U.S., Teamsters Settle Suit on Racketeering : Last-Minute Accord Provides for Direct Election of Officers, Strong Panel to Fight Mob Influence

The Justice Department and the Teamsters Union agreed to settle a historic racketeering suit Monday, providing for direct election of union officers for the first time and creating a powerful panel to fight organized crime within the nation’s largest trade union.

The settlement, reached after round-the-clock negotiations hours before trial was to begin,must be approved by U.S. District Judge David N. Edelstein. He has scheduled a hearing for today in Manhattan.

Atty. Gen. Dick Thornburgh praised the agreement in Washington. “This settlement, which union leaders agreed to early today, culminates 30 years of efforts by the Department of Justice to remove the influence of organized crime within the Teamsters Union,” he said.

“It provides for the court to appoint a union administrator, an investigations officer and an election officer,” Thornburgh added. “The administrator will have the authority to oversee internal union matters for the next three years, while the investigations officer will review allegations of misconduct and La Cosa Nostra influence and the election officer will oversee future union elections.”

Teamsters general counsel James T. Grady attempted to downplay the agreement’s significance, however. “It seems to suggest the government wasn’t looking for that much,” he told reporters in court.

But dissident union members said the agreement was a critical first step in reforming the 1.6-million-member union. “In the big picture, we’re pretty happy,” said Ken Paff, head of the Teamsters for a Democratic Union in Detroit. “It’s a victory for the rank and file.”

Assistant U.S. Atty. Randy M. Mastro announced the settlement in open court at 9:30 a.m. and lawyers on both sides initially hoped Edelstein would approve the 30-page settlement at an afternoon hearing. But after meeting prosecutors, Grady said the judge wanted time “to reflect” on the provisions. “There’s no indication there’s any problem, or it’s in jeopardy,” Grady said.

According to a copy of the agreement obtained by The Times, none of the Teamsters’ 17-member executive board will be forced to resign and the government will not impose a trustee to run the union.

However, a summary of the settlement released by Thornburgh stated that in a separate proposed consent order, Donald Peters, 69, a Teamster vice president from Chicago, “shall permanently resign his international union post.” Marvin Gittler, Peters’ lawyer, said this was not correct when asked about it. However, a ranking Justice Department official said the order “probably” would be filed today.

Unpaid Leave

Additionally, Thornburgh’s summary statement said that in a separate consent order, Harold Friedman, 66, a union vice president from Cleveland who was convicted earlier this year on four federal charges, including labor racketeering, “shall take an unpaid leave of absence.”

A Justice Department source said the order was filed Monday. Sources said the government assumes that Friedman would have to leave the board in any case if his conviction is upheld on appeal.

One of the keys to how the settlement works in practice will be how much power the three administrators would actually wield. “The agreement gives the administrator an avenue for weeding out bad people one by one, insofar as there is a need to do it at locals or on the executive board,” said Clyde Summers, a labor law professor at the University of Pennsylvania and an expert on union democracy.

Original Proposal

Earlier this year, knowledgeable government and union sources said that the government’s initial settlement proposal to the union would have required Teamster Vice Presidents Joseph Trerotola of New York, Joseph W. Morgan of Ft. Lauderdale, Fla., and Theodore R. Cozza of Pittsburgh, Pa., to resign.

A Teamster source said Monday that all 11 board members who settled, except Peters, who is resigning, would get a letter saying that the government has not found sufficient evidence to refer any vice president for discipline to the administrator.

“That was part of the deal,” the source said. Nonetheless, the source acknowledged that if the administrative officer asked the U.S. attorney’s office for any documents it gathered in the case, they would be turned over, without recommendation.

The Times was unable to get a comment from the Justice Department about the letters.

When the suit was filed last June under the Racketeer-Influenced and Corrupt Organizations Act (RICO), prosecutors contended that the Teamsters board was corrupt and in a “devil’s pact” with the mob.

The 113-page suit charged the Teamsters with “a pattern of racketeering that includes 20 murders, several shootings, bombings, beatings, a campaign of fear, bribes, extortion and theft and misuse of funds” and demanded that the executive board be removed and that the government effectively take over the union.

The suit was filed by Rudolph W. Giuliani, the U.S. attorney for the Southern District of New York, who has since resigned to enter private practice.

The 30-page agreement provides for sweeping reforms in a union that has seen three of its six presidents--Dave Beck, James R. Hoffa and Roy L. Williams--convicted of federal crimes and sent to prison, and a fourth, Jackie Presser, die while under federal indictment.

Three-Member Panel

A key section creates a three-member panel at the union’s Washington headquarters to fight corruption and supervise elections. In 1991, the panel will be replaced by a permanent “independent review board” with even broader powers.

“This agreement will force La Cosa Nostra and organized crime out of the Teamsters,” said Assistant U.S. Atty. Louis Freeh, one of the prosecutors.

The three-member panel, all non-union members, will be selected by the government and the union, and approved by the court. The group’s administrator will have the same authority as the Teamsters’ general president to discipline “corrupt or dishonest” union members or officers, according to the document.

The administrator also has the power to veto any expenditures of union funds, any contract other than collective bargaining agreements and any appointment of a union official.

The other officials will have similar authority to investigate potential corruption, and to supervise union elections.

The agreement also amends the union constitution to allow for direct secret-ballot, rank-and-file election of union delegates and top officers for the first time. Lead prosecutor Mastro called the change “unprecedented.”

“There will be direct election of union officers,” he said. “That’s never happened before in this union.”

Under the agreement, delegates will openly nominate new officers, including president, secretary-treasurer, five at-large vice presidents and up to 11 regional vice presidents, at the 1991 convention. Rank-and-file union members will vote by in-person secret ballot at the Teamsters’ 700 locals in four to six months.

Herman Benson, founder of the Assn. for Union Democracy, expressed reservations about having the elections conducted at locals without government supervision. “In my experience, elections of that type in a situation where you have misgivings about democracy, have a great danger of being stolen,” he said.

The agreement requires the panel to report back to the court every three months, and gives the government the option to reopen the lawsuit if the union does not comply.

The agreement was hammered out in grueling meetings at the U.S. attorney’s office in Manhattan between Mastro and Grady, and their assistants, throughout the weekend.

Grady said he presented the agreement to the 11 Teamster defendants, plus three new board members, in a suite at the U.N. Plaza Hotel late Sunday evening. He said he finally obtained their signatures at 1:30 a.m. Monday.

Grady then returned downtown at 2 a.m. to give the document to acting U.S. Atty. Benito Romano, who carried it to Washington to brief Thornburgh.

The trial was to begin Monday morning, and was expected to take six months and require hundreds of witnesses.

Steve Kindred, an organizer for the Teamsters for a Democratic Union, asserted that the union needed the agreement to avoid a trial that would publicly air illegalities. “It allows the union to avoid weeks and weeks of hearing their vicious, venal, profane telephone calls played in court,” he said.

Grady said the agreement accomplishes “two things.” He said members are assured of a “mechanism to remove or replace” corrupt union officials. Secondly, “the goals of a clean and democratic union are consistent with the goal of our new leadership.”

Grady said the union “never considered” the government’s demand for a trusteeship. “That was never an option,” he said. He said prosecutors dropped their demand in mid-February that board members resign as a precondition to settlement.

George Pappy, attorney for Michael J. Riley, a Teamster vice president from Los Angeles, said the union was happy with the settlement.

This story was written by Bob Drogin in New York, Ronald J. Ostrow in Washington and Henry Weinstein in Los Angeles.

LANDMARKS IN THE TEAMSTERS’ TROUBLED PAST

The International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America was founded in 1903 in Niagara Falls, N.Y. Headquartered in Washington, D.C., the union has 1.6 million members in about 700 locals throughout the country. It represents workers in many industries and government.

1957--Dave Beck, president since 1952, is convicted of federal income tax violations and sentenced to federal prison.

1957-60--Senate committee headed by John McClellan (D-Ark.), with Robert F. Kennedy as chief counsel, finds extensive corruption in several U.S. unions, including the Teamsters.

1957--Teamsters expelled from AFL-CIO on corruption charges.

1957-71--James R. Jimmy Hoffa elected president of union in 1957. His election is challenged by dissidents and the government appoints a monitorship over the union for three years. In 1961, Hoffa is reelected and remains president until 1971.

1959--Landrum-Griffin Act passes, giving greater democratic rights to union members.

1964--Hoffa convicted of jury tampering and mail fraud. He was sentenced to 13 years in federal prison.

1971--President Richard M. Nixon commutes Hoffa’s sentence but bars him from union activity for 10 years. Frank Fitzsimmons, Hoffa’s handpicked

interim successor from Detroit, succeeds Hoffa as president.

1975--Hoffa disappears amid rumors that he has been slain by mobsters to prevent him from running against Fitzsimmons. His body isn’t found and he is declared legally dead.

1976--Teamsters for a Democratic Union formed, criticizing corruption in union and asserting that union election procedures prevent reform.

1981--Fitzsimmons dies. Roy L. Williams of Kansas City is chosen to succeed him at special meeting of Teamster board. Later in year, Williams is elected president at union convention in Las Vegas, even though Beck he has just been indicted on charges of attempting to bribe U.S. Sen. Howard Cannon (D-Nev.). Williams is convicted in 1982 and sentenced to federal prison.

1983--Jackie Presser of Cleveland is chosen to succeed Williams.

1983--Justice Department files suit under Racketeer- Influenced and Corrupt Organizations (RICO) Act, seeking control of Teamsters Local 560 in Union City, N.J.

1984--Presser is secret FBI informant, federal officials tell The Times. Two years later, a court document confirms Presser informed for FBI since 1977.

1986--Teamsters for a Democratic Union files suit in federal District Court in Washington, D.C., charging that union’s election procedures violate members’ democratic rights. Labor Department joins Teamsters in successfully opposing the suit.

1986--President’s Commission on Organized Crime says that four major unions, including Teamsters, have substantial ties to organized crime.

1986--After lengthy litigation, a trusteeship is imposed on Local 560.

1986--Presser and two other men indicted in Cleveland on federal payroll-padding charges which allege that they dispensed $700,000 to ghost employees who did no work. Less than a week later, Presser is overwhelmingly reelected as president.

June, 1988--Justice Department files RICO suit against Teamsters Union.

July, 1988--Presser dies. William J. McCarthy, a Teamster vice president from Boston, succeeds him at special meeting of union board.

March, 1989--Justice Department and Teamsters settle RICO case.