Alleged Fraud Seen as Mob’s Link to Union Benefit Funds

Angelo T. Commito was not your average insurance salesman.

Jetting from his home in the Marin County community of Fairfax to his Palm Desert condo, to offices in New York and Chicago, Commito brokered and administered prepaid health plans for government workers and labor unions from California to New York. The 43-year-old entrepreneur boasted last year that he struck 100 deals in his career, and reaped an annual income of $3 million.

“He was a very good host, so he got a lot of business. He’d take you out to eat, buy a nice dinner,” said a Chicago-area lawyer who says he helped Commito on occasion to gain business.

But state and federal law enforcement officials allege that Commito prospered not so much because of his taste for fine food, but because he was a front for organized crime. Some authorities believe he quietly was becoming one of the underworld’s most important links to riches contained in employee welfare trust funds.

Three-Year Sting

But as Commito built his business, the FBI and the Labor Department’s Office of Labor Racketeering were engineering a three-year-long sting. In September, he was indicted in San Francisco, San Diego, Chicago, Atlanta and Baltimore. Commito is charged with fraud and conspiracy in a scheme to pay kickbacks in exchange for the right to provide prepaid health care services to Munford Inc., a Georgia-based convenience store chain, which cooperated with authorities in the sting.

Commito has pleaded not guilty to all charges. Neither he nor his attorney, Daniel Webb, a former U.S. attorney in Chicago, would return phone calls from The Times for comment.

The indictments are narrowly focused. But documents recently unsealed in federal court here, including roughly 6,000 pages of FBI affidavits, transcripts of phone conversations and informants’ statements, show Commito’s operation went much further.

The documents, filed in connection with a Justice Department civil suit aimed at seizing Commito’s property, accuse Commito of inducing labor and government officials to buy into his plans with kickbacks in the form of cash, a Lincoln automobile, a swimming pool, weekends at his desert condo and other favors.

Once he obtained business, FBI transcripts of his statements show, Commito and his confederates took as much as 20% of everything paid into the welfare plans. The government contends workers unwittingly paid a monthly surcharge to Commito and his associates. At the time of Commito’s indictment, Richard Held, head of the FBI in San Francisco, called it a “classic example of sticking it to the little guy.”

In especially revealing detail, the documents at the U.S. Courthouse here point not just to one man’s business, but to what the government believes is the underworld’s continued hold on some unions, particularly locals of the Teamsters, Laborers, and Hotel and Restaurant Employees. The massive court file underscores a U.S. Labor Department concern that a target of organized crime is employee welfare trust funds and the highly specialized area of trust administration.

“The evidence from my perspective is clear: this is an area that’s fraught with rampant abuse,” Ray Maria, deputy inspector general of the Labor Department’s Office of Labor Racketeering, said in an interview.

Maria said he is making the investigation of such fraud a priority and will open a four-agent office in San Diego, responsible for Southern California.

Trillions Involved

Nationwide, pension plans have assets of $1.5 trillion, he said. Uncounted billions more are paid in and drawn from welfare trusts, relied upon by tens of millions of workers for medical, dental and vision care insurance, in a system overseen by private brokers, administrators and trustees.

“The fact of the matter is that if you rob a bank or you rob a grocery store, you will in all likelihood be caught and sent to prison. There’s no such expectation if you engage in benefit plan corruption,” Maria said.

The Commito case did not end with the indictments. Interviews and unsealed documents reveal that investigations are continuing in Honolulu, Chicago, Boston, Puerto Rico, San Diego and elsewhere.

In Los Angeles, the Justice Department’s Organized Crime Strike Force and a grand jury is investigating Commito over allegations that Hollywood labor figures extorted production companies in exchange for labor peace.

In San Francisco in the last month, a federal grand jury issued subpoenas for union records and called at least one Teamster official to testify in connection with a proposed merger of Teamsters locals in Santa Maria and Bakersfield. Commito had hoped to have a friendly official at the head of the merged local who would buy into his plans, the FBI believes. The merger, however, did not take place as planned.

Many Deals Died

It is clear from the documents that Commito’s business did not take off, at least not in California, as he had hoped. The indictment, news reports about what then was a pending investigation early this year, and other events killed many deals. But Commito was nothing if not ambitious.

He set his sights on Southern California’s vast aerospace industry. Ray Majerus was to be pivotal. Until his death last Dec. 16, Majerus was second in command of the United Auto Workers, in charge of its aerospace division, with locals at Rockwell International and McDonnell Douglas.

In a Dec. 17, 1987, phone call to his wife that was intercepted on FBI wiretaps, Commito lamented that just two days before Majerus’ death, he had “made the EyeCare-UAW deal,” according to an affidavit by FBI Agent Louis George of Oakland in connection with a search warrant for Commito’s home and business. When his wife asked whether the deal was on paper, Commito replied, “Of course not.”

George predicted Majerus’ death would not kill the deal. With thousands of dollars in “illegal profits” at stake, “other UAW officials are currently involved or will be recruited . . . to fill the void.”

Within a month, Robert Greenfield, the Illinois lawyer who helped Commito on the UAW deal, and who has not been charged with any wrongdoing, called to say: “The UAW guy that’s going to be in charge of pension negotiations is very friendly to us,” George reported.

‘Legitimate Work’

In an interview, Greenfield, 79, said news reports of the investigation in February killed the deal. He insisted, however, that Commito was “doing very progressive legitimate work,” offering replacement contact lenses for under $30, and that “a guy like Ray Majerus is as clean as they come.”

In San Diego, Commito’s co-defendant, Elliott Kusel, a vice president of EyeCare USA, was trying to persuade a machinist local that represents General Dynamics workers to buy into his vision care plan. (EyeCare itself is not accused of wrongdoing.) Jeff McCumber recalled that Kusel’s style did not impress union negotiators.

“He seemed like a real wheeler-dealer kind of guy,” said McCumber, a San Diego insurance broker who was hired to help find a company to administer an eye care plan for the local. “He seemed like he came in from New York last week.”

Still, Kusel’s office was “impressive,” McCumber said. From appearances, most companies with which Commito dealt were legitimate. United HealthCare Inc., of Baltimore, administered plans in 42 states. The company was indicted with Commito, as was a vice president. The president of another large company, J.D. King Associates of Monterey, also was indicted with Commito.

But while companies that provided the actual health care services seemed reputable, Commito long had been of interest to law enforcement. A 1981 Pennsylvania Crime Commission report on health care fraud contains photos of Commito meeting with reputed Mafia members in his attempt to market his plans in Pennsylvania.

Making Contact

“Commito’s usual procedure for gaining health contracts in various states was to first make contact with the local organized crime family. In the world of La Cosa Nostra, this contact is necessary protocol for anyone who wishes to do business in another’s territory,” the report said.

In the mid-1970s in California, Commito met with reputed Los Angeles Mafia family member Michael Rizzitello, Aladena (Jimmy the Weasel) Fratianno, the long-time mobster turned informant, told authorities.

Fratianno told the Pennsylvania Crime Commission that Rizzitello introduced Commito to Fratianno in about 1977, with instructions that Fratianno provide names of labor officials who would buy Commito’s medical plans. Fratianno put Commito together with ex-San Francisco Teamster leader Michael Rudy Tham, who in 1980 was convicted of embezzling $3,000 from his union.

More recently, in New York, Commito’s agent was John J. Allu, named in a 1983 U.S. Senate Judiciary Committee report as a soldier in New York’s Gambino crime family. Commito’s Labor Health Plans Inc., used the same address in Queens as Allu. According to monitored conversations, Allu, a former Teamsters officer, promised to line up 20 Teamster and Longshoreman locals for Commito on the East Coast.

In Chicago, where Commito began his business career in 1970, he spoke and met with with several members and associates of the Chicago “outfit,” FBI affidavits on file here allege.

Moves in Illinois

He claimed in a monitored conversation to have 100,000 workers in Illinois on his programs, and is listed as a consultant on a health care contract for several thousand government workers, the FBI says.

In 1987, after a Chicago competitor in the health insurance business was convicted of racketeering, Commito moved in. He treated a leader of a Service Employees International local to a $7,000 weekend in Las Vegas. To woo Laborers International Union, Local 1, Commito and his Chicago business agent provided a back yard swimming pool for Frank DeMonte, an FBI affidavit said.

A 1986 report by the President’s Commission on Organized Crime identified the laborer’s local as mob-controlled and DeMonte as a member of the Chicago crime family.

Commito’s “man in California”--as he was identified by Commito in a conversation with an undercover FBI agent--was Fred F. Sanchez. With a background in the leadership of the Teamsters Western Conference and a director of the Western Regional Cannery Workers Council, Sanchez had wide contacts in labor. Wiretaps showed he met often with late Teamsters president Jackie Presser, himself an associate of Mafia figures, on union concerns, some related to Commito. Sanchez, who could not be reached for comment, has not been charged with wrongdoing.

Commito’s downfall was “Joe Edwards,” also known as undercover FBI Agent Joe Carroll, the agent who took the lead in the sting. It began Dec. 9, 1985, when Carroll phoned Commito with a story that he was helping the Munford chain of convenience stores in its effort to find a health plan.

More Than Just a Fee

“I’m looking for a finder’s fee, you know,” Carroll told Commito.

“Well, there’s better than a finder’s fee involved. I’ll explain that to you later,” Commito is quoted as saying in an FBI affidavit in that first telephone conversation.

The deal, described in various documents, was to work like this: Munford would pay a one-time fee of $50,000 to United HealthCare, of Baltimore, for signing up with it. United would pay Edwards $25,000, who would pay Commito $5,000.

The cost of administering the plan was about $5 a month per employee, according to statements attributed to its vice president, Alan Cohn. Each of 6,500 employees, however, would pay $6.75 a month. The extra money was to be split among Carroll, Commito and Cohn. Cohn, like others in the case, has pleaded not guilty.