Conspiracy in Benefit Plans Probed : FBI, Labor Department Study Union Health Contracts

An alleged coast-to-coast criminal conspiracy that has defrauded the employee benefit plans of major labor unions is being investigated by a joint task force of FBI and Labor Department agents, The Times learned Tuesday.

The alleged fraud involves hundreds of thousands of dollars in health insurance payments by members of labor unions in the last few years.

Search warrants filed in federal court in San Francisco, Chicago, Baltimore and other cities show that the investigation centers on Angelo T. Commito, a reputed associate of organized crime figures.

Sources said companies linked to Commito are suspected of using kickbacks and extortion tactics to obtain contracts for prepaid health care plans from labor unions.

Indictments May Be Near

At least half a dozen federal grand juries have been investigating the case for months, and indictments may be sought within several days, authorities said.

These sources, who declined to be named, said the broad investigation was hinted at in April when FBI Director William S. Sessions testified about the government’s continuing crackdown on organized crime before the permanent investigations subcommittee of the Senate Governmental Affairs Committee.

Although Sessions did not specifically mention employee benefit plans, he said the bureau was maintaining vigilance over “criminal organizations that deal in various criminal activities for profit,” including some in the field of labor racketeering.

Sessions noted that in the last two years, in addition to the convictions of Mafia members and associates, 43 officials or members of labor unions were convicted of racketeering charges.

The current investigation reportedly involves labor officials or employees with the Hotel and Restaurant Employees Union, the Teamsters Union, the United Food and Commercial Workers and others. Names of those suspected of criminal conduct could not be learned.

‘New Generation of Racketeer’

Raymond Maria, chief of the Labor Department’s office of labor racketeering, refused in an interview to disclose the names of those targeted. But he said federal investigators are focusing on “a new generation of racketeer” in the labor field.

“This new generation includes bankers, attorneys, accountants and administrators of employee benefit plans who, in many cases, deal with members of organized crime,” he said.

He said the people suspected of wrongdoing in the labor conspiracy allegedly “sought to establish a nationwide criminal monopoly in the delivery of services to employee benefit plans--insurance, health care, vision care, legal services and various types of rehabilitative counseling.”

Kickbacks were “the basic sales tool,” he said, in which union officials or benefit plan trustees received payoffs to award service contracts. The alleged offenses occurred within the last six years.

Maria complained that “the large number of employee benefit plans in the country dwarfs the minuscule number of government agents assigned to investigate instances of fraud. So the situation provides a tremendous incentive to steal and to cheat.”

Hope to Curb Abuses

Federal officials said they hope that the current inquiry cracks down on such abuses.

Commito, who reportedly maintains homes in San Francisco, Palm Springs and Chicago, could not be reached for comment Tuesday. Efforts to obtain comment from his lawyer, former U.S. Atty. Dan K. Webb of Chicago, also were unsuccessful.

Commito’s principal company is Chicago-based Labor Health Plans Inc., but he also owns firms named Labor Health and Benefits Plan and Dental Health Care Alternatives, according to FBI search warrants on file in Chicago.

Active for years in the prepaid health care industry, Commito’s firms usually receive monthly fees from labor unions of $5 to $15 per worker covered, authorities said.

In warrants it has filed, the FBI sought information about alleged payments or gifts from Commito’s firms to a former official of the United Auto Workers who died in December. Agents also sought documents that they believed would show contacts between Commito’s companies and organized crime figures in New York and Chicago, according to court files.

Identified as Mob Associate

The Pennsylvania Crime Commission identified Commito in 1982 as an associate of several Philadelphia-area mobsters, including John James Allu, who was convicted of three perjury counts for his testimony at hearings into New York City Teamsters corruption.

A former Teamster official told The Times that Commito also had been close to Vito Mango, a convicted felon who formerly ran Teamsters Local 413 in Columbus, Ohio, with which Commito had a contract to provide health services.

Court officials in Huntington Beach, Calif., confirmed that a search warrant was served earlier this year on Contact Corp., a prepaid health care company headed by Mark Kusel, in connection with the inquiry. Kusel declined comment on the matter two months ago. A reporter who attempted to call him Tuesday found that the company’s phone had been disconnected.