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REPORT TO THE GENERAL EXECUTIVE BOARD RE: INVESTIGATION AND EVALUATION OF ALLEGATIONS AND CHARGES CONTAINED IN THE APRIL 2004 REPORT OF STIER ANDERSON, LLC, TO THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS July 13, 2005 EDWARD A. MCDONALD
TABLE OF CONTENTS Page INTRODUCTION ......................................................................................................................... 1 PART ONE: THE CHICAGO INVESTIGATIONS WERE NOT “SHUT DOWN”........... ...... 11 PART TWO: EVALUATION OF THE REPORT’S “CONFIDENTIAL” SOURCES AND THEIR CRITICAL INFORMATION.......................................................... ......... 13 A. INTRODUCTION ........................................................................................................... 13 B. RELIABILITY PROBLEMS WITH THE SOURCES AND THEIR C. “CONFIDENTIAL” SOURCE A.......................................................................... .......... 18 (1) The Investigators’ Disparaging Descriptions of D’Amico - and What They (2) What Stier Anderson Knew About D’Amico’s Background and his Motive (3) D’Amico’s Contradictory Stories About Paying (and not Paying) a Bribe..... .... 23 (4) D’Amico’s Allegations about the Outfit and Related Events..................... ......... 27 D. “CONFIDENTIAL” SOURCE B .................................................................................... 30 E. “CONFIDENTIAL” SOURCE C .................................................................................... 31 F. “CONFIDENTIAL” SOURCE D.................................................................................... 33 G. “CONFIDENTIAL” SOURCE E .................................................................................... 35 H. “CONFIDENTIAL” SOURCE F..................................................................................... 37 I. CONCLUSIONS ABOUT THE SIX “CONFIDENTIAL” SOURCES AND PART THREE: EVALUATIONS OF THE IBT’S DECISIONS IN RESPONSE TO A. INTRODUCTION ........................................................................................................... 39 B. STIER’S ROLE IN THE IBT’S NEGOATIONS WITH THE U.S. ATTORNEY C. PROJECT RISE: STIER ANDERSON’S FAILURE TO MEET THE IBT’S EXPECTATIONS............................................................................................................ 43 (1) Failure to Meet Scheduling Commitments .............................................. ............ 43 (2) Unrealistic Promises About Obtaining Receiving Information From The (3) Disappointment with the Development of the RISE Code of Conduct ........ ...... 47 (4) Questions About “Perception and Reality”.......................................................... 50 (5) Escalating Costs................................................................................................... 51 D. THE IBT’S DISSATISFACTION WITH STIER ANDERSON’S (1) Stier Anderson’s Problematic Use of Surveillance....................................... ....... 52 (2) Other Stier Anderson Investigations That The IBT Leadership Found Troubling.............................................................................................................. 54 E. THE CHICAGO INVESTIGATIONS ............................................................................ 60 (1) Introduction.......................................................................................................... 60 (2) The Two Authorized Investigations in Chicago .......................................... ........ 61 F. THE REPORT’S “INDEPENDENT CORROBORATION” .......................................... 63 G. THE TIMING OF THE REPORTS FROM THE “CONFIDENTIAL” SOURCES INTRODUCTION In September 1999, the International Brotherhood of Teamsters (the “IBT” or the “Union”) retained the law firm of Stier Anderson & Malone (“Stier Anderson”) to assist in developing a program of reform that would ensure that all vestiges of organized crime and corruption were removed from the Union. The IBT leadership expected that the implementation of the reform program would foster a culture within the Union that would be intolerant of corruption and would result in the elimination of the requirement of oversight by the IBT’s Independent Review Board (the “IRB”). That requirement had been imposed in 1989 as a result of a consent decree resolving a civil RICO action that the United States Department of Justice had brought against the Union and its General Executive Board in the United States District Court for the Southern District of New York in 1988. After their retention, the Stier Anderson lawyers organized investigators, advisors, and IBT representatives to participate with them in what was called Project RISE for “Respect, Integrity, Strength and Ethics.” Project RISE had two objectives: creating for IBT members a code of conduct that would include an effective enforcement process and completing a nationwide survey or “field study” of IBT locals that would result in a report on the current state of corruption and organized crime within the IBT. The Stier Anderson team worked throughout 2000 and into 2001 drafting a code of conduct and enforcement procedures with the expectation that the Department of Justice would be persuaded that the code and its enforcement process could effectively replace the IRB. Investigators working with Stier Anderson also conducted “field studies” of IBT’s local unions, focusing on approximately 80 locals with troublesome histories. In October 2002, they published a 641 page report entitled “The Teamsters: Perception and Reality - An Investigative Study of Organized Crime Influence in the Union” (“Perception and Reality”) that not only described the current state of the IBT, but also detailed the IBT’s history of corruption and influence by organized crime. From the time of Stier Anderson’s retention, Edwin Stier, the firm’s senior partner, was unstinting in his praise for IBT General President James P. Hoffa and his leadership team and their commitment to anti-racketeering reform. For example, on March 28, 2000, in Congressional testimony about the IBT’s efforts at reform, Stier said, “I must say that throughout this process [of working with the IBT to initiate an anti-racketeering program], I have been extraordinarily impressed by the honesty and commitment of Mr. Hoffa [and] the other officers of the International Union … who have contributed so much to this effort.” By the time “Perception and Reality” was issued in October 2002, Stier went so far as to say, “Our study has found that organized crime is no longer a problem it once was in the Teamsters. The days of the Teamsters being synonymous with organized crime are over. The Teamsters are no longer dominated or heavily influenced by organized crime. Today’s Teamsters are committed to keeping organized crime out of the Union” (IBT October 2, 2002, News Release, at 1), and “The difference [in the IBT] between now and the 1980’s is absolutely dramatic; there’s a 180 degree difference. In terms of its attitude toward corruption, you couldn’t have a more dramatic difference.” (New York Times, October 3, 2002, at A20). The Report’s Executive Summary also states, “What marks a radical change from the past [for the IBT] … is a genuine commitment to anti-racketeering reforms coupled with a realistic ability to carry them out … ” (“Perception and Reality:” Summary of Findings, at 19-20), and “Already, the self-policing being undertaken by the Teamsters places the Union in a leadership role among labor organizations and compares favorably with the internal compliance systems of most business corporations and other private entities.” (Id., at 23-24). As Project RISE proceeded, the IBT leadership began to authorize the Stier Anderson attorneys and investigators working with them to conduct investigations into allegations of corruption in certain local unions. These investigations were independent of Project RISE and were referred to within the leadership as “special investigations” or “General Counsel investigations.” In early 2002, General President Hoffa authorized Stier Anderson to conduct investigations at two locals in Chicago. In 2002 and 2003, Stier Anderson proposed additional investigations in the Chicago area relating to other locals. In April 2004, Stier Anderson issued a Report concerning their on-going and proposed investigations in Chicago entitled “Report and Recommendations: Issues Concerning Chicago Organized Crime Infiltration of Teamster Entities and Attempts to Undermine IBT Anti-Racketeering Reforms” (the “Report” or the “April Report”). The Report paints a picture of the IBT leadership very different from what Stier Anderson had previously depicted. The Report claims that beginning in September 2003, Stier Anderson investigators received information from six individuals “who were in positions to know” and who are referred to as “confidential” sources A through F that “the Chicago organized crime family -- known as the Chicago ‘Outfit’ -- had concluded that its interests in Teamster matters were threatened by IBT investigative activities [being conducted by Stier Anderson] and had ordered those activities shut down.” The Report goes on to state that the “confidential” sources reported, “This objective would be accomplished by influential current and former union officials, including the current president of Joint Council 25 [John Coli] and the executive assistant to the IBT general president [Carlow Scalf].” The Report also says that “confidential” sources claimed that “[Former Joint Council President Bill] Hogan, the JC25 President, and the Executive Assistant are key figures behind attempts to shut down IBT investigations in Chicago.” The Report is then confusing and, in some places, inconsistent in describing its conclusions about the charges attributed to the six sources and about the corroboration that exists for their claims. On the one hand, the Report repeatedly cautions against a rush to judgment: “The IBT investigative team does not assume that information from intelligence sources is accurate” and “The identification of certain issues in this report does not reflect a conclusion that misconduct has actually occurred.” The Report calls for a “full investigation” to determine whether the informants’ allegations are true. On the other hand, the Report contains statements expressing conclusions about the informants’ charges and about certain decisions that the IBT leadership made in 2003 and 2004. However, certain conclusions are repeated with shifting emphases; and it is often unclear just what the Report means to say. First, concerning the commitment of the Hoffa leadership team to reforming the IBT, the Report states, “During the past year, and especially since June 2003, it has become increasingly obvious that the IBT’s leadership’s commitment to the reforms symbolized by Project RISE has wavered.” This finding of “wavering” is quite different from harsher statements elsewhere in the Report on this point. For example, the Report says, “There is substantial evidence to support”…“[the] perception that has taken root among both supporters and opponents of reform that the IBT’s top leadership no longer supports [the anti-racketeering reform] program and will not permit anti-racketeering investigations to threaten the most powerful remaining organized crime influences in the Union, which are centered in the Chicago area.” The Report goes on to say, “The IBT’s 2003-2004 refusal to confront serious issues of organized crime influence and corruption in the Chicago area represents the failure of a crucial test of its commitment to its professed racketeering reform program” and “The reform agenda proclaimed by IBT leaders a short time ago has turned on its head.” The Report ends with: “[C]ontinuing to represent that the Union is committed to reform under the present circumstances could be viewed as a fraud on union members, government agencies, and the public.” Second, the Report states that “covert inquiries and analysis of intelligence information and other evidence produced independent corroboration of the intelligence sources and leaves little doubt that, whether emanating from the Outfit or not, there have in fact been attempts to shut down or severely restrict [Stier Anderson] investigations in Chicago.” The Report later definitively asserts that on February 24, 2004, all anti-racketeering investigations in the Chicago area had been “shut down.” Third, according to the Report, primary responsibility for “shutting down” the Chicago investigations lies with the IBT General President’s Executive Assistant, Carlow Scalf, who “in response to pressure from certain Chicago Teamster leaders,” including the current and former presidents of Joint Council 25, John Coli and Bill Hogan, was “using his influential position to sabotage the IBT investigative team.” The Report also says, “The combined efforts of the executive assistant [Scalf], the JC 25 president [Coli], and their allies succeeded in bringing about the complete shut down of Chicago investigations in 2004.” The Report leaves little doubt that Stier Anderson contends that the Chicago organized crime group, the Outfit, was behind efforts to impede reform and “shut down” the Chicago investigations. Indeed, in addition to finding corroboration for the six “confidential” sources and their reports about the Outfit ordering that the investigations be “shut down,” the Report repeatedly raises the specter of the “infiltration of Teamster entities by the Chicago organized crime family” and states, “If the current shutdown of IBT anti-racketeering efforts in Chicago is allowed to stand, the reason for it will be obvious to both Teamsters and outsiders: the continued influence of the Chicago Outfit and the culture of corruption that has flourished in that area for as long as the Union has.” The Hoffa leadership team was extremely disturbed by the April 2004 Report, especially since the leadership is adamant that they remain steadfast in their commitment to reform. They note that they paid Stier Anderson and their associates approximately $15 million dollars in connection with the reform effort, while still paying for the work of the IRB as required by the Consent Decree; they authorized Stier Anderson to conduct field studies of 80 IBT locals, to conduct intensive special investigations at over 15 locals, to devote substantial resources to the creation of an IBT code of conduct, and to prepare a detailed report on the status of corruption in the Union; and they also cooperated extensively with the IRB and multiple law enforcement agencies. The leadership also takes issue with the charge that the Stier Anderson investigations in Chicago were “shut down” with the obvious implication that the leadership sought to conceal evidence of wrongdoing. They contend that what the Report claims was the “shutting down” of the investigations in February 2004 was actually the leadership’s decision that the investigations remain “on hold” while Stier Anderson prepared a report justifying their proposals and describing the status of their extensive investigative activity. Moreover, while the leadership did reject certain proposals as unwarranted and chose not to permit Stier Anderson to embark on other costly, long-term investigations, they did not seek to cover up anything: in fact, they referred all the proposed investigations to either the IRB or appropriate law enforcement agencies. Finally, the leadership team has very different explanations for why they responded the way they did to Stier Anderson’s proposals for Chicago. First, although no agreement had been finalized, by September 2003, the IBT leadership was more optimistic than ever before that the United States Attorney’s Office for the Southern District of New York (the “Southern District”) would agree to accept an alternative enforcement process that would replace the IRB. The IBT leadership strongly believed that any new enforcement program would not include a role for Stier Anderson. Therefore, the IBT leadership was of the view that it would make no sense to allow Stier Anderson to commence complex, long-term investigations in Chicago only to be replaced if and when a new enforcement program was accepted by the United States Attorney’s Office. In addition, by September 2003, the IBT leadership had grown dissatisfied with the Stier Anderson team and the work that they had done both on Project RISE and in their investigations of locals outside of Chicago. In short, they felt that despite paying approximately $15,000,000 in fees and expenses for the Stier Anderson lawyers and their investigators, the prompt results that Stier Anderson had predicted in 1999 had not been achieved. The IBT leadership was also disappointed with Stier Anderson’s performance in Chicago. Even though the law firm had been authorized to conduct investigations at two Chicago locals in early 2002, they had virtually nothing to show for their efforts 18 months later. Moreover, the IBT leadership believed the additional investigations that Stier Anderson recommended were, in some cases, based on information of dubious reliability and, in other cases, were impractical, unreasonably broad in scope, duplicative of IRB and other investigations, and potentially extremely costly. Shortly after the Stier Anderson Report was issued, the IBT General Executive Board, at the General President’s recommendation, retained Dechert LLP to “investigate allegations made in [the Report] concerning interference in investigations being performed by the Stier Anderson firm and otherwise to evaluate that report and advise IBT and its officers concerning what additional action should be taken concerning the allegations and matters contained in that report.” The General Executive Board also formed a three-member Committee of Board members, Robert Bouvier, Jack Cipriani and Chuck Mack, to whom we reported. Within days of our retention, Stier Anderson terminated its relationship with the IBT. During the following several months, we sought to get to the bottom of the Stier Anderson allegations described above. We interviewed virtually everyone who might provide us with relevant information, including General President James P. Hoffa, General Secretary Treasurer C. Thomas Keegel, General Counsel Patrick J. Szymanski, Executive Assistant Carlow Scalf, Joint Council 25 President John Coli, and IBT officials in headquarters in Washington, D.C., and in Chicago. Despite the lack of cooperation from Stier Anderson, we were also able to interview all six of the so-called “confidential” sources and the four Stier Anderson investigators who had worked on the Chicago matters. In addition, we reviewed countless documents, records and reports concerning the subjects of the April Report. We did not seek to interview any of the Stier Anderson lawyers believing that it made little sense to do so in light of the firm’s refusal even to respond to our initial request for cooperation and the bitterness and hostility that Stier persistently displayed in his correspondence with the IBT and in his public statements about the Report and the reasons for his firm’s resignation. We provided the General Executive Board a 183 page report detailing our findings and conclusions on March 17, 2005. Since our report contained confidential information and highly sensitive descriptions of ongoing, non-public investigations, the Board determined that it would not be appropriate to release the report to the public in its entirety. The Board requested that we prepare an abbreviated version of the report describing our investigation and the critical findings that we made without references to confidential and sensitive information. In what follows, we present our abbreviated report. In Part One, we describe, albeit in an abridged fashion, our finding that the Chicago investigations proposed by Stier Anderson were never “shut down” in the first place. Perhaps most importantly, in Part Two, we describe in detail our analysis of the foundation of the April 2004 Report, the information provided by Stier Anderson’s six confidential sources. We have concluded that there was no basis to credit the information that the sources provided and in light of what the Stier Anderson team knew about the sources, it is entirely unclear why they ever accorded any weight to what the sources had said and why they even repeated their allegations. In Part Three, we review certain aspects of the history of the relationship between the IBT and Stier Anderson to provide a context in which to evaluate the leadership’s decisions in late 2003 and 2004 that the April Report asserts were tainted by “sabotage.” While the April Report contends that the leadership’s actions constitute “independent corroboration” for what the sources reported, we have concluded and demonstrate below that the IBT leadership, given its four year experience with Stier Anderson, had good reason to be dissatisfied with the firm’s performance; and in light of these reasons, they responded in a reasonable and responsible way to Stier Anderson’s investigative proposals. We also review certain of the specific events upon which the April Report relies as corroboration for the sources’ reports, and we describe our finding that none of the items of “independent corroboration” provide any support for the charges in the April Report. Finally, we review the timing of the April Report in an effort to come to some understanding of why the Report - with its inflammatory and poorly supported allegations - was ever released at all. PART ONE: THE CHICAGO INVESTIGATIONS WERE NOT “SHUT DOWN” At the outset, it is important to state that the April Report’s critical allegation that Stier Anderson investigations in Chicago were “shut down” is simply not true. The Report identifies investigations involving seven locals in Chicago and two IBT members that were supposedly “shut down” by the IBT leadership as a result of a plan of obstruction orchestrated by the Chicago Outfit and carried out by Carlow Scalf and his Teamster allies in Chicago. The clear implication of this charge is that the Outfit and Scalf succeeded with their “sabotage” when the Hoffa administration, fearful of what the investigations would reveal and no longer committed to anti-racketeering reform, especially in Chicago, capitulated. Based on our review of correspondence between the IBT leadership and Stier Anderson, as well as our interviews of members of the leadership, it is clear to us that, contrary to the charges in the Report, the IBT did not “shut down” investigations in Chicago in 2004, as Stier Anderson contends. In February 2004, when the IBT leadership and Stier Anderson were having discussions about the various investigative proposals, the leadership accepted Stier’s suggestion that Stier Anderson prepare a report describing the status on their investigations and justifying their recommendations. At that point, the leadership did not “shut down” any investigations. The IBT leadership determined, understandably, that on-going investigations should be placed “on hold” pending the completion of the report. When Stier Anderson provided its Report to the IBT, the leadership was certainly surprised by the explosive nature of its allegations. The Report also contained recommendations for certain investigations that were being made for the first time. The leadership recognized that in light of the reasons that we describe in this report, Stier Anderson did not have a long-term future working for the IBT and that it made no sense for them to proceed -- except for work on one long-term matter that appeared close to resolution. At that point, the leadership did not “shut down” the other investigations; they did not attempt to conceal wrongdoing at Chicago IBT locals; and they did not act in a way that was inconsistent with their stated commitment to reform. Indeed, the leadership directed Stier Anderson to refer all of the investigative matters described in the April Report to the IRB, which had successfully conducted countless investigations of IBT locals, as well as to the Department of Labor and appropriate law enforcement agencies. This was hardly a decision that resulted in the “shutting down” of investigations and the covering-up of wrongdoing. Finally, it is important to note that the purpose of our investigation was not to draw conclusions about the substance of the various allegations of corruption within local unions that Stier Anderson cites in their Report. Our findings that the IBT leadership’s reaction to Stier Anderson’s recommendations was not tainted by “sabotage” and that the IBT leadership did not abandon its commitment to reform, as Stier Anderson claims, should not be read as a conclusion that there is no corruption or wrongdoing in any of the locals referred to in the Report. The entire Report – including, of course, all of the allegations of corruption within local unions that Stier Anderson describes – is in the hands of the United States Attorney’s Office and the IRB. None of those allegations have been ignored or “swept under the rug,” as Stier Anderson implies. It is simply not the case that Stier Anderson is the only entity capable of addressing those issues. It is our understanding and our expectation that to the extent Stier Anderson presents valid allegations or issues that require further investigation at any local, those matters will be addressed by the IRB, by other government agencies and/or by the IBT itself. PART TWO: EVALUATION OF THE REPORT’S “CONFIDENTIAL” SOURCES AND THEIR CRITICAL INFORMATION A. INTRODUCTION At the heart of the allegations about the IBT leadership’s abandonment of its commitment to reform, the influence of the Chicago Outfit with high-level Chicago Teamsters and Carlow Scalf, and the improper “shutting down” of Chicago area investigations is information from the six supposedly “confidential” sources that investigators working with Stier Anderson began to receive in September 2003. The sources, who are identified in the Report as Sources A through F, are presented as reliable and knowledgeable about developments in Chicago IBT and organized crime circles. According to the Report, they informed the Stier Anderson investigators that “the Outfit had concluded that its interests in Teamsters matters were threatened by [Stier Anderson] investigative activities and had ordered those activities shut down.” The sources also reportedly said that the Outfit’s “objective would be accomplished by influential union officials, including the JC 25 President [John Coli] and the Executive Assistant [Carlow Scalf], who would use their positions to stop IBT investigations in Chicago.” Elsewhere in the Report, “confidential sources” are reported to have said, “[Former Joint Council 25 President Bill] Hogan, the JC 25 President, and the Executive Assistant are key figures behind the attempts to shut down IBT investigations in Chicago.” This “confidential” source information is critical to the Report’s conclusions and recommendations. Indeed, despite the lip service that the Report pays to the need for a full scale investigation of what the sources said, a fair reading of the Report leads to the unmistakable conclusion that the information from “confidential” sources A-F is the very foundation upon which the Report stands and that the Stier Anderson team has accepted the “confidential” source information as true. Therefore, we have provided a detailed report of our analysis and conclusions about the source information. Assessments of the credibility of the sources and the reliability of the information that they provided are essential to determining whether their allegations are worthy of belief. Therefore, we sought within days of our retention to obtain from Stier Anderson the confidential appendix that they cite in the Report as containing the statements of the so-called “confidential” sources upon whom they relied. The Stier Anderson firm did not respond to our letter requesting the confidential appendix. Instead, Stier wrote to IBT General Counsel Patrick J. Szymanski on April 28, 2004, to inform him that he refused to release the confidential appendix to us. He claimed that providing the confidential appendix to us “under the present circumstances would compromise the union’s ability to carry out its obligations under the Consent Decree, as well as its commitment to police itself.” Even though he had never spoken to anyone at our firm, he suggested that we were “biased in favor of protecting the general president’s political or personal interests,” that “the true purpose” of our request was “to allow the general president’s office to obtain access to the confidential information for reasons that will not bear scrutiny,” and that the “personal safety” of those sources who would be identified in the confidential appendix “may be at stake.” While we considered interviewing Stier and his attorneys as part of our investigation, his complete lack of cooperation, his refusal even to respond to our correspondence, his unfounded disparaging comments and the bitterness and hostility that he repeatedly exhibited in his correspondence with the IBT and in his public statements about the Report and his firm’s resignation led us to conclude that any further attempts at contacting him and other Stier Anderson attorneys would be unproductive. We did not obtain the confidential appendix from Stier Anderson. Nonetheless, we did obtain the reports that were prepared of the interviews that former FBI agents working with Stier Anderson lawyers had conducted with the six “confidential” sources. Even more important, not only did we interview the four Stier Anderson investigators who participated in the Chicago investigations, we were also able to interview all six of the sources, five in person and one by telephone. Remarkably, we learned that four of the six individuals, who are described as “confidential” sources and whose identity Stier refused to reveal to us, had never sought confidentiality from the Stier Anderson investigators in the first place and did not consider themselves to be confidential informants. We describe below what we learned from the interview reports and from the sources themselves, as well as what we learned elsewhere about the sources. B. RELIABILITY PROBLEMS WITH THE SOURCES AND THEIR INFORMATION - IN GENERAL The information attributed to each of the sources is described on pages 19-21 in the April Report. We discuss below each of the six sources and the information that each one provided. However, we first note that with respect to all six sources, there are fundamental problems that go to the very heart of the quality of the information attributed to them. The first critical problem is one of reliability. Nowhere in the Report is there any description of any reasons for relying on the sources or their information. The Report is silent on why the sources themselves were credible. Moreover, even if it were shown that the sources were honest, there is no evidence even to suggest that the information that they reported was credible. In fact, there is virtually no explanation at all of where and how the sources had obtained the information that they reported. The Report creates a misleading impression concerning the reliability of the sources and their information. The six sources are presented as six independent individuals who corroborate each other. However, it is clear -- and it had to have been clear to the Stier Anderson team -- that much of the information that the six sources reported had been recycled among themselves. This is a process that we call “circular sourcing,” for which we provide the following examples. Sources A and B could not have been less independent of one another. Source A told the Stier Anderson investigators that he initially obtained the information that he reported from Source B; Source B told them that he got the same information from Source A. The principal Stier Anderson investigator in Chicago remarked to us that Sources A and B substantiated one another; but a witness cannot substantiate another by simply repeating what the other had previously told him. Sources C and E were also not independent of each other. They agreed to meet with us but refused to do so unless they were interviewed together, explaining that we “are in this together” and that “our information is the same.” The two sources refused to identify their sources of information, but the principal Chicago investigator for Stier Anderson told us that he “assumed” that most of Source E’s information had come from Source C. We also learned that Source B was closely associated with Source F. In fact, when Source F lost his position with the IBT, Source B, the principal officer of an IBT local, hired him. There is good reason to believe that Sources B and F were also recycling information. In fact, another Stier Anderson investigator familiar with Sources A, B and F, told us that he believed that the information attributed to Source A in the Report was the “blending” of information from three sources. The second problem is one of accuracy. The Report, in its summary of what the six sources reported, essentially has them saying that the Chicago Outfit had Chicago Teamsters and Carlow Scalf use their official positions to “shut down” Stier Anderson investigations in Chicago. But it is clear from the Report itself that that is not what all six of the informants said. For example, on the critical allegation that the Chicago underworld was behind the effort to “shut down” the investigations, sources C, D and F made no mention at all of organized crime trying to interfere with any investigations. Source B mentioned the Outfit but said that he was simply repeating what he said Source A had told him. Thus, only Sources A and E implicated the Outfit in the alleged sabotage. In addition, it is unclear what the informants claimed was to be “shut down.” All six sources are reported to have given information about attempts to “shut down” or impede “Project RISE.” But what did the sources mean by “Project RISE?” In fact, “Project RISE” is only that part of the Stier Anderson retention that was devoted to the development of a code of conduct and the survey and report on the current state of the Union -- not the “special investigations” authorized by the General Counsel for certain IBT locals, such as those in Chicago that the April Report addresses. Thus, when the six sources are reported to describe efforts to impede “Project RISE,” there is, at the very least, ambiguity about what they meant. For example, Source F certainly was not referring to investigations that the Stier Anderson team was conducting or proposed to conduct in Chicago when he spoke about Project RISE. On its face, the information that he reported concerns efforts within the IBT to defeat certain provisions in the proposed RISE Code of Conduct. Those efforts took place in 2000, long before the IBT authorized any Stier Anderson investigations in Chicago. In addition, Source B was clearly misinformed and told us that he thought that “Project RISE” investigations referred to those that would be conducted after the IRB was replaced. The third problem with the “confidential” source information is that it does not make sense. Implicit in the allegation that the Chicago underworld wanted to “shut down” the Stier Anderson investigations is the premise that only the Stier Anderson team is capable of conducting effective investigations of corruption in IBT locals. The fallacy in this premise is that even if the Stier Anderson team were removed from Chicago, the Outfit and any corrupt associates in Chicago IBT locals would still have to cope with the IRB, which, of course, has had enormous success in rooting out organized crime and corruption from IBT locals throughout the Union. We now turn to our evaluation of the six sources and the information that they provided. C. “CONFIDENTIAL” SOURCE A We devote considerable attention to Source A because he was most important in the development of the intelligence information that is at the heart of the April Report. Stier Anderson’s principal investigator in Chicago, who spent a substantial amount of time with Source A, told us, “As full of shit as [Source A] is, he was the first one to tell of Carlow Scalf and the Outfit’s attempts to kill the investigations,” and therefore, he was “the most important source.” According to the investigator, it was only after Source A’s first report, on September 15, 2003, about the Outfit’s efforts to sabotage the investigations that the investigators were assigned to talk to others to see if they could confirm what Source A had said. The Report says the following about “Confidential” Source A: One Confidential Source (“Source A”), who investigators have independent reason to believe has Outfit connections, stated that the Outfit is extremely upset with “Project RISE” and at General President Hoffa for starting it, and has ordered it stopped. Source A reported that there was too much money involved in control of Teamster pension and health and welfare funds in Chicago for the Outfit to tolerate Project RISE. The Executive Assistant [Carlow Scalf], current JC 25 President [John Coli], and a former barred JC 25 President [Bill Hogan] were sabotaging Project RISE pursuant to Outfit instructions, according to Source A. First of all, Stier has corrected an extremely disturbing accusation attributed to Source A in the passage quoted above. The unambiguous meaning of the last sentence is that Scalf was sabotaging Stier Anderson investigations pursuant to direct instructions from the Chicago underworld. However, in a letter to IBT General Counsel Szymanski dated April 21, 2004, after the Report had been issued, Stier conceded that their information was not that Scalf was acting directly at the behest of the Outfit, but instead that he was receiving “pressure from Chicago-area Teamsters who in turn were acting at the instigation of racketeers.” Stier Anderson’s principal investigator in Chicago, who interviewed Source A and the other sources, also told us that despite the careless wording in the Report, none of the sources ever claimed that Scalf was aware that the Outfit was seeking to undermine the Stier Anderson investigations or that Scalf was taking directions from the Outfit. In any case, Source A is Anthony D’Amico, a former business agent and trustee at IBT Local Union 786 who has repeatedly made allegations about corruption in Chicago IBT locals. Despite Stier Anderson’s description of D’Amico as a “confidential” source, the chief Chicago investigator informed us that D’Amico did not provide information attributed to him with any expectation of confidentiality. Indeed, D’Amico has made many of his allegations publicly and has been questioned in depositions about several of his claims. We were able to interview D’Amico by telephone. We attempted to interview him in person on three occasions when we were in Chicago, but we were unable to do so. On one occasion, D’Amico failed to appear for a meeting that had been scheduled the evening before. We reviewed reports of several interviews of D’Amico that the investigators had conducted, and we interviewed others and gathered background information about D’Amico to determine whether he was reliable and whether the information that he reported was credible. We have concluded that there were numerous reasons - many known to the Stier Anderson lawyers - for disbelieving D’Amico and what he said. (1) The Investigators’ Disparaging Descriptions of D’Amico - and What They Told Stier Anderson We interviewed the chief Chicago investigator at length about his experience with D’Amico and his perceptions concerning D’Amico’s credibility and the value of his information. He told us that D’Amico had provided differing accounts of a bribe that at one point he had claimed to have paid to Hoffa in 1997, two years before Hoffa was elected General President. We will describe the details of D’Amico’s shifting accounts of this assertion below. For present purposes, the investigator told us that upon hearing from D’Amico about his claim to have paid the bribe, he was “very hesitant about” him. He said that because of the importance of the allegation, he introduced D’Amico to the Stier Anderson lawyer who was supervising the Chicago investigations and who ultimately was primarily responsible for preparing the April Report. The lawyer wanted to hear first hand what D’Amico had to say about the bribe. When D’Amico met the Stier Anderson lawyer, he contradicted his previous statements and denied that he had ever paid the bribe. The Stier Anderson lawyer then took a sworn statement from D’Amico, and D’Amico again denied paying the bribe. The investigator said, “I told [the Stier Anderson lawyer] when D’Amico denied the bribe, his credibility was out the window.” We also interviewed Bill Moore, the IBT International Representative who was appointed by General President Hoffa as his personal representative in connection with the Stier Anderson investigations at two Chicago locals, and learned his views of D’Amico. Moore met three times with D’Amico to hear his allegations about one of the locals that Stier Anderson had been authorized to investigate. Moore said that he told the Stier Anderson lawyers handling the Chicago investigations that what D’Amico said was “not believable” and in fact, that D’Amico was “almost laughable.” Moore believed that D’Amico was “using the investigators” in order to get even with Chicago Teamster leaders with whom he had had a falling out. Moore said that D’Amico had never provided “anything solid” and that the investigators had problems trying to prove what D’Amico said was true. (2) What Stier Anderson Knew About D’Amico’s Background and His Motive to Fabricate D’Amico was well known to the Stier Anderson lawyers. Not only did one of the lawyers depose D’Amico in January 2004 concerning his bribery allegations, he also deposed D’Amico in December 2002 in connection with the investigation of a Chicago area local. In view of the Stier Anderson lawyers’ first hand experience with D’Amico and other critical facts that the Stier Anderson lawyers knew about him, they must have recognized that D’Amico had a motive to fabricate. In fact, they did. Even though they do not describe in the April Report any reasons to be skeptical about D’Amico, they did refer to his credibility problems in a report that they issued on June 25, 2003, in connection with one of the locals that they were investigating. In that report, Stier Anderson stated that a lawsuit that D’Amico had brought against Local 786 “raise[s] questions about his credibility.” D’Amico had been a member of Local 786 for more than 30 years. In 1996, he was elected to a Trustee’s position on a slate headed by the Local’s current principal officer, Lou Mazzei. Shortly after the election, Mazzei sought D’Amico’s removal from the Local, claming that D’Amico had associated with an organized crime member who had been permanently barred from membership in the IBT. In January 1997, a Local 786 Trial Board concluded that the charges had been established and expelled D’Amico from the Local. The decision of the Trial Board was affirmed later in 1997 by the Chicago area’s Joint Council 25 and the IBT’s General Executive Board, which removed D’Amico from membership in the Union. The decisions removing D’Amico from membership in Local 786 and the IBT itself were reversed four years later by a vote of the delegates at the 2001 IBT International Convention. D’Amico was then reinstated to IBT and Local 786 membership. D’Amico, however, has been unable to find permanent work with any IBT employers and has not been able to take advantage of his IBT membership. D’Amico blames Mazzei and his associates at Local 786 for his problems. He described for a Stier Anderson lawyer at his December 3, 2002, deposition his account of how Mazzei had harassed him and pressured prospective IBT employers not to hire him. D’Amico has sued Local 786, Mazzei, and others involved in the leadership of Local 786, alleging, among other things, that he was wrongfully removed from his Union membership on false charges and deprived of work. D’Amico has also been critical of IBT Joint Council 25, and he has repeatedly complained to the Stier Anderson investigators -- and to us -- that the Hoffa leadership team was not responsive to his complaints. (3) D’Amico’s Contradictory Stories About Paying (and not Paying) a Bribe As we noted above, when D’Amico contradicted his previous claims about paying a bribe, one of the investigators told Stier Anderson that D’Amico’s credibility was “out the window.” The bribery allegation that D’Amico made arose when he was asked about a rumor that had circulated in Chicago IBT circles for some time to the effect that D’Amico was able to get reinstated to IBT membership at the 2001 IBT Convention because he had paid a bribe to Hoffa in 1997 to support his reinstatement. The implausible details of D’Amico’s various contradictory accounts -- which were provided to the Stier Anderson team -- alone should have entirely discredited D’Amico. We review his contradictory statements about the bribe at length, because they so clearly demonstrate D’Amico’s lack of trustworthiness. (a) According to his interview reports, D’Amico first spoke to Stier Anderson investigators about the bribery allegation on September 15, 2003, the same day he initially volunteered his allegations about the Outfit’s efforts to sabotage the Chicago investigations. D’Amico’s first account of the bribe was cryptic and hypothetical: D’Amico stated it is rumored he paid $25,000.00 to get back in the IBT. D’Amico stated it also rumored the meeting with Hoffa was set up by John Coli. D’Amico stated if this were true then that might be why he refers to Carlo Scalf as Hoffa’s bag man as he probably passed the envelope to a guy he thought was named Carl, who was with Hoffa. D’Amico stated if this did take place the meeting was held at a restaurant in a hotel Hoffa stays in when he comes to Chicago, and that he, D’Amico, probably has witnesses, who saw the envelope being passed. D’Amico stated he thought the hotel was a Ramada on the North side of Chicago, and he could show the investigators where it was and the restaurant they had dinner at, which by the way was lousy. D’Amico stated if he did pay the money, he sure did not get much for it, that it would make one think Carl did not give Hoffa his share of the money. D’Amico stated the investigators should tell Hoffa this may come up in his (D’Amico’s) case in US District Court in Chicago next year, and he will have to testify truthfully as to what probably occurred. That D’Amico would play games with the investigators and treat a matter as important as the alleged bribery of the IBT’s General President in such a cavalier manner should immediately have raised red flags about D’Amico and the weight to be accorded to anything he said. Further undermining his credibility was the last sentence of the statement in which D’Amico, who was seeking to have the IBT leadership intercede in his dispute with Local 786, could be viewed as attempting to blackmail the General President. Nonetheless, Stier Anderson instructed the investigators to pursue the bribery allegation, if it can be called that, with D’Amico. (b) On November 6, 2003, when Stier Anderson investigators interviewed him again, D’Amico purported to be serious: D’Amico stated he was approached during either February or March, 1997 by the Hoffa camp and was told for $25,000.00 Hoffa would arrange to have him reinstated, when they got Carey out as General President, because Hoffa was a sure winner in another election. D’Amico stated Hoffa and his people were holding a campaign slate meeting at the Ramada Inn, Rosemont, IL, which he attended. D’Amico stated the time frame was February or March, 1997. D’Amico stated he then gave Carlo Scalf an envelope containing $25,000.00 in cash at the meeting. D’Amico stated he has a witness who saw him give the money to Scalf and is willing to testify. * * * D’Amico stated this bribe will come out in his lawsuit against Local 786, which is currently pending in US District Court, Northern District of Illinois. (c) On November 21, 2003, D’Amico was questioned once again about his claim. He provided important details significantly inconsistent with his previous account: [D’Amico] stated he paid the bribe to Carlo Scalf on the day the General Executive Board of the IBT in Washington, DC upheld his being banned from the IBT and it could have been October 20, 1997, if that is what the records showed. D’Amico stated he did make a $500.00 contribution to Hoffa via a money order, which he gave to Dane Passo sometime during the summer of 1997 at the Hoffa campaign headquarters in Berwyn, IL. D’Amico stated the $20,000.00 was passed to Carlo Scalf at a dinner meeting with Hoffa at a restaurant close to the hotel in Rosemont, IL where Hoffa was staying. D’Amico stated Hoffa had Scalf and 2 other people at the table, when he gave the $20,000.00 to Scalf in a sealed Federal Express envelope. * * * D’Amico stated he did not wish to harm Hoffa, but that this is going to come out in his lawsuit, and will make Hoffa look bad. D’Amico stated that the IBT hierarchy in Chicago is planning on using this to run against Hoffa. D’Amico stated he had a witness to the bribe paid to Scalf, and intimated it was Robert Walston, President and Principal Officer of IBT, Local 743. (d) As we mentioned above, after one of the investigators had heard D’Amico’s allegation about the bribe, he informed the Stier Anderson attorney with whom he was working. According to the investigator, he arranged a meeting with D’Amico and the attorney. When the attorney asked D’Amico about his claim of having paid a bribe to Hoffa and/or Scalf, D’Amico contradicted his previous statements and denied it. The attorney followed up his interview with a formal deposition on January 20, 2004. Once again, this time under oath, D’Amico denied paying the bribe: Q. Did you ever give the Hoffa campaign or anyone close to Hoffa 20,000 or any significant amount of money like that in order to be reinstated [into Local 786]? A. No. * * * Q. So as far as you’re concerned, there is no truth to you ever giving money to Hoffa or someone around Hoffa in order to be reinstated back in the Teamsters? A. There’s no truth to that. I believe that this was put out because of my pending lawsuit to make me and Mr. Hoffa look bad. (e) By the time Stier Anderson was preparing the April Report, D’Amico had once again denied paying a bribe to Hoffa; and once again he had been under oath. When deposed on February 4, 2003, in connection with the lawsuit that D’Amico had filed against Local 786 concerning his removal from membership in the Local and other claims, D’Amico said, “It’s not true,” when asked if he had paid Hoffa $20,000. (f) We spoke with D’Amico ourselves in a telephone interview on August 20, 2004. D’Amico, who displayed a bitterness towards the IBT and Local 786, rambled on at length, at times incoherently. He refused to answer most of our questions but did raise the subject of the bribe. He repeatedly insisted that he had never paid a bribe to General President Hoffa. He claimed that the allegation “came from someone in 786.” D’Amico also made the incredible assertion that he had never made such an allegation to anyone.
Certainly the record of D’Amico’s shifting and contradictory claims about paying and not paying a bribe to General President Hoffa should have established for Stier Anderson that D’Amico was not worthy of belief. His stories about the bribe also made no sense. Why would D’Amico pay a bribe to Hoffa in 1997 to get reinstated in the Union at a convention not scheduled until four years later? In 1997, Hoffa had recently lost an election to former General President Carey and there was certainly no guarantee that Carey’s election would be overturned1 1 It is unclear when D’Amico claimed that the bribe had been paid. In one interview, he said it had been paid in February or March 1997, before Carey’s election was set aside. In another, he places the payment after the election had been overturned. and that Hoffa would ever be in a position to help D’Amico at the 2001 convention. In addition, D’Amico’s accounts are replete with contradictions, especially about matters as critical as the amount of the bribe and when it was supposed to have been paid. Robert Walston, the President and Principal Officer of Local 743, who D’Amico intimated in his statement of November 21, 2003, was a witness to the payment, denied both to the Stier Anderson investigators and to us ever witnessing the bribe payment. He also said that it was a “ridiculous” allegation, because, among other things, when the bribe was allegedly paid, Hoffa was not the president of the Union. Finally, it was clear that the decision of the IBT leadership in 2001 to support D’Amico’s reinstatement at the 2001 convention was made on the merits and supported by overwhelming evidence. Indeed, a simple review of the Report of the Appeals and Grievances Committee supporting D’Amico’s appeal would have established this. (4) D’Amico’s Allegations about the Outfit and Related Events Finally, there were other reasons for discounting D’Amico’s claims about the Chicago Outfit’s attempts to use Coli, Hogan and Scalf to “shut down” the Chicago investigations. This becomes especially clear when the two interview reports that contain accounts of what D’Amico said about the Chicago Outfit are reviewed. One report, dated September 15, 2003, contains the following: Unsolicited D’Amico advised he had met with his close friend Robert Walston, President and Principal Officer, IBT, Local 743, Chicago, IL during the evening of 9/11/03. * * * D’Amico stated Walston told him that the Chicago “Outfit” does not want Lou Mazzei removed as President and Principal Officer of Local 786 and is utilizing William Hogan, Jr. former President, IBT Joint Council 25, Chicago, IL and John Coli, current President, IBT Joint Council 25, Chicago, IL. They had enlisted Carlo Scalf, IBTHQ, Washington, DC to do everything in his power to impede or stop “Project Rise” investigation[s]. D’Amico then asked if the Field Representatives knew who Carlo Scalf was, stating that the name sounded Mexican to him. D’Amico provided a second account, but it is unclear when that account was given, because the investigators prepared two reports of his account that are identical in all respects except for their dates, September 15, 2003, and October 1, 2003. Whatever the date of the interview might be, the second report contains the following: D’Amico stated all of the IBT officials in Chicago are puppets for the “Outfit” and do as they are told, and that includes John Coli and Bill Hogan. D’Amico stated Coli and Carlo Scalf are extremely close and their sabotaging of “Project Rise” is just following orders given by the “Outfit.” D’Amico stated the IRB investigations in Chicago were a joke, basically throwing out anyone that appeared on a list. D’Amico stated the “Outfit” is extremely upset by “Project Rise” and has ordered it stopped. D’Amico stated the “Outfit” is upset with James Hoffa the General President of the IBT, because he started “Project Rise,”, and if Hoffa doesn’t back off he will disappear like his father. D’Amico stated there is too much money involved in the control of the Chicago IBT Pension and Health and Welfare Funds for the “Outfit” to tolerate “Project Rise.” The substance of the two accounts provided ample basis for questioning what D’Amico had said. We note the following: (a) We discussed above the problem with circular sourcing. In the first D’Amico interview report, D’Amico identifies Robert Walston, the principal officer of Local 743, as his source. Walston is Source B. As we describe below, Walston says that he received his information from D’Amico. Not only is this an example of unreliable circular sourcing, it is also a fundamental contradiction between D’Amico and Walston that undermines the reliability of both of them. (b) D’Amico’s question of the investigators in the first interview on September 15, 2003, about whether they knew who “Carlo Scalf” was and his remark that “the name sounded Mexican to him” are also significant. Certainly, he meant to convey that he did not know who Scalf was. However, in the same interview report concerning information reported about the alleged bribe, on the same day, September 15, 2003, D’Amico conveyed that he knew who Scalf was, calling him “Carl” and referring to him as a “bagman.” * * * Even before Stier Anderson deposed D’Amico on January 20, 2004, in light of what their investigators had reported about D’Amico’s credibility (“out the window,” “laughable”) -- and in light of what Stier Anderson themselves had said of the “questions about his credibility” in their June 25, 2003, report -- it is difficult to understand how Stier Anderson lawyers could have given any credit to D’Amico’s allegations. Indeed, Stier Anderson had already had direct experience with D’Amico at his December 2002 deposition and clearly knew of his motives for fabrication and his history of lying. As the Stier Anderson team learned more about D’Amico -- the details of his contradictory accounts of paying (and not paying) a bribe, his claim that Walston was his source (while Walston said that D’Amico was his source), and his bizarre questions about Carlow Scalf, “the Mexican” -- it is baffling that the Stier Anderson lawyers could have seriously considered D’Amico to be worthy of belief. It is also baffling why Stier Anderson did not include in the April Report any qualifying information about “confidential” Source A and words of caution about what he had said. Putting aside D’Amico, Stier Anderson still had five additional “confidential” sources. For reasons that we explain, not one of the five provided information that should have been credited. D. “CONFIDENTIAL” SOURCE B Source B, who is identified as “a local union officer,” is reported to have said that “JC 25 President [John Coli] was attempting to block the ‘Project RISE’ investigation into [a Chicago area Local] and was using his close relationship with the Executive Assistant [Carlow Scalf] to accomplish this.” As mentioned above, Source B is Robert Walston, the President and Principal Officer of IBT Local 743. When we interviewed Walston, he informed us that he had readily met with Stier Anderson investigators in his capacity as a Union officer and that he had never sought to keep the information that he provided confidential. The investigators interviewed Walston on September 20, 2003, five days after they had received the initial allegations from D’Amico. They made it clear that Walston was not a separate, independent source. Indeed, despite the way his information is presented in the Report, according to the investigators, Walston said that he was repeating information that he had received from D’Amico at a card game. Walston himself confirmed this when we spoke with him in Chicago on October 15, 2004. He told us that the only time he had ever heard the allegation that John Coli was trying to interfere with any investigation was when D’Amico made such a claim at one of their regular poker games. Stier Anderson’s inclusion in the Report of Walston’s statement as if it were independent corroboration for D’Amico obviously creates a misleading impression. Moreover, as we noted with D’Amico, Walston’s credibility, as well as D’Amico’s, is undermined by the fact that the two contradict each other, D’Amico saying that he received his information from Walston, Walston saying that he learned the information from D’Amico. Finally, we note that the clear implication of Stier Anderson’s summary of the source information in the Report is that all six informants supported the proposition that the Outfit had ordered that Chicago investigations be “shut down” and that they were using Scalf and Coli to achieve that goal. The report of Walston’s September 20, 2003, interview does have him saying that D’Amico told him that the Outfit was behind efforts to “block the Project RISE investigation [of a Chicago area Local.].” However, when we interviewed Walston, he told us that he had never heard D’Amico or anyone else say that the Chicago Outfit was attempting to use Coli or anyone else to intercede with Scalf or anyone else in order to stop any investigation into any Chicago local. Walston also said that he had no personal knowledge of any attempts by Scalf or anyone else to stop any investigation. E. “CONFIDENTIAL” SOURCE C The Report ascribes to Source C two pieces of information: (1) “that the Executive Assistant [Carlow Scalf] was fronting a move by Chicago Teamsters to derail ‘Project RISE,’” and (2) that Scalf “had been promised by Chicago Teamsters that if he were fired as a result of his efforts in their behalf, they would hire him back as a union consultant.” This information does nothing to support the allegation that the Chicago Outfit had “ordered” IBT investigations “shut down.” Indeed, Source C’s information does not even contain any mention of the Outfit. It is essentially useless for other reasons. With respect to the second claim, that the Chicago Teamsters would hire Scalf as a “union consultant” if he were fired for his efforts to impede Chicago investigations, we met with Source C (and agreed not to reveal his identity) and asked him about the assertion. Source C told us that he had not been accurately quoted. He said that he had learned of a commitment by Chicago Teamster leaders to Scalf to help him get a job, but that commitment had nothing to do with the Stier Anderson’s investigations in Chicago and any efforts by Scalf to sabotage them. Source C said that he had heard sometime in 2002 that if Scalf lost his job as Executive Assistant as a result of an IRB investigation of two former IBT officials, Chicago Teamster officials would arrange for Scalf to find work in Chicago. Source C refused to identify who provided him the information about Scalf in 2002. The information in the Report about a consultant’s job for Scalf also makes little sense. If Scalf were fired for improperly seeking to “derail” investigations authorized by the IBT in Chicago, it would be likely that he would be barred from IBT membership either by the Union or by the IRB. Even if he were not barred, it is unlikely that any IBT officials in Chicago would take the political risk of assisting Scalf once he had been fired by the leadership. With respect to the first piece of information, it does little more than place an exaggerated spin on what was already well known to the Stier Anderson team and to many others in Teamster circles. By mid-2003, Scalf had serious misgivings about what Stier Anderson was doing in the Chicago area, believing, among other things, that the investigations were too costly, that they were duplicative of work being done by the IRB and federal law enforcement agencies, and that it made little sense for Stier Anderson to continue when it appeared that negotiations with the Department of Justice had reached a point where the IRB might soon be ended and the need for Stier Anderson eliminated. We also asked Source C about the basis for his report that Scalf was trying to “derail” the Chicago investigative efforts. He said that he “did not know that” but that he had heard “second hand” that a particular Chicago Teamster leader had said that. Source C declined to identify who had provided this “second hand” information to him. Source C also said that he had no information, first-hand or otherwise, about Scalf acting at the direction of the Outfit. The circumstances in which Source C reported his information also provided little reason for crediting anything that he said. According to the investigators, Source C was an extremely angry retired IBT member who had repeatedly told them that he could provide important intelligence information but he would not do so unless he received certain concessions from the IBT. The investigators refused to “trade for information,” and according to one of them, Source C never provided anything meaningful except what was included in the Report. When we met with Source C (who insisted on being interviewed in the company of Source E), he made the same offer to us; and while he bitterly made conclusory accusations of corruption and incompetence within the IBT leadership, he failed to provide any meaningful or specific information. Finally, we note that despite what the Stier Anderson team knew about him, the Report does not contain any mention of reasons to be cautious about what Source C said. F. “CONFIDENTIAL” SOURCE D Source D is described as “a local union officer.” The Report states, [T]he current principal officer of Local 330 had interceded with the JC25 President [John Coli] to keep “Project RISE” from becoming involved in an investigation of the current principal officer’s alleged organized crime connections, after which someone influential had called the Executive Assistant [Carlow Scalf] to get the investigation stopped. It is difficult to see the relevance of this statement to the Report’s summary assertion that six informants supplied information that the Outfit was influencing high level IBT officials to sabotage Stier Anderson investigations in Chicago. Source D’s report makes no mention of the Outfit at all. Moreover, there is no probative value in the vague claim that “someone influential” had called Carlow Scalf to have an investigation at Local 330 stopped. In any case, we learned that Source D is Joseph Degande, the former principal officer of Local 330. We met with Degande, and he informed us that he never considered himself to be a confidential source and that he had made his complaints about the current principal officer, Dominick Romanazzi, to many other parties. The circumstances in which Degande made his complaints about Romanazzi are particularly relevant to the significance and reliability of the information attributed to him, even though the Report contains no reference to those circumstances. In 2003, Degande was involved in an acrimonious election campaign against Romanazzi. During the campaign, Degande repeatedly charged that Romanazzi should be barred from IBT membership because he had embezzled Union funds and was an associate of organized crime figures. He told us that he made these charges not only to the Stier Anderson investigators, but also to the IRB and various IBT officials, including General President Hoffa, General Secretary Treasurer Keegel, General Counsel Szymanski, and Bill Moore. According to Degande, the IRB opened an investigation in the summer of 2003 on his charges and deposed Degande, Romanazzi and others. Concerning the allegation that Romanazzi had interceded with Joint Council 25 President Coli to impede an investigation into his background, Degande told us that he did not have any personal knowledge that Romanazzi had actually asked Coli to interfere with any investigation (“That I can’t say”). Degande said that he knew that Coli and Romanazzi had met, but he conceded that that was not unusual in view of their positions in the IBT. While he has no knowledge of what Coli and Romanazzi discussed, he believes that Romanazzi asked Coli to prevent an IBT investigation at Local 330 because none was ever begun. Degande said, “It can only be speculation on my part. I only know meetings took place. I wasn’t in on them, but all I know is that everything on the allegations stopped. Now you tell me.” He also said, “You can only speculate.” Concerning “someone influential” calling Scalf, Degande was again speculating. He said that he had no personal knowledge that anyone had called Scalf, but he knew from personal experience that Coli was “close to Scalf” and he believed that Coli or some other important IBT official in Illinois must have called Scalf because “nothing was ever done on the charges” at the IBT. (Of course, Degande also said that the IRB was already investigating his allegations). We interviewed Romanazzi. He told us that upon learning of Degande’s allegations that he was associating with organized crime figures, he contacted the IRB himself and volunteered to be interviewed, as he was adamant that he had done nothing wrong and wanted to clear his name. He told us that he welcomed an investigation by Stier Anderson or anyone else and would never have requested anyone to impede such an investigation. Finally, when we read to Degande the full account of what was attributed to him in the Report, he effectively conceded that he had been speculating: “Everything just added up. You know what I’m saying. I just connected the dots.” G. “CONFIDENTIAL” SOURCE E The Report says that Source E, “who investigators have independent reason to believe has Outfit connections, confirmed the information from other sources that the Outfit has ordered Project RISE shut down.” A report of an interview with Source E on March 15, 2004, prepared by Stier Anderson investigators provide some additional details, including Source E’s claim that “sources” have said that “the Chicago ‘Outfit’ is upset with the Project RISE investigations and have ordered John Coli to stop the investigators, and that Coli is using Carlo Scalf to get this accomplished.” We have no way to evaluate the reliability of Source E’s information. He refused to identify the source or sources of his information for the investigators, although one of the investigators assumed that Source E was repeating what he had been told by Source C. We met with Source E, who, as we noted above, refused to be interviewed separately from Source C, contending that they were “in this together” and that their information was “the same.” Source E repeatedly stated, without supplying any basis, that everyone knows that the Outfit ordered the Chicago investigations shut down and that they used Coli to influence Scalf to achieve their objective. When we asked from whom Source E had heard this, he refused to say, claiming that he was concerned for his safety. We then asked if he had heard that the investigation at a particular Chicago area local was to be “shut down.” Source E said that he had heard that. When we referred to the report of an interview that Source E had given in July 2003 during which he reportedly had said that the Outfit “wants the current leadership at the Local replaced, and that the current investigation by the IBT meets there [sic] needs,” he was unable to explain the discrepancy. At the conclusion of the interview, we noted that our trip to Chicago to interview Sources C and E could be described as unproductive since they would not describe their sources of information and we had no way to evaluate the reliability of their assertions. Source E said that there was nothing that he could do about that. He also said that if we could arrange for Source C to obtain the concessions that he sought from the IBT, he might be more forthcoming. H. “CONFIDENTIAL” SOURCE F According to the Report, Source F “reported being present at a meeting of Teamster officials in the Chicago area during the period when the rules for Project RISE were being drafted and at which the former joint council president and the current JC25 President were present. According to Source F, the current JC25 President [John Coli] explained that Project RISE investigations would be superficial and for show only.” It makes no sense that this information was included in the Report as supporting the claim that the Outfit was influencing various officials to get the Stier Anderson investigations “shut down.” The information has nothing at all to do with the Outfit or the Stier Anderson investigations. It also has nothing to do with Carlow Scalf. Indeed, the information concerns a statement made by Coli about what was obviously the drafting of rules for the RISE Code of Conduct. Those drafting sessions took place in 2000, long before Stier Anderson ever even proposed investigations in Chicago area locals. We were able to interview Source F, who is Danny Moussette, a retired Teamster. Moussette said that he had not provided his information to the Stier Anderson investigators with any expectation of confidentiality. He also told us that the information that the Report attributes to him did indeed relate to a public statement by Coli to more than 30 representatives to Joint Council 25 when the Code of Conduct was being drafted. Coli’s statement was to the effect that he believed that investigations that would be conducted as part of the proposed Code’s enforcement mechanism, not the Stier Anderson investigations, would be “window dressing.” Even if Moussette’s report were somehow relevant to the claims about the Outfit wanting to end the Stier Anderson investigations, it is significant that Moussette had a reason to malign Coli. As Moussette told us, when Coli became the president of Joint Council 25, he fired Moussette from his position at the Council. We also asked Moussette about any knowledge that he might have about the allegations by other sources contained in the Report. Moussette said that he did not have any knowledge of whether the Outfit was trying to block investigations authorized by the IBT in Chicago. He also said that he had no knowledge that Coli or anyone else ever attempted to thwart any investigations in Chicago. I. CONCLUSIONS ABOUT THE SIX “CONFIDENTIAL” SOURCES AND THEIR INFORMATION In sum, there were numerous compelling reasons to discredit all six sources and disbelieve their allegations. Moreover, in light of the first-hand experiences that the Stier Anderson attorneys had had with certain of the informants and what they had learned from their experienced investigators about all six, it should have been apparent when they prepared their Report that virtually all of what the sources had said that was included in the Report was the unreliable product of bitterness, vindictiveness, rumor, speculation, or wishful thinking. For Stier Anderson to have repeated what their six supposedly “confidential” sources had said, especially without ever mentioning any of the reasons for disbelieving them or being skeptical about their information, is, to say the least, disappointing. PART THREE: EVALUATIONS OF THE IBT’S DECISIONS IN RESPONSE TO STIER ANDERSON’S RECOMMENDATIONS CONCERNING INVESTIGATIONS IN CHICAGO A. INTRODUCTION We recognize that even though the sources themselves and their information, as Stier Anderson reported it, were unreliable, it is still possible that some of what they said might have been true. After the Report describes the source information, it goes on for 15 pages presenting what it describes as evidence from “covert inquiries and analysis of intelligence information and other evidence” that has produced “independent corroboration of the intelligence sources.” Indeed, the Report states that the evidence that it presents concerning attempts to sabotage the investigations “constitute[s] the strongest corroboration of the information received from confidential sources.” In fact, what the Report presents is a review of a series of events and interactions between Stier Anderson and the IBT leadership concerning Stier Anderson’s proposals for investigations in Chicago. Notably, all the “independent corroboration” that Stier Anderson describes is circumstantial in nature. Nowhere in the Report do they cite any direct evidence, such as a statement by an identified witness or a relevant document, that shows (1) that the Chicago Outfit sought to interfere with any Stier Anderson investigations, (2) that John Coli, Bill Hogan or someone else took steps improperly to shut down or impede the Chicago investigations, (3) that Carlow Scalf -- whether acting at the behest of organized crime, under pressure from Coli, Hogan or someone else, or for some other reason -- tried to interfere improperly with the investigations, or (4) that the Hoffa leadership team had abandoned or even wavered in its commitment to reform. We sought to determine whether any such direct evidence exists. We interviewed virtually everyone who might provide relevant evidence; we also reviewed countless documents. We did not discover any direct evidence to corroborate in any way what the informants reported and what Stier Anderson concluded. Therefore, we reviewed every item of circumstantial evidence that the Report cites as “independent corroboration” of their confidential informants. Certain of those items are addressed in detail in Section F below. We also reviewed the facts and circumstances that led to the decisions and actions of the IBT leadership with which the Report takes issue. As we described in our Introduction to this report, the IBT leadership explained to us why they decided not to accept certain of Stier Anderson’s proposals. We interviewed those primarily responsible for those decisions, General President Hoffa and General Counsel Szymanski, the IBT’s principal legal advisor and the Union’s point person in the dealing with Stier Anderson. We interviewed other members of the Hoffa administration who expressed to Hoffa and Szymanski their views about Stier Anderson’s performance and the proposals that they made for Chicago, General Secretary Treasurer Keegel, Executive Assistant Scalf,2 and Gary Witlen, the Director of the Legal Department. We also conducted lengthy interviews of Bill Moore, the General President’s personal representative for the Chicago investigations that had been authorized, and several other IBT officials and employees. 2 We note that to resolve an IRB investigation into whether he improperly received a housing allowance from the IBT (an issue unrelated to the allegations that Stier Anderson makes about Scalf), effective January 12, 2005, Scalf agreed to serve a 60-day suspension from his position as Hoffa’s Executive Assistant. Scalf did not admit or deny any wrongdoing. Effective March 12, 2005, Scalf was terminated from his position as Executive Assistant and is no longer employed by the IBT. We describe below the findings and conclusions that we have reached. However, in order to provide a better understanding of our analyses, we first describe certain aspects of the relationship between the IBT and Stier Anderson that shed light on the IBT leadership’s dissatisfaction with Stier Anderson and how that dissatisfaction influenced the leadership’s response to Stier Anderson’s proposals in 2003 and 2004. B. STIER’S ROLE IN THE IBT’S NEGOATIONS WITH THE U.S. ATTORNEY AND STIER ANDERSON’S FUTURE WITH THE IBT In addition to participating in Stier Anderson’s efforts at developing a code of conduct and conducting field studies of local unions, Stier assumed a role in the IBT’s ongoing effort to convince the United States Attorney’s Office for the Southern District of New York to agree to phase out the IRB. Soon after his firm’s retention, Stier was included in IBT strategy sessions and in negotiations with the Southern District. He boldly predicted that in view of his contacts within the Department of Justice and the United States Attorney’s Office, the results of his work with Project RISE would in short order persuade the attorneys in the Southern District that the IRB was no longer necessary. Early on, however, it became clear to the IBT leadership that despite Stier’s assertions, the goal of removing IRB supervision would not be achieved quickly. While the substance of the Union’s negotiations with the United States Attorney’s Office that we described in our report to the General Executive Board is confidential, we can report that by May 2001, the IBT leadership had determined that Stier’s participation in negotiations with the government was no longer productive and he was removed from the negotiating team. Indeed, he was replaced by another lawyer who thereafter participated in the negotiations. In addition, by May 2002, Stier had also been removed from participating in discussions within the IBT about dealing with the Consent Decree and phasing out of the IRB. In fact, Stier was particularly chagrined when Robert Luskin, a Washington, D.C., lawyer who had been advising the Laborers International Union of North America on matters relating to reform, began to advise the IBT leadership. By the end of 2002, it was abundantly clear to most of the IBT leadership that in view of Stier’s performance in dealing with the Southern District and for various other reasons that we describe, if the IBT’s efforts to negotiate an end to the IRB were successful, the new enforcement process that would replace the IRB would not include a role for Stier Anderson. In addition, by the summer of 2003, the leadership felt that progress was being achieved in negotiations with the prosecutors in the Southern District and they were optimistic that it would not be long before the government agreed to a new enforcement process replacing the IRB. Thus, we have found that in late 2003 and early 2004, when the IBT leadership addressed Stier’s recommendations and allegations concerning Chicago locals, they believed that Stier Anderson’s future with the IBT was short-lived. For that reason, the idea of allowing the firm to conduct expensive, complicated, long-term investigations, going forward, made little sense. C. PROJECT RISE: STIER ANDERSON’S FAILURE TO MEET THE IBT’S EXPECTATIONS It is clear to us from our interviews with members of the IBT leadership team that their disappointment with Stier Anderson’s overall performance in connection with Project RISE also played an important part in their decisions on the firm’s recommendations concerning investigations in Chicago. In what follows, we review some of the reasons for that disappointment. (1) Failure to Meet Scheduling Commitments By mid-2003, the IBT leadership had grown increasingly frustrated with the lack of progress achieved by the Stier Anderson team, not just with the Southern District but on several additional fronts. They were particularly irked because of what had turned out to be wildly optimistic projections repeatedly made by Stier about when the code of conduct would be completed and implemented, when the field study and the report on the state of organized crime and internal corruption would be finished, and when the Union could expect the IRB to be phased out. In Stier’s initial meetings with the leadership in the spring and summer of 1999, he spoke of his reputation and contacts within the federal law enforcement community. Hoffa, Keegel, Szymanski and Scalf told us that they were extremely impressed with Stier’s descriptions of his long-term relationships with the then FBI Director and with important figures within the Department of Justice, both in headquarters in Washington, D.C., and in the Southern District of New York. Stier represented that he and his team could get to work promptly and that the IBT could expect that the code of conduct would be completed, the nationwide field study conducted and the organized crime report issued by the end of 2000. The phasing out of the IRB would soon follow. While it might be expected that some puffery would be included in Stier’s pitch, Stier’s on-the-record commitments, even after it had been agreed that he would be hired, had the ring of sincerity. In a memo to General President Hoffa in September of 1999, Stier said, Within one year, the code of conduct should be adopted, the education process should be completed, and enforcement of the system should be in place and operating, and the organized crime study should be completed and released to the public. Even more encouraging was testimony that Stier gave on March 28, 2000, to the House of Representatives Sub-Committee on Oversight and Investigations. In his prepared remarks, Stier said that “By the middle of the summer of this year, we are scheduled to prepare a detailed report on” the national field study that would “account for every local union that has in any way been associated with organized crime during the last thirty years” and for which “[e]very scrap of information relating to the problems in those locals [will be] catalogued and used by our staff to compare with current conditions.” Stier also described the steps that were being taken to create and implement the membership’s code of conduct and enforcement system and said, “The entire process is scheduled for full implementation by January 2001.” Stier’s projections were wildly off the mark. As explained below, the code of conduct was never completed. And the report on the current state of organized crime’s involvement in the Union, while it was included in a far more comprehensive report on the IBT, was not published until October 2002. The IBT leadership recognized that certain factors beyond Stier Anderson’s control had contributed to delays in meeting Stier’s scheduling commitments. They had been extremely patient with Stier, deferring to his experience and giving him broad discretion in order to demonstrate the leadership’s commitment to reform. Nonetheless, by 2003, they were disappointed with Stier Anderson. Not only had Stier given unreasonably optimistic projections at the outset of his retention, he had also continued over and over again to mismanage expectations about when promised goals would be achieved. The IBT leadership had believed that Stier Anderson would provide results, but by mid-2003, after the expenditure of millions of dollars, it was becoming apparent those results were not forthcoming. (2) Unrealistic Promises About Obtaining Information From The FBI The leadership was especially frustrated by something else that Stier did. Stier recognized that in proposing an enforcement process for the RISE Code, it was important that the IBT have the capacity to gather intelligence information about possible corruption and organized crime influence within local unions. Szymanski recalled that as early as July 22, 1999, Stier said in a meeting with Szymanski that he recognized the issue but was confident that through his contacts in law enforcement circles, he would be able to obtain intelligence information critical to effective IBT self-policing. Thereafter, time and time again, Stier would assure the IBT leadership that it was just a matter of time before the FBI would start providing them with essential information. For example, in February 2003, in connection with a request by Stier Anderson to conduct an investigation of a local in Chicago, Stier’s partner, Howard Anderson, wrote a memo to Szymanski stating that the firm was “on the verge” of finalizing an information-sharing agreement with the FBI. Szymanski also said that as late as June 13, 2003, at a meeting that Stier had with Hoffa and Szymanski, Stier continued to remain positive. He said that the FBI was circulating a letter to its field offices that recommended that Stier Anderson should get the same information as the IRB. The fact of the matter, in our experience as former federal prosecutors, is that it was extremely unlikely that the FBI would ever agree to share information with the Stier Anderson team. The FBI has traditionally been extremely reluctant to share their information, even with other law enforcement agencies. Stier Anderson was a private law firm working for the IBT not pursuant to a court appointment, but rather under the terms of a private retainer agreement. The Stier Anderson investigators, while several of them might have been retired from the FBI, were likewise in the private sector. Stier should have recognized that Rule 6(e) of the Federal Rules of Criminal Procedure strictly forbids the disclosure of grand jury information to non-government personnel. He also must have known that in the course of federal investigations, it is often difficult to distinguish between information obtained pursuant to the grand jury process and that received from other sources, especially once such evidence has been commingled. It naturally followed that the Department of Justice and the FBI would have been especially reluctant to share investigative information with Stier Anderson, thereby possibly jeopardizing important criminal investigations and even possibly implicating sanctions under Federal Rule of Criminal Procedure 6(e). Not surprisingly, despite Stier Anderson’s repeated assurances that they were “on the verge” of finalizing an information-sharing arrangement, it had not happened by the fall of 2003. (3) Disappointment with the Development of the RISE Code of Conduct In the fall of 2003, as the leadership grew more dissatisfied with Stier Anderson and their failure to produce meaningful results, certain members of the Hoffa team looked back with disfavor at the impractical and wasteful manner in which Stier Anderson had gone about preparing the code of conduct. The following are a few examples. (1) In his initial presentations to the IBT, Stier had touted Stier Anderson’s capacity for quickly drafting a code of conduct that would be acceptable to the federal prosecutors. The leadership had been led to believe that the Stier Anderson lawyers would be responsible for the drafting. Stier mentioned hiring expert investigators, but their responsibility would be for the field study, not the code. Once Stier Anderson had been retained, however, the size of the group devoted to preparing the code grew significantly. Several Teamsters were first assigned to a formation committee to help set an agenda for the Stier Anderson team. After a few months, the RISE Task Force, consisting of 22 Teamsters from a cross-section of the Union, was created to work with Stier Anderson in developing the code and facilitating its anticipated implementation. Even though Teamster members and officials were required to miss work when assisting in formulating the code, thereby increasing costs for the IBT, participation of the rank and file was certainly something that made sense. Nonetheless, Stier Anderson also recruited individuals from outside the IBT to work on the code. In a memo to Hoffa dated September 13, 1999, Stier proposed that a Washington “think tank” be hired to advise them concerning the code’s preparation. He said that he was “impressed with that organization’s insights and experience in assisting organizations in creating and implementing codes of conduct” and that “their participation will bring significant credibility to the project.” Stier also suggested to Hoffa that a committee of three to five advisors with experience in “union matters and labor racketeering investigations be recruited to provide their perspectives.” Stier said that they would “provide additional credibility.” As it turned out, the board of advisors grew to well beyond the three to five members suggested in the Stier memo and eventually included 11 advisors, many former colleagues and friends of Stier’s. According to Szymanski, the “think tank,” which had no experience with labor unions, appeared to contribute nothing other than bills; and after a few months and the expenditure of over two hundred thousand dollars, they were removed from the project. < |