Teamsters, U.S. Seek to Settle Suit : Demand for Ouster of Five Reported in Corruption Case

Leaders of the Teamsters Union have held talks with federal prosecutors aimed at settling a massive civil racketeering lawsuit that seeks to rid the giant union of alleged corruption, knowledgeable sources said Sunday.

A settlement formula discussed in preliminary talks involves a demand by the Justice Department that at least five members of the Teamsters national executive board--but not William J. McCarthy, the president--resign from office, said sources who spoke on condition that they remain anonymous.

The 10 other “international vice presidents” who help form the union’s governing board would be permitted to continue in office if they signed a public statement calling for internal reforms within the union, including the establishment of secret-ballot elections to choose future presidents of the nation’s largest trade union, the sources said.

‘Free Elections’ Desired

“The negotiations are being handled by the U.S. attorney’s office in New York,” a federal source said. “They’re aimed at getting free elections in the Teamsters and getting the LCN guys out.”

His reference was to an abbreviation commonly used by law enforcement officials for La Cosa Nostra, the Mafia or organized crime. The lawsuit, filed by the government last June, seeks removal of top leaders of the 1.6-million-member union on grounds that they have been influenced by organized crime elements or have taken no action to eliminate such influence in the Teamsters.

Teamster officials could not be reached for comment, although they have pledged to fight the lawsuit with all their resources. Justice Department spokesman John K. Russell said department officials had no comment.

Court Trusteeship Sought

In its unprecedented action under the Racketeer Influenced and Corrupt Organizations Act, the Justice Department contends that the Teamsters Union is heavily influenced by organized crime and is no longer responsibly serving the interests of its membership. It seeks the court-ordered ouster of the Teamsters’ top management, placement of the union under court trusteeship and injunctions barring certain alleged Mafia figures from any contact with the union or its officers.

Federal prosecutors scored a significant breakthrough in their case last October by obtaining court-approved agreements from 10 reputed Mafia leaders to avoid any future dealings with the union. In return for their signed agreements, these 10 crime figures were dismissed as defendants in the case.

The “free elections” reform is considered crucial by prosecutors because Teamster presidents are chosen at an Electoral-College-type convention of delegates and not directly by union members. There have been allegations that organized crime leaders have controlled the elections of some Teamster presidents through this process.

The seven-month-old lawsuit, which is scheduled to go to trial next month, has been “enormously costly” for the Teamsters and the government, one participant said. “It’s been generating a couple of pounds of paper a day,” this source said, as government and defense lawyers have taken depositions from dozens of Teamster leaders and federal officials who later might be called to testify in open court.

Prestigious Law Firm

The union has been represented by the prestigious Manhattan law firm of Mudge, Rose, Guthrie, Alexander & Ferdon, which once included former President Richard M. Nixon and former Atty. Gen. John N. Mitchell among its partners.

U.S. District Judge David N. Edelstein has expressed determination to start the New York trial on Feb. 27.

Aside from its costs, the case has reportedly preoccupied Teamster executive board members in planning details of their individual defenses and that of the union. Earlier this month, the case was bitterly debated at a closed-door three-day meeting of the Teamsters board that degenerated into an acrimonious shouting match between those who might have to resign their seats and those who might stay, sources reported.

Two sources familiar with the meeting said McCarthy predicted that the case might be favorably resolved within three weeks, partly because of the inauguration of President Bush, whom the union supported.

Thank-You From Bush

A day or so later, McCarthy and other union officers won a closed-door meeting at the White House with John H. Sununu, Bush’s chief of staff, during which Bush stopped by to offer a brief thank-you for the Teamsters’ campaign support.

However, Administration sources said, Sununu warned the group that the White House would not intercede in the lawsuit to help union officials.

In fact, Justice Department prosecutors won a major victory against Teamster leaders this month when a federal court jury in Cleveland convicted Harold Friedman, a member of the general executive board, on charges of racketeering and embezzlement. Friedman, convicted for his role in putting non-working Mafia relatives on the Teamster payroll, is among the board members who prosecutors have said must resign.

Sources identified other Teamster vice presidents whose resignations are being sought by the Justice Department as Joseph Trerotola of New York, Robert (Bobby) Holmes of Detroit, Joseph W. Morgan of Hallandale, Fla., and Ted R. Cozza of Pittsburgh, Pa.

Prosecutors are said to believe that McCarthy, who became Teamsters president last summer, is willing to oversee the initiation of union reforms. McCarthy assumed leadership after the death of Jackie Presser.

Two other Teamster board members have announced their retirement since the Justice Department filed its lawsuit. They are Maurice R. Schurr of Philadelphia and John H. Cleveland of Washington.