ERISA requirements allows a
pension plan from considering past pension payments. If an employee has
found employment elsewhere and left the bargaining agreement area, that employee returns
to the union, his previous pension contributions are not included in the vesting
requirement of ERISA, and the employee has to start all over.
The previous contributions will be included and
considered when the employee reaches his or her 62nd birthday and the previous and future
contributions are equal to twenty or more contributed partial or total credits.
ERISA requires that the pension fund investments be diverse. When this is achieved, then the fund has what is known as a balanced portfolio.
A balanced portfolio is normally an equal
distribution of income investments (bonds, blue chip stocks leaning toward security,
mortgages, long term money instruments, etc.), growth investments (more volatile stocks
and that may return a larger gain), or any legal investment that has more risk, but can be more rewarding), and liquidity for immediate needs.
These investments may be in the form of short term CD's, savings
and checking accounts. The ratios for these investments are quite flexible and ERISA does
not address how much should be where.
ERISA does require that no more then 10% of the pension portfolio
be invested in any one individual stock or bond, for example, a real estate loan.
This does not hold true to a mutual fund company where that
transaction is, in most cases, encompassing many diverse investments. The law is quite
flexible on how a fund invests its resources. Even where flagrancy is quite recognizable
and millions of dollars have been lost, prosecution is next to impossible.
Under the guise of "well at that time we thought it was a solid investment and in the best
interest of the fund response," trustees have been able to avoid being charge with a
criminal and misuse charge or when charge, acquitted.
As you can see, even with ERISA laws present there is substantial
room for manipulation and many creative plan administrators and other responsible parties
who when held captive can utilize to generate financial fallout.
Many illegal practices can take place with the pension funds and
some of the more prevalent practices besides those already mentioned
include churning, commission rates, and real estate investment fraud.
Churning
Churning is quite common and it refers to a stock broker or
investor who constantly buys and sells stocks and bonds to increase the
purchasing and selling commissions that are included in those transactions.
The fund has to pay a higher
commission rate than what is available.
Some real estate investment fraud schemes usually include
front-end and long-term financing kick-backs. When A real estate developer requests a loan
from a pension or another benefit fund it is normally structured into two phases:
1. the construction loan and
the financing for the actual construction. As a condition of loaning the money to the
developer, the trustees mandate that the project must be constructed by
union labor only.
Percentages of the loan normally around 3 % is paid to the benefit
fund attorney and a benefit fund appointed real estate agent who makes sure the project is
being constructed according to the specifications. In LCN controlled unions The lawyer or
agent or both share their commission with the LCN;
2. once construction is completed, the
construction loan is rolled over to what is known as
the loan term financing. 3-5% is again paid to the lawyer and the agent who in turn
kick-back the additional financial fall out to the LCN.
Another scheme that may be used in concert with the above scheme
is:
By law trustee's are required to maximize the fund assets and that also includes real estate investments. In order
to loan a favored developer trust fund moneys and avoid governmental
scrutiny the trust loans the developer the funds at lets say 5% and the going best rate
available is 7%.
The developer believes that the construction and operation after
completion cost of that project is going to cost him 3 million dollars a year. He has
projected that the projected business is going to bring in 5 million dollars a year.
Before taxes a gain of 2 million dollars.
The developer puts together a projection by doing ten million dollars a year business and
telling the trustees that he will give the trust 50% of all proceeds of business over 7
million dollars. This is known in the lending business as a kicker.
The developer and the LCN controlled trustees
know that the 7 million dollar level of business is never going to become a reality, but
it places a blanket of protection over the trust for making the loan at a lower than bank
interest rate. Of course, the trustees could argue that the union and benefit fund
contributions made by the workers on the project would not have been
there if the job was not financed by the fund and would have been done
by non-union workers.
Positions
Unneeded secretarial and support help are quite
common in fund offices and you will find these positions held by relatives and cronies of
the LCN and the union official. Many funds have established positions for collectors of
delinquent accounts.
The responsibility and the remedies for collecting delinquent
accounts are with the union and the Collective Bargaining Agreement. Many funds utilize
the ERISA laws and its requirements to operate its own collection
procedure and create unneeded positions.
5500 Reports
Each fund must file an annual report which is
commonly known as a 5500 Report. This report contains information reflecting the assets,
liabilities, employees, expenses, funding periods,
gains and losses of a fund. The report does not contain each and every purchase and sale
transaction of the fund.
Creative and even unknowing accountants,who
compile the information, paint a picture of a fund well run and void of misuse. Besides
revealing general information, this report is quite useless when a fund is subject to
scrutiny.
Most investigators will find this perusal a waste of time and
futile. To really find out if any churning and misuse of a fund is taking place, it is
important that reports made to
trustees by brokerage firms and investors be made available.
Each union and employer trustee will have in
their possession periodic reports. These reports will list the purchasing, selling and
commissions of the investors transactions.
Pension funds have what is know as actuaries
working on behalf of the fund. The actuary will examine the investments,
assets and liabilities. The actuary then interpolate the results and a report will follow
explaining.
If the fund is over-funded with increases in
benefits available, or under-funded and in need of additional contributions, by law a
pension fund is required to achieve fully funding within a given period of time.
The problem for the union trustees in achieving fully funded
status is that it narrows down future negotiated fund demands and
control over employers who by law are responsible to achieve fully funding status. Many
games are played by the actuary and his control is necessary to the LCN and its captive.
The Legal Councils in the pension plan is also
vital to the LCN. He or she makes sure that the trustees are protected and have a defense
when subjected to membership and regulatory agencies ask questions.
Many of these legal representatives have been placed in LCN
controlled benefit funds as either a reward for low or no cost representation of an LCN
member or associate. Or, he makes sure that the illegal use of the funds and the
manipulators are protected.
The Fund Administrator is appointed by the trustees and essential
to the LCN captive. It is vital that this position be filled by a
lackey or collaborator who is willing to aid and abet any and all sponsored and money
making activity. The glossing of shady investments or other schemes are, in most captives,
the work of the administrator and her or her cohorts.
Many past and favored members are not eligible for becoming the
recipient of a pension. The administrator fraudulently creates past hours for work, even
though not worked in a given period, showing the recipient working at a time prior to the
introduction of the pension fund and where credits are awarded for
union membership, commonly called past service.
Or, the recipient's name is listed with the employees of a
contributing employee for hours of work and contributions made on his or her behalf even
though the employee was not working for that employer.
Some administrator's will utilize a company that has ceased to
exist or one that has filed for bankruptcy to create hours of work for a favored member.
The favored members name is added to the remittance forms that
were submitted by the defunct employer. Many Taft Hartley established funds will honor
uncollected funds and allow those members working for that company to receive pension
credit anyway. In many cases, the administrator may just add the name
of the favored member to a remittance form that was created by him and listing a made-up
name with created hours of work.
Health and Welfare funds are also jointly administered and subject
to ERISA and other applicable laws, but the ability to siphon off funds is even greater.
Besides utilizing the same investment and crediting employee requirements, health and welfare programs have some distinct and additional methods available
to the LCN and its lackeys.
Controlled Dental, Optical and Medical Provider Plans
A physician, dentist or optician establishes a program where the
union membership, through the health and welfare plan, are required to utilize the
physician, dentist, or optician or its established group when care is needed.
Normally, the service is made available at a reduced rate,
presented to the trustee's and union membership as a cost saving vehicle. The union
membership doesn't approve these plans, nor do they have any authority to do so.
ERISA only requires that the members be
supplied a copy of what benefits are available and the hours of work
needed to qualify. The only due process available to the membership is
to vote out of office those union officials.
As a rule, most unions are informed of the necessity of such a
plan and the savings that the membership are enjoying. In reality, the service provider,
as a reward for the increase in business, is kicking-back cash or other valued commodities
to the LCN or wayward fund trustee(s) or union official.
Following the restrictive HMO or health provider
concept paves the way for substantial abuse in the medical field and
even ancillary services such as X-ray facilities, pharmaceutical supplies and pre-surgical
procedures may be included in the schemes.
Provider Kick-backs
Many insurance providers, including some major carriers have been
willing to pay LCN members and captive union officials an annual fee for allowing their
company to provide the health coverage needs. This is normally done through inflated
commissions, which are shared, laundered and disbursed.
A vehicle for making sure an LCN favored
insurance provider is selected. Costly conditions and requirements are found in the
unwanted carriers bid request and the favored company is given a substantial advantage.
Inflated Costs
A physician or provider may submit a fraudulent
bill for insurance reimbursement or may inflate the
actual cost of service.
A member in concert with a medical provider may inflate the actual
services and spilt the profits or the fund.
Besides all the others mentioned, the administrator may provide
the contributions and qualifications made on behalf of a union member and make them
available to a LCN favored person. The recipient utilizes the name and social security
number of the member for his or her medical needs.
Training Fund
Training funds are also a
vehicle for misuse and in LCN controlled unions are method for taking care of relatives
and favored members. Many training fund administrators and teachers are
the recipients of this relationship and are not qualified to instruct and pass on the
information to the membership.
Training Fund Fraud
Some of the more prevalent illegal practices
that they are involved in include:
Supply Fraud
The purchase of steel and welding classes is
either recycled or purchased in the amounts or quality listed. plastic encapsulation
sheeting, filters, hepa vacuums, respirators, tivac clothing used for teaching asbestos
cleanup are purchased from LCN favored suppliers at inflated cost and not in the
quantities reflected in the purchase order. The list of supply fraud goes on and on.
Fraudulent Work at Training Sites
The training fund instruction includes concrete pouring, mason
tending, blacktop laying and all related craft jurisdiction. Much of
the actual construction of a training facility is being performed by the trainees and
involving limited labor cost. A scheming training fund administrator may create a
fraudulent bill stating the work was performed by the John Doe construction company.
Vacation and annuity funds face the same problems as the other
funds.
Supplemental Unemployment Benefit Funds
The Supplemental Unemployment Benefit (SUB)
funds are designed to create additional funds for unemployed members. In order to become a
recipient a worker must be eligible for state unemployment insurance. The schemes are
similar as the other funds and in LCN controlled unions become
advantageous for favored employees.
The list of violations and misuse of union funds goes on and on.
No report or book could cover all the ingenious mistreatment schemes
available and being exercised in LCN enslaved unions. Even though, I have not covered them
all, I have attempted to incorporate some of the more common ones that
will be found.
It is quite important that the investigator
develop a game plan when delving into the irregularities of the LCN controlled local union
and its officials.
Asking members to discuss these areas without being pre-armed with necessary information will be an effort in futility. One must always remember that the membership fears the LCN more than you, and any conversing or complaining will lead to his or her being blackballed.
Besides Title 18 and its sub sections known to most of those
involved in labor racketeering perusals. Labor and Environmental Laws should also be
utilized when investigating a LCN captive union local and district council.
The representations made are guidelines only
and any application and interpretation should be made by a qualified legal council.
Labor Management Relations Act of 1947
(Taft Hartly)
As a result of the passage and enactment of the Labor Relations
Act of 1935. Many employers and citizens not wanting to be forced into labor organizations
were. The Labor Management Act was passed after survived a Truman veto.
It pared down much of the labor organization's ability to impose
its way and advanced Federal authority over unions that affected interstate commerce.
As a result the National Labor Relations Board was established to
oversee this act, but the exhaust all remedies doctrine has narrowed down the NLRB's input
until all contractual and union bylaw procedures have been implemented and
used up.
In a LCN captive union many violations of this Act can be found and this section and its sub sections may prove to
be helpful. However for the sake of brevity, I have omitted most of the language contained
in this law, so my interpretation and opinions will have to suffice. It
is quite important however that you review the many sections and subsections as a follow
up to what is written and contained in this document.
Article 29 USCS § 141. Short title;
Congressional declaration of purpose and policy
(a) This Act may be cited as the "Labor
Management Relations Act, of 1947" Industrial strife which interferes with the normal
flow of commerce and with the full production of
articles and commodities for commerce, can be violated or substantially
minimized if employers, employees, and labor organizations each recognize under law one
another's legitimate rights in their relations with each other, and above all recognize
under law that neither party has any right in its relations with any
other to engage in acts or practices which jeopardize the public health, safety, or
interest.
It is the purpose and policy of this Act, in order to promote the
full flow of commerce, to prescribe the legitimate rights of both employees and employers
in their relations affecting commerce, to provide orderly and peaceful procedures for preventing the interference by either with the legitimate rights of the other, to protect the rights of
individual employees in their relations with labor organizations whose activities affect commerce, and are inimical to the general welfare, and to protect the
rights of the public in connection with labor disputes affecting commerce. Some of the
areas of illegal practices covered by this Act include:
Violence, threats, interference with workers rights, negligence,
mass picketing, Federal funded projects, construction sites, secondary activity,
picketing, boycotts, activity for union security, union breach of fair representation,
wrongful expulsion or exclusion, wrongful union discipline, etc.
Labor, Management
Reporting and Disclosure Act of 1959 (Landrum-Griffin Act)
When the Labor Management Act of 1947 was passed it did not
address many internal union problems regarding the rights of members to oppose current
officials, receive union documents and be informed of union practices.
Prior to 1959, many union officials even owned their own
construction companies and would benefit from the lack of restrictions. What I feel was the most important area
addressed by this amendment was the area of fiduciary responsibilities.
I have included some area of Landrum Griffin for use as a guide
only. I have included some personal comments which are mine alone and may not reflect the
opinions and decisions of the courts and governmental regulatory authorities.
Article 29 USCS § 431 Reporting of Labor Organizations,
Officers and Employees of Labor Organizations, and
Employers
(a) Adoption and filing of constitution and bylaws: contents of report.
Every labor organization shall adopt a constitution and bylaws and
shall file a copy thereof with the Secretary, (of
Labor) together with a report, signed by its president and secretary or corresponding
principal officers, containing the following information-
(1) the name of the labor organization, its
mailing address, and any other address at which it maintains its
principal office or at which it keeps the records referred to in this title (29 USCS §§
431 et seq,);
(2) the
name and title of each of its officers;
(3) the initiation fee or fees
require from a new or transferred member and fees for work permits required by the
reporting labor organization;
(4) the regular dues or fees
or other periodic payments required to remain a member of the reporting
labor organization; and
(5) detailed statements, or references to
specific provisions of documents filed under this subsection which contain such
statements, showing the provision made and procedures followed with respect to each of the following
(a) qualifications for or restrictions on
membership,
(C) participation in insurance or other labor
benefit plans,
(D) authorization for disbursement of funds of
the labor organization,
(E) audit of financial
transactions of the labor organization,
(F) the calling of regular and special meetings,
(G) the selection of officers and stewards and any
representatives to other bodies composed of
labor organizations, representatives, with a specific statement of the manner in which
each was elected, appointed, or otherwise selected, (H) discipline or removal of officers,
or agents for breach of trust,
(I) imposition of fines,
suspensions, and expulsions of members, including the grounds for such action and any
provision made for notice, hearing, judgment on the evidence, and appeal procedures,
(J) authorization for bargaining demands,
(K) issuance of contract
terms,
(L) authorization for strikes
and
(M)
issuance of work permit. Any change in the information required by this subsection shall
be reported to the Secretary (of Labor) at the time the reporting labor organization files
with the secretary the annual report required by subsection (B).
(B) Annual financial report; filing; contents. Every labor
organization shall file annually with the
Secretary (of Labor) a financial report signed by the president and
treasurer or corresponding principal officers containing the following information in such
detail as may be necessary accurately to disclose its financial
condition and operations for its preceding fiscal year-
(1) assets and liabilities at
the beginning and end of the fiscal year;
(2) receipts of any kind and the sources thereof;
(3) salary, allowances, and other direct or
indirect disbursements (including reimbursed expenses) to each officer and to each
employee who during such fiscal year, received more than $10,000 in the aggregate from
such labor organization and any other labor organization affiliated with it or with which it is affiliated, or which is affiliated with the same national or
international labor organization;
(4) direct and indirect loans
made to any officer, employee, or member which aggregated more than $250 during the fiscal
year, together with a statement of the purpose, security, if any, and arrangements for
repayment;
(5) direct and indirect loans to any business
enterprise, together with a statement of the purpose, security, if any,
and arrangements for repayment; and
(6) other disbursements made
by it including the purposes thereof;
all in such categories as the Secretary (of Labor) may prescribe.
(C) Availability of information to members;
examination of books, records and accounts. Every labor organization
required to submit a report under this Title (29 USCS §§ 431 et seq.) shall make
available the information required to be contained in such report to all of its members,
and every such labor organization and its officers shall be under a duty enforceable at
the suit of any member of such labor organization in any State court of competent
jurisdiction or in the district court of the United States for the district in which such
labor organization maintains its principal office,to permitsuch member for just cause to
examine any books, records, and accounts necessary to verify such report.
The court in such action may, in its discretion, in addition to
any judgment awarded to the plaintiff or plaintiffs allow a reasonable attorney's fee be
paid by the defendant, and costs of the action.
Opinionn
Many labor organizations do not comply with each and every notification requirement, such as letting the
Department of Labor know many of the work rule changes that have
resulted from the collective bargaining process and or procedures for appointing shop
stewards.
When the DOL is made aware of this, they normally notify the union
and tell them to comply with the law from now on. As far as utilization of § 431
violations they should be coupled with other violations when applied against a LCN
controlled union.
Article
29 USCS § 432. Reports of Officers and Employees of Labor Organizations
(a) Filing; contents of report. Every officer of
a labor organization and every employee of a labor organization (other that an employee
performing exclusively clerical or custodial services) shall file with the Secretary a
signed report listing and describing for his preceding fiscal year-
(1) Any stock, bond, security, or other interest,
legal or equitable, which he or his spouse or minor
child directly or indirectly held in, and any income or any other
benefit with monetary value (including reimbursed (expenses) which he or his spouse or
minor child derived directly or indirectly from, an employer whose employees such labor
organization represents or is actively seeking to represent, except
payments and other benefits received as a bona fide employee of such employer;
(2) any transaction in which he or his spouse or
minor child engaged directly or indirectly, involving any stock, bond, security, or loan
to and from, or other legal or equitable interest in the business of an employer whose
employees such labor organization represents or is actively seeking to
represent;
(3) any stock, bond, security, or other interest,
legal or equitable, which he or his spouse or minor child directly or indirectly held in,
and any income or any other benefit with monetary value (including
reimbursed expenses) which he or his spouse or minor child directly or indirectly derived
from, any business a substantial part of which consists of buying from, or selling or
leasing directly or indirectly to, or otherwise dealing with such labor organization.
(4) any stock, bond, security,
or other interest, legal or equitable, which he or his spouse or minor child directly or
indirectly held in, and any income or any other benefit with monetary
value (including reimbursed expenses) which he or his spouse or minor child directly or
indirectly derived from, a business any part of which consists of buying from, or selling
or leasing directly or indirectly to, otherwise dealing with such labor organization;
(5) any direct or indirect
business transaction or arrangement between him or his spouse or minor child and any
employer whose employees his organization represents or is actively
seeking to represent, except work performed and payments and benefits received as a bona
fide employee of such employer and except purchases and sales of goods in the regular
course of business at prices generally available to any employee of
such employer; and
(6) any payment of money or other thing of value
(including reimbursed expenses) which he or his spouse or minor child received directly or
indirectly from any employer or any other person who
acts as a labor relations consultant to a employer, except payments of the kinds referred
in section 302 (c) of the Labor Management Relations Act, 1947, (Taft Hartly) as amended (29 USCS § 186 (c).
(b) Report of certain bona fide investments. The
provisions of paragraphs (1), (2), (3), (4), and (5) of subsection (a)
shall not be construed to require any such officer or employee to report his bona fide
investments in securities traded on a securities exchange registered as a national
securities investment company registered under the Investment Company
Act of the Public Utility Holding Company Act of 1935, or to report income derived
therefrom.
(c) Exemption from filing
requirement. Nothing contained in this section shall be construed to require any officer
or employee of a labor organization to file a report under subsection (a) unless he or his
spouse or minor child holds or has held an interest, has received income or any other
thing with monetary value or a loan, or has engaged the services of an
employer as defined therein.
Title 29 USCS § 436. Retention of Records
Every person required to
file any report under this title (29 USCS §§ 431 et seq.) shall maintain records on the
matters required to be reported which will provide in sufficient detail the necessary
basic information and data from which the documents filed with the secretary may be
verified, explained or clarified, and checked for accuracy and completeness
and shall vouchers, worksheets, receipts, and applicable resolutions,
and shall keep such records available for examination for a period of not less then five
years after the filing of the documents based on the information which they contain.
SAFEGUARDS FOR LABOR ORGANIZATIONS
Title 29 USCS § 501. Fiduciary responsibility of officers
of labor organizations
(a) Duties of officers;
exculpatory provisions and resolutions void.
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 and any resolutions of the governing bodies
adopted thereunder, to refrain from dealing with such organization as an adverse party or
in behalf of an adverse party in any matter connected with his duties and from holding or
acquiring any pecuniary or personal interest which conflicts with the
interest of such organization, and to account to the organization for any profit received
by him in whatever capacity in connection with transactions conducted by him or under his
direction on behalf of the organization.
A general exculpatory provision in the constitution and bylaws of
such labor organization or a general exculpatory resolution of a
governing body purporting to relieve any such person of liability for breach of the duties
declared by this section shall be void as against public policy.
(b) Violations of duties; action by members after
refusal or failure by labor organization to commence proceedings;
jurisdiction; leave of court; council fees and expenses.
When any officer, agent, shop steward, or
representative of the labor organization is alleged to have violated
the duties declared in violation (a) and the labor organization or its governing board or
officers refuse or fail to sue or recover damages or secure an accounting or other
legitimate relief within a reasonable time after being requested to do
so by any member of the labor organization,such member may sue such officer, agent, shop
steward, or representative in any district court of the United States
or in any State court of competent jurisdiction to recover damages or secure an accounting
or other appropriate relief for the benefit of the labor organization. No such proceeding
shall be brought except upon leave of the court obtained upon verified application and for
good cause shown, which application may be made ex parte.
The trial judge may allot a reasonable part of
the recovery in any action under this subsection to pay the fees of
council prosecuting the suit at the instance of the member of the labor organization and
to compensate such member for any expenses necessarily paid or incurred
by him in connection with the litigation.
(c) Embezzlement of assets; penalty. Any person
who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use,
the use of another, any of the moneys, funds, securities, property, or 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.
Opinion Because of the numerous 501 violations
that are committed in LCN controlled locals and district councils,
These areas should be explored and incorporated into any
investigation. some of these violations include:
1. Officers who expend union funds without
membership approval.
2. Failure to correct effects of past denials of
rights guaranteed union members.
3. Mismanagement, secrecy, failure to disclose, failure to process
grievances, and failure to conduct union affairs.
4. Failure to pay international union dues,
adobes are considered a circumvention.
5. Mismanagement of pension funds
6. unauthorized payments of attorney fees.
7. Unauthorized salary
increases
Article 29 USCS § 502. Bonding of
officers and employees of labor organization, amount, form, and placement of bonds;
penalty for violation
(a) Every officer, agent, shop steward, or other
representative or employee of any labor organization (other than a labor organization
whose property value and annual financial receipts do not exceed $5,000
in value), or of a trust which labor organization is interested, who
handles funds or other property thereof shall be bonded to provide protection against loss
by reasons of acts of fraud or dishonesty on his part directly or
through connivance with others.
The bond of each person shall be fixed at the amount mot less than
10 per centum of the funds handled by him and his predecessor or predecessors, if any
during the preceding fiscal year, but in no case more than $500,000. If the labor organization or the trust in which a labor organization is interested does
not have a preceding fiscal year, the amount of the bond shall be, in the case of a local
labor organization, not less then $1,000, and in the case of any other
labor organization, not less than $10,000. Such bonds shall be individual or schedule in
form, and shall have a corporate surety company as surety thereon.
Any person who is not covered by such bonds
shall not be permitted to receive, handle, disburse, or otherwise exercise custody or
control of the funds or other property of a labor organization or of a
trust in which a labor organization is interested.
No such bond shall be placed through an agent
or broker or with a surety company in which the labor organization or any officer, agent
shop steward, or other representative has any direct or indirect interest.
Such surety company shall be a corporate surety which holds a
grant of authority from the Secretary of Treasury (T- Listed) under the Act of July 30,
1947 (6 U.S.C. 6-13), as an acceptable surety on
Federal bonds: has made other bonding arrangements which would provide the protection
required by this section at comparable cost or less, he may exempt such labor organization
from placing a bond through a surety company holding such grant of
authority.
(b) Any person who willfully violates this
section shall be fined not more than $10,000 or imprisoned for not more
than one year or both.
Article 29 USCS § 504. Prohibition against certain
persons holding office
(a) Membership in Communist Party or conviction
of crime. No person who is or has been a member of the Communists Party or who has been
convicted of, or served any part of a prison term resulting from his conviction of,
robbery, bribery, extortion, embezzlement, grand larceny. burglary, arson, violation of
narcotics laws, murder, rape, assault with intent to kill, assault which inflicts bodily
injury, or a violation of title II or III of this act, any felony
involving abuse or misuse of such person's position or employment in a
labor organization or employee benefit plan to seek or obtain an illegal gain at the
expense of the members of the labor organization or the beneficiaries of the employee
benefit plan, or conspiracy to commit any such crimes or attempt to commit any such
crimes, or a crime in which any of the foregoing crimes is an element, shall serve or be
permitted to serve-
(1) as a consultant or adviser to any labor
organization
(2) as an
officer, director, trustee, member of any executive board or similar body, business agent,
business manager, organizer, employee, or representative in any capacity of any labor
organization,
(3) as a
labor relations consultant or adviser to a person engaged in an industry or activity
affecting commerce, or as an officer, director, agent, or employee of any group or
association of employers dealing with any labor organization, or in a position having specific collective bargaining authority or direct responsibility in the
area of labor-management relations in any corporation or association
engaged in an industry or activity affecting commerce, or
(4) in a position which entitles its occupant to
a share of the proceeds of, or as an officer or executive or administrative employee of, any entity whose activities are in whole or substantial part devoted to
providing goods or services to any labor organization,
(5) in any capacity, other
than in his capacity as a member of such labor organization, that involves decision making
authority concerning, or decision making authority over, or custody of, or control of the moneys, funds, assets, or property of any labor organization, during
or for the period of thirteen years after such conviction or after the end of such
imprisonment, whichever is later, unless the sentencing court on the motion of the person
convicted sets a lesser period of at least three years after such
conviction or after the end of such imprisonment, whichever is later, or unless prior to
the end of such period, in the case of a person so convicted or imprisoned,
(A) his citizenship rights,
having been revoked as a result of such conviction, have been fully restored, or
(B) if the offense is a Federal offense,the
sentencing judge or, if the offense is a State or Local offense, the United States
district court for the district in which the offense was committed
pursuant to sentencing guidelines and policy statements under section 994(a) of title 28,
United States Code, determines that such person's service in any
capacity referred to in clauses (1) through (5) would not be contrary to the purposes of
this Act.
Prior to making any such determination the
court shall hold an administrative hearing and shall give notice of such proceeding by
certified mail to the Secretary of Labor and to State, county and
Federal prosecuting officials in the jurisdiction or jurisdictions in which such person
was convicted.
The courts determination in any such proceeding
shall be final. No person shall knowingly hire, retain, employ, or otherwise place any
other person to serve in any capacity in violation of this subsection.
(b) Penalty. Any person who
willfully violates this section shall be fined not more than $10,000 or imprisoned for not
more than five years, or both.
(c) Definitions. For the
purpose of this section-
(1) A person shall be deemed to have been
"convicted" and under the disability of "conviction" from the date of
the judgment of the trial court, regardless of whether the judgment remains under appeal.
(2) A period of parole shall not be considered as part of a period of
imprisonment.
(d) Person barred from office of labor
organization during appeal of conviction; salary placed in escrow. Whenever any person-
(1) by operation of this section, has been barred
from office or other position in a labor organization as a result of a conviction, and
(2) has filed an appeal of that conviction, any
salary which would be otherwise due such person by virtue of such office or position,
shall be placed in escrow by the individual employer or organization responsible for
payment of such salary.
Payment of such salary into escrow shall continue for the duration
of the appeal or for the period of time during which such salary would be otherwise due,
which ever period is shorter.
Upon the
final reversal of such person's conviction on appeal, the amounts in escrow shall be paid
to such person.
Upon the final sustaining of such person's conviction on appeal,
the amounts in escrow shall be returned to the individual employer or organization
responsible for payments of those amounts.
Upon final reversal of such person's
conviction, such person shall no longer be barred by this statue (section)
from assuming any position from which such person was previously
barred.
Opinion Until recently this section of the law
did not apply to union clerks and custodians.
In LCN controlled locals and district councils,
those not capable of meeting these standards would be rewarded by placement into those
positions.
Normally when the DOL learns of these violations
they notify the union that they have employed a barred individual and the matter is
corrected.
In LCN captive locals you will find many of the shop stewards with
the acquiescence of the business manager have committed offenses as listed above.
When the available information proves a complete lack of regard
for this section. Then these violations should be made part of any
charges filed against the business manager, business agents. and involved officials.
ERISA (Retirement Income Security Act)
Title 29 USCS § 1082. Minimum funding
standards
Note: ( Because of the length of section 1082,
I have placed the minimum funding standards text into highlights and explanations).
(a) Avoidance of accumulated
funding deficiency
(1) Every
benefit fund subject to this part shall satisfy the minimum funding standard (or the
alternative minimum funding standard under section 305 (29 USCS § 1085) for any plan year
to which this part applies.
A plan to which this part applies shall have satisfied the minimum
funding standard for which this part applies shall have satisfied the minimum funding
standard for such plan year the plan does not have an accumulated
funding deficiency.
(2) For the purposes of this part, the term
"accumulated funding deficiency" means for any plan the
excess of the total charges to the funding standard account for all plan years (beginning
with the first plan year to which this part applies) over the total
credits to such account for such years or, if less the excess of the total charges to the
alternative minimum funding standard for such plan years over the total credits to such
account for such years.
Opinion What
this and the language that follows in 1081 means, is:
Every Taft Hartly fund (pension) must from the first year of the
commencement of the plan should become fully funded under this language
within the period of time required under this section.
Time tables and formulas for achieving this are also spelled out
in this and related sections. Fully funded means that if all contributions from employers
ceased, the fund's capital resources would be in a position of self
sufficiency and benefit payments to participants and beneficiaries
would not have to be reduced.
The fund actuary is responsible for projecting what contributions
and modifications may be needed to meet these requirements.
In LCN captive locals and district councils his role is paramount
and his acquiescence is necessary.
In order for the fund to remain above suspicion
the captive actuary will fudge the true return on investments or the percentage of
interest he is utilizing for fund growth.
This is quite easy to accomplish and all he has
to do, is reflect in his opinion the projected costs of participant benefits are higher
then what they really are.
Another scheme is to show that the funds investment account which
may have received only a 3% growth in a given year is not really out of line even though
the Dow Jones average may be 8 % for that year.
The actuary and shady investment broker check and find a another
investment barometer such as say the Standard and Poors whose annual
growth average may be only 4%. Still another ploy is to include what is known as future
contributions into the actuarial growth formula and in the process hide any realized fund losses. In every ongoing pension plan, monthly payments are received by the fund from the employer.
These contributions are called future funds. Many plans annually
receive more in these contributions, then they include them in interest
and gain of the fund investments.
Even another scheme is implemented and that is,
contributions made on behalf of employees that do not meet the
crediting standards.
When an employee only works say 230 hours in a
fiscal year, that employee is not entitled to a partial credit. The employee's
contribution is not listed in the funding requirements and the moneys are reflected as
investment growth. As you can see, there are many methods available to the actuary to
cover the real investment growth of the pension fund and how the moneys
really entered the fund.
Title 29 USCS § 1104. Fiduciary duties
(a) Prudent man standard of care. (1) Subject to sections 403 (c) and (d) (29 USCS § 1103), (c) and (d), 4042 (29 USCS § 1342), and 4044 (29 USCS § 1344),
A fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and
beneficiaries and-
(A) for the exclusive purpose of:
(i) providing benefits to participants and their beneficiaries;and
(ii) defraying reasonable expenses of
administering the plan
(B) with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like character
and with like aims.
(C) by diversifying the investments of the plan so as to
minimize the risk of large losses, unless under the circumstances it is clearly prudent
not to do so; and
(D) in accordance with the documents and
instruments governing the plan insofar as such documents and instruments are consistent
with the provisions of this title or tile IV.
(2) In the case of an eligible individual account plan (as defined
in section 407 (d) (3) (29 USCS § 1107 (d) (3), the diversification
requirement of paragraph (1) (c)
and the prudence requirement (only to the extent that it requires diversification) of
paragraph (1) (B) is not violated by acquisition or holding of qualifying employer real
property or qualifying employer securities (as defined in section 407 (d)(4) and (5) (29
USCS § 1107 (d) (4) and (5).
(b) Indicia of ownership of assets outside
jurisdiction of district courts.
Except as authorized by the Secretary by regulation, no fiduciary
may maintain the indicia of ownership of any assets of a plan outside
the jurisdiction of the courts of the United States.
(c) Control over assets by participant or
beneficiary. In the case of a pension plan which provides for individual accounts and
permits a participant or beneficiary to exercises control over assets in his account, if a
participant or beneficiary exercises control over the assets in his
account (as determined under regulations of the Secretary)-
(1) such participant or
beneficiary shall not be deemed to be a fiduciary by reason of such
exercise, and
(2) no person who is otherwise a fiduciary shall
be liable under this part for any loss, or by reason of any breach, which results from such participant's or beneficiary's exercise of control.
Violations of 1104 are also quite prevalent in LCN controlled unions. In many cases, benefit fund misuse may be difficult to address because the Benefit funds are jointly administered and may not be subject to internal union investigations. If witnesses and discovery implicate the union and its officials of misconduct and theft then they can be incorporated under 501 violations.
1. Disclosure to participants and beneficiaries of, theft of
funds, plan features and changes
2. Diversification of investments
3. Conflicts of Interest
5. misuse of expenses
Title 29 § 1106 Fiduciary benefits and compensation that are prohibited.
Section 1106, which is not incorporated in this report, defines
and explains prohibited transactions. Utilization of the assets of the fund for direct and
indirect personal use and the payment of wages or capital distribution to trustees is
prohibited.
I have included section 1106, because it reflects how benefits and
remuneration can be made to trustees and others.
Many LCN controlled union officials who serve
as fund trustees take advantage of this section.
They reward themselves with high cost vacations
under the guise of benefit fund business and pick up the dinner tab of LCN members and
numerous other misuse expense reimbursement schemes.
Cases have been made that the funds have been misused when a LCN
captive trustee brings his spouse, sons and daughters and their spouses to benefit
conventions and meetings.
However many cases have been lost under the
defense that the trustee provided a better service to the fund by having his family with
him.
29 USCS § 1108. Fiduciary benefits and
compensation not prohibited by 29 USCS § 1106.
Nothing in section 406 (29 USCS § 1106) shall be construed to
prohibit any fiduciary from-
(1) receiving any benefit to
which he may be entitled as a participant or beneficiary in the plan, so long as the
benefit is computed and paid on a basis which is consistent with the terms of the plan as
applied to all other participants and beneficiaries;
(2) receiving any reasonable compensation for
services rendered,or for reimbursement of expenses properly and actually incurred, in the
performance of his duties with the plan; except that no person so serving
who already receives full-time pay from an employer or an association of employers, whose
employees are participants in the plan, or from an employee
organization whose members are participants in such plan shall receive
compensation from such plan, except for reimbursement of expenses properly and actually
incurred; or
(3) serving as a fiduciary in addition to being
an officer, employee, agent, or other representative of a party in
interest.
(d) Owner-employees; family
members; shareholder employees. Section 407(b) (29 USCS § 1107(b) and
subsections (b), (c), and (e)of this section shall not apply to any transaction in which a
plan, directly or indirectly-
(1) lends any part of the corpus or income of the
plan to;
(2) pays any compensation for
personal services rendered to the plan to; or
(3) acquires for the plan any property from or
sells any property to; any person who is with respect to the plan an owner-employee (as
defined in section 401(c)(3) of the Internal Revenue Code of 1986 (26USCS § 401 (c) (3) a
member of the family as defined in section (2) USCS § 267(c)(4) of any
such owner-employee, or a corporation controlled by any such owner employee through the
ownership, directly or indirectly, of 50 percent or more of the total combined voting
power of all classes of stock of the corporation.
For purposes of this
subsection a shareholder employee (as defined in section 1379 of the Internal Revenue Code
of 1954 (26 USCS § 1379) as in effect on the day before the date of the enactment of the
Subchapter S Revision Act of 1982 (enacted October 19, 1982) and a participant or
beneficiary of an individual retirement account or individual retirement annuity described
in section 408 of the Internal Revenue Code of 1986 (26 USCS § 408) or a retirement bond
described in section 409 of the Internal Revenue Code of 1954 (26 USCS § 409) (as effective for obligations issued before January 1, 1984) and an
employer or association of employers which establishes such an account or annuity under
408(c)of the Internal Revenue Code of 1986 (26 USCS
§ 408(c) shall be deemed to be an owner-employee.
(e) Acquisition or sale by plan of qualifying
employees securities; acquisition, sale or lease by plan of qualifying employer real
property.
Sections 406 and 407 (29 USCS §§ 1106 and 1107) shall not apply
to the acquisitions or sale by a plan of qualifying employer securities (as defined in
section 407(d)(5) (29 USCS § 1107(d)(5) or acquisition, sale or lease by a plan of qualifying employer real property (as defined in section 407(d)(4) (29 USCS § 1107(d)(4))-
(1) if such acquisition, sale, or lease is for
adequate consideration (or in the case of a marketable obligation, at a sale price not
less favorable to the plan than the price determined under section407(e)(1) (29 USCS §
1107(e)(1),
(2) if no commission is charged with respect
thereto, and
(A) the plan is an eligible individual account
plan (as defined in section 407(d)(3) (29 USCS § 1107(d)(3), or
(B) in the case of an
acquisition or lease of qualifying employer real property by a plan which is not an
eligible individual plan, or of an acquisition of qualifying employer securities by such a
plan the lease or acquisition is not prohibited by section 407(a) (29 USCS § 1107(a).
Title 29 USCS § 1109. Liability for breach of fiduciary
duty
(a) Any person who is a
fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or
duties imposed upon fiduciaries by this title shall be personally liable to make good to
such plan any profits of such fiduciary which have been made through
use of assets of the plan by the fiduciary, and shall be subject to such other equitable
or remedial relief as the court may deem
appropriate, including removal of such fiduciary. A fiduciary may also be removed for a
violation of section 411 of this Act (29 USCS § 1111).
(b) No fiduciary shall be
liable with respect to a breach of fiduciary duty under this title if such breach was
committed before he became a fiduciary or after he ceased to be a fiduciary.
Title 29 USCS § 1111. Persons
prohibited from hold certain positions
(a) Conviction or imprisonment.
No person who has been convicted of, or has been imprisoned as a
result of his conviction of, robbery, bribery, extortion, embezzlement, fraud, grand
larceny, burglary, arson, a felony violation of Federal or State law involving substances
defined in section 102 (6)of the Comprehensive Drug Abuse Prevention
and Control Act of 1970 (21 USCS § 802 (6), murder, rape, kidnapping, perjury assault
with intent to kill, any crime described in section 9 (a) (1) of the Investment Company
Act of 1940 (15 USCS 80a-9(a)(1), a violation of any provisions of this act, a violation of section 302 of the Labor-Management Relations Act, 1947 (29
U.S.C. 186), a violation of chapter 63 of title 18, United States Code (18 USCS §§ 1341
et seq.), a violation of section 874,1027, 1503,
1505, 1510, 1951, or 1954 of title 18 United States Code, a violation of the
Labor-Management Reporting Act of 1959 (29 U.S.C. 401, any felony involving abuse or
misuse of such person's position or employment in a labor organization or the
beneficiaries of the employee benefit plan, or conspiracy to commit any such crimes or
attempt to commit any such crimes, or a crime in which any of the foregoing crimes is an
element, shall serve or be permitted to serve-
(1) as an administrator, fiduciary, officer,
trustee, custodian counsel, agent, employee, or
representative in any capacity of any employee benefit plan,
(2) as a consultant or adviser to an employee
benefit plan, including but not limited to any entity whose activities are in whole or
substantial part devoted to providing goods or services to any employee
benefit plan, or
(3) in any capacity that involves decision making
authority or custody or control of the moneys, funds, assets, or
property of any employee benefit plan,
during or for the period of thirteen years
after such conviction or after end of imprisonment, whatever is later, unless the
sentencing court on the motion of the person convicted sets a lesser period of at least
three years after such conviction or after the end of such
imprisonment, whichever is later, or unless prior to the end of such period, in the case
of a person convicted or imprisoned (A) his citizenship rights, having been revoked as a
result of such conviction, having been fully restored, or (b) if the
offense is a State or Local offense, the United States district court for the district in
which the offense was committed, pursuant to sentencing guidelines and policy statements under 994 (a) of title 28, United States Code, determines that
such person's service in any capacity referred to in paragraphs (1) through (3) would be
contrary to the purposes of this title. Prior to making any such determination the court
shall hold a hearing and shall give notice to(of) such proceedings by certified mail to the Secretary of Labor and to State, county, and Federal prosecuting officials in the jurisdiction or jurisdictions in which such
person was convicted.
The courts determination in any such proceeding shall be final. No
person shall knowingly hire, retain, employ, or otherwise place any person to serve in any
capacity in violation of this subsection.
Notwithstanding the preceding provisions of this subsection, no corporation or partnership will be precluded from acting as an administrator,fiduciary, officer, trustee, custodian, counsel, agent, or employee of any employee benefit
plan or as an consultant to any employee
benefit plan without a notice, hearing, and determination by such court that such service
would be inconsistent with the intention of this section.
(b) Penalty. Any person who
intentionally violates this section shall be fined not more than $10,000 or imprisoned for
not more than five years, or both.
(c) Definitions.
For the purposes of this section-
(1) A person shall be deemed to have been
"convicted"and under the disability of "conviction" from the date of
the judgment of the trial court, regardless of whether the judgment remains under appeal.
(2) The term "consultant" means any
person who, for compensation, advises, or represents
an employee benefit plan or who provides other assistance to such plan, concerning the
establishment or operation of such plan.
(3) A period of parole or supervised release shall not be
considered as part of a period of imprisonment.
(a) Requisite
bonding of plan officials. Every fiduciary of an employee benefit plan and every person
who handles funds or property of such a plan (hereafter in this section referred to as
"plan official") shall be bonded as provided in this section; except that-
(1) where such plan is one
under which the only assets from which benefits are paid are the general assets of a union
or of an employer, the administrator, officers, and employees of such a plan shall be
exempt from the bonding requirements of this section, and
(2) no bond shall be required of a fiduciary (or
of any director, officer, or employee of such fiduciary) if such fiduciary-
(A) is a corporation organized and doing business
under the laws of the United States or of any State;
(B) is
authorized under the laws to exercise trust powers or to conduct an
insurance business;
(C) is subject to supervision or examination by
Federal or State authority; and
(D) has at all times a combined capital and
surplus in excess of such a minimum amount as may be established by
regulations issued by the Secretary, which amount shall be at least
$1,000,000.
Paragraph (2) shall apply to a bank or other financial institution
which is authorized to exercise trust powers and the deposits of which are not insured by
the Federal Deposit Insurance Corporation, only if such bank or institution meets bonding
or similar requirements under State law which the Secretary determines are at least
equivalent to those imposed on banks by Federal law.
The amount of such bond shall be fixed at the
beginning of each fiscal year of the plan. Such amount shall not be
less than 10 per centum of the amount of funds handled. In no case shall such bond be less
than $1,000 nor more than $500,000, except that the
Secretary, after due notice and opportunity for hearing to all interested parties, and
after consideration of the record, may prescribe an amount in excess of $500,00, subject
to the 10 per centum limitation of the preceding sentence.
For purposes of fixing the amount of such bond, the amount of
funds handled shall be determined by the funds handled by the person, group, or class to
be covered by such bond and by their predecessor or predecessors, if
any, during the preceding reporting year, or if the plan has no preceding reporting year,
the amount of funds to be handled during the current reporting year by such person. group,
or class,estimated as provided in regulations of the
Secretary.
Such bond shall provide protection to the plan against loss by
reason of acts of fraud or dishonesty on the part of the plan official directly or through
connivance with others.
Any bond shall have as surety on Federal bonds under authority
granted by the Secretary of the Treasury pursuant to sections 6 through 13 of title 6,
United States Code. Any bond shall be in a form or of a type approved by the Secretary,
(T-Listed) including individual bonds or schedule or blanket forms of
bonds which cover a group or class.
It shall be unlawful for any plan official to whom subsection (a)
applies, to receive, handle, disburse, or otherwise exercise custody or control of any of
the funds or other property of any employee benefit plan, without being bonded as required
by subsection (a) and it shall be unlawful for any plan official of such plan, or any
person having authority to direct the performance of such functions, or
any of them, to be performed by a plan official, with respect to whom the requirements of
subsection (a) have not been met.
(c) Conflict of Interest
prohibited in procuring bonds. It shall be unlawful for any person to procure any bond
required by subsection (a) from any surety or other company or through any agent or broker
in whose business operations such plan or party in interest in such plan has any control
or significant financial interest, direct or indirect.
(d) Exclusiveness of statutory basis for bonding
requirement for persons handling funds or other property of employee benefit plans.
Nothing in any other provision of law shall require any person,
required to be bonded as provided in subsection (a) because he handles funds or property
of an employee benefit, to be bonded insofar as the handling by such person of the fund or
other property of such plan is concerned.
The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this section including
exempting a plan from the requirements of this section where he finds
that
(1) other bonding arrangements or
(2) the overall financial condition of the plan
would be adequate to protect the interests of the beneficiaries and participants.
When, in the opinion of the Secretary, the
administrator of a plan offers adequate evidence of the financial responsibility of the
plan, or that other bonding arrangements would provide adequate protection of the
beneficiaries and participants, he may exempt such plan from the
requirements of this section.
Opinion Many LCN controlled
unions do not meet the required bonding needs and invest fund assets to coax the insurance
company to meet bonding requirements. Many of the bonds procured by LCN
captives are not T-Listed.
As a result of conviction or by agreement many
local and district council unions have been placed under trusteeship by either the
International Union or Federal and State authorities.
The final goal of reestablishing union democracy and stopping the
misuse is fraught with danger.
In too many instances, the appointed trustee is not aware of the
daily problems encountered by a local union and the need to enforce the existing
collective bargaining agreement.
Most government trustees are ex-judges or law enforcement
officials who have never worked in the construction industry and are incapable of handling
daily problems.
Other trades or non-union forces take advantage of the imposed
trusteeship and either raid or enjoy this time period.
Under international union imposed trusteeships, the individual
named as the trustee, is not aware of local conditions
and the different agreements, and special conditions that may appear in
the collective bargaining agreement.
Many of these international trustees are also officers in another
local or for the international union as a international representative with other work
responsibilities.
Many of these trustees call for new elections before the LCN, and
its control of the local union has been eradicated.
Too many times when this happens the relatives
and cronies of the removed or incarcerated officials become the new officials of the
union.
The biggest mistake made by the trustee is to under estimate the
vast control that the LCN has of the captive local.
Through the years, the LCN has made the union and the jobs gained by collective bargaining available for its friends,
relatives, and associates. These people may even constitute a majority and control the
elective process or control the other members. It becomes even more important to identify
these people.
The appointed trustee must an untainted member of the local union
to assist in this endeavor. This achievement may prove to be quite difficult by is
absolutely necessary.
Fear or lack of understanding of due process is
wide spread and not easily overcome and the union membership is overly suspicious of the
trustee and his goals. To overcome this distrust, the election process should be delayed
until creative and untainted members realize that they have the ability to seek office and
meet the needs of the union and its membership. Every person acting as a trustee should
become well versed with the different collective bargaining agreements and the local
unions craft jurisdiction. Always keep in mind that even though the bad
union officials have been removed, the LCN is ever present and still involved.
Advise from friendly members may be coming from someone unfriendly. In many instances LCN activity continues for
years in benefit funds because of plan designs and requirements. Plans should be
redesigned to create competition between brokers, insurance companies and other service
providers.
Find out more about the membership and who may be LCN controlled.
Don't rush to democracy, it takes time to bring about change. Talk to democratically
elected union officials about what should be done.
The UAW and most Electrician unions are well run and can offer some good advise. Talk to the membership and keep then
informed of progress and of incurred problems.
Definitions and Terminology
Adobe A
payment made by a non-union worker pays the union a fee for being allowed to work on union
jobs.
Against the wall A physical threat from a LCN
member.
Alter-Ego employer An employer
who looks to circumvent the collective bargaining agreement, beneficially owns and
operates another company in the same industry and engages the service's non-union
personnel and utilizes inferior work conditions.
Advertisement Picketing The type of picketing
used where the employees have never been organized or the union had no prior collective
bargaining relationship. Typical picket signs state that the employees of an employer are
not receiving the wages and work conditions enjoyed by the labor
organization.
B
BA A business agent, field representative or the business manager of a union.
Basic Trades Consisting of the
Bricklayers, Carpenters, Cement Finishers, Ironworkers, Laborers, Marble-Tile and
Terrazzo, Operating Engineers, and Teamsters Unions. (The Plasterers, Lathers and Pile
Drivers are part of the Carpenters Union. The surveying engineers are part of the
Operating engineers union.)
Backdoor jobs jobs that are
not presented to the general union membership and
are usually plush or better in nature or the recipient of such a job is not eligible to go
to work because of seniority or other union hiring rules.
Blue Flu Started by police unions, it is
sometimes used in the white collar unions and means numerous members call the employer and
tell them that they are to sick to come to work.
This is done when an agreement exists between
the union and employer. The membership is attempting to change a condition and cannot
bargain until the termination of the Collective Bargaining Agreement.
Broom A laborer that is responsible for cleaning
the shanties that the workers may change their clothing and eat their lunch.
Building Trades See Basic and Mechanical trades.
Buster A hydraulic or electric
jack hammer used to break concrete
Calvin Klein Employee An
employee that is well dressed and not wearing work clothing .
Cheater A union employee
working for a non-union employer or a union employee that reaches a private deal with an
employer.
Check-off The process where
union dues are withheld from a members paycheck
Closed Shop A company that by contract cannot
employ non union workers.
Connected Employee Any
employee that is a relative or associate of a union official or LCN member.
Cover An employee that has to
do the work of two men so that a connected worker can leave the job, or not have to work
as hard.
Davis Bacon Act. The section of the Wage and
Hours law that pertains to what wages should be paid on Federally funded construction
projects. As a matter of policy these wage rates are the same as those
of the local unions, and for the same geographic
area covered by the local union collective bargaining agreement.
Degenerate A worker that is a habitual gambler
Dodge Report A daily
publication that lists job listings and is published throughout the United States.
Doublebreasting The same as alter-ego.
Drop Zone An in-plant area that is designated for
the illegal disposal of hazardous waste.
Electrician tagalong A worker who follows the
electricians around and gathers the unused or discarded cuttings of
electrical wiring for its copper content.
EEOC Reports Equal Employment Opportunity
Reports. These reports are filed annually by a labor organization and list the amount of
workers the union represents and how many are classified minorities.
ERISA Employee's Retirement
Income Security Act.(see Title 29)
F
Family Operation An employer
that uses only relatives to perform work.
Favored Nations Clauses Contract language
installed to allow the signatory employer or employer group to be afforded and favorable
conditions bestowed on another employer or employer
group.
Featherbedding A condition where the Collective Bargaining Agreement or intimidation cause the employer to employ unnecessary employees.
It also means where Federal and State Laws
place more employees on a job then are necessary.
5500 Report An Annual Federal
Report filed by the Board of Trustees listing the assets, receipts and disbursements of a
benefit fund.
G
General Foreman On larger projects and a number
of foreman have crews, many local union Collective Bargaining Agreements require that a
general foreman is needed.
Gumbo A watery clay that is quite difficult to
work in and remove. normally found in sewer, water
line and transmission line installation projects.laying projects
H
Heavy and Highway Work
encompassing road, utility line and most construction outside the
confines of a building.
Hob knocker
A type of hydraulic jack hammer
Hod A hod is a small metal or wooden box at the
end of a pole and was used in early construction projects by mason tenders who delivered
bricks, mortar to the brick mason prior to elevator and mechanical
hoist equipment.
HUD Project Federal Funded
Housing Projects, They do not Come under the Davis Bacon Act wage Scale. Substantially
lower wages have caused this work to be lost by the building trades.
Job Killer A hard worker or labor saving device
Kick-back The process where
the union official or LCN member is rewarded for allowing favored conditions on the job
site or any of a number of favored business ventures.
L
Labor Faker A non-working employee
Landrum-Griffin Act. Or the Labor-Management Reporting and Disclosure Act of 1959 (see title 29
laws)
LM-2 Report A required Annual Department of Labor
form that is lists the union officers names and titles, wages and union expenses.
Marathon
sessions Long and tedious negotiations.
Market Recovery Plan A program where labor unions
allow flexibility of manpower, ease restrictions and wage rates in order to combat
non-union contractors.
Maritime Trades Consist of
Many building trades that perform work in the water or on the docks. They also include
Longshoremen, Seafarers, Grain Handlers, United Auto Workers,
Steelworkers, United Mine Workers, Railroad Workers, Rubber Workers, Chemical Workers,
etc.
They are open for most AFL-CIO unions to participate, normally for
lobbying purposes.
Meat A naive worker or employer
Mechanical Trades Asbestos
workers, Boilermakers, Electricians, Elevator Constructors, Glazier's, Painters, Plumbers,
Roofers, Sheetmetal workers, and Steamfitters unions and together with the basic trades
comprise the building trades. (The Plumbers, Sheetmetal workers, and Steamfitters are also
known as the United Association.)
Monkey Hole man A laborer that brings dynamite
into a tunnel area
Necessary Worker Also known as a bullshit worker,
who is union employee that is not connected and is A non-connected member of a LCN
controlled union
No-Show An employee who is
paid by an employer even though he is seldom on the job site.
O
On the carpet A berating by a LCN member to
another LCN member or connected associate
One Liner An agreement between
an employer and the union that is limited to wages and Benefit payments.
Open Shop An employer can hire both union and
non-union workers
OSHA Occupational Safety and Health
Administration
Palm Springs mobster A
reference to a want to be, or a low level LCN member.
Pinkie ring What workers call a LCN member behind
his back.
Quarter 250 hours, the minimum time needed to
qualify for health and welfare benefits and a partial pension benefit.
R
Raid When a trade claims and performs the
traditional work of another union.
Rainy Day Delivery The illegal
method of dumping liquid hazardous waste on the roadways. A vale is partially opened and
the wastes leaks out of the tanker.
Rear Guard Action When a job
is coming to an end some workers slow down or destroy portions of the project so that they
can get more time on the job.
Reserved Gate Established to
prevent site picketing. The targeted company and replacement workers
can only use this area for leaving and entering the work area. The picketing employees can
only strike or advertise at this designated area.
Right to Work Laws State Laws in 13 states that
make closed shop practices illegal.
Sandhog A laborer that works in a tunnel
Sanitary Landfill A landfill that is licensed to
accept sanitary trash and waste.
Scab A non-union employee that replaces a union
employee and may cross a picket line.
Secondary Boycott Picketing or boycotting of an
employer who may be a supplier or vendor with the primary organizing target.
Shit job A difficult unwelcome
job
Show-Up time When an employee
shows up for work and inclement weather or another condition prevents him or her from
working they are paid normally two hours of pay. If an employee starts
work and inclement weather or another condition prevents him or her
from completing the normal days work they are paid an additional two hours of pay. This
can vary from agreement to agreement.
Sit-down A meeting of senior LCN members to
listen to and resolve problems.
Site picketing Many projects
may have more than one General contractor on a project and not involved
in the organizing effort
This type of organizing can shut down there
operation as well.
Sneaker Brigade Non-union employees who are hired
by a union contractor to perform services after the union workers have gone home.
Street cleaner A LCN loan shark who visits a job
site to collect owed moneys.
Sympathy Strike Workers of a sister union or
another trade, walk off the job or refuse to cross a picket line in support of the
striking or picketing union members.
Strike Can only take place where the employees
had a prior employment relationship with the employer or the union had a prior Collective
Bargaining Agreement that has expired. were working.
Sweetheart Agreement
An employer receives better working conditions from the union then
other employers who are signatory to the Collective Bargaining Agreement.
T
Taft Hartley Laws
Labor-Management Relations Act of 1947 amended the National Labor Relations Act of 1935.
This law established guide lines and procedures for dealing with
employer (section 8-A) and Union (8-B) grievances and violations.
They included craft jurisdictional remedies (10-K) and laws and
guidelines for negotiations and Benefit Funds.
Targeted job A project slated for picketing
Temporary Injunction A back to work order by a
Federal or State official or a court that compels a striking union to go back to work
during the strike phase of collective bargaining.
Thousand Hours The annual time needed to receive
a full pension credit.
Twenty Weeker
A job that is going to last. The time needed to be eligible state unemployment insurance.
Wildcat Strike A union pulls
its members off of a job when a collective bargaining agreement exists.
Y
Yellow Dog Contract An agreement between an
employer and an employee or group of employees, whereby the employee would agree not to
become a member of a union.