Readers Digest

The Mafia's Deadly Grip On Unions


While the press and federal law enforcers have focused on organized crime inside the Teamsters, the Mafia has moved, virtually unimpeded, into other unions affecting critical industries

FOR A LABOR LEADER, Alfred Pilotto, president of Local No. 5 of the Laborers' International Union, has curious credentials. Federal and local law enforcers who keep tabs on him as part of their organized-crime intelligence gathering activities describe Pilotto as a Chicago syndicate underboss, supervising mob interests on the city's South Side. As such, he is alleged to be one of five lieutenants immediately below the Chicago mob's operating director, Joseph Aiuppa.

Another reputed gang underboss, Vincent Solano, while serving as president of Laborers' Local No. 1, directs mob interests on the North Side, according to law enforcers. The other Laborers'' locals in Chicago are influenced by Pilotto from his post as vice president on the Chicago Laborers'' District Council.

Change names and places-to New York State, say, or Florida- and the Mafia is deep inside the Laborers there as well. Organized crime's hold on this union of 650,000 largely unskilled construction workers points to a frightening fact. While the press and federal !law enforcers have focused on criminal influence inside our biggest union, the Teamsters, the Mafia cancer has spread, virtually unimpeded, in other important unions-including the Hotel and Restaurant Employees and Bartenders International Union (Culinary Workers) and the International Longshoremen's Association, both affiliated with the AFL-CIO.

With these unions, the Mafia has control over "tollgates" straddling such critical industries as transportation, construction, hotels, tourism and eastern-seaboard shipping. Through these tollgates pour millions in tribute from the sale of labor peace (freedom from work stoppages) and from sweetheart contracts (freedom from paying going wages). Add new rivers of loot from union pension funds, whose assets now exceed $25 billion, and from union health and welfare funds. This makes labor racketeering one of the Mafia's biggest and most rewarding industries. Few of us-either as wage earners who are robbed of a just wage or as consumers who pay higher prices-remain untouched by it.

Friendly Partners. Did we get into this fix because we lack adequate laws? No. We have the Landrum Griffin Act, passed by Congress in 1959 following Senate committee disclosure of union corruption. We also have federal statutes against racketeering.

What has been missing is enforcement. Congress handed responsibility for enforcing Landrum-Griffin to the Labor Department. But, traditionally, Labor officials have been friendly partners with union leaders in fashioning training programs, safety regulations, full-employment pro projects. Also, Assistant Labor Secretaries who enforce Landrum-Griffin come out of the unions and understandably do not relish the role of "cop" against fellow unionists.

Take the frustrating case of the Great Florida Union Robbery. When William Gamble, a lanky and boyishly eager Air Force veteran, joined the Labor Department as a Landrum-Griffin compliance officer in 1970, he was assigned to the Organized Crime Strike Force at Miami, one of 15 such units in the country. Captained by a Justice Department lawyer, the strike force draws its investigative manpower from the FBI, the IRS, the Drug Enforcement Administration, the U.S. Customs Service, the Labor Department and other agencies.

As a Labor Department representative in Miami, Gamble had opportunities for labor racket-busting as numerous as they were urgent. Members from 17 of the country's 27 crime families had taken up residence in the Sunshine State. Many had come because the climate of law enforcement in southern Florida was even milder than the weather, and because no single crime family had staked out exclusive racket privileges. Others had come, particularly from Chicago and New York, to infiltrate construction unions and levy tribute both on contractors and workers engaged in the building boom of the 1950s.

But when Bill Gamble rolled up his sleeves to investigate labor racketeering, he found that the Labor Department didn't regard him as a criminal investigator at all. Gamble investigated the same crimes as his FBI colleagues on the strike force: embezzlement, extortion, racketeering. He confronted the same violence: five Miami union leaders would be murdered between 1968 and 1977. But, unlike the FBI agents and other investigators, Gamble was not empowered to carry a gun or sign out a search warrant. In 1969, during the tenure of Assistant Labor Secretary Willie Usery, the Civil Service Commission had classified Landrum-Griffin compliance officers as "general administrative employees."

Twin Target. Ironically, "administrative employee" Gamble's first major encounter was with a union extortionist, Richard Nell, head of an International Union of Operating Engineers local. Nell's heavies had destroyed thousands of dollars' worth of construction equipment and had sent two policemen to the hospital. Gamble and colleague Hugo Menendez ended Nell's reign with the help of contractors and union members who risked their lives to testify. Nell was sentenced to five years in prison for racketeering, extortion and income-tax evasion. He would also have to serve three years on a prior conviction.

Gamble and Menendez then targeted two more predators. One was Bernard G. Rubin, czar of the six Laborers'' Union locals and trustee of six Laborers' trust funds in southeast Florida. By 1974, Rubin was dealing himself $180,000 yearly in salaries alone, without the consent of his 10,000 Laborers. This was twice the salary of George Meany, president of the 14-million-member AFL-CIO.

Their other target was Rubin's union lawyer and business associate, Seymour Gopman. Gopman counseled some dozen locals and 40 union trust funds. His law firm had a virtual monopoly on union legal work in southern Florida, drawing more than $7 million yearly in fees.

Gamble and Menendez had run across the trail of Rubin and Gopman while looking into the financial affairs of the head of a Laborers' local. But when they started investigating the pair, the Labor Department pulled Menendez off the strike force to supervise union elections and handle similar civil chores.

There had been four Labor Department representatives on the Miami strike force when Gamble joined up. Now, on the eve of the Rubin-Gopman investigation, there were only two. And the Labor Department kept interrupting Gamble's pursuit by assigning him to inconsequential duties. Once, for example, Gamble had to stop his strike-force work to look into the theft of $150 from a union treasury- by a man who was already dead. When Gamble protested against this interruption of his racketeering investigations, his Labor Department superiors would tell him: "Remember, we're not cops."

Double Dipping. Eventually, the Justice Department supplied Gamble with a partner who more than compensated for the distractions from the Labor Department: lawyer Marty Steinberg. Together, the two tackled a roomful of financial records pried from Rubin and Gopman.

In trailing union thievery, investigators usually study one set of union books or trust accounts at a time. But Gamble and Steinberg laid out the disbursement records of all the locals and trust funds with which Rubin was involved. When they checked travel claims against reimbursements, burglar alarms began to clamor. For a union business trip to Honolulu, for instance, Rubin billed the expense to one of his locals and to three trust funds. The total: $7116. In over four years of double and quadruple dipping, Rubin's peculations from this source alone came to more than $$50,000.. Unauthorized salary increases provided an additional $$329,000. Gopman had even more locals and trust funds to tap. For one trip to San Francisco, lawyer Gopman billed 12 union trust funds for a total of $15,600.

Tried first, Rubin was convicted on 103 counts of labor racketeering, embezzlement, failure to keep union records and tax evasion-and sentenced to five years plus a $$50,000 fine. Although convicted, Rubin retained his union offices pending appeal.* According to Marty Steinberg's sworn testimony before the Senate Permanent Subcommittee on Investigations, Rubin also continued to make out sizable checks against union treasuries and trust funds. When Steinberg asked the Labor Department to name a monitor to slam the door against further pillage, the Labor Department said no. It wasn't until a federal court threatened to lift Rubin's bond and jail him unless he resigned his union offices that Rubin stepped down. By then, according to Steinberg's testimony, he had allegedly embezzled an additional $2 million.

*This past October, the U.S. Supreme Court considered Rubin's petition. Because the U.S. Circuit Court of Appeals had not reviewed the two counts against Rubin relating to unauthorized salary increases, the Supreme Court vacated the judgment and remanded the case to the Fifth Circuit. A reversal of these counts would not affect Rubin's sentence, but might make him eligible for an earlier parole. Therefore, the Supreme Courts ruled that he was entitled to a review of those charges.

Plea-Bargain Ploy. Gopman presented other problems to Gamble and Steinberg as he fought all the way to the Supreme Court to prevent the production of his financial records. Although Gopman was unsuccessful in this, the delay cost Gamble and Steinberg two years to win a 1977 indictment against him. It listed 104 counts, charging Gopman with $1,840,000 of thefts from union members' dues and welfare benefits. Gopman bargained out a four-year sentence by pleading guilty to four of the charges, including embezzlement, accepting kickbacks on a pension-fund loan, multiple expense-account billing and income-tax evasion. He gave up his lawyer's license and accepted a court order that barred him from ever serving unions or union welfare funds again.

Yet, for Gamble and Steinberg, the end of the Rubin-Gopman affair brought vexation rather than elation. Much larger business remained unfinished. The Mafia's influence in Florida unions still had to be uprooted. But, again, the Labor Department wasn't cooperating.

Gamble and Steinberg had already gathered substantial evidence of mobster influence in Florida's unions. For instance, Steinberg had revealed in Senate testimony that the Miami Strike Force had two protected witnesses who told how New York and Chicago mobsters had gained control of some Florida unions and their trust funds.

Gamble and Steinberg had sniffed out a Chicago connection while exploring a maze of companies that administered a dental and eye care program for members of the Southeast Florida Laborers' District Council. The top company, based in Chicago, was called Consultants and Administrators, Inc. (C&A).

Our own investigation revealed interesting ties between C&A and the Laborers' Union, both in Florida and in Chicago.

In Florida, for example, a director of the C&A subsidiary, whose clinics provided the care, was Paul Fosco, son of Laborers' president Angelo Fosco. Young Fosco pleaded self incrimination when the Senate Permanent Subcommittee on Investigations questioned him about his role in the sale of life and health insurance to union groups.

In Chicago, C&A has a dental and eye care contract with the Laborers' District Council health and welfare fund, one of whose trustees is Alfred Pilotto, the reputed mob underboss we have already met. C&A contracted part of its administrative duties to a firm headed by Pilotto's son-in-law, James Pinckard. The firm's incorporation papers listed as its address the four-family dwelling occupied by Pilotto's family, including the Pinckards-Jim and Celeste.

A federal grand jury in Chicago, assisted by the FBI, is investigating the Chicago Laborers dental and eye care program to see if racketeering laws have been violated.

Turn-Around Ahead? In the meantime, in Miami, strike-force chief Atlee Wampler, III, pleaded with the Labor Department more investigative manpower. For want of sufficient help, Wampler argued, some 22 mobsters and fronts continued their pillage immune from investigation. The Labor Department's response at first was to announce the pull-out of more of its men.

Early this year, Assistant Labor Secretary Francis X. Burkhardt announced that, of the 64 of his compliance officers assigned to the Justice Department, all but 15 would be transferred by October 1-leaving but one for each task force. These would "coordinate" rather than investigate. When I asked Burkhardt about his agency's virtual withdrawal from the Justice Department's strike forces, he gave me his own view on how to fight labor racketeering. The most effective way, he said, was by enforcing the pension-reform act of 1974 known as the Employee Retirement Income Security Act, which calls for civil suits aimed at removing faithless trustees and recovering pilfered money. Justice officials scorn this approach, pointing out that it has not broken the mob's grip on the Teamsters.

Moreover, to police some 2000 union pension funds and another 2500 health and welfare funds (all jointly managed by union leaders and employers), the Labor Department musters a thin line of fewer than 300 investigators, accountants and lawyers. Meanwhile, gangsters and their fronts remain in place to continue depredations unrelated to pension funds.

The way to contain labor racketeering, Justice Department officials contend, is to clean out tainted unions by sending gangsters and their fronts to jail. And there is hope. Under severe criticism from the Senate's Permanent Subcommittee on Investigations, the Labor Department was in the process, last October, of hiring go people- including 64 field investigators and 14 supervisors-for assignment to the organized-crime strike forces. While the Labor Department described its new sleuths as "criminal investigators," they would not carry firearms, or have arrest powers as FBI and Customs Service agents do. Consequently they would not be assured the early retirement that goes with hazardous work. This, it was felt by Justice Department critics, would discourage experienced criminal investigators from seeking the new Labor Department jobs.

So, while the Justice Department was happy with the Labor Department's changed attitude toward labor racketeering, law enforcers felt that they would have to rely chiefly on the FBI.

The FBI, our chief investigative arm, is no longer reluctant to battle union corruption for fear of incurring the charge of union busting. Indeed, stopping labor racketeering has become one of the Bureau's top priorities. In specialized programs at the FBI training center in Quantico, Va., agents are studying union structure, labor law, and the techniques with which racketeers plunder union funds.

A turn-around in the war against the Mafia's power inside labor could be under way. With the expected new help from the Labor Department and from the FBI, the Justice Department plans a nationwide drive to break the Mafia's grip on the Laborers' International Union.


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All original work Copyright 1998. All rights reserved.