I.  INTRODUCTION

Since 1989 the International Brotherhood of Teamsters (IBT) has been operating under a court order (the Consent Decree) that established an independent monitoring system of which the current Independent Review Board (IRB) is a part and required the inclusion of anti-racketeering provisions in the IBT Constitution to ensure that organized crime would not be permitted to exploit the union as it had in the past. The Consent Decree puts the IBT under an affirmative, legally enforceable duty to combat organized crime and racketeering. It was imposed upon the union in large part because IBT leaders had ignored evidence of organized crime infiltration and corruption.

Apart from this legal obligation, the current IBT administration, beginning in 1999, voluntarily undertook a comprehensive reform program designed to instill trust, restore the IBT's reputation, and demonstrate that the Teamsters Union could police itself: The IBT's anti-racketeering program has been carried out under the name Project RISE, which stands for "Respect, Integrity, Strength, and Ethics." Although some aspects of the union's anti-racketeering program are independent of Project RISE — such as the commitment to take appropriate investigative and other steps to protect the union from organized crime influences —"Project RISE" is commonly understood within the union as a shorthand term for all IBT-initiated anti-racketeering reform efforts. Documents with the Project RISE logo summarize its mission as "fulfilling our commitment to run a clean union." IBT leaders have made numerous statements of support for the reform program to union members, government officials, and the media, and have used its existence as a reason to end or modify the Consent Decree.

This report describes issues identified by IBT investigators operating under their mandate to fulfill the union's obligations under the Consent Decree and its commitment to implement the anti-racketeering measures announced by IBT leaders. The issues go to the heart of the union's anti-racketeering program: infiltration of Teamster entities by the Chicago organized crime family and attempts to stifle IBT investigations of organized crime-related corruption in that area. An appendix to this report describes each issue in greater detail, and a confidential appendix contains additional source materials and references. The report concludes with recommendations for resolving the identified issues and restoring the credibility of the IBT's reform program.

II. SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

During the past year, and especially since June 2003, it has become increasingly obvious that the IBT leadership's commitment to the reforms symbolized by Project RISE has wavered. As a result, the credibility of the IBT anti-racketeering reform program has been severely undermined. A perception has taken root among both supporters and opponents of the reforms that the IBT's top leadership no longer supports the program and will not permit anti-racketeering investigations to threaten the most powerful remaining organized crime influences in the union, which are centered in the Chicago area. As described in this report, there is substantial evidence to support this perception.

In September 2003, IBT investigators received reports from intelligence sources who were in positions to know about developments within the Chicago Teamsters community and Chicago organized crime circles to the effect that the Chicago organized crime family — known as the Chicago "Outfit" — had concluded that its interests in

2

Teamster matters were threatened by IBT investigative activities and had ordered those activities shut down. This objective would be accomplished by influential current and former union officials, including the current president of Chicago Joint Council 25 (JC25 President) and the executive assistant to the IBT general president (Executive Assistant).

A full investigation is required to establish whether and to what extent the Chicago Outfit is behind efforts to shut down organized crime-related investigative activities in that area. Such an investigation is warranted because any organized crime influences that reach into the general president's office revive the issues that led to the Consent Decree and cannot be ignored. Moreover, while it has yet to be established that the Chicago Outfit was behind them, there is no doubt that there have been efforts to limit and ultimately eliminate IBT investigations in Chicago. Since mid 2003, for example, the following has occurred:

• Despite substantial unresolved issues relating to organized crime and corruption, an IBT investigation of Local 726 was ended after the Executive Assistant made repeated statements questioning the need for the Local 726 investigation. The purported basis for ending the investigation and withdrawing the general president's personal representative who had been assigned to it was a letter by the personal representative, the writing of which had been orchestrated by the Executive Assistant.

• The Executive Assistant conducted a similar lobbying campaign against continuing the IBT investigation of Local 786, to which the same personal representative had been assigned. Once again, the Executive Assistant orchestrated the writing of a letter from the personal representative that he used to support his argument that the investigation should be ended.

·           The Executive Assistant took steps to conceal his role in generating the letters he used to justify his argument that the Local 726 and Local 786 investigations should be ended.

3

·         The Local 786 investigation, while not shut down until February 2004, was severely narrowed in December 2003 in a way that excluded addressing any organized crime-related issues.

·         Charges against three Teamsters, including one who knowingly associated with an organized crime member, that were recommended in June 2003 on the basis of an interim report concerning the Local 786 investigation have not been filed.

·         A February 2003 recommendation to begin an overt investigation of Local 714 in Chicago because of multiple issues related to organized crime, corruption, and the reappearance of conditions that led that local to be placed into trusteeship based upon a 1996 IRB report, was not acted upon until June 2003. When the recommendation was reiterated at that time, the general president ordered the issues turned over to the IRB.

·         The Executive Assistant has made repeated efforts to keep invoices for Chicago-related investigations from being paid for arbitrary reasons.

·         In January and February 2004, after IBT investigators attempted to interview Chicago-area Teamsters believed to have knowledge relevant to carrying out the IBT's anti-racketeering mandate, strong complaints were made by the JC25 President to the office of the general president and the IBT general counsel.

·         By mid February, following repeated Chicago-based complaints that reached the general president's office after each interview that was conducted, the IBT investigative team stated that it would produce a comprehensive report on the organized crime and other issues under investigation in the Chicago area, including the high-level efforts to derail the team's anti-racketeering activities, and request a meeting with the general president to address them.

·         On February 24, 2004, IBT investigators were instructed by the general president's office to stop all investigative activity in Chicago pending submission of this report.

The attempts to stop anti-racketeering investigations in Chicago occurred in the context of mounting evidence that more, not less, investigative activity is warranted in the Chicago area. Among the issues that need to be addressed are the following:

4

·              Whether Local 726 Teamster supervisors have been engaging in an ongoing practice — extending through at least February 2004 — of soliciting bribes from Local 726 rank-and-file members in exchange for full-time. City of Chicago jobs and lucrative overtime jobs, and the extent to which this practice implicates organized crime;

·              Whether organized crime members and associates who, according to the present principal officer of Local 726, had many contacts with the former principal officer who resigned in April 2003 continue to have contact or' association with present executive board members;

·              Whether charges should be brought against seven active Local 726 members and one member on withdrawal status who have been identified by intelligence sources and public documents as members or associates of the Chicago Outfit;

·              Whether kickbacks or other improper payments were generated through a dental and vision plan maintained by the Local 727 Health and Welfare Plan;

·              Whether the trustees of the Local 727 pension and benefit plans violated their fiduciary duties by permitting persons and entities with ties to organized crime, involvement in racketeering schemes, or both, to be vendors to or employees of the plans;

·              Whether a Local 727 business agent is associated with organized crime and/or has engaged in prohibited associations with organized crime figures, and whether payments to the business agent from the local's benefit plans reflect fair compensation for services actually rendered to the plans pursuant to an arm's-length employment agreement;

·              Whether the principal officer of Local 743 entered into sham collective bargaining agreements with two employers and whether those employers have ties to organized crime;

·              Whether the current principal officer of Local 743 is involved in the video poker machine business and whether he has contact, through that business or otherwise, with individuals associated with organized crime;

·              Whether Local 781's current principal officer, who is also the vice president of Joint Council 25, has engaged in a prohibited association with William T. Hogan Jr., a barred member;

5

 

·              Whether the charges proposed in the June 2003 interim report concerning Local 786 should be filed against: (1) the Local 786 benefit fund's administrator for knowingly associating with an organized crime member who is a barred Teamster; (2) the benefit fund's collections manager for providing false information and receiving full-time compensation for less than full-time work; and (3) the Local 786 benefit fund's assistant administrator for refusing to appear for a sworn statement;
 

·           Whether and to what extent organized crime continues to control or influence the affairs of Local 786;

 

·           Whether and to what extent Local 786 employers who were associated with or controlled by organized crime failed to make proper contributions to the Local 786-affiliated benefit funds because of corrupt or illegal schemes and practices; and

 

·         Whether the current Local 786 principal officer and other members of the local's executive board abused their fiduciary duties by misappropriating in excess of $8,000.00 of local union funds for their personal benefit in violation of IBT written policy.

 

Issues relating to organized crime infiltration and associated corruption in the Chicago area are numerous and cut across jurisdictional lines. They include allegations relating to Joint Council 25 and to IBT representatives in the area. Some service providers and vendors used by multiple locals in the Chicago area and/or their affiliated benefit funds have apparent organized crime connections and have been implicated in racketeering schemes, or both. There is a pattern of Teamster employers, many of which have demonstrable organized crime connections, using nonunion labor to perform jobs that are or could be subject to a collective bargaining agreement, a practice that is apparently condoned by some Teamster leaders. There is also a widespread perception among Chicago-area Teamsters that William Hogan Jr. continues to exercise substantial influence throughout Joint Council 25 and is involved in various schemes affecting Teamster entities

6

in the area, despite his status as a barred member with whom other Teamsters cannot associate. According to confidential sources, Hogan, the JC25 President, and the Executive Assistant are key figures behind the attempts to shut down IBT investigations in Chicago. IBT investigators have found substantial evidence to support the perception of Hogan's continued influence, such as an October 2003 meeting between Hogan and the current Joint Council 25 vice president.

A comprehensive effort is required to address the pervasive organized crime and corruption issues in Chicago and to restore the credibility of the IBT's anti-racketeering reform program. That credibility cannot be restored if IBT officials known to be hostile to investigating organized crime and corruption issues, particularly in the Chicago area, are permitted to exercise authority over investigative activities. Thus, the Executive Assistant should be sequestered from any such responsibility and any replacement be sincerely committed to the union's announced anti-racketeering principles and objectives. In addition, educational events should be planned to counter what appears to have been an intentional campaign of disinformation about IBT anti-racketeering activities and to reinforce the union's commitment to genuine cultural reform. Finally, certain investigative and administrative decisions that may have been influenced by attempts to shut down the anti-racketeering reform efforts should be reexamined.

There is still time to redeem the integrity of the IBT's anti-racketeering program before its credibility is irreparably damaged and the public statements of Teamster leaders in support of reform are deemed to have been fraudulent. Credibility cannot be restored, however, if Teamster leaders attempt to maintain a balancing act between taking the steps

7

necessary to combat racketeering and responding to pressure from those who oppose genuine reform. A clear choice must be made. If the IBT leadership chooses to carry out its public commitment to genuine anti-racketeering reform, then it will have to confront strongly entrenched interests in Chicago, address on their merits numerous unresolved issues of organized crime influence and corruption, and hold Teamster entities in that area to the same standards as the rest of the union.

IlI BACKGROUND

A.          The IBT's Anti-Racketeering Commitment

The IBT's ongoing commitment to rid itself of organized crime influence and racketeering was expressed in a formal General Executive Board (GEB) resolution as well as in numerous public statements by top union officials. Stier Anderson's role in helping the union to fulfill this commitment has been described and reaffirmed in numerous contexts, beginning with the June 8, 1999 retainer letter which confirmed that the IBT was retaining Edwin H. Stier "to assist the IBT in assuring that it is fully capable of protecting its membership and the public from exploitation of the Union by organized crime and corrupt officials." One task was to develop a strategy "to deter, to the fullest extent possible, wrongful conduct by IBT officials and to assure that if evidence of such conduct surfaces, it will be dealt with swiftly and fairly."¹

The union's commitment, and Stier Anderson's role in helping to carry it out, was reiterated many times in a variety of public and private forums. On July 23, 1999, for example, General President James P. Hoffa announced in an IBT publication "a new initiative to eradicate corruption and any remaining mafia influences in the Teamsters

8

Union." Hoffa "'made the promise that we would take dramatic steps to remove any remaining influence of organized crime from our union, and set new, higher standards for a corruption-free union,' and announced that the GEB "'unanimously passed a resolution for a comprehensive, internal anti-corruption plan; a self-policing plan unlike any other union.- Stier was also quoted in that article as follows: "`I am convinced that Jim Hoffa and the leaders of this union are committed to running a clean union and are determined to remove any remaining vestiges of organized crime.² Later that year, General President Hoffa was pictured on the cover of Teamster standing next to James M. Kossler, a former FBI agent who supervised key organized crime investigations, and Stier over the statement — "'We will run a clean union.- Inside the magazine, in a signed message, the general president strongly affirmed his commitment to eradicating corruption: "I am absolutely committed to our new anti-corruption program because I believe it is essential to our long-term success and growth.... If there are any hidden mob associates in the union, we will identify and remove them. This will set a clear standard for dealing with the threat of mob influence in the future."³

Predictably, there was skepticism about the sincerity of the union's announced commitment to fighting organized crime and corruption. In a July 7, 1999 New York Times article, for example, prominent labor reporter Steven Greenhouse stated that "some labor relations experts questioned whether Mr. Hoffa might be appointing Mr. Stier less to clean up the union than to impress the Government with his plan to put in place his own anti-corruption program." One labor relations expert, Richard Hurd of Cornell University, "asked whether Mr. Hoffa might someday fire Mr. Stier, the way President Richard M. Nixon once

9

fired the special prosecutor Archibald Cox, if Mr. Stier's anti-corruption mechanism targets Mr. Hoffa or his close allies." Hurd was further quoted as follows: "`Naming Stier is the kind of thing you'd expect a reformer to do, not the kind of thing you'd expect someone who had questionable intentions .... I'm reluctant to say this is proof that Hoffa is serious, but it's certainly a positive sign. The truth will be in how it plays out.'" The article also attributed to Stier the following: "Mr. Stier said . . . that he would quit if he grew convinced that Mr. Hoffa was not serious about fighting corruption or was undercutting him."⁴

In February 2000, IBT General Counsel Patrick J. Szymanski wrote to the chief of the FBI's Organized Crime and Drug Operations Section to request assistance "that will enable the Union to remove any remaining vestiges of organized crime and to prevent any future attempt by organized crime to infiltrate or influence the Union, its officers and members." Szymanski's letter stated that the IBT's top officers were "personally and irrevocably dedicated" to the goal of protecting the union from organized crime. To this end, the letter continued, "the Union has embarked upon a far-reaching Anti-Corruption Program headed by former prosecutor Ed Stier and former [FBI] Special Agent Jim Kossler." As part of this program, Szymanski made the "commitment" that the union and "its retained independent investigators will provide the Bureau with any reports and relevant information generated from disclosed information, as well as any evidence of criminal conduct that might be gathered in the course or our own investigations." In its concluding paragraph, the letter stated: "The IBT is committed to fighting corruption of any form and allegations involving organized crime will be given our highest priority."⁵

On October 4, 2001, in a letter to Andrew W. Schilling of the U.S. Attorney's Office for the Southern District of New York concerning discussions about the 1989 Consent Decree, Szymanski expressed frustration with the Government's "failure to recognize the accomplishments of this administration and its fidelity to the principles embodied in the Consent Decree," noting that the IBT had "hired experienced former federal law enforcement officers to conduct a study to identify and deal with any remaining organized crime influence in the Union."⁶

In October 2002, the IBT released its comprehensive investigative study of organized crime influence in the union, thereby completing the first phase of the union's Project RISE reform program. Accompanying the organized crime study's release were public statements by the IBT's top leaders reported in numerous media outlets reiterating their commitment to keep the union free of organized crime influences.⁷ As the organized crime study itself made clear, however, the true test of the union's commitment lay in the future: "If the Teamsters Union adheres faithfully to the principles of Project RISE, it will culminate a process that has lasted for a century and involved combating powerful outside forces arrayed against the vital interests of union members." The report also made clear that the existence of a credible internal enforcement mechanism — and the union's commitment to use it — was the most important difference between today's IBT and the entity that was brought under government monitorship in 1989: "The most important change in the IBT has been its commitment to a credible program of self policing and cultural reform."⁸

11

The union's commitment to anti-racketeering reform was reiterated as recently as the September/October 2003 issue of Teamster, which contained a section that referred to the organized crime study. It concluded: "Although the Teamsters have come a long way in rooting out corruption, union leaders realize it is important to operate internal systems that will sustain a commitment to protecting the members and the union."⁹

Despite the IBT leaders' repeated public commitments to combat organized crime and corruption, many Teamsters, as well as Government officials and other interested outsiders, have remained skeptical. Fueling skepticism is the perception that corruption and organized crime influences are deeply rooted within the Teamsters Union and that IBT leaders, although they pay lip service to reform, will not back up their reform principles when confronted with specific cases. Clearly, the only way to make the anti-racketeering commitment credible is to demonstrate that the union can and will move decisively against corrupt elements in the union no matter how powerful and politically influential they may appear to be. This is the ultimate test of the IBT's or any organization's commitment to reform. Given the Teamsters Union's history of involvement with organized crime, its poor public image, and the adversarial relationships it has had with law enforcement agencies, passing this test was certain to be a difficult process that could succeed only if IBT leaders provided strong support to anti-racketeering measures.

B.         Building a Credible Self-Policing System

Because building an effective internal intelligence gathering, investigation, and enforcement system was essential to the credibility of the union's anti-racketeering

12

commitment, Stier Anderson and Kossler assembled a team of experienced attorneys and investigators.

Most of the team members already knew a great deal about the union from participating in the earlier stages of the reform program. To help it carry out the organized crime study and other aspects of Project RISE, the union had assembled a team and board of advisors that, in the words of the study, "provided as comprehensive a reservoir of knowledge and expertise concerning organized crime, the Teamsters, and related issues as has ever been assembled.^"10 These persons contributed their talents, experience, and reputations to the reform effort because they genuinely believed the union's leadership was committed to it. They helped persuade others — outsiders such as government officials, legislators, journalists, and academics, as well as Teamsters at all levels — to share that belief.

As the anti-racketeering program progressed from theory to practice, the IBT investigative team began developing intelligence networks in key parts of the country, including Chicago, establishing and maintaining relationships with law enforcement agencies, conducting investigations, and assisting the lBT in the prosecution of individual charges and trusteeship proceedings. All of these activities were designed to carry out the IBT's responsibilities under the Consent Decree, as well as the public commitments the union had made.

The system that developed from the IBT's commitment to reform is designed to be at least as effective a deterrent to organized crime infiltration and racketeering as is the system of external monitoring imposed by the Consent Decree. At the same time, the IBT

13

investigative team sought to build upon the many relationships it developed with Teamsters at all levels to enlist members of the union in the ongoing struggle against racketeers. The investigative team has operated on the premise that the overwhelming majority of Teamsters are honest and support the goals of the reform program. Consequently, IBT investigators were able to obtain significant cooperation from current and former Teamster members, officers, and service providers. The information provided by union sources is an important complement to what investigators are able to obtain through their own expertise, liaison with government agencies, and network of sources who have in-depth knowledge about local underworld groups.

To be effective in combating the kinds of organized crime and racketeering threats that can be expected to confront the Teamsters Union, the self-policing system must have the ability to carry out investigations at three basic levels. First, there is an "intake" level in which the investigators receive and analyze leads and intelligence information, but do not initiate further action other than to maintain contact with ongoing sources of intelligence. Second, there is a covert level of investigation in which the investigators attempt to corroborate new intelligence by searching databases, interviewing cooperating witnesses, drawing upon their law enforcement expertise and connections, and using other techniques that do not involve openly confronting the subjects of the investigation. Finally, there are overt investigations that seek information from relevant sources, including subjects, which may need to invoke the powers of the general president or other authority to demand documents and testimony. Sometimes the three levels overlap, as when overt inquiries contribute to intelligence gathering.

14

While most investigative field work, especially at the intelligence gathering stage, is carried out by investigators, it is important to the success of the system that attorneys and investigators work as a team. In overt investigations, Stier Anderson attorneys conduct most of the questioning, review documentary evidence, analyze testimony and the entire evidentiary record, conduct research, and write the reports. At the intelligence gathering and covert stages, attorneys must be in regular contact with investigators to evaluate the significance of information being received against appropriate standards, such as those set by the Consent Decree, the IBT Constitution, and legal standards. They sometimes interview cooperative witnesses as part of the evaluation process. The attorneys also help the investigators prioritize their efforts, ensure that evidence meets appropriate standards of relevance and weight, and determine when matters need to be shared with outside agencies such as the FBI or IRB. Moreover, because the attorneys have a national overview that individual investigators may not, they can help spot patterns and facilitate the sharing of critical information between investigators in different regions.

By 2003, the IBT could point to a solid record of achievement in fulfilling its anti-racketeering commitment. Building on the foundation of the field studies they had conducted at 80 Teamster locals, the team of former prosecutors, retired FBI agents, and others with relevant experience that conducted the organized crime study had begun to construct the kind of ongoing intelligence network required to detect current and future organized crime influences. Members of the team had developed cooperative relationships with federal and state law enforcement agencies, and in 2002 and 2003, members of the IBT investigative team cooperated with the IRB in investigations in New York and Texas.¹¹

15

The IBT was also beginning to demonstrate that it could investigate, bring charges, and prosecute cases on its own, without relying on the IRB or other outsiders to do so. In November 2002, for example, charges were filed against an IBT vice president based on evidence developed solely by the IBT's own investigators.¹²

Up to that point, the union's leaders had demonstrated the requisite level of commitment and support to the process of building and maintaining an effective self-policing system. There were delays, inconsistencies, and resistance from certain quarters, but these could be attributed to the predictable difficulties any organization is likely to encounter when trying to implement important changes. Especially since mid 2003, however, there have been increasing signs that persons and organizations with a vested interest in avoiding scrutiny of their practices were attempting to shut down the reform program. As summarized below, there is reason to believe that the epicenter of this resistance is in Chicago and involves the Chicago Outfit.

IV. UNRAVELING OF THE IBT'S REFORM COMMITMENT IN 2003

A.         The Persistent Threat of the Chicago Outfit

For as long as the IBT has been in existence, Chicago has been an important center of Teamster economic and political strength as well as the source of corrupt influences that have threatened the integrity of the entire union. In 1908 IBT General President Daniel J. Tobin stood off a challenge from racketeer-inspired Chicago Teamsters. Tobin's display of courage and integrity on that occasion probably saved the fledgling IBT from an early demise.¹³ Nearly a century later, the racketeer threat to the union emanating from Chicago persists largely because of the continued vitality of the Chicago Outfit. While many other

16

traditional organized crime groups have lost most of their strength because of the intense law enforcement campaigns against them during the past three decades, the Outfit remains, as the Chicago Crime Commission described it in 1997, "alive and well and operating in various levels of government and business in Chicago."¹⁴

The perpetual high level of official corruption in Chicago has been an important factor in the Outfit's survival and continued prosperity. A series of federal probes in the 1980s and continuing into the 1990s exposed a thoroughly corrupt Chicago court system and led to the convictions of state legislators, judges, law enforcement officers, and lawyers. Other federal cases damaged the hierarchy of the Chicago Outfit.¹⁵ In recent years, however, government resources have been heavily committed to the war on terrorism and other priorities, lessening the law enforcement pressure on the Outfit.

The Teamsters and other unions have played prominent roles in the culture of corruption that has prevailed in Chicago. Some of the Chicago Outfit's associations with Teamster locals include Local 777's longtime president, Joseph Glimco Sr., who was a member of the Outfit and, according to some sources a capo in the organization;¹⁶ Local 786 official James V. Cozzo, a high-ranking member of the Outfit who was permanently barred from the Teamsters based upon charges that he was a member of organized crime;¹⁷ and Dominic Senese, Local 703 president in the late 1980s and a powerful Chicago labor leader, who was barred from the IBT in 1990 for being a member and associating with members of organized crime.¹⁸ In addition, the IRB proposed charges against Local 738's Secretary-Treasurer and Principal Officer Peter Agliata, son-in-law of Joseph Ferriola, one-time head of the Outfit, for knowingly associating with members of

17

organized crime. In 1993 Agliata entered into an agreement with the IRB and resigned his IBT membership.¹⁹ Former Local 714 member Salvatore Galioto, who was involved with Teamster officials in equipment rental for film production, was associated with the Chicago Outfit through its West Side street crew. Galioto's uncle is underboss James Marcello and his father is a lieutenant in the Outfit. In May 2000, Galioto pleaded guilty to charges relating to a Medicare fraud scheme.²⁰ Yet another example is Teamster Local 731 rank­and-file member Peter DiFronzo, who resigned his membership in 1998 following IRB charges alleging him to be an Outfit member and chief lieutenant for his brother, Outfit boss John DiFronzo.²¹

In 1997 the Chicago Crime Commission reported that the Outfit remained "viable and strong" and concluded that it was "not in decline, just more subtle." The Outfit, according to the Commission's report, "is more flexible and adaptable than ever before. Its power and wealth has never been more sound and difficult to permeate."²²

The Chicago Crime Commission's 1997 observations about the Outfit's continuing vitality are, if anything, even more true today based upon what IBT investigators have learned from intelligence gathering and investigative activity. Moreover, the other conditions that have always made the Teamsters Union vulnerable to organized crime influence are currently present in Chicago.²³ Ongoing political corruption helps ensure the Outfit's survival and prosperity and in some cases — such as the City of Chicago's "Hired Truck Program," discussed in the appendix to this report (Tab 7) and the City's Streets and Sanitation Department (Appendix, Tab 1)— has a direct impact on the union. Federal pressure on the Outfit and the corrupt system that allows it to thrive has not disappeared,

as evidenced by the recent indictment of a former Illinois governor.²⁴ Federal resources are, however, currently stretched thin due to other priorities. Finally, and most important, the union's internal resistance to racketeer influences is weak in Chicago. Consequently, anti-racketeering measures in that area require strong IBT leadership to succeed. As discussed below, during the past year that leadership has not been forthcoming.

 

B.        Confidential Source Information Concerning Attempts by the Chicago Outfit To Shut Down IBT Investigations

 

Beginning in September 2003, IBT investigators received reports from confidential intelligence sources — who were in positions to know about developments within the Chicago Teamsters community as well as Chicago organized crime circles —to the effect that the Outfit had concluded that its interests were threatened by IBT investigative activities and had ordered those activities shut down. According to the sources, this objective would be accomplished by influential union officials, including the JC25 President and the Executive Assistant, who would use their positions to stop IBT investigations in Chicago.

 

One confidential source ("Source A"), who investigators have independent reason to believe has Outfit connections, stated that the Outfit is extremely upset by "Project RISE" and at General President Hoffa for starting it, and has ordered it stopped. Source A reported that there was too much money involved in control of Teamster pension and health and welfare funds in Chicago for the Outfit to tolerate Project RISE. The Executive Assistant, current JC25 President, and a former barred JC25 President were sabotaging Project RISE pursuant to Outfit instructions, according to Source A.²⁵

19

A second confidential source ("Source B"), a local union officer, stated that the JC25 President was attempting to block the "Project RISE" investigation into Local 786 and was using his close relationship with the Executive Assistant to accomplish this.²⁶ (See discussion of Local 786 issues in the appendix to this report, Tab 5.)

A third confidential source ("Source C"), a former Teamster with ongoing contacts inside the union, reported that the Executive Assistant was fronting a move by Chicago Teamsters to derail "Project RISE" and that the Executive Assistant had been promised by the Chicago Teamsters that if he were fired as a result of his efforts on their behalf, they would hire him back as a union consultant.²⁷

A fourth confidential source ("Source D"), a local union officer, stated that the current principal officer of Local 330 had interceded with the JC25 President to keep "Project RISE" from becoming involved in an investigation of the current principal officer's alleged organized crime connections, after which someone influential had called the Executive Assistant to get the investigation stopped. (See discussion of Local 330 issues in the appendix to this report, Tab 6.)²⁸

A fifth confidential source ("Source E"), who investigators have independent reason to believe has Outfit connections, confirmed the information from other sources that the Outfit has ordered Project RISE shut down.²⁹

A sixth confidential source ("Source F") provided information relating to the current JC25 President's initial understanding of the nature of the IBT investigations in Chicago. The source reported being present at a meeting of Teamster officials in the Chicago area during the period when the rules for Project RISE were being drafted and at which the

20

former joint council president and the current JC25 President were present. According to Source F, the current JC25 President explained that Project RISE investigations would be superficial and for show only.³⁰

C.        Independent Corroboration of Confidential Source Information

The IBT investigative team does not assume that information from intelligence sources is accurate. It is precisely for this reason that additional steps — including overt investigations when warranted — are necessary. However, covert inquiries and analysis of intelligence information and other evidence produced independent corroboration of the intelligence sources and left little doubt that, whether emanating from the Outfit or not, there have in fact been attempts to shut down or severely restrict IBT investigations in Chicago. Indeed, these attempts constitute the strongest corroboration of the information received from confidential sources. Thus, a full investigation is required to establish whether and to what extent the Chicago Outfit is behind efforts to shut down organized crime-related investigations in that area.

1.          Resistance to Ongoing and Proposed Formal Investigations in 2003

In early 2003, two formal IBT-initiated investigations were in progress in Chicago, and IBT investigators had obtained evidence warranting the opening of a third. By the end of the year, IBT support for one of the ongoing investigations had been prematurely withdrawn, the other substantially narrowed to eliminate the organized crime-related issues, and the proposed third investigation referred to the IRB. This outcome appears to have been in large part the result of the Executive Assistant's persistent opposition to IBT

21

investigations in Chicago in response to pressure from certain Chicago Teamster leaders anxious to keep the entities they controlled free from scrutiny.

Since his appointment in 1999, when the current IBT administration took office, the Executive Assistant has been in a position to exercise a great deal of control and influence over decisions requiring the approval of the general president. In addition to having virtually daily access to the general president and thereby being in a superior position to make his views on various issues known, the Executive Assistant has exercised direct authority over a number of functions that affect the IBT's anti-racketeering program. For example, the individuals who have been appointed as personal representatives of the general president to assist in IBT-initiated investigations were already serving as international representatives and as such continued to report, as a practical matter, to the Executive Assistant. The Executive Assistant is in a position to affect the processing of invoices to pay investigators and, through his approval authority for travel, can monitor and affect the payment of investigation-related expenses. In short, the key position occupied by the Executive Assistant offers an excellent opportunity to sabotage the anti-racketeering program if the incumbent in that position is so inclined.

Before mid 2003, there were few obvious signs that the Executive Assistant was hostile to Project RISE or the IBT's anti-racketeering program in general, except for two brief but troubling incidents during the summer of 2002. Earlier that year, as described in the appendix to this report (Tabs 1 & 5), a personal representative of the general president had been appointed to assist the investigation of issues concerning Chicago Locals 726 and 786. In July 2002, the Executive Assistant summoned the personal representative to

22

Washington to explain why he and Stier Anderson were pursuing the investigation of Local 726 when, according to the Executive Assistant, there was no organized crime involvement in the local. During that month, a rumor circulated that the Executive Assistant was going to fire the personal representative for failing to keep him apprized of what was going on in the investigations of Locals 726 and 786. The personal representative was not fired, however, and the Executive Assistant disavowed any intention of doing so.³¹

In late August 2002, while the general president was on vacation, the Executive Assistant arbitrarily refused to authorize the payment of an invoice for the lead investigator in Chicago who was assisting in the Local 726 and Local 786 investigations. Although this was the second troublesome incident in the space of little more than a month involving the Executive Assistant and Chicago investigations, the matter was resolved upon the return of the general president and these incidents did not appear to be significant until they were followed by more serious attempts to interfere with Chicago-based investigations beginning in mid 2003.

On February 26, 2003, Stier Anderson recommended to the IBT that it launch a formal investigation, with the appointment of a personal representative, into issues concerning Chicago Local 714. These issues included apparent ties between individuals occupying positions of authority in Local 714 and organized crime figures, and the reappearance of conditions that led to the trusteeship imposed upon the local as the result of a 1996 IRB report.³² For months, no action was taken in response to this request.

While the Local 714 investigation request was pending, IBT investigators in Chicago continued to develop information relevant to Local 714 issues as well as intelligence

23

information concerning other Chicago-area Teamster entities. In addition, the IBT personal representative for the investigations of Locals 726 and 786, assisted by the investigative team, had been examining documents and beginning to take sworn statements of witnesses in connection with the issues concerning these locals. On June 10, 2003, the investigators took the sworn statement of a Teamster who is the daughter of organized crime lieutenant and barred member James Cozzo. Her sister, Cozzo's other daughter, was the assistant administrator of Local 786's affiliated benefit funds. The first Cozzo daughter described interactions between her father and the benefit funds' administrator.³³

The June 10 interview followed a series of attempts to obtain evidence relevant to the Local 786 investigation from individuals with known or suspected connections to the Chicago Outfit. On February 19, the investigators took the sworn statement of an individual with reputed Chicago Outfit connections, who was employed by both the local and several of its affiliated benefit funds, to inquire about evidence that he had a no-show job at either the local or the funds. On February 20 and again on March 11, the benefit funds administrator was interviewed about the no-show job issue as well as about his own contacts with Outfit member Cozzo (this administrator was the son of the former principal officer of Local 786 who was allegedly put in that position by the Outfit, was barred from the union after resigning in response to IRB charges, and plead guilty to federal charges of accepting bribes from an employer). On April 29, 2003, Cozzo's other daughter, a Teamster on withdrawal status, refused to appear for her scheduled sworn statement.³⁴

Thus, it is reasonable to infer that by June 2003 at least one prominent Outfit member, James Cozzo, was well aware of IBT investigative activities concerning Local 786

24

and its affiliated benefit funds — both of which, according to intelligence sources, are influenced by Cozzo and his Outfit cohorts.³⁵

In the meantime, there were significant developments related to the Local 726 investigation. In April 2003, the local's principal officer, who had been at the center of allegations concerning organized crime ties, resigned to take a position with the State of Illinois. In June the new principal officer confirmed to the Local 726 investigative team that the former principal officer had in fact associated with members of organized crime. That same month, however, the Executive Assistant took the position that the investigation of that local should be ended because the former principal officer had resigned and the new principal officer had stated that there was no longer evidence of organized crime in the local. On June 13, 2003, in response to a request from the Executive Assistant, the Local 726 representative wrote a letter to the Executive Assistant indicating that the new Local 726 principal officer stated there was no longer organized crime influence in the local. The personal representative's letter noted, however, that some organized crime issues remained unresolved.³⁶

On June 25, 2003, Stier Anderson submitted an interim report to the IBT recommending the filing of charges against three Local 786 Teamsters: first, against the administrator of Local 786-affiliated benefit funds for associating over a six-to-seven year period with barred Teamster and Chicago Outfit lieutenant Cozzo and for providing false testimony about the work attendance of a subordinate; second, against one of Cozzo's daughters, who was assistant administrator of Local 786's affiliated benefit funds and a close friend of the administrator, for failing to appear for a sworn statement; and, third,

25

against an employee of the benefit fund and the union for receiving full-time pay for less than full-time services and for providing false testimony regarding his attendance atwork.³⁷ At a meeting with the general president in June, Stier reiterated the need to act on the February 2003 recommendation to investigate issues related to Local 714. Instead, without explanation, the general president in July instructed that the Local 714 issues be referred to the IRB. No action was taken in response to the Local 786 charge recommendations, and when Stier raised the matter again with the general president in July, he was told that the charges were too minor.³⁸

 

With progress on IBT investigations in Chicago retarded by the Local 714 referral to the IRB and the failure to file the recommended charges concerning Local 786, the Executive Assistant initiated a series of actions to roll back the overt investigations still in progress in Chicago and to inhibit general investigative activity in that area:

 

·              In August 2003, while the general president was on vacation, the Executive Assistant refused for the second year to approve payment of bills for Chicago-based investigators.³⁹

 

·           In early September, the Executive Assistant instructed the personal representative for the Local 726 and Local 786 investigations not to perform any work, including collecting information or performing additional audits, for any local in Chicago without clearing it with him first.⁴⁰

 

·           On September 9, the personal representative sent a letter to the Executive Assistant stating that the U.S. Department of Labor (DOL) had just completed an audit of Local 786 and, according to what the local's attorney claimed had been conveyed to him, had found no issues. Solely on this basis, the personal representative's letter stated that it was time to "further evaluate as to our need to remain in Teamster Local 786, unless or until more information would come to light."⁴¹

 

On the same date, September 9, the personal representative sent a letter to the Executive Assistant stating that, given the current principal officer of

26

Local 726's statement that "he believes there are no other sources of negative influence [organized crime] affecting the Local now that [the former principal officer] is gone," his assignment as personal representative to Local 726 should be terminated.⁴²

·              On September 15, without notifying Stier Anderson, the general president terminated the personal representative's assignment with respect to Local 726.⁴³

On September 23 the Executive Assistant was present at a meeting in IBT headquarters to discuss the nonpayment of the Chicago investigators' bills and the status of the organized crime investigations nationwide, including Locals 726 and 786. Participating in the meeting were the general president, the general secretary-treasurer, the general counsel, the Executive Assistant, and Edwin H. Stier. When the discussion turned to Locals 726 and 786, the Executive Assistant argued that the investigations of these locals should be terminated. As a pretext for this argument, the Executive Assistant referred to letters from the general president's personal representative purporting to recommend shutting down the investigations, without revealing that the Executive Assistant had orchestrated the writing of these letters.⁴⁴

 

·           At the end of the September 23 meeting, Stier left with the understanding that any decision to remove the personal representative from any local under investigation would be discussed by everyone first, and that, in the absence of such a discussion, the personal representative would not be removed from his position in Local 786 and would be reinstated in Local 726.

 

·           Less than one week later, on September 29 the Executive Assistant took steps to procure from the personal representative a letter recommending that the Local 786 investigation be terminated and then the Executive Assistant took further steps to cover up his role in procuring this letter.⁴⁵

 

Following this series of events, the Local 726 investigation remained effectively shut down, while the Local 786 investigation proceeded until December 12, 2003, when the general counsel relayed an instruction from the general president that the investigators were authorized only to complete a document review regarding personal expense abuse

27

by Local 786's principal officer and to take the principal officer's final sworn statement. Any other activity had to be cleared with the general president's office.⁴⁶

 

Thus, by the end of 2003, the actual and proposed overt IBT investigations in the Chicago area had been shut down, severely restricted, or, in the case of Local 714, referred to the IRB. In addition, it was completely clear by that time that the Executive Assistant was hostile to conducting any level of investigative activity in Chicago and was using his influential position to sabotage the IBT investigative team. This was consistent with the informant information that was being received during this period concerning Chicago Outfit pressure to stop IBT investigations in Chicago.