CASH AND CAREY
More Trouble with the Teamsters


By Jeffrey Goldberg
The New Republic
August 11 and 15, 1997

One day this past January, in a closet-sized room in a Washington Office building, an obscure Teamster named John Murphy stumbled upon a startling document. The document revealed the existence of an organization called Teamsters for a Corruption-Free Union - an organization that, in the fullness of time, would be shown to count no Teamsters as members and to be unfree of corruption itself. The document had been filed with federal officials in the waning days of last year's tumultuous Teamster election, which pitted incumbent President Ron Carey - the man reputed to have rid the Teamsters of mobsters - against James P. Hoffa - son of the famously corrupt and presumably deceased union boss.

Carey narrowly won that election, to the cheers of union reformers everywhere, but, in the aftermath of Murphy's discovery, the Justice Department has refused to certify the victory. Instead, it awaits the judgement of a federally appointed election monitor whose ruling on the election's validity is expected soon. If the monitor overturns the results, Hoffa would probably win a rematch - assuming, that is, Carey even ran again.

Already the document's discovery has led to the uncovering of an alleged money-laundering scheme launched to assist Carey's campaign, carried out with the help of a prominent liberal activist group and orchestrated by a key Carey supporter. Whatever the federal election monitor decides, it seems clear from the available evidence that Carey's supporters employed unethical and illegal campaign tactics - even as they were accusing Hoffa's forces of similarly questionable activities.

Amid the investigations and criminal charges, one question lingers. Murphy, a Hoffa supporter, came across the paper while inspecting documents made available at the offices of the federally appointed Teamster election monitor. Yet why didn't the official, Barbara Zack Quindel, notice it first? Indeed, why did Murphy, the head of a small-time beer drivers' local union, discover something that neither the Justice Department (which closely monitors Teamster activities), nor a quasi-governmental investigations board (which oversees the Teamsters), nor a federal Judge (who oversees the investigations board), had discovered on their own? "It's amazing to me that the entire government couldn't find what I found." says Murphy.

One, relatively charitable, explanation for this collective error is that federal officials were so eager to promote the cause of reform - a cause they believed Carey championed and Hoffa would destroy - that they turned a blind eye to election shenanigans on Carey's behalf. A less charitable explanation - one advanced by Carey's opponents on Capitol Hill and within the Teamsters - is that federal watchdogs went soft on Carey because, under his leadership, the Teamsters had become a source of political support and campaign contributions for the Democratic Party. According to press accounts and sources within the Teamsters, the Justice Department is investigating connections between campaign finance fraud schemes at both the Democratic National Committee and the union.

Three years ago, when I began gathering material for an article about the Teamsters that eventually appeared in New York magazine, I entered the story, like most reporters, prepared to like Carey and dislike Hoffa. Hoffa fulfilled my expectations. He is an empty suit, powered to celebrity on the strength of his mythical name alone. He is also a former business partner of Allen Dorfman, the master pension thief and stepson of Capone ally Paul "Red" Dorfman. (And, in the Teamsters, there is such a thing as guilt by association: according to the federally approved rules governing Teamster affairs, association with a known organized crime figure can get a Teamster member expelled for life.) During the course of an unintentionally hilarious weekend at a Las Vegas Teamster meeting, I found Hoffa to be interested in blackjack and uninterested in the challenges of trade unionism. His cronies, many of whom were on his election slate last year, were, in the main, louts and brutes.

Carey, too, fulfilled expectations - at first, I found Carey's anti-goombah rhetoric appealing, and he charmed me, as he charms many reporters, with his complete lack of style. But, in looking into Carey's past, unsettling allegations surface - stories about Carey's alliance with a mob-connected Teamster leader: about his vouching in court for a member of his local union who was also an organized crime figure, about Louis Sunshine, a Mafia bagman whose friends say passed instructions to Carey on behalf of his crime bosses; about accusations that Carey tried to keep a mobbed-up Kennedy Airport Teamster local in the hands of the Lucchese crime family; about the testimony of Alphonse D'Arco, a former Lucchese chieftain who told FBI investigators that Carey is a Lucchese associate; about the implausible ways in which Carey amassed his real estate empire; and about his supposedly clean local, which it turned out, was secretly funding a loan-sharking ring.

Carey denies knowing about the loan-shark operation, as he denies everything - coincidence topping coincidence according to his spokesmen. But in my three months of reporting, which included on-the-record interviews with firsthand witnesses to illegal activities within Carey's local, I found the allegations credible enough to warrant a Justice Department investigation. No such investigation was ever launched. Instead, the department has deferred to a quasi-governmental investigation board called the Independent Review Board (IRB), which is supposed to be neutral but, according to critics, is partial to Carey.

The IRB was created in 1989, after a consent decree was struck between the Teamsters and the Justice Department, which had sued the union to rid it of mob influence. The IRB, which possesses the court-ordained power to expel dirty Teamsters from the union is chaired by a former federal judge named Frederick Lacey, who was appointed to the IRB in 1989. The IRB's most eminent member is William Webster, former director of both the FBI and the CIA.

In 1994, the IRB issued a report clearing Carey of all charges of corruption, but there's reason to question the report's credibility. A letter that Lacey wrote to Thomas Puccio, the New York lawyer who is the court-appointed trustee of a mobbed-up Teamster local at Kennedy Airport, suggests that Lacey was sympathetic to Carey from the start. The letter, written a few months before the IRB report came out, was prompted by Puccio's freelance investigation into Carey's alleged mob ties. Puccio's chief aide at the time, an ex-Labor Department investigator named Michael Moroney, became convinced after interviewing D'Arco that Carey was tainted. Lacey, in his letter to Puccio, warned the lawyer of the consequences of Moroney's investigation: "...You and Mr. Moroney ought to have in mind what would happen if you brought Carey down in that there were 'old guard' Teamsters throughout the country who were hoping Carey would be eliminated as a candidate in 1996 so that the clock could be turned back to what it was when I first came on the scene as Independent Administrator." The letter is notable for the naivete with which the former federal judge shows his hand. Lacey didn't return telephone calls seeking comments.

The Lacey letter was prompted by Carey's lawyer at the time, Charles F.C. Ruff, who is now counsel to President Clinton. Ruff had complained to Lacey about the freelance investigation of Carey. The details of Ruff's work for Carey are unclear, but one thing he did do was aid in the hiring of the Palladino & Sutherland detective agency, which was paid $150,000 out of the Teamster's budget for services it won't disclose. Jack Palladino is most famous for his work on behalf of Clinton during the 1992 presidential race in shutting down "bimbo eruptions." A secretary at his firm said that Palladino "won't return calls about the Teamsters."

Had the IRB or the Justice Department been monitoring the Carey camp as carefully as it monitors Hoffa and his allies, it might have unearthed the document that Murphy eventually stumbled across. Federal prosecutors say that the document is the key to what they believe was a complicated scheme that allowed Carey's supporters to channel money from the Teamsters general union fund into Carey's re-election war chest - in clear violation of the law. The key players in the scheme, prosecutors say, were Michael Ansara, a former student radical who owns a telemarketing firm based in Boston; Teamsters for a Corruption-free Union, a group which turned out to be a front for Carey's re-election bid; Citizen Action, a national grass-roots organization ostensibly dedicated to "good government"; and Martin Davis, a political consultant whom prosecutors believe was the plan's mastermind.

According to investigators, the scheme worked as follows: last year the Teamsters paid more than $97,000 to Share Group, Ansara's telemarketing firm, to make calls on behalf of Teamster-friendly Democrats running for Congress. But a Teamsters official asked Share not to make all of the calls it was supp osed to make; Ansara took the leftover money and funneled it to his wife, who then wrote a check for $95,000 to Teamsters for a Corruption-Free Union. That group in turn, passed the money on to a consulting organization called the November Group, a now-defunct telemarketing and fund-raising firm that last year did work for the Democratic National Committee. One of the two principals in the November Group was Davis. The November Group used the money to finance the mailing of a million pro-Carey fliers to union members at the same time the election ballots were mailed.

As an employer, Ansara cannot make donations to the campaigns of union officials. Also, the scheme meant that Teamster general funds ended up paying for part of Carey's re-election bid.

And that's not the end of it. Apparently, the money left over from the original payment to Share didn't cover the full amount of Ansara's wife's donation. But, at about the same time this was happening, prosecutors say, Citizen Action paid Ansara $75,000 for "consulting work." Prosecutors believe that payment was meant as partial reimbursement for his wife's donation to the Teamsters. This is crucial because, earlier, Citizen Action had received a $475,000 donation from the Teamsters - a donation that was supposed to be financing independent expenditures on behalf of Teamster-friendly Democrats running for Congress. So in effect, prosecutors say, Citizen Action - which is currently plagued by additional and unrelated scandals - kicked back $75,000 of the $475,000 Teamster gift, only it kicked it back to Carey's campaign, not the union's general fund. Again, general union money ended up financing Carey's campaign.

According to Teamster spokeswoman Nancy Stella, Carey knew nothing of the scheme. A Carey spokesman, John Bell, blames the former campaign director, a man named Jere Nash - a "rogue campaign manager," in Bell's estimation. "You've got to understand - Carey basically placed his campaign in a blind trust," Bell explains. (Nash declined to comment.) But Carey chose Nash to run his campaign at the suggestion of Martin Davis. If Carey was close enough to Davis to trust his advice on selecting a campaign manager, how could he not have known about the money-laundering scheme?

As for the other figures, Ansara's business partner, George Bachrach, suggests that his friend was merely an idealistic dupe of unnamed malefactors "Michael Ansara has had a lifelong commitment to progressive causes and had a strong commitment to clean up the Teamsters with Ron Carey," Bachrach says. "That's what led him into this very regrettable circumstance. It was absolutely ideological, and he was misled by other actors who got him involved," he says, apparently referring to Davis. Ansara has pleaded guilty to one count of conspiracy and is now cooperating with federal authorities; Davis, who is pleading not guilty to charges of mail fraud, is reported to be working with investigators, too. Davis won't talk to the press, and his lawyer could not be reached for comment. A Citizen Action spokesman did not return phone calls.

The close ties between Carey and so many liberal activists is no coincidence. To many liberals, Carey had become something of a hero - not merely because he cleaned up or appeared to clean up) such a notoriously corrupt union but also because he helped repair the breach between blue-collar workers and the Democratic Party. Virtually alone among unions, the Teamsters in the 1970s and 1980s supported Republicans. But when Carey took over, in 1991, he brought the Teamsters back into the Democratic fold. During the last election cycle, the Teamsters donated nearly $2.5 million in hard money to Democrats. And, according to a memo written last August by former DNC Finance Director Richard Sullivan, the Democrats expected DRIVE, the Teamsters' political action committee, to donate hundreds of thousands of dollars in soft money to state Democratic parties. "We would like contributions of $5,000 from the DRIVE Political Fund to be made payable to each of the following state parties," Sullivan wrote to Martin Davis, the same Martin Davis whom prosecutors believe masterminded the money-laundering scandal. In the memo, Sullivan lists seventeen state parties and, on the next page, tells Davis how much money the other state parties should receive from DRIVE - $277,600 to the California party, for instance. Stella, the Teamsters spokeswoman, says, "we don't know whether we received" the request list, which had been faxed to a Teamster official.

Could Clinton administration officials, eager to keep Carey in power, have encouraged federal officials to overlook evidence of Carey's corruption? The fact that Democrats took Teamster donations - and that Harold Ickes, a former high ranking administration official, is close to Carey - does raise questions about the administration's willingness to scrutinize Carey's record. So does the fact that Ruff, Carey's old lawyer, now works for Clinton. And there is no denying the importance of Teamster support for the Democrats: the union, with its DRIVE operation, is one of the great cash cows of politics, representing the possibility of many millions in contributions over coming election cycles.

Still, the possibility of overt subversion by the White House of the government's supervision of the Teamsters seems at this point remote. So far at least, no evidence has emerged that anybody in the White House tried to influence the Carey-Hoffa election, or the investigation into Carey's stewardship of the union. The Independent Review Board's members were not appointed by Clinton, so their complicity in a Clinton fund-raising scandal seems unlikely. And, although the Justice Department ostensibly could have intervened directly if it had evidence of corruption, it might have been reluctant to step onto the IRB's jurisdiction.

What is more likely than overt subversion of the federal role is more a matter of climate control. Knowing that Carey's Teamsters were a valuable source for Democratic contributions (and that these contributions would disappear in a Hoffa-run Teamsters) could only have encouraged the watchdogs' natural inclination to favor the "progressive" Carey faction over the Hoffa crowd. Even today, some Carey opponents doubt that Barbara Zack Quindel, the federal election monitor, would like to see Carey's victory annulled: it turns out she is married to a member of the board of the Wisconsin branch of Citizen Action. (That this has not been ruled a conflict of interest does not reflect well on the integrity of federal oversight in the Teamster case.) In the end, though, Quindel may have no choice but to overturn the election results, which could lead to a most perverse outcome: the federal government in essence handing the Teamsters presidency to a man named Jimmy Hoffa.