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UNITED STATES v. LOCAL 295 OF THE INTL. BHD. OF TE

January 31, 1992

UNITED STATES OF AMERICA, Plaintiff against LOCAL 295 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, EXECUTIVE BOARD OF LOCAL 295 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 851 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, EXECUTIVE BOARD OF LOCAL 851 OF THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, FRANK MANZO, HARRY DAVIDOFF, MARK DAVIDOFF SHARRON MOSKOWITZ, NANCY SIANO, FRANK CALISE, ANTHONY CALAGNA, MICHAEL URSO-PERNICE, ROBERT REINHARDT, LEONE MANZO, RICHARD SCHROEDER, ANTHONY GUERRIERI, THOMAS GRECO, CARMELO AMATO, Defendants


The opinion of the court was delivered by: EUGENE H. NICKERSON

 NICKERSON, District Judge:

 The amended complaint of United States names as defendants two Locals, Local 295 and Local 851, of the International Brotherhood of Teamsters, AFL-CIO (the Teamsters International) and related officers and alleged co-conspirators, and alleges violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § § 1961-1968, including nineteen acts of racketeering.

 The United States moves for the second time for the appointment of a trustee for Local 295.

 The court assumes familiarity with its previous memoranda and orders dated March 7, 1991; June 28, 1991; and July 23, 1991.

 I.

 The amended complaint seeks a preliminary injunction: (1) enjoining defendants from violating the federal racketeering laws; (2) enjoining individual defendants from participating in the affairs of, or dealing with officers or employees of, Locals 295 and 851 or Local 851's Pension and Welfare Funds; (3) enjoining current Executive Board members of both Locals from taking any action for their organizations; (4) removing all officers and trustees of Locals 295 and 851 and their Executive Boards and of Local 851's Pension and Welfare Funds; (5) appointing one or more trustees, pendente lite, for both Locals and Local 851's Pension and Welfare Fund; and (6) ordering the trustee to conduct general elections to elect officers for the Executive Boards of both Locals.

 The United States also seeks a permanent injunction (1) prohibiting the individual defendants from dealing with any member, officer, representative or agent of the Locals, their Executive Boards, and Local 851's Pension and Welfare Funds; (2) making permanent any provision of the preliminary injunction the Court deems appropriate; and (3) divesting from individual defendants their interest in the racketeering enterprise alleged in the complaint.

 II.

 By Memorandum and Order dated March 7, 1991, this court denied the motion of various defendants to dismiss. The court struck as moot the claim for the injunctive relief barring defendant Frank Manzo from future dealings with any labor union, because the Consent Judgment in the United States District Court in the Southern District of New York had already granted the United States that relief. United States v. International Bhd. of Teamsters, 88 Civ. 4486 (Edelstein, J.) (S.D.N.Y. Mar. 14, 1989). The court also granted partial summary judgment for the United States requiring defendants Frank Calise and Harry Davidoff jointly and severally to disgorge $ 961,400 and barring them from future dealings with any labor organization. The court denied partial summary judgment with respect to Manzo and the Locals for divestiture on the ground that factual disputes remain.

 In a June 28, 1991 Memorandum and Order, this court amended its order requiring Calise and Davidoff to disgorge. This court rescinded its holding that they were jointly and severally liable for the $ 961,400 and postponed until after discovery a finding of the amount each must pay of that amount.

 In a July 23, 1991 Memorandum and Order, this court adopted the findings made in Investigations Officer v. Anthony Calagna, Sr., Michael Urso-Pernice, Robert W. Reinhardt, Anthony Calagna, Jr., Salvatore E. Cataldo, Ralph Delsardo, and John Moran, Jr., Decision of the Independent Administrator, (June 14, 1991) (Lacey), under the Teamsters International Consent Decree in the District Court for the Southern District of New York concerning the ongoing corruption of Local 295. United States v. Local 295 of the Int'l Bhd. of Teamsters, No. 90 CV 0907, 1991 U.S. Dist. LEXIS 10669 (E.D.N.Y. July 31, 1991). In that June 14, 1991 decision, former Judge Frederick B. Lacey said, "In my two years as Independent Administrator, I have seen few IBT [Teamsters International] Locals with the sullied reputation associated with Local 295, a reputation richly deserved, as reflected by the record in this case." (at 24).

 Based on those findings, Judge David N. Edelstein sustained former Judge Lacey's decision to remove and permanently bar all but one member from the Executive Board of Local 295 and to appoint a temporary trustee to run the daily operations of the Local.

 This court declined to appoint a permanent trustee for Local 295 in light of Judge Edelstein's appointment of a temporary trustee. Instead, the court said that the United States could "renew its motion at a future time if the temporary trustee arrangement proves inadequate". Id. at 4.

 The United States now moves again for the appointment of a permanent trustee. The United States points to the conviction of the former president of Local 295, Anthony Calagna, for extortion an August 8, 1991; a letter to this court from former Judge Lacey outlining the institutional limitations of the present Temporary Trustee; portions of the record of proceedings in the District Court in the Southern District of New York; and a Declaration and attached exhibits of Special Agent James Malley, a federal law enforcement official, chronicling patterns of extortion and intimidation by the former officers of Local 295 and their involvement with La Cosa Nostra. See documents, correspondence, depositions, court records, and other material collected in the Declaration of Assistant U.S. Attorney Christopher Lehmann. Hereinafter references are to exhibits contained in this declaration.

 III.

 A.

 Former Judge Lacey found on June 14, 1991 that the former Executive Board members were derelict in failing to investigate corruption within Local 295. The first question is whether the present Temporary Trustee should be given a chance to stamp out any ongoing corruption.

 The United States contends that the Consent Decree and the IBT Teamsters International Constitution limited former Judge Lacey's selection options by requiring that a trustee be a Teamsters International member. He said in a letter to this court that the present trustee, William Ferchak, while competent to perform the business functions of the Local's Executive Board, lacks the skills and experience necessary to investigate and remove any possible corruption still plaguing the union.

 Ferchak does say that "an objective of the Consent Order [from Judge Edelstein] is to rid the [Teamsters International] of any influence of organized crime. My Trusteeship over the affairs of Local 295 will be highly sensitive to ensuring compliance with this important policy." But he does not mention the specific corruption of Local 295, nor does he say what, if any, any actions he has taken or plans to take to achieve reform. He plainly conceives of his role solely to conduct the business affairs and negotiations of Local 295 in a professional manner. He is not, nor does he pretend to be, capable of conducting a sustained, aggressive investigation into potentially ongoing corruption involving organized crime.

 Local 295 also says that the Teamsters International Investigations Officer continues to monitor the Local and has conducted a recent financial audit. But under the terms of the Consent Decree, the Independent Administrator's and Investigations Officer's positions will expire nine months after the election of International Officers. Those elections have recently been held. Former Judge Lacey says that the Temporary Trustee could continue beyond that date, but cautions that "the resources and support of [Lacey's] office, the Investigation Officer's office and Judge Edelstein may no longer be available". Moreover, the Independent Administrator's Office has responsibility for all of the manifold problems involving the Teamsters International.

 This court is mindful that Congress considered the appointment of a trustee to run the affairs of a union local as an extraordinary measure.

 Absent some clear cut limitations on the use of this remedy [a civil RICO trusteeship], there is a valid public concern that the tremendous power which ...


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