County Unions’ Contractor for Job Benefits Indicted

Officials of Los Angeles County employee unions have forged ahead with a key employee-benefits contract with a New York businessman even though they know he is under indictment in Michigan for federal bribery and racketeering charges, sources said.

Asher Schapiro, chairman of Employee Benefit Services Inc., was indicted in July by a federal grand jury in Detroit on 16 counts of conspiracy, racketeering and money laundering. His firm recently won a contract to enroll 66,000 Los Angeles County employees in a health-benefits program and to sell them life insurance.

Employee Benefit Services officials in Los Angeles said Schapiro took a leave of absence from the company after the indictment was handed down. His son, Stuart, is now acting as chief executive officer, said Ron Kleiman, the firm’s project director. There are no criminal charges pending against Schapiro in Los Angeles County.

Under an agreement with the Coalition of County Unions and Service Employees International Union Local 660, Employee Benefit Services acts as an individual consultant to all union employees who sign up for medical and dental benefits.

The company provides the computer-assisted consulting service without cost to the unions. In exchange for the service, union officials agreed to allow Employee Benefit Services to sell life insurance policies during the consultations, which are conducted at the workplace. The firm receives a commission on sales of life insurance.

Officials at Local 660 said they learned about Schapiro’s indictment after they had signed the contract but before his firm had enrolled any workers in the benefits and life insurance programs.

“We felt we were too far into this to pull back out,” said Annelle Grajeda, assistant general manager at Local 660. She added: “We’ve had good feedback from the employees.”

Schapiro was charged in an alleged scheme to bribe an official who administered employee benefits for the now defunct American Motors Co. According to the indictment, Schapiro paid the official about $98,000 from 1985 to 1987 to assure that AMC used an optional life insurance policy offered by Schapiro’s company.

Officials at Local 660 said they have heard no complaints from county employees who have participated in consultations with Employee Benefit Services. They said they had checked the firm’s record in other states where it provides similar services to public employees and found the company had a good record.

Union officials said they have learned from other sources that some employees have complained of “hard-sell” tactics used by Employee Benefit Services workers pitching the life insurance policies.

Schapiro is also at the center of a political controversy in Rhode Island, where it has been reported that he made campaign contributions to high-ranking state Democratic Party leaders who later contacted state administrators on Schapiro’s behalf.

As a result of the controversy--which centered on state Democratic Party Chairman Mark Weiner--Rhode Island state officials canceled their contract with Employee Benefit Services. The contract was similar to its agreement with the Los Angeles County unions.

Kleiman said Employee Benefit Services began enrolling county employees Aug. 16, several weeks after Schapiro informed the unions of his indictment. To date, the firm has enrolled 35,000 people in benefits programs. About 10,000 of those have signed up for the life insurance program, Kleiman said.