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UNITED STATES v. INTERNATIONAL BHD. OF TEAMSTERS

July 9, 1992

UNITED STATES OF AMERICA, Plaintiff,
v.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND HELPERS OF AMERICA, AFL-CIO, et al., Defendants. IN RE: APPLICATION LXXVIII OF THE INDEPENDENT ADMINISTRATOR


Edelstein


The opinion of the court was delivered by: DAVID N. EDELSTEIN

EDELSTEIN, District Judge:

 This opinion emanates from the voluntary settlement in the action commenced by the plaintiff United States of America (the "Government") against the defendants International Brotherhood of Teamsters (the "IBT") and the IBT's General Executive Board (the "GEB") embodied in the voluntary consent order entered March 14, 1989 (the "Consent Decree"). The Consent Decree provides for three Court-appointed officials: the Independent Administrator to oversee the Consent Decree's remedial provisions, the Investigations officer to bring charges against corrupt IBT members, and the Election officer to oversee the electoral process leading up to and including the 1991 election for International Officers (collectively, the "Court Officers"). The goal of the Consent Decree is to rid the IBT of the hideous influence of organized crime through the election and disciplinary provisions.

 Application LXXVIII presents for this Court's review the decision of the independent Administrator regarding disciplinary charges brought by the Investigations officer against David L. Reardon ("Reardon"), Secretary-Treasurer of IBT Local 563 in Appleton, Wisconsin. The Independent Administrator found that Reardon was part of a scheme to embezzle funds from Local 563 and brought reproach upon the IBT by taking part in the scheme.

 I. BACKGROUND

 The Investigations Officer brought two charges against Reardon. Charge One alleged that Reardon brought reproach upon the IBT by giving false testimony under oath in the criminal trial of Local 563's then Secretary-Treasurer, Dennis Vandenbergen ("Vandenbergen"), who was convicted in 1990 of using Local 563 money to make illegal campaign contributions. Charge Two alleged that Reardon embezzled funds from his Local in connection with the illegal campaign contribution scheme created by Vandenbergen, and brought reproach upon the IBT by doing so.

 Pursuant to paragraph F.12(C) of the Consent Decree, the Independent Administrator must decide disciplinary hearings using a "just cause" standard. The Investigations Officer has the burden of establishing just cause by a preponderance of the evidence. December 27, 1990 Opinion & Order, 754 F. Supp. 333, 337 (S.D.N.Y. 1990). After conducting a hearing where Reardon was represented by counsel and receiving post-hearing briefs, the Independent Administrator issued a twenty page decision. The Independent Administrator found that the Investigations Officer failed to meet his burden of proving Charge One, but met his burden of proving Charge Two. Neither Reardon nor the Investigations Officer object to the Independent Administrator's finding with respect to Charge One. *fn1" Reardon, however, challenges the Independent Administrator's finding with respect to Charge Two.

 Charge Two implicates Article II, Section 2(a) and Article XIX, Section 6(b) of the IBT Constitution. Article II, Section 2(a) is the IBT membership oath, which provides in relevant part that every IBT member shall "conduct himself or herself in a manner so as not to bring reproach upon the Union." Article XIX, Section 6(b) is a non-exhaustive list of disciplinary charges that may be filed against IBT members. One such charge is violating the IBT membership oath. See Article XIX, § 6(b)(2). Another such charge is the embezzlement or conversion of IBT funds or property. See Article XIX, § 6(b)(3).

 A. The Illegal Campaign Contribution Scheme

 In 1990, Vandenbergen, then Secretary Treasurer of Local 563, was convicted in the United States District Court for the Southern District of Wisconsin with conversion of Union funds to the benefit of a local political campaign on behalf of mayoral hopeful Dorothy Johnson ("Johnson") in violation of, inter alia, 18 U.S.C. § 501(c). Knowing that union funds could not be used for campaign contributions pursuant to Wisconsin law, Vandenbergen implemented a money-laundering scheme to use Local 563's funds for contributions to Johnson's campaign. At a March 9, 1988, meeting of Local 563's Executive Board (the "March 9th Meeting"), Vandenbergen had the Executive Board members vote themselves each a $ 300 "bonus." The bonuses were then used by the Executive Board members to make individual contributions to Johnson's campaign; each contribution was $ 300.

 While Reardon was a member of Local 563's Executive Board, he was not present at the March 9th Meeting. Most Executive Board members physically exchanged their personal contribution checks for their bonus checks. Reardon, however, received his bonus check for $ 300 on March 31, 1988, and wrote a $ 300 personal check to the Johnson campaign on or about April 5, 1988. On or about April 8, 1988, Reardon cashed his bonus check.

 B. The Independent Administrator's Findings Regarding Reardon's Involvement in the Scheme

 It is well settled that "fraudulent intent to deprive [the Union] of its funds" is required to sustain a charge of embezzlement. June 6, 1991 Opinion & Order, 775 F. Supp. 90, 98 (S.D.N.Y. 1991), aff'd, in relevant part, US v. IBT, 948 F.2d 1278 (2d Cir. 1991). Such intent can be inferred from circumstantial evidence. United States v. Local 560, 780 F.2d 267, 284 (3d Cir. 1985). The Independent Administrator found that "Reardon participated in Vandenbergen's scheme to funnel the Local's funds to a political campaign and in doing so he acted with 'fraudulent intent to deprive [local 563] of its funds.'" (Decision of the Independent Administrator ("Ind. Admin. Dec.") at 10).

 The Independent Administrator stated that although Reardon did not attend the March 9th Meeting, he did "receive a $ 300 bonus which was eventually funnelled" to Johnson's campaign. Id. at 16. In addition, the Independent Administrator found that even though Reardon did not physically exchange a campaign check for a bonus check like the other members of the Executive Board, the amount of the "bonus" was "'integrally and inextricably intertwined'" with his contribution to the Johnson campaign. Id. Accordingly, the Independent ...


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