Gene Giacumbo goes through the looking-glass

By Philip F. Kelly Jr.
web posted June 5, 2000

Last fall, Bill Hamilton was convicted of fraud for laundering hundreds of thousands of dollars for the 1996 reelection campaign of then-Teamsters' president Ron Carey. Hamilton was the Teamsters' political director. Since then, many have been waiting to see whom else U.S. Attorney Mary Jo White will indict.

Testimony in the Hamilton trial implicated high-ranking labor officials, including AFL-CIO Secretary-Treasurer Richard Trumpka, Gerald McEntee, president of the Association of Federal, State, County and Municiple Employees (AFSCME), Andrew Stern, John Sweeney's successor at the Service Employees International Union (SEIU) as well as officials at the Democratic National Committee and Clinton fundraiser Terry McAuliffe. President Clinton's former deputy chief of staff Harold Ickies was also implicated in testimony.

Not surprisingly, the Justice Department did not appoint an independent counsel to investigate White House involvement in the illegal scheme. Minor figures have pleaded guilty, but the other shoe stubbornly refuses to drop. Now, Teamsters' President James P. Hoffa has filed a $3 million civil racketeering suit against Carey that also leaves out Trumpka, McEntee and the others. What's going on between the Clinton White House and labor unions? Has federal oversight of corrupt unions degenerated into arm-twisting for campaign cash? Have prosecutors been pressured into treading lightly? No indictments have been handed down against Carey, Trumpka, McEntee et al, while Arthur Coia of the Laborers' Union (LIUNA) and the late Edward Hanley of the Hotel and Restaurant Employees (HERE) ---both big Democratic contributors--- avoided takeovers of their unions in sweetheart deals with the Justice Department. After hearing Gene Giacumbo's story, one begins to understand how government oversight of unions might facilitate the convergence of powerful special interests.

Oversight introduces another potent and largely unaccountable interest into the rank-and-file's business---politicians. Cash-rich unions that don't want oversight and money-hungry politicians are a combustible mix.

In 1989, the Bush Administration settles a RICO suit against the Teamsters by entering into a consent decree that established federal oversight of the union. Former judge Frederick Lacey was appointed Independent Administrator, and supervision of the decree was assigned to Federal District Judge David Edelstein. The agreement provided for the first democratic election of a Teamsters president by its members, which resulted in the 1991 election of Carey on a reform ticket.

In December 1991, the teamsters annual financial report filed with the Department of labor listed a net worth of $156.3 million. On February 1, 1992, Carey was sworn in as Teamsters president. Giacumbo, who was president of Local 843, was elected an International Vice President on the Carey slate. By the end of 1992, the Teamsters' annual report listed a net worth of $114.8 million, a $41.5 million loss from the previous year. In June 1993, Teamsters International Trustees audited the union's finances and discovered "accounting discrepancies and improper expenditures". Three trustees called for an immediate review. Carey refused their request. By the end of the year, the Teamsters' annual report listed a net worth of $64 million, a further decline of 49.2 million.

Meanwhile Carey was becoming politically active. In summer 1992, he met with labor lawyer Harold Ickies, who led the 1992 Clinton-Gore campaign in New York. What happened next is hotly disputed. Carey says only that he pledged to help the Clinton campaign, F.C. Duke Zeller, director of communications at the Teamsters for 14 years, claims that union leaders set up a multimillion-dollar slush fund for Clinton. In his book, Devil's Pact, Inside the World of the Teamsters Union, Zeller wrote that union officials--including Carey--played "fast and loose" with Teamsters' funds, and that Ickies "repeatedly appealed" for more money during the campaign.

Around the same time, Teamsters International V.P. Giacumbo discovered irregularities in Carey's personal finances. Since the 1980's Carey had purchased real estate in Florida and Arizona well beyond his modest means. Before the election, the reformer" Carey was widely reported to be making about $40,000 a year. Giacumbo offered Lacey documents exposing Carey's financial dealings. Lacey demurred, but soon after an article in Time magazine which quoted Giacumbo and detailed Carey's extensive real estate holdings. Lacey subsequently spoke with Charles Ruff, White House counsel during the Clinton impeachment. Ruff was then working for Carey and the Teamsters, and he had briefed the review board on the allegations against Carey. In a letter to Thomas Puccio, a government trustee overseeing Teamsters Local 295, who had raised to Lacey and Ruff allegations linking Carey to organized crime, Lacey made plain his sympathy for Carey and reminded Puccio to consider "what would happen if you brought Carey down.. so that the clock would be turned back to what it was when first I came on the scene as independent administrator".

Not long after Carey's swearing-in as Teamsters' president, International V.P. Giacumbo discovered irregularities in Carey's personal finances. Since the 1980's, Carey had purchased real estate in Florida and Arizona well beyond his reportedly modest means.

Lacey, the lone Independent Administrator, has since morphed into an Independent Review Board (IRB) comprised of Lacey and two others: Judge William Webster, former FBI and CIA director and Grant Crandell, general counsel for Trumpka's ideological United Mine Workers. (Many believe Trumpka is the real power at the AFL-CIO.) The Teamsters' trustees frozen out by Carey for trying to examine the union's books sent to the IRB a copy of a letter they had sent to Carey noting that the Teamsters' constitution requires an audit every six months. In May 1994, Carey rebuffed the trustees and passed an emergency dues assessment because the union's net assets had dropped below $20 million. The AFL-CIO also lent the Teamsters $15 million.

Despite all the allegations, the IRB cleared Carey on July 11, 1994. Soon questions about Lacey's impartiality were raised in a new Time article that cited Lacey's letter to Puccio. Lacey was furious at the disclosure and sent an angry letter to the magazine. Giacumbo was widely assumed to be the source of the leaked letter. Shortly thereafter, the Teamsters brought Giacumbo before the IRB on charges he misused union funds by accepting four payments of $400 on duplicate car reimbursements from the Local and the International.

Gene Giacumbo now discovered just how dangerously unaccountable quasi-governmental agencies like IRB can be. Webster recused himself from IRB hearing because he had a relationship with Giacumbo's employer Anheuser-Busch. Giacumbo had by then publicly admitted that he had passed the Lacey letter to Time, and he requested that Lacey likewise recuse himself from the hearing. Lacey refused. Giacumbo then filed a restraining order, but it was denied by Edelstein. In October 1995, the IRB found against Giacumbo, suspended him from the union for six months and fining him the $1600. This decision was sent to Edelstein for approval per the consent decree. Unbelievably, Edelstein sent the decision back to the IRB for reconsideration because he deemed it too lenient.

At a supplemental hearing in March 1995, the IRB decided Giacumbo had violated his suspension by attending a Local meeting nominating delegates to the 1996 Teamsters' International Convention. This time the IRB imposed a three-year suspension on Giacumbo-- in part because he had shown disrespect for the sanctions-- and sent the decision back to Edelstein. On January 9, 1997 the court again sent the sanctions back for reconsideration. This time Edelstein added, "this Court deems it proper for the IRB to contemplate the wisdom of ever permitting Giacumbo to hold a position of influence within the IBT (Teamsters) or any IBT-affiliated entity". A few months earlier, Giacumbo had appeared at the National Press Club with Duke Zeller and questioned the IRB's handling of Carey.

Not surprisingly, the IRB---following Edelstein's second remand--- issued a May 1997 decision that imposed a lifetime ban, stripping Giacumbo of all Teamsters benefits and pensions. Giacumbo appealed to the 2nd Circuit Court of Appeals. In March 1999, the 2nd Circuit held that the inference that Giacumbo violated his suspension by appearing at Teamsters' gatherings was "arbitrary and "capricious". It blamed the lifetime ban on the district court's repeated remands for more punishment. The Circuit Court vacated the second and third sanctions and told Edelstein to have IRB reconsider whether the first sanction should stand.

The IRB then declared that time served was "sufficient" ---even though it was three years longer than the origional sanction--- and demanded payment of the $1600 fine with interest. On August 2, 1999, Edelstein affirmed this decision over the explicit instructions of the 2nd Circuit Court, whereupon Giacumbo appealed again to the circuit court. Both sides are currently preparing oral arguments.

Did IRB act improperly to protect Ron Carey? Is the Justice Department involved? Guardian angels are abroad in America today, but whom are they protecting? Not whistleblowers like Giacumbo. The public has a right to a full investigation of every facet of the Carey money swaps, including allegations against White House officials and powerful union leaders. And citizens like Gene Giacumbo have a right to be protected from what has bordered on a government-sanctioned witch-hunt.

Thankfully, the 2nd Circuit Court of Appeals has intervened. Giacumbo is still fighting for Lacey's recusal. Of course, the charges against him wouldn't hold much water outside the IRB funhouse. The U. S. Attorney hasn't brought any embezzlement charges, and it's unlikely she will. But meanwhile, Giacumbo hasn't been able to work. The Teamsters fought his unemployment benefits to the New Jersey Supreme Court and send reams of IRB reports to every employer looking for a reference. But, with any luck, he'll soon get his life back.

Federal oversight of the Teamsters (and other unions) appears too eager to overlook misdeeds. Vigorous prosecution is the only way to stem union corruption.

Philip F. Kelly Jr. is editor of Labor Watch which is a publication of the Capitol Research Center.

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