John D. Abbott was one of Oregon's most influential labor leaders when he came under scrutiny in 1998 by the inspector general of the Laborers International Union of America.

» Money firm faces new scrutiny Officials are investigating a deal that Capital Consultants made for a union chief who helped steer funds to the company (7/30/00)

The International was under intense federal pressure to rid itself of corruption after a presidential commission identified the Laborers in 1985 as one of four international unions under organized crime influence.

Under threat of a U.S. Justice Department racketeering lawsuit, the Laborers agreed in 1995 to clean up its leadership. Robert D. Luskin, a former Justice Department organized crime prosecutor, and Doug Gow, a former associate deputy director of the FBI, came aboard for the task. In five years they would oust more than 400 corrupt officers including, Gow told The Oregonian, 123 known Mafia members and associates.

Most of the action was on the East Coast and in the Midwest, and Abbott wasn't suspected of being involved with organized crime. But in December 1997, Abbott popped onto Gow's radar screen for another reason.

Gow heard that Abbott and the rest of his union district council had approved $8,372 severance pay for a former underling, William Jesse Loose, who was in a Utah jail on felony sex charges that later netted him five years to life in state prison. They had authorized the payment without prior clearance from the International, a violation of the union's reform rules.

Gow ordered an audit of Abbott's handling of union funds.

Abbott at the time held dual positions as business manager and secretary-treasurer of the Oregon, Southern Idaho & Wyoming District Council of Laborers. He served as a trustee on five different Laborers trust funds, which collectively controlled hundreds of millions of dollars. One of them alone -- the Oregon Laborers-Employers Trust -- steered nearly $100 million to Capital Consultants LLC, a Portland investment advisory firm headed by Jeffrey L. Grayson.

Abbott stuck loyally by Capital Consultants even in December 1995 when the Department of Labor filed a lawsuit accusing Grayson and the company of overcharging the Laborers trusts on investment fees.

Far from expressing outrage, Abbott told The Oregonian at the time that "we were pleased and we still are pleased" with the firm.

Capital Consultants and Grayson admitted no wrongdoing but settled the suit by agreeing to repay the Laborers union trusts $2 million.

Two years later, Grayson helped engineer the sale of a catering company that Abbott's late wife had operated, netting Abbott $60,000.

But Abbott's entrenched role at the Laborers began to unravel when union leaders found evidence that he had helped himself to union money.

The March 1998 audit alleged that Abbott had improperly taken $172,000 of union funds for his own use. Most of the money -- $150,184 -- Abbott had charged for personal expenses on his union credit card, according to the audit. Abbott repaid the credit card charges on Feb. 10, 1998 -- seven days after Capital Consultants filed legal notice of its loan in the catering company sale.

But the March 25, 1998, audit report made additional allegations.

It said Abbott had dipped into the till for another $22,160, including $7,275 in vacation pay he had awarded himself that the union said he wasn't entitled to. In the settlement agreement he signed with the union that November, Abbott neither admitted nor denied wrongdoing but agreed to repay $11,385 in unexplained cash payments from the council and another $3,500 the audit had said he pocketed by drawing duplicate advances from both the council and the international union to finance his attendance at an international convention.

Abbott pledged to make restitution. But he missed his first few payments. And the union cracked down. Luskin said he gave Abbott the choice of giving up his union office voluntarily or facing expulsion. Abbott chose to resign.

In the settlement agreement he signed in November 1998, Abbott promised to finish repaying the money, vacate his positions on the union trust funds and as business manager of the district council, and never again seek or hold union office.