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UNITED STATES v. INTERNATIONAL BHD. OF TEAMSTERS

June 22, 1998

UNITED STATES OF AMERICA, Plaintiffs,
v.
INTERNATIONAL BROTHERHOOD OF TEAMSTERS, et al., Defendants. In the Matter of the Carey Slate Protest.



The opinion of the court was delivered by: EDELSTEIN

OPINION & ORDER

 EDELSTEIN, District Judge:

 This matter is an appeal from the Election Appeal Master's decision dated May 15, 1998, 98 Elec. App. 349 (KC) ("EAM Decision"), affirming in all respects the Election Officer's decision dated April 27, 1998, PR-035-EOH (Post-47-EOH) ("EO Decision").

 Background

 The EO Decision arose out of a protest filed by the slate of Ron Carey ("Carey") on May 16, 1997, and supplemented on May 30, 1997. The protest alleged that James P. Hoffa ("Hoffa") and members of his slate failed to make mandatory disclosures on Campaign Contributions and Expenditure Reports ("CCERs") required under the Election Rules, and that they accepted substantial prohibited union and employer contributions, in violation of the Election Rules. EAM Decision at 2-3. The protest was initially denied by the former Election Officer, Barbara Zack Quindel, on August 21, 1997. Id. at 2. However, that decision was reversed and remanded by the Election Appeals Master's decision dated November 17, 1997, in which he ordered the Election Officer to "thoroughly and convincingly" investigate the protest. In re Carey Slate Protest, 97-Elec.-App. 322 (KC) (Nov. 17, 1997) at 7.

 On April 27, 1998, the Election Officer, Michael G. Cherkasky, issued a lengthy decision, granting the protest in part and denying it in part. The Election Officer's decision was the culmination of an extensive five-month investigation into the allegations of wrongdoing by Hoffa and his campaign. The investigation uncovered violations of the Election Rules requiring candidates to disclose and identify financial supporters and expenditures. However, the Election Officer was unable to determine the source of all unitemized contributions to Hoffa and his Slate. Nevertheless, except for services which the Election Officer found to have been improperly donated to the Hoffa Campaign by Richard Leebove ("Leebove") and his public relations company, RL Communications, Inc. ("RL"), the Election Officer found no evidence that there were "anything but minimal contributions from prohibited sources" among the aggregate total of $ 3.6 million raised by Hoffa's campaign. EO Decision at 17, 109, 115.

 Therefore, despite the violations found against Hoffa and others, the Election Officer determined that disqualification from running in the rerun election was not warranted in this case because the primary violations of the Election Rules related to the failure to disclose otherwise proper campaign contributions. EO Decision at 112, 116. However, the Election Officer did impose certain remedial measures against the Hoffa Campaign and others. See EO Decision at 117-120.

 The Election Officer's decision was appealed to the Election Appeals Master by various members of the Carey Slate as well as Leebove and RL. EAM Decision at 6-7. The members of the Carey Slate primarily argued that "the remedies imposed by the Election Officer were insufficient to cure" the violations of the Election Rules. They argued that Hoffa should be disqualified from the rerun election and/or the contribution received from Leebove and RL Communications should be fully disgorged and applied to the costs of the rerun election. Id. Leebove and RL challenged the adverse findings and remedies imposed against them. Id. Hoffa did not appeal the factual findings or the remedy imposed against him by the Election Officer.

 The Election Appeals Master, after reviewing the Election Officer's decision and the appeals submitted by the various parties, affirmed the Election Officer's decision in all respects, finding that the Election Officer's decision and remedies were neither arbitrary nor capricious. EAM Decision at 9, 18. Leebove and RL as well as IBT member William Carothers ("Carothers") and International vice-president Ken Mee ("Mee") filed timely appeals with this Court. *fn1"

 Election Officer's Findings

 As the Election Appeals Master noted in affirming the Election Officer's decision, "three principal determinations lie at the center of this appeal." EAM Decision at 4. First, the Election Officer found that Leebove, and RL, both considered employers under the Election Rules, improperly contributed $ 167,675 in services to the Hoffa Campaign by grossly underbilling the time spent working for the campaign. EO Decision at 86-88. Second, the Election Officer found that at least 194 individual contributions of more than $ 100 each, totaling over $ 43,868, were not individually disclosed on Hoffa's CCERs, and were instead reported in the unitemized category. In particular, the Election Officer determined that Hoffa intentionally concealed a $ 1,000 contribution from former IBT General President William McCarthy ("McCarthy"), and that Hoffa did not testify honestly about the decision not to disclose the McCarthy contribution. EO Decision at 30-32. Third, the Election Officer concluded that compensation for work performed for the campaign of Tom O'Donnell, candidate for regional vice president on the Hoffa Slate, and the Hoffa Campaign by Kevin Currie ("Currie"), a convicted Class E felon, was not reported on the CCERs as required. EO Decision at 60-62. Although Currie's employment was not itself a violation of the Election Rules, the Election Officer determined that payments were made to Currie's wife rather than to Currie, and were reported as such, so that the records would not reflect that a felon was on Hoffa's paid campaign staff. EO Decision at 61.

 Nonetheless, the Election Officer determined that "the violations found in the Carey Slate Protest investigation [did] not warrant candidate disqualification." Id. at 114. The Election Officer noted that the "hallmarks" (personal knowledge, intentional misconduct, and abuse of official authority) of the disqualification remedy imposed against Carey were not present in this case. Id. at 114-15. He found that Hoffa's "failure to disclose certain contributions of more than $ 100 did not hide prohibited contributions from the IBT electorate," and that "Hoffa's intentional concealment of an otherwise proper $ 1,000 contribution" was "de minimis in the scale of $ 3.6 million in total contributions." Id. at 115. The Election Officer noted that the reporting violations would be remedied, and that "any adverse consequences would be ameliorated in advance of the rerun election" by requiring that the Hoffa Slate Campaigns make full disclosure of the source of these contributions and by imposing remedial fines. Id.

 As for the improper contribution from Leebove and RL to the Hoffa Campaign, the Election Officer found that while this was "a very serious violation," it did not warrant disqualification of Hoffa. Id. He determined that "Leebove's activity was not secret during the campaign," and that the "evidence [did] not show Mr. Hoffa's personal knowledge and participation in a scheme set up with the intent to support his campaign with a significant amount [of] money from an employer." Id. at 115-16.

 Although the Election Officer did not disqualify Hoffa from running in the rerun election, he did impose certain remedial measures intended "to ensure a 'fair, honest, open and informed election[].'" EO Decision at 110 (quoting Art. XVI, Sec. 2(f)(1) of the Rules for the 1995-1996 IBT International Union Delegate and Officer Election) (the "Election Rules"). In order to cure the violation involving Leebove and RL, the Election Officer (i) levied a fine of $ 16,767 against the Hoffa Slate (10% of the improper contribution received from Leebove and RL), (ii) barred any candidate, slate or independent committee from contracting with Leebove or RL, or paying them for any services, goods, or work of any kind for the duration of the 1996 election; (iii) barred Leebove and RL from performing any work for or against any candidate or from billing or receiving monies from or incurring debt for IBT election related work for the duration of the 1996 election; and (iv) ordered a notice to be posted in the Teamster magazine to inform the membership of the improper contribution. EO Decision at 33, 88-89.

 In fashioning a remedy for the 194 individual contributions totaling $ 43,868.80 that were not individually disclosed on Hoffa's CCERs, including the intentionally concealed $ 1,000 contribution from McCarthy, the Election Officer imposed a fine of $ 1,000 against the Hoffa Campaign for the McCarthy donation, and fined Hoffa an additional $ 4,286, an amount equal to 10% of the remaining improperly reported contributions. EO Decision at 32. In addition, the Election ...


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