The opinion of the court was delivered by: LAURA TAYLOR SWAIN, District Judge Page 3
Plaintiff, the International Brotherhood of Teamsters ("IBT"), brings
this action pursuant to the Racketeering Influenced and Corrupt
Organizations Act ("RICO"), alleging that Defendants defrauded the IBT of
funds which were used improperly to promote Defendant Ron Carey's
("Carey") 1996 candidacy for re-election as the IBT's General President.
Following the issuance of the Court's October 1, 2001. Opinion and Order
granting in part, and denying in part a motion to dismiss the complaint
in this case. Plaintiff filed an amended complaint (the "Amended
Complaint"). Defendants Ron Carey, William Hamilton, Michael Ansara,
Barbara Arnold, Ira Arlook, Charles Blitz, Rochelle Davis, Nathaniel
Charny, Martin Davis. The Share Group, Inc., Cohen & Weiss have moved
pursuant to Federal Rules of Civil Procedure 12(b)(6) to dismiss the
Amended Complaint. Subsequent to the service of Defendants' motion to
dismiss, the case was dismissed consensually as against Defendants Martin
Davis, Barbara Arnold, Michael Ansara, the Share Group, Cohen Weiss and
Simon ("Cohen Weiss") and Nathaniel Charny.*fn1 The Court has
jurisdiction of this action pursuant to 28 U.S.C. § 1331 and 1367.
For the reasons set forth below, the motions of Defendants Carey,
Hamilton, Ira Arlook, Rochelle Davis, Charles Blitz are granted with
respect to Plaintiff's federal claims; Plaintiff's state common law
claims will be dismissed without prejudice.
In 1988, the Government filed a civil RICO action against the IBT and
its leadership. In connection with the 1988 lawsuit against the IBT the
Government sought, among other relief, to establish Government
supervision of the election of IBT officials. Amended Complaint, ¶
27. In March 1989, the Government and the IBT entered into a consent
decree settling the Government's claims against IBT. The consent decree
provided, among other things, for direct, secret ballot, elections of IBT
officers and further provided that the court would appoint an election
officer (the "Election Officer") to supervise the election in 1991 for
IBT national officers and, if the Government so requested, the 1996
election. Id. ¶ 28. The consent decree also authorized
court-appointed officers to investigate and sanction IBT members and
officers for violations of the IBT constitution and federal law.
Id. Beginning in 1992, pursuant to the terms of the consent
decree, an Independent Review Board ("IRB") assumed responsibility for
determining whether members or officers had violated the IBT Constitution
and federal law. Id.
The Government exercised its right to have the 1996 IBT election
supervised pursuant to the consent decree. Id. ¶ 30. The
court gave the Election Officer authority to supervise the 1996 election
and approved rules governing the conduct of the 1996 election. The
election rules prohibited the use of IBT funds to promote the candidacy
of any individual and barred employers from contributing to the election
campaign or soliciting contributions for any candidate date.
Id. ¶ 31.
Defendant Carey and James P. Hoffa campaigned in the 1996 election for
IBT General President. Carey was declared the winner in a close and hotly
contested election. Id. ¶ 32.
On August 21, 1997, the Election Officer invalidated the 1996 election
on several grounds, one of which was that the Carey re-election campaign
had engaged in improper fund-raising that involved the use of IBT funds
to promote Carey's candidacy. The Election Officer ordered a rerun
election. Id. ¶ 33. In July 1998, the IRB permanently
barred Carey from IBT membership after finding that Carey had violated
his fiduciary duties and knowingly derived personal benefit from improper
election campaign contributions in connection with the 1996 election.
Id. ¶ 37. The IRB also permanently barred Defendant
Hamilton from holding any office or having any employment relationship
with the IBT upon finding that Hamilton had embezzled IBT funds and had
brought reproach on the IBT. Id. ¶ 38.
In late 1998, a rerun election was held and Hoffa was elected IBT
General President. IBT expended approximately $2.2 million in costs
associated with the supervision of the 1998 rerun election. IBT also
incurred costs for attorneys' fees in connection with the Government's
investigation into the 1996 election. Id. ¶ 39.
Defendants Hamilton, Nash, Martin Davis, Ansara, Blitz and Charny were
thereafter prosecuted on federal criminal charges. Defendant Martin Davis
pleaded guilty to conspiracy and making false statements to the Election
Officer. Defendant Ansara pleaded guilty to conspiring to embezzle union
funds, to commit mail fraud, and to making false statements to the
Election Officer, and Defendant Blitz pleaded guilty to making false
statements to the Election Officer. Id. ¶ 41. Defendant
Hamilton was convicted after trial of conspiracy, embezzlement,
mail and wire fraud, making false statements. Id. ¶
43. Defendants Arlook and Rochelle Davis entered into non-prosecution
agreements with the Government in which they agreed to cooperate in the
Government's investigation of the conduct that is the subject matter of
the Amended Complaint. Id. ¶ 44.
In connection with the 1996 election, Defendants devised and executed
certain schemes to defraud the IBT and embezzle funds from it.
Id. ¶ 47. Defendants needed to raise funds for Defendant
Carey because the race with Hoffa was very close and the Hoffa election
campaign was raising more funds than the Carey election campaign.
Defendants were aware that, if Defendant Carey lost the election,
Defendants would lose their positions and their relationships with the
IBT. Id. ¶ 48.
In or about July 1996, Defendant Nash, Martin Davis and Ansara devised
a scheme to defraud the IBT by causing the IBT to contribute funds to
designated organizations in exchange for contributions by wealthy
individuals to the Carey election campaign. Id. ¶ 49. In
connection with this scheme, Cohen Weiss and Charny established a
fund-raising committee. Teamsters for a Corruption Free Union ("TCFU"),
to accept donations to the Carey campaign. Id.
¶ 51. TCFU established a separate bank account for donations to
Carey's campaign. Id. Defendants Martin Davis, Ansara and Blitz
agreed to solicit donors for Carey's re-election campaign. Id.
¶ 52. The Defendants induced donors to make contributions by
promising that the IBT would make contributions, in amounts larger than
the amounts the donors contributed to the Carey's campaign to certain
political organizations or advocacy groups designated by the donors.
Id. ¶ 53.
In or about October 1996, Arsara and Blitz met numerous times in
California. They and Martin Davis agreed that Charles Blitz would
send the donors' checks to Michael Ansara, who would hold the checks
pending confirmation that a reciprocal IBT contribution had been made.
Id. ¶ 55. Michael Ansara agreed that, once the IBT approved
the reciprocal contribution, he would forward the donors' checks to the
TCFU in New York. Id. ¶ 56. At the direction of Martin
Davis, Defendant Nash contacted Defendant Hamilton, who agreed to seek
Carey's approval of the scheme. Id. ¶¶ 60-61. The IBT could
not make the contributions without Carey's approval. Id. ¶
In or about October 1996, Blitz asked Defendant Rochelle Davis, the
Financial and Administrative Director of Citizen Action, a lobbying
organization concerned with federal, state and local issues, to request a
$225.000 contribution from the IBT. Id. ¶ 63. On or about
October 14, 1996, Arlook and Rochelle Davis directed a Citizen Action
employee to send a written request for $225.000 to Hamilton with a copy
to Michael Ansara. On or about October 23, 1996, Arlook and Rochelle
Davis, at Blitz's direction, sent a request to Hamilton seeking a second
contribution in the amount of $250.000. The total amount requested by
Citizen Action was $475.000. Id. ¶¶ 64-65.
Martin Davis thereafter asked Nash to ask Hamilton to recommend to
Carey that the IBT make the contributions to Citizen Action. Nash met
with Carey's executive secretary in mid-October 1996 in order to explain
the scheme. Then, on or about October 16, 1996, Nash spoke with Carey by
telephone and explained that the IBT contributions to Citizen Action
would benefit Carey's re-election campaign. Carey told Nash that he would
approve the contribution to Citizen Action. Id. ¶¶ 66-69.
On or about October 23, 1996, Hamilton sent Carey a memo recommending
approval of the Citizen Action contributions. On or about October 24,
Carey approved the check request for Citizen Action. Id.
¶¶ 70-71. In or about October 1996, the IBT contributed $475,000 in
IBT General Treasury funds to Citizen Action. Id. ¶ 72.
In or about October 1996, Nash asked Hamilton to recommend an IBT
contribution to Project Vote, an organization whose goal was to mobilize
low income and minority voters. On or about October 17, 1996, Hamilton
sent a memo to Carey seeking approval of a $75,000 contribution to
Project Vote. Id. ¶ 74. On or about October 17, 1996,
Carey's executive secretary telephoned Carey and Carey approved the
request. Shortly thereafter, Hamilton caused the IBT to donate $75,000 to
Project Vote. Id. ¶¶ 75-76. On or about October 23, 1996,
Hamilton sent a second memo to Carey asking for another contribution of
$100,000 for Project Vote. Carey's ...