How DC 37 Became America's Most Indicted Municipal Union
by Bob Fitch
Published August 25 - 31, 1999
Over 300 delegates from DC 37, America's biggest, richest, and most indicted municipal union, crowded into the basement of their 125 Barclay Street headquarters last Wednesday night to elect replacements for two fallen leaders: Stanley Hill and Al Diop.
Hill stepped down last December as DC 37's $300,000-a-year executive director after a top aide confessed to rigging the 1995 contract-ratification vote. Diop, head of the 25,000-member clerical workers union, has been indicted— along with two other DC 37 veeps— for using the Barclay Street headquarters as a penthouse apartment and billing rent and maid service to the union. "We believe some of those expenses were for male prostitutes," Manhattan D.A. Robert Morgenthau said when he announced the indictments.
It was a contest between Hill's heirs and his adversaries. The reformers were led by social-workers union president Charles Ensley; the regulars by DC 37 secretary Helen Greene, the highest-ranking Hill loyalist left unindicted.
The outcome of Wednesday's election would reveal who really ran the union— and controlled its nearly $100 million budget. The winner would become a vice president of AFSCME (the American Federation of State, County, and Municipal Employees)— and automatically become the favorite to fill Hill's job next year, when trustee Lee Saunders's term is supposed to expire.
The reformers were confident they had the votes, but by 11 p.m., Greene's followers were running through the halls ululating in triumph, past Ensley's supporters who sat in a windowless room in the building's sub-basement, griping about how they'd just been outmaneuvered.
Only hours before the vote, the rules got changed.
The two locals with the most votes (and the most indictments) switched to "block voting," which meant that each delegate would cast the same ballot. So the delegates who supported Ensley couldn't express their choice. Greene beat Ensley easily, 59 to 40 percent, but take away the votes cast by the two power locals and Ensley would have won with 68 percent.
Clearly, Greene wasn't hurt with her core constituency by the corruption accusations that have been hurled against her. Critics want to know why she never released the vote totals of her local in the '95 citywide contract ratification vote. And her name was on a list of 10 DC 37 officials who'd run up $16,000 in questionable charges on American Express cards. "Who authorized the card?" a delegate demanded to know Wednesday night from the convention floor.
Union sources say most of Greene's expenditures were local and district council related, but she was allowed by Saunders to pay back $6000 in personal charges. Greene reneged on a promised Voice interview. Pat Passantino, a DC 37 spokesperson, insists "every penny for all 10 officials— the entire kit and caboodle— went for union expenses."
Greene's record in the '95 ratification-vote scandal, her unwavering support for Hill, her cheerleading for Mayor Giuliani's reelection: all clash with the reform image Saunders has been trying to cultivate in the post-Hill era. But loyalty is as crucial to union bosses as dogma is to the church fathers. Besides, who else was there?
Of the 20 vice presidents who served last year on the ruling executive board, eight have been indicted. And five have actually died. There are homes for the aged with better excess morbidity rates than DC 37's executive board.
Ray Markey, dean of the DC 37 dissidents, summed it all up. "Tonight shows not just who has the power. It shows that to keep it, the new leaders resorted almost automatically to the same old undemocratic methods that corrupted DC 37 in the first place."
They can't prove it— because the election was held by secret ballot—but reformers are now convinced that, in the war against corruption, AFSCME sides with those who stayed loyal to the leaders who were marched off in handcuffs, not the ones who resisted them. Confiding to his supporters, Wednesday night, Ensley said, "I told [AFSCME aide] Elliot Seide, 'The buzz is you people fixed the election.' He denied it. But I wasn't born yesterday."
"Each side had a full and fair opportunity to present their case," said Chris Policano, DC 37's communications director. "The election was monitored by the American Arbitration Association. Observers from all candidates were present."
The institutions of DC 37 weren't engineered to be responsive to the wishes of the members. On the contrary, each constituent part— the local, the delegate assembly, the executive board, the benefit funds—has been designed to concentrate power, perks, and dues money at the top. And to keep accountability from ever reaching the elite.
It's a tradition that goes back— as Hill himself has often observed— to the Victor Gotbaum days, when the ballots in the social-workers union Local 371 were thrown down a staircase. Gotbaum, who ran the union from 1963 to 1988, prevented Hill, then a dissident, from getting reelected.
While patronage itself is not illegal, it's inherently corrupting. And the more the leaders resort to patronage, the more union politics is transformed into an inside game of deals with powerful outsiders: mayors who can help you get more patronage, top AFSCME officials who will ignore the members' protests, tough guys who are good at intimidating dissenters.
Consider how bats have evolved so they can live visionless lives in dark caves: they've developed exquisitely sensitive organs for hearing. In a similarly compensatory way, DC 37 has evolved over the last 50 years so members' voices have become almost inaudible. But their leaders have developed extreme receptivity to the voices of powerful outsiders.
This evolutionary process has produced DC 37's double personality: strong in its control over the 123,000 members, but easily pushed around by Rudolph Giuliani; completely dominated by AFSCME President Gerald McEntee, and quietly penetrated by the mob.
It's not easy to see how mobsters got a foothold in a civil service union like DC 37. AFSCME can't control hiring like the construction unions; there are no deliveries to stop the Teamsters' choke point; mobsters can't even threaten a strike to get a shakedown because of the Taylor Law.
Besides, the union mainly represents nurses' aides, school lunchroom attendants, and office clerks— not iron workers, carpenters, or longshoremen.
But it was just this perceived lack of "muscle" that allegedly led Victor Gotbaum to bring in longshoreman boss Anthony Scotto, in the often violent battle with the Teamsters for control of city hospital workers. (Gotbaum denies that Scotto provided strong-arm assistance in the Teamster wars.)
Scotto, a convicted extortionist, whose wife Marion runs an Italian restaurant— Fresco by Scotto— married into the Gambino crime family. Marion's uncle was Albert Anastasia, Murder Inc.'s "Lord High Executioner." Scotto's father-in law was "Tough Tony" Anastasia, the Brooklyn docks boss.
When Marion's dad died in 1963, 29-year-old "Young Tony" succeeded him as president of longshoremen's local 1814. Under Carlo Gambino, "the Boss of all Bosses," Scotto rose quickly to caporegime.
Organized crime never had a more prominent political leader than Scotto— and organized labor never had a better fundraiser.
He raised $1 million for Hugh Carey's 1974 gubernatorial campaign; $50,000 for Cuomo's lieutenant governor's race. It was the $350,000 Scotto raised from ship owners, however, that got him convicted of extortion in 1979. "I testified at his trial," Gotbaum recalls. "I loved Anthony. We had a wonderful relationship."
Because he was close to Scotto, Gotbaum also got close to Scotto's attorney, Bertram "Bud" Perkel. "A fox in the hen house" was the charge when Scotto had Perkel appointed to the New York Port Commission. In 1965, Gotbaum retained Perkel to be the union's outside counsel, and then counsel to DC 37's benefit funds. And Perkel is still there, receiving $205,000 in yearly compensation as counsel, according to federal records. "My firm [Baker & Botts] gets the compensation," Perkel explained in a phone interview. "I have associates in my office that help me."
Perkel spent Wednesday night celebrating with Helen Greene at 125 Barclay Street.
I asked Perkel, who was the union's counsel during what may be the two biggest labor corruption scandals in New York history— the fall of Anthony Scotto and DC 37's record 27 indictments— if he felt any personal responsibility. Perkel chuckled softly, "It was tragic to me. I've always known that there's a certain amount of ethical flexibility in all corporate union relations. But I was always on the side of the angels. No matter who was running the show, they never touched the benefit funds."
What about the funds' $250,000 loan to indicted local 371 president Charlie Hughes, made in 1992, due in 1995, but still not paid back, according to the most recent federal records? "I had absolutely no control over that," said Perkel. "If my recollection serves, the loan was made because a renovation was going on."
"Did he check to see if there really was a renovation going on?"
"We have no ability to either collect or determine the terms of the loan, or see if the renovation exists," he explained.
Besides ties to the Gambinos and their associates, the other prominent crime family with connections to DC 37 is Columbo's.
Last year the Daily News reported that, in 1986, when Gotbaum ran for central labor council president, he asked reputed mobster William "Wild Bill" Cutolo for help. They met twice.
According to Tommy DiNardo, an associate of Cutolo's who was head of the DC 37 local that represented boiler-room workers, Gotbaum asked him to set up the meeting. Gotbaum denies it. "Come on, I didn't even know the fucking guy," he insisted. "My only real impression of Cutolo was that he wasn't my kind of guy. Flashy. Rings. I met him in his candy store. Then we went to a restaurant on the Lower East Side."
It was under Gotbaum that a mural portraying blue-collar union officials with ties to the Columbo crime family— including Frankie Morelli ("Frankie the Gent"), president of 983— went up.
The three were dressed up like '30s mobsters, leaning against a car, carrying submachine guns. Underneath the license plate was a sign: "Join the union or else!"
Asked about the mural, Gotbaum said, "It could be. It's so insignificant to me. But I don't recall it. A lot of Italian [leaders] had some members, 'boys of the street.' If it ever affected the union," Gotbaum said, he would have acted.
In 1984, Gotbaum backed "Frankie the Gent" against non-mob incumbent Joe Zurlo for DC 37 President. Gotbaum minimizes the significance of the race: "The office wasn't that important. You know, don't you, that the presidency of DC 37 is just an honorary position."
As for mob-connected unionists in general, Gotbaum explained, "For me, I didn't give a shit as long as they kept it out of the union. Oh, there were incidents. I remember one time, some one came to me: 'Vic, they're running numbers in the hospitals.' I told them 'If they stay the fuck out of the union, I'm not bothered.' It was later that I learned there were all these kickbacks."
What about the reports that Morelli died in 1994 not of a heart attack, but of a beating in his 5th floor office right next to the executive director's? "I heard it was AIDS," said Gotbaum. "But it wasn't a bad beating. It was more of a threat. Anyway, it was after my time."
The sounds of Morelli's beating could be heard by dozens on the 5th floor. Sources say the ruckus caused two top DC 37 officials to run out of the building and hide in a nearby hospital. Cutolo's crew reportedly was expressing its concern that kickbacks from sandwich pilfering hadn't been shared properly. When the proper arrangements were made, the two DC 37 officials left the hospital.
Under Hill, things got completely out of hand. On July 17, 1990, not long after Hill had become executive director, Vinnie Parisi was attacked by five goons on DC 37's loading docks. He got no slack because he was 72 years old and undergoing chemotherapy. Why beat a dying man?
Parisi sat on DC 37's executive board. He ran the hospitality committee, with power to determine which resorts and caterers DC 37 would choose.
According to a source, Parisi refused to sanction Cutolo's favorite places. He wouldn't agree to shifting members from his local to Morelli's, which Cutolo controlled. "He threw something at Cutolo," said a witness at a meeting between the two men a week before the beating. "Then he told Cutolo to go fuck himself."
After the incident, Parisis's daughter Carol immediately called Morelli to reach Cutolo, whom she strongly suspected had ordered the beating. "I called Cutolo every name I could think of," she said. "Morelli not only relayed the message, he taped it and gave it to Cutolo."
It was from Cutolo himself that Edward Bennett, Parisi's son-in-law, got the tape of his wife's obsecene tirade. "Sometimes the husband can get into trouble for what the wife does," Cutolo said ominously.
The Bennetts, who still have their complimentary tape from Cutolo, reported the threat to the FBI.
It's widely said, and frequently by Victor Gotbaum himself, that Stanley Hill was "weak." But it was under Gotbaum that Morelli and his associates won influence in the union, leaving Stanley to handle them.
True, Stanley didn't manage them well, but these "associates" are notoriously hard to manage. The "seven habits of highly effective people" don't seem to work.
When 100 boiler guys stormed into 125 Barclay in 1995, breaking into offices, vandalizing the building, and shutting down the elevators, Stanley quickly gave in to the demand that a $450,000 retainer be paid to an outside lawyer of his acquaintance.
As park workers' president and whistle-blower Mark Rosenthal's civil RICO suit charges, Hill made the "imprudent payments to Klein in order to protect Hill against threats of physical harm."
Was Hill just chicken? Actually, Cutolo seemed pretty scary to a lot of people.
It was allegedly Cutolo's crew that murdered most of the 12
crime family members who died in the Columbo family wars.
Cutolo himself beat a 1994 murder charge. But recently, he disappeared. One rumor has it he went into a building and never came out. Another has Cutolo in the government's witness protection program.
Cutolo may be hard to find now, but he hasn't lived his life in total obscurity. In 1990, he was publicly identified as a Columbo crime-family member and expelled from the Teamsters Union for life by a court appointed Independent Review Board.
So how come in 1991, Gerald McEntee made contributions to Wild Bill Cutolo on behalf of the National Leukemia Research Association? And then, throughout the 1990s, DC 37 officials kept repeating McEntee's mistake. Many bought tables at Cutolo's affairs. Two union presidents, Al Diop and Robert Taylor, also received awards.
During the '90s, an award from the National Leukemia people meant you got a microscope to keep for a year— and you gave them $20,000. Was it charitable impulses that led to the contributions? Or self-preservation?
Diop and McEntee were long term, well-known labor leaders. But Taylor, Morelli's driver, had just been in office a few months after Morelli's death. Why did Taylor, who's been indicted on multiple counts of grand larceny by the D.A. and is the target of two civil RICO suits, get the chance to pay for the microscope? Did he have a choice?
Probably not. Patronage leads to corruption; corruption leads to organized crime. When union leaders demand kickbacks, sell no-show jobs, and rip off their vendors, they wind up not only with more cash but with a need for unique criminal services: money laundering and protection.
People who purchase these mob services gradually tend to lose leverage over the terms of the agreement.
What explains DC 37's mob ties? How could the same union that helped finance the Columbia Teach-In, featuring philosopher Richard Rorty and feminist Betty Friedan, pour money into Wild Bill's favorite charity? Undoubtedly, as Gotbaum maintains, "Cutolo was not my kind of guy." Victor's early career was in foreign affairs.
Nowadays, he prefers the company of investment bankers and art dealers. But as a labor leader, he found himself reaching out not just to Cutolo but to even bigger mob figures like Scotto as well as mob-wannabe's like Frankie Morelli. How come?
Gotbaum wasn't looking for friendship. Presumably he was trying to accumulate power in New York City, where it's been estimated that 100 out of the city's 600 locals are dominated by crime familes. For Victor, a trip to the candy store with Cutolo could help him reach the presidency of the Central Labor Council.
If working with the mob was a matter of personal ambition with Gotbaum, in the Hill regime, it became a matter of personal survival.
It's not just that Hill was weak. For corrupt leaders, workling with the mob isn't a matter of personal strength or preference. It's a matter of impersonal processes.
It all starts with their decision to substitute patronage for participation. Then one thing leads to another. The trips to the candy store probably didn't end with Gotbaum or with Hill.
Last Wednesday night's Election Massacre preserves the necessary process of keeping the members out of the life of the union.