Cleaning Up the Teamsters

A government takeover may be the only way to get the mobsters out of the world's largest union

They all came to Jackie Presser's elaborate funeral in suburban Cleveland on July 13, 1988. The mayor. The city council president. The ranking minority member of the Senate Labor Committee. The secretary-treasurer of the AFL-CIO. Civic leaders. Management lawyers. Union lawyers. The international vice presidents of the Teamsters Union. An assorted collection of organized crime figures and hangers-on. And, inevitably, the FBI.

By the time of his death, Presser had come to symbolize the dilemma of the International Brotherhood of Teamsters (IBT). He walked the line between cleaning up the Teamsters and staying alive:

• He had been a secret FBI informant since 1974. As Teamsters president, Presser continued to voluntarily supply information on organized crime to the FBI and reportedly cleared top union appointments with the FBI to ensure they were not controlled by organized crime. Yet he became president of the Teamsters in 1983 with the support of the Cleveland Family, the Chicago Family, and New York's Genovese Family of La Cosa Nostra (LCN). In 1986, Presser was indicted by a federal grand jury for placing ghost employees on the payroll of Teamsters Local 507 in Cleveland.

• His presidency was notable, among other things, for a successful and highly visible campaign to publicize reform within the union. Yet simultaneously, Presser actively encouraged physical attacks on the dissident reform factor in the union, Teamsters for a Democratic Union (TDU).

Last June, the Justice Department filed a civil RICO action seeking to place the entire union under trusteeship to remedy its "devil's pact" with organized crime. In March, the Teamsters settled with the government. A three-person panel composed of non-Teamsters approved by the court will oversee most union functions, including elections, expenditures, and contracts other than collective bargaining agreements. The settlement also calls for new union elections, in which members have their first chance to vote directly for officers by secret ballot.

That the government has taken such unprecedented control over the world's largest labor union testifies to the Teamsters' continuing economic power—diminished though it has been by trucking deregulation—and to the failure of the Teamsters leadership to take positive steps to rid the union of the scourge of organized crime. When the lawsuit was filed, critics charged that the government had gone too far, that its proposed remedy was too too drastic, too "totalitarian." Yet if a secret FBI informant like Jackie Presser was unable or unwilling to eliminate mob influence in the Teamsters, how and by whom would it ever be done? Acting alone, Presser's successor, William McCarthy, would seem an unlikely clean-up man.

Despite nearly $800,000 in annual salaries and benefits from his various union positions, Jackie Presser did not hold an enviable job. Four of the last five presidents of the Teamsters have been indicted, three of them convicted. The two who weren't convicted, Frank Fitzsimmons and Jackie Presser, both died in office. The other three, Dave Beck, Jimmy Hoffa, and Roy Williams, were all indicted, convicted, and removed from office.

Given these statistics, it is remarkable that anyone came forward to succeed Presser. One man who did, Weldon Mathis, was the Teamsters' secretary-treasurer, the union's number-two post. He had been serving, with Presser's approval, as acting president. The 62-year-old Mathis has a criminal record, including a conviction for illegal possession of explosives. Prior to being handpicked by Presser as secretary-treasurer, Mathis had been a Teamsters vice president since 1972, with a base of operations in Atlanta. According to the Los Angeles Times, Presser personally cleared his appointment as secretary-treasurer with FBI official James Moody. Mathis was widely perceived to have had Presser's blessing to succeed him as president.

The other candidate, the eventual winner, was William McCarthy, the union's third international vice president and head of its New England region. At a news conference on July 15, 1988, following the election that made him president, he suggested that Presser was "rolling over in his grave" at McCarthy's narrow 9-8 victory before the union's executive board.

A Teamsters vice president since 1969, McCarthy had been a rival of Mathis's for the secretary-treasurer spot in 1985. An April 1984 secret FBI memorandum based on information supplied by Presser indicates that McCarthy told Presser that he had first to "obtain the approval and backing" of the head of the Boston Family before seeking that post. A month later, FBI electronic surveillance picked up a conversation between Anthony "Fat Tony" Salerno (alleged in the RICO action to have been, at various times, "the Consiglieri, Acting Boss and Boss of the Genovese Family") and John "Peanuts" Tronolone (allegedly "a high ranking member of the Cleveland Family and an associate of the Genovese Family"). In that conversation, Tronolone told Salerno that McCarthy might be worth supporting for the secretary-treasurer position.

Most news reports referred to newly elected President McCarthy as "tough," "confrontational," "aggressive," and "militant." He would take a harder line in collective bargaining, they predicted, and in responding to the Justice Department's RICO action. None suggested that organized crime interests had once again influenced the election of the Teamsters president.

Yet a cursory analysis of the support for each candidate could certainly have led to such a conclusion. Only one of the seven other executive board members who supported Mathis's losing candidacy had his criminal record specifically cited either in the Justice Department's RICO action or the 1986 Report of the President's Commission on Organized Crime. By contrast, four of the eight board members who supported McCarthy had their criminal records specifically mentioned either in the RICO suit or the Organized Crime Commission Report.

Mathis credited McCarthy's surprise victory to the maneuverings of New York's Joseph Trerotola—and Trerotola told the Cleveland Plain Dealer that he accepted the credit. The Organized Crime Commission Report had described Trerotola as "blind…to the influence of organized crime" in the Teamsters and said he had "obtained his [Teamsters] vice-presidential post only after the New York LCN gave its approval." Five months after the election, in January 1989, Trerotola and the other three McCarthy supporters all were reportedly asked by the Justice Department to resign as part of a proposed settlement of the civil RICO action. (Trerotola denied he was asked to resign.) News reports indicated that only one Mathis supporter, Detroit's Robert Holmes, was asked to resign. The Teamsters rejected the proposed settlement.

In the first six weeks of his presidency, McCarthy moved swiftly and ruthlessly to consolidate his power—punishing his opponents and rewarding his supporters. Important jobs or fringe benefits were taken away from four vice presidents who had supported Mathis and given to McCarthy supporters. McCarthy also helped vice presidents Harold Friedman of Cleveland and Joseph Morgan of Miami take similar actions against their opponents on a regional level.

He fired John Climaco, one of the country's most highly regarded labor lawyers, from his post as Teamsters general counsel and removed Climaco and his law firm as the union's counsel in the RICO suit. Not coincidentally, Mathis and Climaco had been trying to settle the suit, reported Business Week, by "promising sweeping reforms that could undermine mob influence in the union." McCarthy even fired Father David Boileau, who had been in charge of the union's human service department. The incredible conclusion the New York Times drew from this was that McCarthy was "showing determination to steer the union…away from the tarnished legacy of his predecessors."

For 40 years, Teamsters presidents have had to live with the fact that organized crime exerts significant control over their union. Some, like Hoffa and Roy Williams, were willing accomplices. Others like, Dave Beck and Frank Fitzsimmons, were more passive. Only Presser took positive steps to reduce the mob's hold on his union. Because Teamsters presidents tend not to write memoirs (Presser's immediate predecessor, Roy Williams, came the closest with his extended testimony to the President's Commission on Organized Crime in 1985), the truth about how much credit should go to Presser may never be known. Release of his complete FBI informant's file would certainly shed a lot more light.

Nevertheless, you cannot get around the fact that Presser was the FBI's man in the Teamsters during a turbulent 14-year period—including 5 years as president—when at least organized crime's influence over the union's lucrative benefit funds drastically declined. Presser's role as a secret informant was much more than mere window-dressing to keep the government off his back. The FBI's Oliver Revell has testified in a deposition that Presser provided crucial information that helped convict members of the Genovese family. But even Presser's information was not enough to eliminate the stranglehold that organized crime had over many of the largest Teamsters locals.

Presser obviously had a keen appreciation for the risks he was taking. In an interview with Steven Brill for his highly regarded 1978 book, The Teamsters, Presser, already an FBI informant, spelled out his understanding of the dilemma that faced any Teamsters president:

"You know, that chair Fitzsimmons sits in isn't a throne, it's an electric chair. They [government prosecutors] got the last two men who sat there [Beck and Hoffa] and sent them to jail, and it wouldn't surprise me if they got Fitz on something soon. They're sure trying. On the other hand, if you're totally honest and if you try to clean up the union like you say I should, and you try to do it fast enough and without making accommodations so the government won't get you, the other guys—the hoods—will get you. Just like they got Hoffa when he threatened them. So that's a death chair either way."

William McCarthy obviously faces the same dilemma. It is too early in his tenure as president to tell whether he will try to remove organized crime from the Teamsters. His actions to date, however, indicate that he is more concerned with simply rewarding his friends and punishing his enemies—Presser supporters all. In fairness to McCarthy, it may be the only course of action he can safely follow. As former Teamsters president Roy Williams told the President's Commission on Organized Crime:

"Q: So that any Teamsters president, sitting where you sat for several years, has to take into account that portions of his union are under the control of organized crime and not under his control?

A: Yes.

Q: Do you think it's possible that someone sitting in that chair could significantly change and disrupt the activities of organized crime?

A: Not without having a bigger organization than they got. They was here a long time before any of us ever got here, and they have got pretty powerful. And you fellows haven't been able to do nothing with them either.

Q: And they remain extremely powerful today?

A: Yes, they do."

Why should the Teamsters be the union most controlled by organized crime? Why not other big unions like the autoworkers or the steelworkers? One answer is economic power. The Teamsters have long controlled the labor market in local trucking in all major metropolitan areas of the country. As a consequence, local Teamsters unions have enormous leverage over thousands of businesses that depend on union deliveries. After World War II, under the leadership of Dave Beck, the Teamsters began organizing over-the-road trucking companies, a natural extension of its core business of organizing specialized local delivery drivers.

This economic power reached its highest point under Jimmy Hoffa in the 1960s. Upon taking over from Beck in 1958, Hoffa ruthlessly centralized his own power in a manner reminiscent of Bill McCarthy in 1988. By 1961, Hoffa had persuaded almost all of the interstate trucking industry to agree in principle to a single nationwide contract for highway drivers. And in 1964, the first National Master Freight Agreement was signed, covering almost half a million Teamsters. By the late 1970s, Teamsters membership had soared to 2.3 million, making it the world's largest single union.

By most accounts, especially those of Williams and the Commission on Organized Crime, Hoffa was the first Teamsters president heavily influenced by the mob. How this occurred is not clear. Why it did is obvious. Control of interstate trucking and local deliveries in major metropolitan areas offered unparalleled opportunities for extortion, kickbacks, and shakedowns. And the sheer size of the Teamsters meant that its pension funds and local union treasuries had substantial assets to loot.

Ultimately, however, the Teamsters union is the government's creation, its own Frankenstein's monster. The Teamsters' market power was made possible by the Interstate Commerce Commission, which, starting in the 1930s, eliminated open competition in over-the-road trucking and substituted a rigid cartel. Labor costs could grow indefinitely and be passed on to customers through government-mandated rate increases. It was only a matter of time before a union leader with the ambition, vision, and ruthlessness of Jimmy Hoffa came along to capitalize on the market opportunity given him by the government. And with Hoffa came organized crime.

Controlling the union provides a host of ways for mobsters to enrich themselves and their own operations. Through outright embezzlement or dubious loans to finance speculative ventures such as Las Vegas casinos, they can convert union reserves—primarily membership dues and benefit funds—to their own uses. They can also exploit their power over the union by extorting payoffs from business through "sweetheart contracts." As the Organized Crime Commission's report states, "In return for a payoff to a corrupt union official, the employer can use fewer workers, pay them less, and assign and discharge them at will. [Or] an employer can make illicit payments to union representatives in return for the privilege of using non-union labor or for the union's promise not to organize workers within its jurisdiction."

Up till now, the government has dealt with the consequences of organized crime's control of important Teamsters locals on a case-by-case basis. Numerous specific examples of mob involvement in the Teamsters—supported by convictions in court—were recounted in papers filed in the civil RICO action against the Teamsters:

• Anthony Salerno, boss of the Genovese Family and a member of the commission of La Cosa Nostra, was convicted in 1986 for presiding over an extortion scheme, using Teamsters Local 282 and other unions to force concrete contractors in the New York area to meet extortion demands.

• Phillip Rastelli, boss of the Bonnano Family, and Teamsters Local 814 officers were found in 1985 to have threatened a number of moving and storage companies with labor disruption in order to operate a bid-rigging and market division scheme. The Bonnano Family had interests in certain moving companies in the New York metropolitan area and used the threat of labor problems to prevent other companies from competing with the criminally controlled companies.

• Frank Manzo of the Lucchesi Family was convicted in 1985 of criminal RICO charges stemming from a scheme operated at JFK International Airport in which organized crime figures used their control over Teamsters labor to threaten a freight forwarder and other firms with business disruptions. These firms subsequently paid off organized crime figures and union officials to buy labor peace.

• Roy Williams and Chicago organized crime figure Joseph Lombardo were convicted in 1983 of attempting to bribe a U.S. senator, Howard Cannon, then chairman of the Senate Commerce Committee, with a parcel of land owned by the Central States Pension Fund. The sentencing judge described this bribe attempt as "part of a larger, ongoing pattern in which union officials corrupted the operations of the Pension Fund.…in short, Williams and his predecessors and associates have treated the fund as their own preserve."

A graphic picture of how organized crime operates within the Teamsters was drawn by U.S. District Judge Harold Ackerman in 1986 when he placed Teamsters Local 560 in New Jersey into trusteeship: "It is not a pretty story. Beneath the relatively sterile language of a dry legal opinion is a harrowing tale of how evil men, sponsored by and part of organized criminal elements, infiltrated and ultimately captured Local 560 of the International Brotherhood of Teamsters, one of the largest local unions in the largest union of this country.

"This group of gangsters, aided and abetted by their relatives and sycophants, engaged in a multifaceted orgy of criminal activity. For those that enthusiastically followed these arrogant mobsters in their morally debased activity there were material rewards. For those who accepted the side benefits of this perverted interpretation of business unionism, there was presumably the rationalization of 'I've got mine, why shouldn't he get his.' For those who attempted to fight, the message was clear. Murder and other forms of intimidation would be utilized to insure silence. To get along, one had to go along, or else."

It is impossible to break the mob's hold on the Teamsters one case at a time. As the President's Commission on Organized Crime concluded: "At both the international and local levels, the IBT obviously continues to suffer from the relationship with organized crime. Indeed, so pervasive has this relationship become that no single remedy is likely to restore even a measure of true union democracy and independent leadership to the IBT.…If the Local 560 case is representative of the depths of the problem, systematic use of trusteeships by the courts may be necessary to prevent organized crime from continuing to do business as usual in the IBT."

The Justice Department responded to the commission by filing, belatedly, its civil RICO action, brought by then-U.S. Attorney and organized-crime nemesis Rudolph Giuliani. The suit, against the National Commission of La Cosa Nostra and the General Executive Board of the Teamsters, sought to:

• Permanently enjoin the members of the commission of La Cosa Nostra and any other persons acting under their control from having any dealings of any kind with the Teamsters or from owning or operating any business that employed Teamsters members.

• Permanently prohibit the executive board of the Teamsters and all persons under their control from associating directly or indirectly with any persons associated with La Cosa Nostra.

• Have the court order new "free and fair" elections for the Teamsters executive board.

• Have the court appoint one or more trustees to assume all the duties of the Teamsters executive board "other than negotiating and entering into collective bargaining agreements and participating in the affairs of any Teamsters-related political action committee" until such time as the court-appointed trustees determined that free and fair elections can be held.

The government was uncharacteristically sensitive in not attempting to touch the core areas of trade union activity—collective bargaining and political action. Yet there was widespread bipartisan political opposition to the lawsuit, which some critics compared to the Polish government's suppression of Solidarity. Before the suit was filed, 246 members of Congress—mostly Democrats—signed a letter denouncing it. Sen. Orrin Hatch (R–Utah) said the suit "smacks of totalitarianism. It really does." Given the history of the Teamsters and organized crime, however, the relief the government sought in open court after a full trial scarcely merited such denunciations.

Yet even Teamsters dissidents condemned it. Instead, Teamsters for a Democratic Union (TDU) wanted to simply replace the old delegate-convention system with direct rank-and-file election of executive board members. As a model, TDU cited the government-supervised United Mine Workers (UMW) national election in 1972. Under the terms of the settlement, they will have their chance to see whether direct elections—combined with some trustee-style oversight—can rid the union of organized crime.

But even TDU supporters admit that holding free elections is not a panacea. Lawyer Thomas Geoghegan, writing in The New Republic in favor of free elections as a substitute for court trustees, also touted the UMW model. He conceded, however, that "of course, the political culture of the Teamsters would not change overnight. The mob, after all, has run the union for over 40 years, and a whole generation of leaders has come to power under the arrangement. But in ten to 15 years the Teamsters Union would be unrecognizable."

Ten to 15 years is a long time to wait for the honest working men and women of the Teamsters to retake their union. While important, elections will never be the antidote for organized crime's violence and threats of violence. And even the settlement offers no guarantees. Herman Benson, executive director of the Association for Union Democracy, a nonpartisan civil liberties organization dedicated to the rights of individual members, notes that local elections will be conducted without government oversight. "In my experience, elections of that type in a situation where you have misgivings about democracy, have a great danger of being stolen," he warns.

Indeed, the UMW role model is a false analogy. The UMW's corrupt president, Tony Boyle, was only one man. And while he and his supporters used violence, they were basically amateurs. La Cosa Nostra is not an amateur organization. The TDU should know better. And if their memories are short, they ought to reread relevant portions of the government's complaint in the RICO action regarding the fate of earlier Teamsters dissidents:

• In April 1961, defendant Anthony Provenzano, a capo in the Genovese Family and formerly a Teamsters vice president and an officer of Teamsters Local 560 in New Jersey, recruited two men to kill Anthony Castellitto. Castellitto was a popular Local 560 officer who opposed Provenzano's leadership. Castellitto was murdered on June 6, 1961. Seventeen years later, Anthony Provenzano was sentenced to life imprisonment for his part in Castellitto's murder.

• On June 13, 1972, Lloyd Hicks, the recording secretary of Teamsters Local 390, was gunned down in Miami. Two days earlier, Hicks had announced that he would run for president of the local.

• In 1972, Joseph Wojcik, an organizer of Teamsters Local 513 in Philadelphia, was murdered. Wojcik had charged that Nick Franks, the local's president, had received $25,000 in return for agreeing to a sweetheart contract.

• On September 27, 1974, Daniel Seifert was shot to death by two masked assassins in a Chicago suburb. Seifert was to be a key government witness in the 1975 prosecution of defendants Joseph Lombardo, Allen Dorfman, Anthony Spilotro, and two Teamsters Central States Pension Fund Trustees for defrauding the Pension Fund of $1.4 million.

• In 1975, former Teamsters president Jimmy Hoffa disappeared. Hoffa had campaigned on a platform of ridding the Teamsters of corruption.

• On July 26, 1977, Vincent James Bonacasa was shot to death in Babylon, New York. Bonacasa, who was a business agent of Teamsters Local 808, opposed the leadership of that local.

• On March 6, 1981, George A. Franconero was shot to death from behind. Franconero had testified in United States v. Palmeri, in which the president, secretary-treasurer and trustee of Teamsters Local 945 in West Paterson, New Jersey, were all convicted of labor racketeering. Franconero was murdered the morning after the convicted union officers received notices requiring them to surrender and begin their prison sentences.

• In 1985, a shop steward in Teamsters Local 705 in Chicago beat up a Teamsters member for attending the public hearings of the President's Commission on Organized Crime, which was investigating corruption in the Teamsters leadership.

• On September 24, 1986, Bruno Bauer was murdered while working the night shift. He was shot four times at close range. Bauer was a dissident member of Teamsters Local 707 in New York City.

While the United Mine Workers election is not a model solution for the Teamsters, there is successful precedent for court-appointed trustees where organized crime has infiltrated union organizations. The Teamsters ought to know. In November 1987, when Jackie Presser was still president, he and other former trustees of the Teamsters Central States Pension Fund agreed to a final settlement of the government's 10-year-old lawsuit against the former Central States trustees. During the course of the lawsuit in 1982, U.S. District Court Judge James Moran of Chicago had placed the Teamsters' largest pension fund under court supervision to ensure that organized crime no longer had access to its assets. Under court supervision, the investment banking firm of Morgan Stanley was appointed to manage the pension fund, and the results speak for themselves: fund assets grew from $3.7 billion to $8.1 billion in five years, and the fund benefits paid annually to participants increased from $500 million to $840 million over a five-year period.

A full implementation of the government's original plan would not necessarily have ensured Teamsters reform. A truly hands-off policy toward collective bargaining could, for example, still permit sweetheart contracts. And in the New Jersey Local 560 case, the trustee-supervised election simply replaced the president and vice president—barred from running for office because of reported ties to the Genovese Family—with the president's brother and the vice president's nephew, who openly ran as surrogates for their banned relatives. But a trusteeship is their best shot, even in the modified form accepted by the Teamsters, who agreed in large part to the government's terms. And a three-person panel is more likely to succeed than a single individual, particularly if one of the new administrators is a prominent labor lawyer backed by the staff of a major law firm. Like Morgan Stanley, such an institution would be hard to intimidate and would have the resources necessary to do a thorough job.

Government, at a minimum, has a positive obligation to protect citizens from violent crime. Given the extensive role the federal government has claimed for itself in protecting and regulating unions, it has a special obligation to ensure that union members are free from violence or threats of violence as they participate in the internal affairs of their unions. Yet the federal government has failed, and failed miserably, over a period of more than 30 years to give even minimal protection to those honest Teamsters who have dared to challenge the influence of organized crime in their union.

It was the government that created the conditions that allowed the Teamsters to achieve unprecedented market power, conditions that encouraged organized crime to enrich itself at the expense of the union's membership. And it is the government that has known since the McClellan-Kennedy hearings in the late 1950s of the mob influence in the Teamsters. And working on a case-by-case basis, it is the government that, in the words of former Teamsters President Roy Williams, hasn't "been able to do nothing with [organized crime] either."

Trucking deregulation has weakened the Teamsters' market power, reducing the number of drivers covered by the National Master Freight Agreement from a high point of 450,000 to about 180,000. Overall, Teamsters membership has declined from 2.3 million in the 1970s to 1.6 million today. But while Teamsters' power on the highways has declined and organized crime no longer uses the Central States Pension Fund as its personal bank, the Teamsters still maintain their power in urban areas and organized crime continues to dominate or influence, through fear and violence, many of the largest Teamsters locals.

The government helped create the mess. Now it has a chance to clean it up. Finally, after four decades, honest Teamsters may be able to take back their union.

Contributing Editor Michael McMenamin is a lawyer in Cleveland.