occurring when payment advances the union's interests, into an entitlement, earned by the Olympian achievement of avoiding criminal charges. Counsel does not even opine how payment of Mr. Ross' and Mr. Agathos' legal fees in this scenario advances Local 97's interests. Although Mr. Ross and his counsel ignore what to them must seem an inconvenient restriction, Section 13(A)(e) plainly permits payment of an officer's legal fees only upon a showing that such payment serves the Local's interests. The Independent Administrator correctly concluded that payment of Mr. Ross' and Mr. Agathos' fees was not in the Local's interests. Accordingly, in causing Local 97 to make such payments, Mr. Ross violated Section 13(A)(e).
c. Article XIX, Section 7(b)(3): Embezzlement of Union Funds
Article XIX, Section 7(b)(3) of the IBT Constitution makes embezzlement a ground for union discipline. The Independent Administrator found that in causing Local 97 to pay his and Mr. Agathos' legal fees, Mr. Ross acted with fraudulent intent to deprive Local 97 of its funds. (Ind. Admin. Dec. at 20); see February 9, 1993 Opinion & Order, 814 F. Supp. 1165, 1178-79 (S.D.N.Y. 1993) (applying fraudulent intent standard in connection with charge of embezzling union funds); November 8, 1991 Memorandum & Order, slip op. at 5-6 (S.D.N.Y. 1991) ("Nunes") (same), aff'd, No. 91-6300 (2d Cir. Mar. 27, 1992); November 8, 1991 Memorandum & Order, slip op. at 11 (S.D.N.Y. 1991) ("Local 295") (same); October 9, 1991 Memorandum & Order, 777 F. Supp. 1123, 1126 (S.D.N.Y. 1991) (same), aff'd, No. 92-6056 (2d Cir. Sep. 15, 1992). The Independent Administrator inferred fraudulent intent from Mr. Ross' failure to seek and obtain general membership approval for payment of legal fees, his failure to disclose to the general membership his refusal to testify before the Grand Jury, and his violation of Local 97's Bylaws. Given such conduct, the Independent Administrator could reasonably find that Mr. Ross intended to defraud Local 97.
Mr. Ross, as President of Local 97, cannot be considered an abecedarian; he had to have fairly detailed knowledge of the IBT Constitution and Local 97's Bylaws, both of which he violated in the course of having Local 97 pay his and Mr. Agathos' legal fees. See United States v. IBT, 978 F.2d 68, 73 (2d Cir. 1992) ("Because [respondents] were self-described 'reformers' fully aware of past abuses within the IBT, the administrator correctly discounted appellants' excuses that they were new to their jobs and relied on past local practices."). Not only did Mr. Ross knowingly violate the IBT Constitution and Local 97's bylaws, he also intentionally deceived the general membership. Mr. Ross acknowledged that his decision not to inform the general membership of his refusal to testify before the Grand Jury stemmed not from personal ignorance or oversight, but rather from a desire to keep his conduct from the general membership. Taken together, Mr. Ross' actions in connection with Local 97's payment of legal fees reveals a callous disregard of, and lack of respect for, the general membership he purports to represent. Indeed, respondent's conduct belies the emptiness of his assertion that he "has always had the best interests of Local's [sic] membership at heart." Respondent's Memorandum, at 23. The Independent Administrator's finding of fraudulent intent is amply supported by the evidence, and is not arbitrary or capricious.
B. The Penalty Imposed By the Independent Administrator Is Not Arbitrary or Capricious
On each of the charges brought by the Investigations Officer, the Independent Administrator permanently barred Mr. Ross from holding IBT office, ordered his removal as President of Local 97, and prohibited him from receiving compensation from any IBT-affiliated entity. Furthermore, the Independent Administrator precluded IBT-affiliated entities from making contributions on respondent's behalf to employment benefit plans, whether controlled by IBT-affiliates or third-parties, although the Independent Administrator did not alienate his vested benefits. Finally, the Independent Administrator prohibited any IBT-affiliated entity from paying Mr. Ross' legal fees in connection with this action. In imposing these penalties, the Independent Administrator concluded that
Ross completely abdicated his fiduciary duty as the principal officer of Local 97 by failing to look into the beating incident, by failing to inquire into the nature and scope of the DOL investigation, and by violating the IBT Constitution and Local 97 Bylaws in connection with the payment of Agathos' and his legal expenses. Ross has proven that he is not fit to serve in any position of trust or responsibility within the IBT or any of its affiliates.
(Ind. Admin. Dec. at 27).
Mr. Ross claims that the penalty imposed upon him by the Independent Administrator is arbitrary and capricious because other IBT members found to have committed similar, or more serious, offenses received more lenient punishments. This Court finds that the Independent Administrator had ample justification for the penalty he imposed on each count. As to Count One, other IBT officers who breached their fiduciary duties by failing to investigate allegations of wrongdoing have received similar, or more severe, penalties than those imposed upon Mr. Ross. See, e.g., February 9, 1993 Opinion & Order, 814 F. Supp. 1165, 1181 (S.D.N.Y. 1993) (Union officer who breached fiduciary duty to membership Permanently barred from IBT); July 13, 1992 Opinion & Order, 803 F. Supp. 740, 742 (S.D.N.Y. 1992) (Union officers permanently barred from IBT for failing to investigate that fellow officers were members of LCN); May 15, 1992 Opinion & Order, 792 F. Supp. 1346, 1357 (S.D.N.Y.) (President of IBT Local 682 prohibited from holding Union office or any employment with IBT due to his failure to investigate allegations that his Vice President was a member of La Cosa Nostra). Similarly, as to Count Two, IBT officials who engaged in improper financial dealings in connection with the IBT have received significant penalties. See, e.g., February 9, 1993 Opinion & Order, 814 F. Supp. 1165, 1184 (S.D.N.Y. 1993) (Union officer who engaged in improper financial transactions permanently barred from IBT); February 11, 1992 Memorandum & Order, 787 F. Supp. 345, 349 (S.D.N.Y.) (five-year suspensions for IBT officers who embezzled union funds), aff'd, 978 F.2d 68 (2d Cir. 1992); October 9, 1991 Memorandum & Order, 777 F. Supp. 1123, 1124 (S.D.N.Y. 1991) (same), aff'd, No. 92-6056 (2d Cir. Sep. 15, 1992).
Moreover, the Independent Administrator has authority to impose a sentence that is more severe than that imposed on other IBT members who committed similar conduct. See United States v. IBT, 981 F.2d 1362, (2d Cir. 1992) (given sound reasoning for the punishment, court upheld Independent Administrator's authority to impose harsher sanction than that imposed on other IBT members who engaged in similar misconduct). As the second Circuit noted when it reversed the district court's imposition of more severe sanctions than those set by the Independent Administrator, "[a] court may only consider whether the [Independent] Administrator made 'an allowable judgment in [his or her] choice of remedy.'" United States v. IBT, 978 F.2d 68, 73-74 (2d Cir. 1992) (quoting Sokoloff v. Saxbe, 501 F.2d 571, 576 (2d Cir. 1974)). The circuit court added that "the experienced Independent Administrator--himself a former federal district court judge--heard the witnesses and fixed a penalty. On this record there is no basis for finding the penalty chosen by the administrator was either arbitrary or capricious." Id. at 74. Given the Independent Administrator's broad authority and discretion in imposing sanctions on disciplined IBT members, the penalty imposed on Charges One and Two cannot be considered arbitrary or capricious.
For the reasons stated above, Mr. Ross' objections to the Independent Administrator's decision are DENIED. The decision of the Independent Administrator is AFFIRMED IN ITS ENTIRETY. In addition, the stay of penalties imposed by the Independent Administrator is DISSOLVED, effective immediately.
Dated: July 13, 1993
New York, New York
David N. Edelstein