013105 INTERNATIONALBROTHERHOOD OF TEAMSTERS

AFL-CIO

 

 

January 31, 2005

Dear Member:

This letter summarizes the actions that have been taken since the imposition of the emergency trusteeship. The results of the trusteeship, to date, have been successful, and I have recommended that the trusteeship be lifted and a Personal Representative of the General President be appointed to oversee the actions of the recently elected officers and to insure the success of the reforms that have been instituted under the trusteeship. The General President adopted my recommendation and ended the trusteeship, effective January 3 1. 2005. He also appointed John Cuite to act as his Personal Representative at Local 456.

On November 8, 2002, the Independent Review Board ("IRB") issued a report recommending that Local 456 be placed into trusteeship because the Local was not being conducted for the benefit of its membership. As a result of the IRB's Report and Recommendation, on January 7, 2003 General President Hoffa issued an Order placing Local 456 into trusteeship and appointed me Temporary Trustee over the affairs of the Local. On February 22, 2003, a hearing was held before an IBT panel to determine whether Local 456 should remain in trusteeship. The trusteeship was continued following a decision by the IBT panel dated May 8, 2003.

Following the imposition of the trusteeship, numerous interviews and depositions were conducted in connection with an investigation of the allegations contained in the IRB Report. As a result of the interviews and investigations, we made a number of service provider changes and staffing changes on both the union and funds side of the Local.

New procedures have been implemented governing the operation of the Local's Hiring Hall to ensure a fair system regarding the distribution of work referrals. All telephone calls involving the Hiring Hall and work referrals will now be recorded. The Hiring Hall hotline will be overseen by an individual having no prior relationship with Local 456 and its membership. He will periodically report to the General President's Personal Representative at Local 456.

The IRB Report alleged that the Local's officers had improperly imposed a sixmonth waiting period for union membership, and that certain applicants were improperly being denied union membership. The six-month probationary period has been eliminated and union membership will be determined by the probationary clauses in each collective bargaining agreement.

25 LOUISIANA AVENUE, N.W. • WASHINGTON, D.C. 20001-2198 • (202) 624-6800

Procedures have been implemented to perform background checks on all union officers, Business Agents and Shop Stewards.

James Reilly, a former U.S. Department of Treasury agent and former IRB investigator, and Roland R. Acevedo, an attorney who conducted the investigations into the allegations contained in the IRB Report, have been retained to assist the Local. Reilly and Acevedo will conduct periodic worksite visits, investigate allegations of misconduct by members, union officers or other individuals representing the Local or its membership, monitor the Hiring Hall procedures and work to protect the union and its membership from corrupt influences. They will report to the General President's Personal Representative assigned to Local 456.

A comprehensive petty cash voucher system has been instituted and, with the exception of gasoline cards, the use of union credit cards has been eliminated. An independent forensic audit was conducted and forensic audits will be conducted in the future.

As Trustee of the Union, I appointed myself, John Cuite, Anthony Basileo and James Reilly as union-appointed Trustees of the Local 456 benefit funds. As such, we oversaw and became familiar with the affairs of the Funds. I note that the FBI and Department of Labor subpoenaed large quantities of the Funds' files. The results or conclusions of their investigation are unknown at this time.

An investigation of the Local's funds revealed that the welfare fund administrator embezzled approximately $37,500. The administrator was terminated and has repaid the fund in full. A subsequent audit of the fund also revealed that certain medical claims had been improperly paid without obtaining the fund trustees approval. The funds are taking steps to recover these improper payments.

Prior to the Trusteeship, three million dollars was embezzled from the pension and annuity funds by Ken Deckter who was an officer at the investment firm of Unity Management. The Funds filed lawsuits against Ken Deckter, Unity Management and the custodian bank, Fleet, which allowed the transfer to take place. The law firm of Slevin & Hart was retained as special counsel to assist in the case. The whereabouts of the stolen money remain unknown and the complete mechanics of the transfer have not fully come to light. Although a structured settlement involving all culpable parties has been discussed and proposed, the amount offered was insufficient and was rejected by the Trustees. The Parties continue to litigate the action.

The Trustees terminated Fleet Bank and replaced it with the Amalgamated Bank.

A limited audit of the pensions benefit calculations revealed that numerous pensions were calculated incorrectly, both underpayments and overpayments. A more extensive examination of all calculations is now being conducted, the results of which will be ready in the near future.

The Fund has contracted with medical, dental and prescription drug networks to improve the availability of medical providers and benefits to the members.

The space occupied by the Fund staff has been renovated and configured to comply with the privacy requirements concerning the processing of health claims by the federal law known as "HIPPAA".

On September 29, 2004, nominations were held for union officers. With the exception of the office of Secretary-Treasurer, all nominations were unopposed. The following individuals were elected as the Local's new officers: Edward Doyle, Jr., President and Principal Officer; Robert Roberge, Secretary-Treasurer; Syd Goldstein, Vice-President; Arthur Tucci, Jr., Recording Secretary; Albert Fricchione, Trustee; Richard Corbett, Trustee; and Louis Picani, Trustee. On November 22, 2004 the newly elected officers attended a two-day training session given by a representative from the IBT. Your officers were also given an overview by legal counsel of the outstanding issues facing the union and the funds and were duly sworn in today, Jan. 31, 2005.

What I noted represents a small example of the work that was done and continues to be done. As I stated at the well attended hearing on February 22, 2003, my goal and that of General President Hoffa was to correct what needed to be corrected, keep the Local together and recommend the Local's release from Trusteeship as soon as reasonably possible. I feel we accomplished those objectives. I realize that this has been a tough period for the membership and I wish to express my sincere appreciation to the overwhelming majority of you who cooperated so that the job could be completed.

Local 456 is an important Local, impacting the standard of living of several thousand Teamster families. Under the leadership of your recently elected executive board, Local 456 has an opportunity to grow, protect your jobs, pension and benefits and maintain influence and respect in the community. Though there will be oversight required by the IBT to insure that the by-laws, IBT Constitution and all relevant law is respected, I want to emphasize that your elected Executive Board will have all the rights and powers of any Teamster local union Executive Board. The trusteeship is over.

Daniel J. Kane

Intenational Representative

cc: General President J. P. Hoffa

General Secretary-Treasurer C.T. Keegel