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Robert D. Luskin Office of the GEB Attorney
GEB Attorney Laborers International Union of North America
1025 Thomas Jefferson Street, N. W.
Suite 420 East
Washington, D.C. 20007-5423
Phone: (202) 625-1200
Fax: (202) 625-1230

June 13, 1997 Letter image

Construction & General Laborers’
District Council of Chicago,
Its Officers and Delegates
Chicago District Council
6121 West Diversey Avenue
Chicago, Illinois 60639

 

Copies of this Notice and Complaint must be posted at the offices of the
Construction & General Laborers District Council of Chicago and Vicinity
and its affiliated locals.

Additional copies of the trusteeship Complaint are available to all union members of
Locals affiliated with the Construction & General Laborers’ District Council of
Chicago and Vicinity upon request by contacting the Inspector General’s Office at
(202) 942-2315.

 

To the Officers and Delegates of the Construction & General
Laborers District Council of Chicago and Vicinity:

 

Pursuant to the LIUNA Ethics and Disciplinary Procedure, Section 3, the GEB Attorney is

delegated all of the powers of the LIUNA General President "to impose and review the imposition of

trusteeships, over any district council, local or other entity within the union." Article IX, Section 7 of

the International Constitution provides that the General President may appoint a trustee to take charge

and control over the affairs of a district council when such action is necessary "for the purpose of

correcting corruption or financial malpractice, assuring the performance of collective bargaining

agreements or other duties of a bargaining representative, restoring democratic procedures, otherwise

carrying out the legitimate objects of such subordinate body or the International Union, or to protect

the organization as an institution." Under this provision of LIUNA’s Constitution, before a trustee may

be appointed, a hearing must be conducted for the purpose of determining whether such a trustee shall

be appointed.

By this letter and the enclosed trusteeship Complaint, I advise you that I have concluded that

the imposition of a trusteeship over the Construction & General Laborers’ District Council of

Chicago and Vicinity is necessary to correct corruption and financial malpractice, to restore

democratic procedures and to carry out the legitimate objects of the International. The grounds

for trusteeship are more specifically set forth in the accompanying Complaint, which is being filed

with LIUNA’s Independent Hearing Officer.

This letter also provides notice that a hearing will be held beginning on Wednesday, July

16, 1997 at 9:00 a.m. subject to further order of the Independent Hearing Officer who will

control the scheduling of the hearing. Officers and delegates of the District Council will be

offered an opportunity to attend and participate in the hearing. You will be further advised

regarding the time ,location and procedures of the hearing.

After the hearing has been concluded, the Independent Hearing Officer will rule on

whether a trusteeship is warranted and advise you of his ruling.

In addition, pursuant to Article IX, Section 6 of the L.I.U.N.A .Constitution, and

Paragraph 3 of the LIUNA Ethics and Disciplinary Procedure, you are hereby ordered by the

GEB Attorney not to dispose of any record referring or relating to the allegations set forth in the

accompanying Complaint, or the individuals named therein, effective immediately, until further

order of the GEB Attorney. Failure to comply with this order shall constitute a basis for

disciplinary action under the Ethics and Disciplinary Procedure.

Yours Sincerely,

Robert D. Luskin

Trusteeship Complaint enclosed.

cc:

Peter F. Vaira, Independent Hearing Officer

Arthur A. Coia, General President

Michael Bearse, General Counsel

Terrence Healy, Regional Manger

W. Douglas Gow, Inspector General

 

 

OFFICE OF THE INDEPENDENT HEARING OFFICER

LABORERS’ INTERNATIONAL UNION OF NORTH AMERICA

In Re: Trusteeship Proceedings,

Chicago District Council

No.

 

 

 

COMPLAINT FOR TRUSTEESHIP

Pursuant to Section 3 of the LIUNA Ethics and Disciplinary Procedure and Article IX,

Section 7 of the LIUNA Constitution, the GEB Attorney has determined that a trusteeship of the

Construction & General Laborers’ District Council of Chicago and Vicinity ("Chicago District

Council") is necessary to rid that entity of corruption, to restore democratic procedures, to correct

financial malpractice and to carry out the legitimate objects of LIUNA and its affiliates.. In support of

the imposition of a trusteeship, the GEB Attorney alleges as follows:

INTRODUCTION

For at least the past twenty-five years, the leadership of the Chicago District

Council has had strong, discernable ties to the leadership of organized crime in Chicago.

Organized crime has exerted influence over the Chicago District Council by placing and

retaining mob members, mob associates and relatives of mob members in positions of leadership

in the Chicago District Council and a number of its affiliated locals and funds. Control over

leadership positions in the Chicago District Council benefits organized crime in Chicago by

providing mob members, mob associates and relatives of mob members with:

  1. significant sources of income and the appearance of legitimate jobs;
  2. political and economic power;
  3. control and influence over the finances of the Chicago District Council and its affiliated locals; and
  4. influence over affiliated union pension, health ~ welfare, training and political action funds through power of appointment.

Evidence of organized crime’s influence over the Chicago District Council includes:

As further described below, a trusteeship is necessary to rid the Chicago District Council of the corrupting influence of organized crime, to end the undemocratic practices that have allowed corruption to flourish, to correct financial malpractice, and to carry out the legitimate objects of LIUNA and its affiliates.

ORGANIZED CRIME IN CHICAGO

1 . The Chicago Outfit. La Cosa Nostra (the "LCN"), also referred to as the mob, the

Mafia or the "Outfit," is a criminal organization that operates in various cities throughout the United

States. The LCN is comprised of groups of men who are organized into units referred to as families."

The Chicago family of the LCN is commonly referred to as " the Outfit". ‘ LCN families such as the Chicago Outfit are generally

headed by a "boss" who is assisted by an "underboss" and a counselor called a "consigliere". Leadership positions within the

Chicago Outfit have changed over time due to criminal convictions, death and other circumstances.

2. Chicago Outfit Crews. LCN families such as the Chicago Outfit generally conduct

criminal activities through entities known as "crews." Each crew is headed and supervised by a

person generally referred to as a "crew boss" or "capo." Each crew consists of individuals inducted

into membership in the LCN who are thereafter referred to as "soldiers" or "made members".

Crews also consist of LCN "associates", individuals who are not "made members" but who

knowingly participate and cooperate in the activities of the family. While each crew in the Chicago

area tends to operate certain types of criminal activity within certain geographical areas, the types of

criminal activity and the geographical boundaries of these crews have varied over time due to

criminal convictions, death and other circumstances. Over the past twenty-five years, the Chicago

District Council has had strong ties to a number of crews, including the North Side Crew, the 26th

Street Crew and the Chicago Heights Crew.

 

THE CHICAGO DISTRICT COUNCIL

 

3. The Chicago District-Council. The Chicago District Council is an affiliate of LIUNA

operated pursuant to the LIUNA International Constitution, the Uniform District Council Constitution,

and the Uniform Local Union Constitution. The Chicago District Council is the central representative

body for twenty-one affiliated local unions in the Chicago area (collectively referred to as the

"Affiliated Locals""). Pursuant to Article I, Section 2 of the LIUNA Uniform District Council Constitution ( "UDCC"),

the members of the Chicago District Council consist of delegates from the Affiliated Locals.

4. Leadership of the Chicago District Council. The leadership of the Chicago District Council includes the

Business Manager, Secretary-Treasurer, President, Vice President and Sergeant-at-Arms. The Chicago District Council is required to

list its officers and the salaries of its officers on "LM-2 Reports" filed with the Labor Department in accordance with

the provisions of Title 29, United States Code, Section 431. The Chicago District Council is also required to

memorialize nominations, elections and salary approval in meeting minutes in accordance with the provisions

of Articles VI and VII of the UDCC. Over the past twenty-five years, as reflected in its minutes and LM-2s,

the most important leadership positions at the Chicago District Council have been held by and transferred to mob members, mob

associates or relatives of mob members through uncontested nominations or appointments.

5. Affiliated Locals of the Chicago District Council. The members of the Chicago District Council consist of

delegates from its Affiliated Locals pursuant to Article I, Section 2 of the UDCC. Officers in the Chicago District Council must be

properly appointed delegates to the Chicago District Council from the Affiliated Locals pursuant to Article VI,

Section 1 of the UDCC. Over the past twenty-five years, a large number of the delegates and officers of the Chicago District Council

have been mob members, mob associates or relatives of mob members from the following Affiliated Locals: Local 1, Local 2, Local 5,

Local 225, Local 1001 or local 1006.

6. Affiliated Funds of the Chicago District Council. Members of the Chicago District Council, and members of the

Affiliated Locals of the Chicago District Council participate in the following funds (collectively referred to as the "Affiliated Funds"):

( 1 ) The Laborers Pension Fund; (2) Pension Plan for the Funds' Office Staff of the Chicago District Council of Laborers’ Health and

Welfare and Pension Funds; (3) Health and Welfare Department of the Construction and General Laborers’ District Council of

Chicago and Vicinity; (4) The Construction and General Laborers’ District Council of Chicago and Vicinity Training Trust Fund; and

(5) the Laborers’ Political League, a political action fund. The Chicago District Council has the authority and

responsibility to appoint individuals to certain positions on the Affiliated Funds pursuant to the governing documents of the

Affiliated Funds, and through such appointments exercises influence over the selection of employees and service providers of these

funds. The leadership of the Chicago District Council has appointed a number of mob members, mob associates, and relatives of mob

members as trustees of the Affiliated Funds and used its influence to secure for such persons contracts with and employment by

these funds. In its appointment and retention of trustees to the Affiliated Funds, the Chicago District Council has failed to act as a

reasonable fiduciary consistent with governing law, and has failed to properly appoint and retain Affiliated Fund trustees consistent

with the governing documents of these funds.

EVIDENCE OF CORRUPTION. FINANCIAL MALPRACTICE

AND UNDEMOCRATIC PRACTICES

7 Individual Ties to the Chicago Outfit. The following individuals who are serving, or have served, as officers or

delegates to the Chicago District Council, or as trustees, officers or employees of the Affiliated Funds, are members of the Chicago

Outfit, associates of the Chicago Outfit or relatives of Chicago Outfit members:

9. Threats of Violence and Use of Bribes. Since the inception of LIUNA’s reform effort in early 1995, threats of

violence and attempted bribery have been used to discourage inquiry regarding organized crime’s ties to the union in the Chicago

area and/or to control positions of union leadership in the Chicago area.

10. Failure of Democratic Process. For at least twenty-five years, corruption within the Chicago District Council

has manifested itself in the failure of democratic process. Decisions regarding the transfer of official positions are made by corrupt

officials and often reflect changes in the power structure of the Chicago Outfit. Democratic elections are circumvented through

repeated reliance on constitutional provisions designed for limited application. Corruption is perpetuated and democratic selection of

officers is prevented through a pattern of abuse, including

  1. the avoidance of elections through uncontested nominations;

  2. repeated transfer of power through the filling of vacancies between elections;

  3. appointments or uncontested nominations of unqualified or marginally qualified individuals; and

  4. the longstanding failure to address allegations of organized crime connections, no show jobs, or criminal arrests, indictments or convictions.

Due to this pattern of abuse, not a single contested election has occurred at the Chicago District Council or in

Affiliated Locals I, 2, 5, 225, 1001 or 1006 in the past twenty-five years.

 

11. Retention and Promotion of Convicted Felon as an Officer. Following a felony conviction in or around 1982

involving kickbacks received from the Chicago District Council’s affiliated health and welfare fund, James Caporale retained his

position as Secretary-Treasurer of the Chicago District Council and was promoted to the additional position of

Business Manager of the Chicago District Council. From approximately l982 - 1987, delegates and officers of the

Chicago District Council, including Ernest Kumerow, Frank Caruso, Bruno Caruso and John Matassa, Jr. permitted

James Caporale to retain the highest positions of authority within the Chicago District Council and to receive over ½ million dollars in

salary in direct violation of a court order and the" good standing" provisions of Article VI, Section l of the UDCC. In addition, from

approximately 1984, this conduct violated Title 29, United States Code, Section 504.

 

12. Rapid Promotion of Unqualified Individuals or Individuals with Minimum

Qualifications. Mob members, mob associates and relatives of mob members have been promoted within the Chicago District

Council, the Affiliated Locals and the Affiliated Funds without proper qualifications or with only minimum

qualifications for office. As one example, in approximately l 987, Joe Lombardo, Jr. was appointed to the position of

Secretary-Treasurer of the Chicago District Council yet was not a delegate from an Affiliated Local in violation of Article VI, Section 1

of the UDCC.

 

13. Failure to Properly Hold Scheduled Election of 1987. Officers of the Chicago District Council are elected to

four-year terms pursuant to the provisions of Article VI, Section 2 (g) of the UDCC. The Chicago District Council nomination and

election process scheduled for August of 1987 did not occur consistent with this four year election cycle. The failure to

properly hold an election in 1987 allowed official positions within the Chicago District Council to continue to be

transferred through uncontested appointments up to the time of James Caporale’s ultimate resignation. Between James Caporale’s

indictment on felony charges in approximately 1981 and his resignation caused by his incarceration for these charges in

approximately 1987, James Caporale participated in the selection of a number of high ranking officials at the Chicago District Council.

During this period, the following individuals, who are mob members, mob associates or relatives of mob members, took positions in

the Chicago District Council: Ernest Kumerow, Frank Caruso, Joe Lombardo, Jr. and Dominick DiMaggio.

 

14. Subsequent Transfers of Power to Individuals with Ties to the Chicago Outfit.

From 1987 to 1997, the following individuals, who are mob members, mob associates or relatives of

mob members, have taken over official positions in the Chicago District Council consistent with the

longstanding pattern of abuse of democratic procedures referenced in paragraph 10: Bruno Caruso,

Leo Caruso, John Matassa, Jr., James DiForti.

 

I5. Unauthorized Union Salary Payments. The following individuals who are serving, or

have served, as officers or employees of the Chicago District Council have held office in, or have been employed by,

another body of the Union and have received salary and other compensation for such positions without proper approval of the

General President as required under Article V, Section 3 of the UDCC and/or Article IV, Section 3 of the Uniform Local

Constitution:

James Caporale

Bruno Caruso

Frank Caruso

Leo Caruso

James DiForti

Ernest Kumerow

John Matassa, Jr.

Alfred Pilotto

Joseph Spingola

 

16. City of Chicago "No Show" Investigation. An investigation of "no show" jobs conducted by the Inspector

General’s Office for the City of Chicago, in approximately 1991,resulted in the suspension and demotion

of Nicholas Gironda and the resignation of Leo and Frank Caruso from their City of Chicago jobs. Following this investigation,

delegates and officials from Local 1001, who also held positions of responsibility within the Chicago District Council, significantly

increased Nicholas Gironda’s salary. Delegates and officials from Local 1006, who also held positions of responsibility within the

Chicago District Council, retained Frank Caruso, and retained and ultimately promoted Leo Caruso.

 

17. Appointment of Corrupt Individuals to Affiliated Funds. Control of official positions within the Chicago District

Council provides the Chicago Outfit with influence over the selection of trustees of the Affiliated Funds of the Chicago District

Council. The following individuals are among the mob members, mob associates or relatives of mob members who have

been placed in positions in the Affiliated Funds by the Chicago District Council: Alfred Pilotto,James Caporale, Vincent Solano,

Ernest Kumerow, Joe Lombardo, Jr., John Matassa, Jr., Bruno Caruso, Frank Caruso, and Leo Caruso. Appointments to trustee

positions in certain Affiliated Funds by the Chicago District Council have been, and are being, made for "unexpiring terms" in

direct conflict with the governing documents of these Affiliated Funds.

 

18. Failure to take step to Investigate or Eradicate Mob Influence. Despite proceedings by the President’s

Commission on Organized Crime and Congressional Committees concluding that various officers of the Chicago District Council

and/or certain affiliated entities were mob members, mob associates or relatives of mob members, despite widespread reporting

of similar allegations by local news media, and despite a series of prosecutions establishing the accuracy of many of these allegations,

the leadership of the Chicago District Council has failed to take steps to investigate or eradicate mob influence in derogation of their

fiduciary and constitutional duties.

 

GROUNDS FOR TRUSTEESHIP

 

Count I

 

CORRECTING CORRUPTION AND

ERADICATING THE CORRUPT INFLUENCE OF ORGANIZED CRIME

19. In light of the evidence developed by LIUNA’s Inspector General and the facts set forth in paragraphs 1

through 18, the GEB Attorney has determined that it is necessary to place the Chicago District Council under trusteeship in order to

correct corruption and to eradicate the influence of organized crime. Given the demonstrable associations between the leadership of

the Chicago District Council and the leadership of the Chicago Outfit; the actions taken by current and former Chicago District

Council leadership to place and retain mob members, mob associates and relatives of mob members in positions of power; the failure

to hold a single democratic election for any official position in over twenty-five years; the failure to properly appoint trustees to

Affiliated Funds; and the failure to engage in meaningful efforts to acknowledge or address the issue of organized crime corruption

within the jurisdiction of the Chicago District Council, the imposition of a trusteeship over this entity is necessary to eradicate

the influence of organized crime within the Chicago District Council, as well as its Affiliated Locals and Affiliated Funds.

 

20. By placing the Chicago District Council under trusteeship, LIUNA will be able to correct the corrupt abuses of

that entity’s leadership, assure proper appointment of trustees to the Affiliated Funds, more closely monitor activities of Affiliated

Locals, and take informed additional steps to rid the Chicago District Council and its affiliated entities of organized crime

corruption.

 

Count II

 

RESTORING DEMOCRATIC PROCEDURES

21. In light of evidence developed by LIUNA’s Inspector General and the facts set forth in paragraphs 1 through 18,

the GEB Attorney has determined that it is necessary to place the Chicago District Council under trusteeship to restore democratic

procedures. Given the associations between the leadership of the Chicago District Council and the leadership of the

Chicago Outfit; the actions taken by current and former Chicago District Council leadership to place and retain mob members, mob

associates and relatives of mob members in positions of power; the failure to hold a single democratic election for any official position

in over twenty five years; the failure to properly appoint trustees to Affiliated Funds; and the failure to engage in any meaningful,

open and democratic efforts to acknowledge or address the issue of organized crime corruption within the jurisdiction of the Chicago

District Council, the imposition of a trusteeship is necessary to restore democratic procedures.

 

 

22. By placing the Chicago District Council under trusteeship, LIUNA will be able to foster open and democratic

practices within the Chicago District Council and to assure the proper, democratic appointment and removal of Chicago District

Council officers and Affiliated Fund trustees.

Count III

 

CORRECTING FINANCIAL MALPRACTICE

 

23. In light of the evidence developed by LIUNA’s Inspector General and the facts set forth in paragraphs 1

through 18, the GEB Attorney has determined that it is necessary to place the Chicago District Council under trusteeship to correct

financial malpractice. Given the unauthorized "dual" salary payments from the Chicago District Council and its affiliated entities

as well as other financial abuses that have benefitted or are benefitting mob members, mob associates or relatives of mob members,

the imposition of a trusteeship is necessary to correct financial malpractice.

24. By placing the Chicago District Council under trusteeship, LIUNA will be able to correct financial abuses that

exist within the Chicago District Council and achieve sound and ethical management for the benefit of its membership.

 

Count IV

 

CARRYING OUT THE LEGITIMATE OBJECTS OF

LIUNA AND ITS AFFILIATES

 

25. Certain "objects" of the International Union are set forth in Article II, Section 1 of the LIUNA Constitution. The

"objects" of District Councils are set forth in Article II, Section l of the UDCC and include the responsibility "to fulfill the objects of

the International Union as specified in Article II, Section I of the International Union Constitution." UDCC, Art. II,

Section I (a). Thus, the Chicago District Council is obligated to pursue the International’s objects in addition to those enumerated in

the UDCC.

 

26. Additional objects of the International and its affiliated entities are set forth in the LIUNA Ethical Practices Code

("EPC") and the LIUNA Ethics and Disciplinary Procedure ("EDP"),which form part of the International Constitution. The EPC sets

forth certain specific ethical practices that "shall apply to the International Union, all District Councils, every Local Union, all

subordinate bodies, and to every employee, member and officer thereof, and to every union trustee and employee of any

benefit fund or political action committee." The EPC and the EDP set forth and reinforce standards of conduct in the following areas:

Democratic Practices, Financial Practices, Health, Welfare and Retirement Funds, Business and Financial Activities of Union Officials

and Barred Conduct.

 

27. In light of the evidence developed by the Inspector General and the facts set forth in paragraphs 1 through 18,

the GEB Attorney has determined that it is necessary to place the Chicago District Council under trusteeship to carry out the

legitimate objects of LIUNA and its affiliates as expressed in the LIUNA International Constitution, the UDCC, the EPC and the EDP.

Given the associations between the leadership of the Chicago District Council and the leadership of the Chicago

Outfit; the actions taken by current and former Chicago District Council leadership to place and retain mob members, mob associates

and relatives of mob members in positions of power in the Chicago District Council and its affiliated entities; the longstanding abuse

of democratic processes; the longstanding failure to investigate mob influence or examine allegations of mob control; and the

ongoing financial malpractice, the Chicago District Council is currently unable to carry out the legitimate, constitutional objectives of

a LIUNA affiliate. Specifically, the Chicago District Council has failed:

 

a. To promote and foster respect for and compliance with the Constitution of the International Union, the Uniform Local Union Constitution and this Constitution and all of the rules, regulations, policies, practices and lawful and decisions adopted and promulgated in the furtherance and administration of said Constitutions. UDCC, Art. [I, Sec.1(h):

b. To promote respect for, compliance with, and observance of all of the provisions of agreements by it and its affiliated Local Unions and the members thereof. UDCC, Art. 11, Sec. l( i );

c. To unite under [LIUNA’s] banner all persons engaged in work within its jurisdiction... for their mutual benefit, aid and protection. LIUNA Constitution, Art. II, Sec. I (a);

d. To promote a better understanding by government and the public of the aims and objects of this Organization and the Labor Movement as a whole. LIUNA Constitution, Art. II, Sec. l ( j );

e. To take all such other action as may tend to conserve and promote the welfare and interest of this International Union, its affiliates and members, .LIUNA Constitution, Art. II, Sec. l ( r );

f. To protect the democratic rights of LIUNA’s members to participate fully, without fear, abuse, or intimidation in all Union affairs; to ensure that each member shall have the right to run for office, to nominate through duly established constitutional procedures, and to vote in free, fair and honest elections; to ensure that the union’s operations shall be conducted in a democratic and fair manner; and to ensure that corruption, discrimination or anti-democratic procedures shall not be permitted under any circumstances. EPC, Democratic Practices Section.

g. To make meaningful efforts to eradicate corruption and prohibit barred conduct, which is defined to include: committing any act of racketeering; knowingly associating with any member or associate of organized crime; knowingly permitting any member or associate of the LCN to exercise control or influence over the affairs of the Union; or obstructing or interfering with the LIUNA Inspector General.. EPC and EDP, Barred Conduct Sections.

CONCLUSION

 

WHEREFORE, the GEB respectfully requests that a trusteeship be imposed upon the Chicago District Council.

Respectfully Submitted,

 

Robert D. Luskin

GEB Attorney

Date: June 1 3,1997

Provided courtesy of LABORERS for JUSTICE  as a service to our LIUNA

Brothers and Sisters, Jim McGough (847-202-3838) (jimmcgough@super-highway.net)