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United States v. Ferrara

decided: April 7, 1972.


Feinberg, Timbers, Circuit Judges, and Thomsen, District Judge.*fn*

Author: Timbers


These appeals graphically depict how corrupt labor union officials can use their positions to promote their own selfish interests at the expense of the interests of those they ostensibly represent.

Appellants Fred Ferrara, Arthur Russell, Elmer Hauck and George Papalexis*fn1 were convicted after a three-day non-jury trial in the District Court for the Southern District of New York, Milton Pollack, District Judge, of conspiring to violate and of violating §§ 302(a)(1), (a)(4) and (b)(1) of the Taft-Hartley Act, 29 U.S.C. §§ 186(a) (1), (a)(4) and (b)(1) (1970), by demanding and receiving money and a thing of value from employers of employees whom they represented. The trial judge fined each appellant $4500, and Ferrara, Russell and Hauck received prison terms of one year, two months and one month, respectively. On appeal, appellants claim that the evidence was insufficient to support the trial judge's findings; that the government failed to show that the Taft-Hartley Act applied to the payments in question; that the application of the Taft-Hartley Act, as amended in 1959, to their activities violated the ex post facto clause of the Constitution; and that they were denied their right to a speedy trial. Finding no error, we affirm.


The evidence presented at trial established that from 1954 through 1965, the period covered by the indictment, appellants and co-defendant James Gleason*fn2 were officers of Local 11, Chain Service Restaurant, Luncheonette and Soda Fountain Employees and Bartenders Union (AFL-CIO) (hereafter "Local 11"). During this same period, Local 11 represented employees of the Walgreen Company.

During the course of contract negotiations between Walgreen and Local 11 in 1954, management's representative, co-conspirator Casey LaFramenta, complained that the provision in the contract which allowed fountain employees to eat free of charge was costing the company a great deal and that its employees were the only ones in New York with such a "free food" provision. Gleason, the union's business agent for Walgreen's employees, and Ferrara, then president of Local 11, told LaFramenta that the "free food" provision could not be eliminated.

Thereafter, appellant Ferrara approached Gleason privately about the prospect of convincing Walgreen employees to give up the free food benefit. Ferrara explained that if the employees would accept a modification of this benefit and if Ferrara could persuade Walgreen to purchase its coffee from Abraham Wechsler, chairman of the board of Wechsler Coffee Company, then Ferrara, Gleason, Russell, Hauck and Papalexis could arrange a lucrative deal which would earn them several thousand dollars. Gleason agreed to help Ferrara implement this proposal.

At about this time, Ferrara asked Walgreen's negotiator, LaFramenta, whether Walgreen would purchase its coffee from Wechsler. LaFramenta relayed this suggestion to Donald Haas, who was then head of the Walgreen purchasing division. Thereafter, Local 11 dropped its demand that the free food provision be included in the contract.

Gleason then used his position as union business agent for the Walgreen employees to convince them to accept a modification of the food benefit provision. The Walgreen employees eventually agreed to give up free food in exchange for a $3 weekly increase in salary and a 50% discount on food purchases.

In exchange for Local 11's promoting this modification of the food benefit provision, Walgreen agreed to purchase its coffee from Wechsler. Ferrara then arranged with Edward Wechsler, brother of Abraham Wechsler, to have Wechsler Coffee make an annual payment to a person designated by Ferrara, Hauck or Russell of four cents a pound on all sales of Wechsler coffee to Walgreen.

Thus, from 1954 to 1965, Walgreen purchased its coffee requirements in the New York City area from Wechsler Coffee, despite the absence of any business justification for doing so. Prior to 1954, Walgreen had been using coffee roasted and ground in its own plant in Chicago, and Walgreen's representatives could give no plausible explanation for changing its source of supply. Moreover, while Walgreen was purchasing its coffee from Wechsler, James Plummer, the food and fountain supervisor for Walgreen's New York stores, received numerous consumer complaints about the coffee, and informed his superiors that the coffee was overpriced and of poor quality. Plummer was told by co-conspirator LaFramenta to "keep his hands off the coffee." Plummer was later told that Wechsler coffee would be purchased because Local 11 had "something to do with it."

Furthermore, each year from 1954 through 1965, Wechsler Coffee made the agreed-upon payments to nominees of Ferrara, Hauck and Russell. In 1954, 1955 and 1956, Ferrara paid Gleason $800, $700 and $650-700 in cash, respectively, as Gleason's share on the Wechsler deal. In 1957 and 1958, Ferrara gave Gleason checks drawn on the account of Wechsler Coffee, payable to Gleason. Gleason then cashed the checks and divided the proceeds equally with Ferrara, Russell, Hauck and Papalexis. In 1959, the check was made payable to Riese Enterprises, owned by Irving Riese, Ferrara's brother-in-law. In 1961, 1962, 1963 and 1964, the Wechsler checks were made payable to Rudolph Wetter, Gleason's cousin. After each check was cashed, Wetter received 10% of the proceeds, and appellants reimbursed Wetter for whatever income tax liability he incurred. In 1965, the check also was made payable to Wetter, who again received 10% of the proceeds. However, this year, rather than dividing the proceeds equally between the five defendants as had been done in each previous year, Gleason kept half of the proceeds and gave the other half to Ferrara.

To uphold their end of this tripartite arrangement, appellants, who as previously noted were officers of Local 11, did not again demand that the free food provision be included in the collective bargaining agreements negotiated by appellants ...

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