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UNITED STATES v. INTERNATIONAL BHD. OF TEAMSTERS

July 14, 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 LXXIX 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" or "Union") 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 LXXIX presents for this Court's review the decision of the Independent Administrator regarding a disciplinary charge brought by the Investigations Officer against James L. Coli ("Coli"), the Secretary-Treasurer of IBT Local Union 727 in Chicago, Illinois The Independent Administrator found that Coli brought reproach upon the IBT by willfully violating his fiduciary duty to investigate and act with respect to allegations and evidence that Joseph Talerico ("Talerico"), a business Agent of Local 727, was involved in criminal activity and associated with Philip Ponto ("Ponto"), a member of La Cosa Nostra ("LCN"). For the reasons stated below, this Court affirms the decision of the Independent Administrator in its entirety.

 I. BACKGROUND

 The Investigations Officer charged that Coli brought reproach upon the IBT in violation of Article II, Section 2(a) and Article XIX, Sections 6(b)(1) and (2) of the IBT Constitution by failing to investigate and act with respect to allegations and evidence that Talerico was involved in criminal activity and associated with Ponto, a member of LCN. 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. Two such charges are: (1) violating the IBT Constitution, a Local Union bylaw or other Union rule; and (2) violating the IBT membership oath. See Article XIX, §§ 6(b)(1)-(2).

 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 Coli was represented by counsel, and receiving post-hearing briefs, the Independent Administrator issued a decision finding that the Investigations Officer satisfied his burden of proving that Coli breached his fiduciary duty to the members of Local 727. (Decision of the Independent Administrator ("Ind. Admin. Dec.") at 11).

 A. Coli and Talerico

 Coli, a licensed attorney in Illinois and California, has been the Secretary-Treasurer of Local 727 for approximately ten years. As the Secretary-Treasurer of Local 727, Coli is the principle officer of the Local and is in charge of hiring and firing union employees, as well as granting leaves of absence. Talerico was a Business Agent with Local 727 before Coli became associated with the Local. Talerico held this post until August 27, 1990, when this Court affirmed the Independent Administrator's findings that he brought reproach upon the IBT, in violation of Article II, Section 2(a) and Article XIX, Section 6(b) of the IBT Constitution, by: (1) incurring contempt citations for his refusal to testify before a federal grand jury that investigated the skimming of funds from a Las Vegas casino; and (2) knowingly associating with Ponto. See August 27, 1990 Opinion & Order, 745 F. Supp. 908 (S.D.N.Y. 1990), aff'd, 941 F.2d 1292 (2d Cir. 1991), cert. denied, 112 S. Ct. 1161 (1992).

 B. Talerico's Criminal Conduct and Association With Ponto

 Investigations conducted by the Federal Bureau of Investigations ("FBI") in the early 1980s revealed that Talerico, while a business agent with Local 727, had information about LCN's involvement in Las Vegas casinos. The FBI documented several meetings between Talerico and Ponto in Las Vegas and obtained surveillance photographs of meetings between the two men.

 On February 8, 1982, Talerico was subpoenaed to appear before a special grand jury in the United States District Court for the District of Nevada (the "Grand Jury"). The Grand Jury had been empaneled for the purpose of investigating an alleged LCN "skimming" operation involving the Las Vegas Stardust Hotel and Casino. Talerico was ordered to testify before the Grand Jury under a grant of immunity. On February 9, 1982, Talerico invoked his Fifth Amendment privilege against self-incrimination and refused to testify. Due to his refusal to testify, Talerico was found in civil contempt and was incarcerated from May 25, 1982, until November 18, 1982 when he was released at the expiration of the Grand Jury term.

 On January 10, 1984, Talerico was indicted for criminal contempt. On August 28, 1984, Talerico entered a plea of nolo contendere. He received a 90-day sentence that ran concurrently with his second incarceration for civil contempt.

 C. Coli's Knowledge of Talerico's Incarceration and Organized Crime Ties

 Coli admittedly knew that Talerico served two periods of imprisonment in Nevada. During both periods of incarceration, Talerico asked Coli for a leave of absence from his position at Local 727. Coli granted both requests. Each time Talerico gained released from prison, Coli allowed Talerico to return to work at Local 727. In addition, Coli did not take any action with respect to Talerico between November 30, 1989, the date the Investigations Officer filed charges against Talerico, and July 12, 1990, the date the Independent Administrator issued his decision concerning Talerico.

 Coli has testified that all he knew about Talerico's "problem with the Government" was that "he had refused to testify and was therefore being incarcerated." (Investigation Officer's exhibit ("IO Ex.") 2 at p. 41; see IO Ex. 3 at p. 13). Coli never questioned Talerico about the source of this "problem;" nor did Coli endeavor to learn the nature of the Grand Jury investigation or the nature of the questions that Talerico refused to answer.

 In addition, Talerico's organized crime ties received extensive media coverage in the Las Vegas area. It appears, however, that only one such newspaper article was published in Chicago: a June 6, 1982, Chicago Tribune piece. The Chicago Tribune reported that the FBI had conducted surveillance of Talerico, who was believed to be the "chief courier" in a casino skimming operation involving members of organized crime. The article reported that the FBI had observed Ponto, a "made" member of the mafia, and Talerico, an IBT official, exchanging brown paper bags in a parking lot in Nevada. The article also reported another meeting in a parking lot between reputed "mob boss" Joey Aiuppa ...


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