Schwab Won’t Be Prosecuted in Probe of Funds

The U.S. attorney’s office has decided against prosecuting former Los Angeles Harbor Commissioner Michael Schwab, who resigned last year amid allegations that he misappropriated money at the Wilmington union where he worked as business manager.

However, the decision may not mean an end to Schwab’s case.

Officials at the U.S. Labor Department, which sought Schwab’s prosecution for allegedly mishandling part of a $9,000 grievance settlement in 1986, said they may renew their probe in an attempt to turn up additional evidence for the U.S. attorney to consider.

The labor officials said they were informed last week that federal prosecutors had concluded they did not have sufficient evidence to indict Schwab. A spokeswoman for the U.S. attorney’s office declined comment.

“We can always present the case in maybe a different light,” said John Peterson, supervisory investigator for the Los Angeles-area Office of Labor Management Standards. “We have not yet decided what we are going to do.”

As he has in the past, Schwab, 42, of Wilmington said Friday that he has done nothing wrong.

“I’m just glad to see justice prevails,” he said, referring to the decision not to prosecute. “You know, I’ve always felt I was innocent from Day One.”

Schwab gave up his seat on the Board of Harbor Commissioners in February, 1987, at Mayor Tom Bradley’s request. A Bradley spokesman said at the time that the mayor wanted a board “where no member is experiencing any difficulty or is under any cloud.” Schwab had served less than a year.

That same month, Schwab also lost his union position over allegations by three members of the Wilmington-based Pile Drivers Local 2375, who claimed not to have received their shares of the grievance settlement. The settlement had been paid to the union the previous year.

Schwab was business manager and recording secretary of the local, which represents pile drivers, bridge, wharf and dock carpenters, welders, rig-builders, marine divers and tenders.

An investigation by the local’s parent union, the United Carpenters and Joiners of America, found that Schwab and the union’s financial secretary had violated union rules in handling the money.

Although he would not detail the union’s findings, spokesman William Luddy said Schwab and the financial secretary were ousted as a result of the investigation.

Schwab is still a member of the local. He said he is receiving Workers’ Compensation for an injury suffered while working on the Metro Rail project.