CORE TERMS: corruption,
extortion, organized crime, trusteeship, membership, election,
racketeering, negotiations, convicted, ongoing, memorandum, appointment,
indictment, conspiracy, appoint, local union, corrupt, leadership,
fiduciary duties, pled guilty, threatening, appointing, violating,
temporary, permanent, enjoining, severance, indicted, extort, Corrupt
Organizations Act
LexisNexis(R) Headnotes
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Headnotes
COUNSEL: [**1] ANDREW
J. MALONEY, United States Attorney, Eastern District of New York (Pamela
R. Perron, Thomas A. Carr, Varuni Nelson, Christopher G. Lehmann, Joseph
D. McCann of counsel) Brooklyn, New York, for plaintiff.
GORDON, HURWITZ, BUTOWSKY, WEITZEN, SHALOV & WEIN (Victor Rocco,
Lawrence Zweifach, of counsel) New York, New York, for defendants Local
295 of the International Brotherhood of Teamsters and Executive Board of
Local 295 of the International Brotherhood of Teamsters.
IRA DROGIN, Esq., New York, New York, for defendants Local 295 of the
International Brotherhood of Teamsters and Executive Board of Local 295
of the International Brotherhood of Teamsters.
GOLDMAN & HAFETZ (Frederick P. Hafetz, Edward R. Harris, of counsel) New
York, New York, for defendants Local 851 of the International
Brotherhood of Teamsters and Executive Board of Local 851 of the
International Brotherhood of Teamsters.
PAT V. STISO, Esq., Bronx, New York, for defendants Frank Manzo and
Leone Manzo.
SHAW, LICITRA, ESERNIO & SCHWARTZ (J. Stanley Shaw, of counsel) Garden
City, New York, for defendants Harry Davidoff and Mark Davidoff.
STILLMAN, FRIEDMAN & SHAW (Charles A. Stillman, of counsel) New York,
New York, for defendant Sharron Moskowitz.
[**2]
ROBERT D. FOGLIA, Esq., Ridgewood, New Jersey, for defendant Sharron
Moskowitz.
NANCY SIANO, defendant pro se.
FRANK CALISE, defendant pro se.
MICHAEL B. POLLACK, Esq., New York, New York, for defendant Anthony
Calagna.
SIMON & MILLER (Herbert Simon, of counsel) for defendants Michael
Urso-Pernice and Robert Reinhardt).
SUTTER, MARTEN & LAWRENCE (John Joseph Sutter, of counsel) Mineola, New
York, for defendant Richard Schroeder.
RICHARD REHBOCK, Esq., New York, New York, for defendants Anthony
Guerrieri, Thomas Greco, and Carmelo Amato.
JUDGES: Nickerson
OPINIONBY: EUGENE H.
NICKERSON
OPINION: [*16]
MEMORANDUM AND ORDER
NICKERSON, District Judge:
The amended complaint of United States names as defendants two Locals,
Local 295 and Local 851, of the International Brotherhood of Teamsters,
AFL-CIO (the Teamsters International) and related officers and alleged
co-conspirators, and alleges violations of the Racketeer Influenced and
Corrupt Organizations Act (RICO),
18 U.S.C. § § 1961-1968, including nineteen acts of racketeering.
The United States moves for the second time for the appointment of a
trustee for Local 295.
The court assumes familiarity with its previous memoranda and orders
dated March
[**3] 7, 1991;
June 28, 1991; and July 23, 1991.
I.
The amended complaint seeks a preliminary injunction: (1) enjoining
defendants from violating the federal racketeering laws; (2) enjoining
individual defendants from participating in the affairs of, or dealing
with officers or employees of, Locals 295 and 851 or Local 851's Pension
and Welfare Funds; (3) enjoining current Executive Board members of both
Locals from taking any action for their organizations; (4) removing all
officers and trustees of Locals 295 and 851 and their Executive Boards
and of Local 851's Pension and Welfare Funds; (5) appointing one or more
trustees, pendente lite, for both Locals and Local 851's Pension and
Welfare Fund; and (6) ordering the trustee to conduct general elections
to elect officers for the Executive Boards of both Locals.
The United States also seeks a permanent injunction (1) prohibiting the
individual defendants from dealing with any member, officer,
representative or agent of the Locals, their Executive Boards, and Local
851's Pension and Welfare Funds; (2) making permanent any provision of
the preliminary injunction the Court deems appropriate; and (3)
divesting from individual defendants
[**4] their
interest in the racketeering enterprise alleged in the complaint.
II.
By Memorandum and Order dated March 7, 1991, this court denied the
motion of various defendants to dismiss. The court struck as moot the
claim for the injunctive relief barring defendant Frank Manzo from
future dealings with any labor union, because the Consent Judgment in
the United States District Court in the Southern District of New York
had already granted the United States that relief. United States v.
International Bhd. of Teamsters, 88 Civ. 4486 (Edelstein, J.) (S.D.N.Y.
Mar. 14, 1989). The court also granted partial summary judgment for the
United States requiring
[*17]
defendants Frank Calise and Harry Davidoff jointly and severally to
disgorge $ 961,400 and barring them from future dealings with any labor
organization. The court denied partial summary judgment with respect to
Manzo and the Locals for divestiture on the ground that factual disputes
remain.
In a June 28, 1991 Memorandum and Order, this court amended its order
requiring Calise and Davidoff to disgorge. This court rescinded its
holding that they were jointly and severally liable for the $ 961,400
and postponed until after discovery
[**5] a
finding of the amount each must pay of that amount.
In a July 23, 1991 Memorandum and Order, this court adopted the findings
made in Investigations Officer v. Anthony Calagna, Sr., Michael
Urso-Pernice, Robert W. Reinhardt, Anthony Calagna, Jr., Salvatore E.
Cataldo, Ralph Delsardo, and John Moran, Jr., Decision of the
Independent Administrator, (June 14, 1991) (Lacey), under the Teamsters
International Consent Decree in the District Court for the Southern
District of New York concerning the ongoing corruption of Local 295.
United States v. Local 295 of the Int'l Bhd. of Teamsters, No. 90 CV
0907, 1991 U.S. Dist. LEXIS 10669 (E.D.N.Y. July 31, 1991). In that
June 14, 1991 decision, former Judge Frederick B. Lacey said, "In my two
years as Independent Administrator, I have seen few IBT [Teamsters
International] Locals with the sullied reputation associated with Local
295, a reputation richly deserved, as reflected by the record in this
case." (at 24).
Based on those findings, Judge David N. Edelstein sustained former Judge
Lacey's decision to remove and permanently bar all but one member from
the Executive Board of Local 295 and to appoint a temporary
[**6] trustee
to run the daily operations of the Local.
This court declined to appoint a permanent trustee for Local 295 in
light of Judge Edelstein's appointment of a temporary trustee. Instead,
the court said that the United States could "renew its motion at a
future time if the temporary trustee arrangement proves inadequate". Id.
at 4.
The United States now moves again for the appointment of a permanent
trustee. The United States points to the conviction of the former
president of Local 295, Anthony Calagna, for extortion an August 8,
1991; a letter to this court from former Judge Lacey outlining the
institutional limitations of the present Temporary Trustee; portions of
the record of proceedings in the District Court in the Southern District
of New York; and a Declaration and attached exhibits of Special Agent
James Malley, a federal law enforcement official, chronicling patterns
of extortion and intimidation by the former officers of Local 295 and
their involvement with La Cosa Nostra. See documents, correspondence,
depositions, court records, and other material collected in the
Declaration of Assistant U.S. Attorney Christopher Lehmann. Hereinafter
references are to exhibits
[**7]
contained in this declaration.
III.
A.
Former Judge Lacey found on June 14, 1991 that the former Executive
Board members were derelict in failing to investigate corruption within
Local 295. The first question is whether the present Temporary Trustee
should be given a chance to stamp out any ongoing corruption.
The United States contends that the Consent Decree and the IBT Teamsters
International Constitution limited former Judge Lacey's selection
options by requiring that a trustee be a Teamsters International member.
He said in a letter to this court that the present trustee, William
Ferchak, while competent to perform the business functions of the
Local's Executive Board, lacks the skills and experience necessary to
investigate and remove any possible corruption still plaguing the union.
In his affidavit submitted on the present motion by defendant Local 295,
Ferchak outlined his credentials and job experience and summarized the
nature of his work as the Temporary Trustee of Local 295. Nowhere
[*18] did he
suggest any experience investigating corruption. Nor did he mention any
present efforts or future plans to investigate possible corruption.
Ferchak's discussion of the challenges facing
[**8] Local
295 deal primarily with business operations and contract negotiations.
The two times he specifically refers to "problems" of Local 295 are in
connection with "negotiating a collective bargaining agreement" and
confirming with a bank his "exclusive authority to sign union checks".
Ferchak does say that "an objective of the Consent Order [from Judge
Edelstein] is to rid the [Teamsters International] of any influence of
organized crime. My Trusteeship over the affairs of Local 295 will be
highly sensitive to ensuring compliance with this important policy." But
he does not mention the specific corruption of Local 295, nor does he
say what, if any, any actions he has taken or plans to take to achieve
reform. He plainly conceives of his role solely to conduct the business
affairs and negotiations of Local 295 in a professional manner. He is
not, nor does he pretend to be, capable of conducting a sustained,
aggressive investigation into potentially ongoing corruption involving
organized crime.
Local 295 also says that the Teamsters International Investigations
Officer continues to monitor the Local and has conducted a recent
financial audit. But under the terms of the Consent Decree,
[**9] the
Independent Administrator's and Investigations Officer's positions will
expire nine months after the election of International Officers. Those
elections have recently been held. Former Judge Lacey says that the
Temporary Trustee could continue beyond that date, but cautions that
"the resources and support of [Lacey's] office, the Investigation
Officer's office and Judge Edelstein may no longer be available".
Moreover, the Independent Administrator's Office has responsibility for
all of the manifold problems involving the Teamsters International.
This court is mindful that Congress considered the appointment of a
trustee to run the affairs of a union local as an extraordinary measure.
Absent some clear cut limitations on the use of this remedy [a civil
RICO trusteeship], there is a valid public concern that the tremendous
power which the statute offers may be abused . . . .
In the case of labor unions, the Department of Justice should study and
consider the feasibility and potential effectiveness of alternative
remedies for the Government, short of the imposition of a civil RICO
Trusteeship. A trusteeship is clearly an extreme remedy . . . .
Federal Government's Use of
[**10] the
RICO Statute and Other Efforts Against Organized Crime, S. Rep. No. 407,
101st Cong., 2d. Sess., at Sec. XII, 1990 WL 201659 (Leg. Hist.)
[Hereinafter "Senate Report"].
This court is satisfied that it is faced with an extraordinary
situation. See
United States v. Local 560, Int'l. Bhd. of Teamsters, 581 F.Supp. 279
(D.N.J. 1984), aff'd
780 F.2d 267 (3d Cir. 1985), cert. denied
476 U.S. 1140, 106 S. Ct. 2247, 90 L. Ed. 2d 693 (1986);
United
States v. Local 30, United Slate, 686 F. Supp. 1139, 1168 (E.D.Pa. 1988);
United States v. International Bhd. of Teamsters, 905 F.2d 610, 612-13
(2d Cir. 1990) (summarizing Consent Decree appointing trustee for
Teamsters International). Contrary to the argument of Local 295,
vestiges of its old regime are not gone. The record establishes, without
significant evidentiary dispute, a consistent and extended pattern of
racketeering and extortion and a sufficiently strong possibility that
the corruption persists to warrant a special remedy from the court. "The
implementation of trusteeships under civil RICO is no longer a novel,
one-time experiment. It is quickly being
[**11]
recognized as an extremely valuable part of effective law enforcement."
Senate Report, at Sec. I.
Moreover, Judge Edelstein has already followed former Judge Lacey's
recommendation and removed Local 295's Executive Board and appointed a
Temporary Trustee. This court must now decide whether to transform the
Trusteeship into one capable of conducting investigations as well as
negotiations.
[*19] B.
This court may appoint a trustee to oversee the affairs of a local union
under the Racketeer Influenced and Corrupt Organizations Act,
18 U.S.C. § 1964 (a).
United States v. Local 560, Int'l. Bhd. of Teamsters, 581 F.Supp. 279
(D.N.J. 1984), See also
United
States v. Local 30, United Slate, 686 F. Supp. 1139, 1168 (E.D. Pa.
1988) (establishing "decreeship" which retained new union
leadership but imposed close court scrutiny and appointed "liaison
officer" between union and court).
In determining whether injunctive relief is warranted, this court
applies a preponderance of the evidence standard to determine whether
there have been violations of a statute and whether there is a
likelihood that the violations will continue.
Local
30, 686 F. Supp. at 1164 [**12] and
cases cited;
Local 560, 581 F. Supp at 327-28 (applying preponderance of evidence
standard).
The amended complaint alleges a long history of corrupt acts by numerous
members of Local 295's Executive Board. Some of these comprise nineteen
acts of racketeering in violation of RICO, 18 U.S.C. §§ 1961 - 1968. In
the words of former Judge Lacey's June 14, 1991 decision:
The evidence presented to me demonstrates that from at least 1975, until
the present, Local 295, its officers, former officers, employers of its
members, and others associated with the Local Union, have been the
subject of repeated and ongoing allegations and findings of corruption,
including La Cosa Nostra infiltration into the Local.
reprinted in Lehmann Ex. 1 at 12).
Institutional practices and traditions tend to endure long after
specific individuals are gone. The evidence establishes that the
corruption in Local 295 was not simply in practice, but in spirit and
belief. Organized crime certainly has the power--both through inducement
and intimidation--to continue asserting itself in the affairs of Local
295.
In Local 295 the corruption has been extensive in terms of diversity,
duration,
[**13] and
number of people involved. Many of the guilty do not appreciate the
gravity of their crimes. None of their associates has displayed any
interest in reforming the union. The record shows a smug, almost
contemptuous, indifference to the presence of organized crime in union
affairs by a number of former union officials and an active effort by
many in Local 295 to thwart reform.
On January 3, 1991, Anthony Calagna, Sr., (Calagna), President of Local
295 from 1986 to 1991, was convicted of extortion and conspiracy to
extort money from P.C. Delivery Services, Inc.. United States v. Calise,
Calagna, and Schroeder, CR 89-308 (s) (E.D.N.Y. April 12, 1991)
(Nickerson, J.) (weekly payoff in extortion scheme continued through
December 1987). Investigations by the Federal Bureau of Investigations
(FBI), show that Calagna is a member of the Lucchese Organized Crime
Family of La Cosa Nostra. In fact, when Lucchese Family associate and
former President of Local 295 Frank Calise was convicted and removed
from office, the Lucchese Family made Calagna a mafia "soldier" and
arranged for his election as President of Local 295 even though he was
not a member of Local 295 at the time.
FBI records
[**14] as
well as Calagna's testimony chronicle his contacts with, and special
favors for, members of organized crime, as well as his failure to
investigate union corruption.
After his conviction and removal from office, former Local 295 Vice
President Robert Reinhardt assumed the presidency while Anthony Cuozzo
became Vice President. Cuozzo was Chairman of the Anthony Calagna
Defense Fund Committee. On June 27, 1991, the Investigations Officer
under Judge Edelstein's Consent Decree charged Anthony Cuozzo with
"bring[ing] reproach upon the union, violating [his] fiduciary duties as
a union officer, violating [his] oath and interfering with Local 295's
and the IBT's legal obligations under the Consent Order, . . . [and]
knowingly associating with Calagna, a member of La Cosa Nostra."
[*20] The
continued support of Calagna extended beyond Anthony Cuozzo to the
entire Executive Board. The Executive Board embezzled union funds to pay
for Anthony Calagna's Criminal Defense Counsel. At a meeting on May 16,
1989, two weeks after the criminal indictment of Calagna, the Executive
Board agreed to pay the attorney's fees for him and authorized a $
600.00 per week pay raise for him.
The Executive Board adopted
[**15] a
severance plan for the sole benefit of officers of Local 295 after the
Board learned that Local 295 and its officers were the subject of an FBI
investigation.
The officers of Local 295 also failed to investigate the charges against
Calagna. The Executive Board did not consult Local 295's attorney about
the legality of using union funds to pay for his criminal defense,
although such legal advice was routinely sought for other matters. On
June 2, 1989, Local 295 paid Michael Pollack, Esq., $ 50,000 to
represent Calagna at his criminal trial.
This kind of treatment has not been accorded solely to Calagna. The
Executive Board of Local 295 continues to make payments to another
former officer who was indicted and convicted for abuse of his union
office. On February 2, 1989, former Vice President of the Local 295,
Harry Davidoff, along with others, was convicted of conspiracy and
several acts of extortion. He and his co-defendants, who were either
members or associates of the Lucchese Crime Family, used their positions
and influence in Locals 851 and 295 to extort payoffs from various
freight carriers in exchange for dropping employee demands during
collective bargaining negotiations and
[**16] ending
strikes. Despite Davidoff's and his co-defendants' convictions, Local
295 continues to pay him $ 1,903 out of its general fund each month--
totaling nearly one hundred thousand dollars in the last five years.
On June 14, 1991, former Judge Lacey issued a decision chronicling past
union corruption and the Executive Board's apparent indifference to it.
The Executive Board then consisted of Calagna, President; Michael
Urso-Pernice, Secretary-Treasurer; Robert M. Reinhardt, Vice President;
Anthony Calagna, Jr., Recording Secretary; Salvatore E. Cataldo,
Trustee; Ralph Delsardo, Trustee; and John Moran, Jr., Trustee. Vice
President Anthony Cuozzo was not a member of the Executive Board at that
time and was therefore not charged by the Investigations Officer with
wrongdoing. Later, however, the Investigations Officer did charge Cuozzo
with associating with Calagna, a member of La Cosa Nostra.
Former Judge Lacey found that these Executive Board members had (1)
violated their fiduciary duties by failing to investigate and to take
action on numerous allegations of criminal acts by and convictions of
present and former union officers and allegations of La Cosa Nostra
involvement in the
[**17]
Local's affairs and (2) embezzled the Local's funds by paying Anthony
Calagna's lawyer's fees and awarding him a substantial pay increase, by
establishing a severance plan for union officers, by buying a car in
violation of the Local's by-laws for Secretary-Treasurer Michael Hunt's
retirement, and by making payments to Harry Davidoff since 1972 despite
his conviction for extortion and conspiracy to extort Local 295
employers. (Lehmann Ex. 1).
The evidence assembled by the Investigations Officer and adopted by
former Judge Lacey illustrates a uniform disregard by Local 295's former
officers concerning the possible influence of organized crime in the
union's affairs.
Asked whether, as a union official, he might be concerned if someone he
knew might be tied to organized crime, Calagna replied at a hearing on
November 2 and 19-23, 1990 before former Judge Lacey, "Not really, I
didn't give a [expletive deleted]". Other Local 295 officers exhibited a
similar disdain for their fiduciary duties. As the Investigations
Officer wrote in his Post-Hearing Memorandum,
Like the other [former members of Local 295's Executive Board], Delsardo
chose to deliberately ignore the indicia that Local 295
[**18] is in
the grip of a corrupt element:
[*21] "Q:
When these things kept happening, the FBI visit, the FBI search of those
offices, indictment of Calise, and the indictment of Calagna, Calise's
guilty plea, then Calagna's guilty verdict, did you or any other member
of the board ever discuss the fact that Local 295 might have a problem
that the officer's should look into?
A: No.
Q: . . . Did you or any other member of the board ever look into these
matters?
A: No."
Tr. 736-37; see id. at 740. The testimony of each of the other
respondents was consistent with this corrupt refusal to act. E.g., Tr.
669-74 (Moran); Tr. 752-753, 776-79 (Cataldo); Tr. 801-02, 804-05
(Calagna, Jr.); Tr. 882-96 (Urso-Pernice).
Quoted in Decision of Independent Administrator, June 14, 1991 (Lacey),
Lehmann Ex. 1 at 17. See also, id. at 13-15 reprinting excerpts of Tr.
Reinhardt).
In summary, the evidence exhibits more than simply a failure by the
Executive Board to act affirmatively in the face of substantial evidence
of corruption. Local 295's officers closed ranks against the
government's investigation. They agreed to pay attorney's fees for
Calagna and to increase his salary, to establish a
[**19]
severance plan for each other, to continue paying Davidoff a handsome
monthly salary, and to try to evade detection.
In 1985, after Calise and Davidoff were indicted, the Local 295
Executive Board asked Davidoff's then attorney and later Calagna's
attorney, Michael Pollack, to have Local 295's offices swept for
electronic surveillance devices. In testimony before the Investigations
Officer, Pollack described their motive: the "union was concerned that
employers were eavesdropping on them and there also was a concern about
law enforcement". Quoted in Decision of Independent Administrator, June
14, 1991 (Lacey), Lehmann Ex. 1 at 18.
These derelictions by the officers and Board members are, of course,
chargeable to the Local itself. A union may be held accountable for the
acts of its officers, see
United
States v. Local 30, 686 F. Supp. 1139, 1166 (E.D.Pa. 1988),
and liable based on its authorization of its officer's general activity.
Charles D. Bonanno Linen Serv., Inc. v. McCarthy, 708 F.2d 1, 12 (1st
Cir. 1983) ("knowing tolerance" of illegal activity sufficient to
uphold monetary award against local union for its representative's
[**20]
failure to control violence);
United Bhd. of Carpenters, v. United States, 330 U.S. 395, 410, 91 L.
Ed. 973, 67 S. Ct. 775 (1947) ("knowing participation by the union
in the operation of the illegal agreement after its execution").
In any event, the corruption in Local 295 extended beyond the leadership
to the membership itself. In 1991, Carmelo Amato, a former shop steward
of Local 295, and Thomas Greco, an employee at Stair Cargo, pled guilty
to an extortion conspiracy involving Stair Cargo Services, Inc.. The
conspiracy continued through July, 1989. United States v. Guerrieri,
Calise, Greco, Amato, 89 CR 307 (s) (E.D.N.Y. May 31, 1991) (Nickerson,
J.).
When a special meeting of the general membership was called to consider
payment for Calagna's criminal defense, a majority of the 100 to 200
members present out of a total membership of 1,500 to 1,600 approved the
payment. While this does not establish the general membership's
complicity in illegal activities, it does illustrate the ability of the
Local's officers to maneuver the general membership into sanctioning the
Executive Board's embezzlement. As former Local 295 Secretary-Treasurer
Michael Urso-Pernice testified in a deposition
[**21] on
September 5, 1990 pursuant to the International Teamsters Consent
Decree:
I think [Vice President Reinhardt] explained the charges, and he didn't
think [Calagna] was guilty, the charges were a little ridiculous or
whatever you want to say and [Calagna] wanted to know if we could use
their money to pay for his fees. Then I believe Anthony [Calagna] got up
and spoke too. I forget what he said and then we took a vote [which
passed] after that.
(Lehmann Ex. 26 at 107-08).
In addition to the criminal activities of Anthony Calagna, Frank Calise,
and Carmelo
[*22] Amato,
the Local has been associated with an array of other federal indictments
and convictions.
In United States v. Vincent Santa and Thomas Orlando, 86 CR 303
(E.D.N.Y. Feb. 4, 1987) (McLaughlin, J.), the defendants were indicted
and later convicted for extortion and conspiracy to commit extortion by
threatening work stoppages and labor unrest involving Local 295 and
Local 851. In United States v. Salvatore Reale and George Parker, 86 CR
302 (E.D.N.Y. February 4, 1988) (Weinstein, J.), Reale pled guilty to
extortion charges for threatening air freight companies with
interference from Local 295. In United States
[**22] v.
Frank Cammarano, 89 CR 654 (E.D.N.Y. March 30, 1990) (Glasser, J.),
Cammarano was convicted of a similar offense. In United States v.
Parker, 88 CR 026 (E.D.N.Y. December 22, 1988) (Weinstein, J.), Local
295 employer George Parker pled guilty to extorting money from air
freight companies by threatening to have Local 295 and Local 851
unionize non-union employees.
Defendants' contention that Local 295 is now free of the influence of
organized crime rings hollow. Previous assertions that all corruption
had been eliminated from the Local proved wrong, and the recent
convictions and pleas of its officers argue for continued, close
scrutiny.
Significantly, after former Judge Lacey stayed the removal of all but
one member of Local 295's Executive Board, the Executive Board on June
24, 1991 sent the membership a "Notice of Special Elections" to replace
the removed officers. This special election violated both the
International Teamsters Constitution and the Local 295 By-Laws.
For example, the "Notice of Special Elections" announced that "the 50%
meeting attendance requirement shall not be enforced as a condition of
eligibility to run for office in this election". The Investigations
[**23]
Officer characterized this recent act of Local 295's officers as
"designed to allow [the Executive Board] to select their own
replacements, unfettered by the Local 295 by-laws and to suit the
purposes of the Local's organized crime masters".
This court concludes that there is a likelihood of continued corruption
and that the court should appoint a trustee. The record establishes a
variety of illegal practices, including efforts to evade detection and
prosecution; extensive corruption of the Local's officers and involving
the membership; the persistence of corruption over a number of years
despite changes in leadership; and a distinct lack of effort to
eliminate corruption, by such means as independent auditing, periodic
investigations, effective grievance procedures, and independent
monitoring of elections.
C.
Defendants claim that replacing the Temporary Trustee or changing his
status to a consultant would undermine his ability to negotiate 91
collective bargaining agreements, each of which would last for three
years and would effectively destroy the Union's bargaining position with
all employers.
Defendants thus pose a trade-off between a trustee capable of vigorously
representing
[**24] the
union members and one with investigative experience. That trade-off need
not exist. Even if a trustee with investigative expertise is
inexperienced in labor negotiations, some arrangement is surely possible
with the present trustee--as a consultant, a deputy, etc.--retaining
some responsibility for such matters.
IV.
Before appointing and specifying the powers of the Trustee, the court
must determine the source of funding for the Trusteeship. The court
directs the parties to submit within 20 days of date of this memorandum
and order papers addressed to this matter.
In an appearance before Judge Edelstein, the United States stated that
it would propose to use $ 65,000 in a fund available for the victims of
extortions and other RICO violations at Local 295 to finance the
trusteeship. The parties should discuss the legal and practical
propriety of using this
[*23] and
other sources of funding. The court will consider investing the Trustee
with the powers suggested by the United States, but declines to define
the terms of the Trusteeship until the court can determine available
resources.
Based on its experience with similar RICO trusteeships, the United
States will submit, within twenty
[**25] one
days, cost estimates of administering Local 295 as well as of
investigating possible corruption.
Counsel for both parties shall also submit, within twenty days, no more
than three nominees each for the Trustee, along with the nominees'
qualifications.
So ordered.
Dated: Brooklyn, New York
January 31, 1992
Eugene H. Nickerson, U.S.D.J.