New York Times

Fraud Trial Begins for Ex-Teamster Official


October 22, 1999

Federal prosecutors detailed their case on Thursday against the teamsters' former political director, accusing him of conspiring with Democratic Party officials, the A.F.L.-C.I.O.'s secretary-treasurer and others to siphon union money to the 1996 re-election drive of Ron Carey, the teamsters' former president.

In opening statements at the trial of the former official, William Hamilton, on charges of embezzling union money, conspiracy, fraud and perjury, Robert Rice, an assistant United States attorney in Manhattan, said Hamilton had worked closely with two top Carey campaign officials to divert $885,000 in union money to the campaign.

Rice asserted that Hamilton had taken part in several complex schemes in which teamster money was donated to liberal groups, and in exchange longtime donors to those groups contributed to the Carey campaign.

Insisting that Hamilton and the Carey campaign aides had looted the union's treasury, Rice said, "The scheme can best be described as a swap scheme, a quid pro quo, a you'll scratch my back and I'll scratch yours."

Hamilton's lawyer, Robert Gage, said his client was innocent of the charges, which were filed in April 1998.

Gage asserted that Hamilton was the victim of swap schemes that he said had been orchestrated by Carey's direct mail consultant, Martin Davis, to insure that the Carey campaign had money to pay the $700,000 it owed Davis's firm for campaign mailings. Davis and Jere Nash, Carey's campaign manager, have pleaded guilty to carrying out the swap schemes.

Gage described his client as an idealist who approved big teamster donations to liberal groups, not to advance Carey's campaign, but to help restore Democratic control of Congress and elect a Congress that would be friendlier to unions.

Rice, the prosecutor, said Hamilton, as well as Davis and Nash, carried out the swap schemes, in which $735,000 was donated to three liberal groups -- Citizen Action, the National Council of Senior Citizens and Project Vote. As part of those schemes, wealthy contributors to those groups donated $185,000 to the Carey campaign.

Carey narrowly defeated James P. Hoffa in the 1996 race for the teamsters presidency, but Federal monitors ordered a new election and ousted Carey from the office after determining that he had breached his fiduciary duty by not stopping his campaign aides from carrying out the swap schemes.

Rice described another scheme in which, he said, Hamilton approved a $150,000 teamster payment to the A.F.L.-C.I.O. Days afterward, the labor federation contributed $150,000 to Citizen Action, which in turn paid $100,000 to Davis's direct-mail firm. The prosecutor said Richard Trumka, the A.F.L.-C.I.O.'s secretary-treasurer, had requested the $150,000 payment.

Over the last two years, Trumka has insisted on his innocence and has invoked the Fifth Amendment in declining to testify on the matter. No charges have been brought against him.

Rice also said Davis had approached Terence McAuliffe, the finance chairman of the Clinton-Gore campaign, to propose a deal in which the teamsters would contribute large sums to the Democrats if Democratic National Committee officials got Democratic donors to give to Carey. Rice said McAuliffe had Davis talk to two other Democratic finance officials, Laura Hartigan and Richard Sullivan.

Rice said that Sullivan sent Hamilton a list of suggested contributions to state Democratic parties and that soon afterward the teamsters donated $236,000 to various state parties. In the past, Federal investigators have said the Democrats were unsuccessful in finding donors for the Carey campaign.

McAuliffe, Ms. Hartigan and Sullivan have all repeatedly denied wrongdoing. No charges have been brought against any Democratic National Committee officials.

Hamilton was planning to make the donations to the Democratic state parties, Gage said, even before Sullivan made his request. Gage argued that Davis and Nash knew of Hamilton's intention to make large donations to the Democrats and that Davis parlayed this knowledge to try to manipulate D.N.C. officials so they would arrange for Democratic donors to give to Carey.

Many of the details laid out by prosecutors on Thursday have already been made public, but the airing of those details in court is bound to once again throw Democratic and A.F.L. C.I.O. officials on the defensive.

Michael Collins, a spokesman for the Republican National Committee, did not hide the Republicans' intent to gain political mileage from the trial.

"It's very important for the country to understand how a million dollars in workers' money was diverted to the benefit of the Clinton-Gore '96 campaign and the Democratic National Committee," he said. "What's going to be obvious is there are a lot of people who should be sitting in the dock with Hamilton."

Jennifer Backus, the committee's press secretary, said, "This matter has been investigated by three Congressional committees as well as the Justice Department, and these investigations turned up no indication that any D.N.C. employee or official acted in any improper or unlawful way."

In his remarks, Rice called the defendant a "teamster insider." But Gage countered by telling the jury that Hamilton, 57, had spent many years working for civil rights and abortion rights and had more recently fought "the Gingrich Congress" and Republican efforts to undercutworkers' rights.

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