September 27, 1997

Aides to Carey Are Reported to Implicate Him

By STEVEN GREENHOUSE
and DON VAN NATTA Jr.
New York Times

NEW YORK -- Aides to Ron Carey, president of the teamsters' union, have told government prosecutors and a federal election overseer that he had general knowledge of a fraudulent scheme in which union money was donated to several liberal groups that, in exchange, had their donors contribute to his re-election campaign last year, officials involved in the investigation say.

The accounts of the Carey aides contradict the teamster leader's strongly worded assertion at the AFL-CIO's national convention this week that he had known nothing of the scheme and that campaign aides had betrayed him and the union.

Last week Carey's campaign manager and two campaign consultants pleaded guilty to fraud and conspiracy in fund raising for his re-election. They said they had decided to cut corners in seeking money for the campaign because they believed in Carey as a union leader and corruption fighter and because he had been trailing his opponent, James Hoffa, both in fund raising and in polls among members of the International Brotherhood of Teamsters.

The guilty pleas followed by a month the finding of the federal election overseer, Barbara Zack Quindel, that at least $220,000 had been circuitously funneled from the teamsters' treasury into the Carey campaign.

Ms. Quindel overturned Carey's narrow victory of last December over Hoffa and ordered a new election. She declined to disqualify Carey from running in that election, saying she did not have evidence that he known of the scheme, but has since said he will be barred from running if federal officials find that he was a participant.

That question is now being investigated by the office of the U.S. attorney in Manhattan.

Under federal law, the campaign of a union candidate is to be totally separate from the union's activities. In addition, federal law bars union money from being used to advance the candidacy of a union official.

Asked whether Carey had known even generally of the scheme, his lawyer, Reid Weingarten, said Friday:

"I don't think it's true. Quindel expressly said she had no knowledge of his wrongdoing, and we have been told expressly by the U.S. attorney's office that he's not a target."

Although officials say some Carey aides have now told them that the president was generally aware of the fraud, many details of the witnesses' accounts could not be learned. Without strong evidence to support those witnesses, the case could evolve simply into a matter of their word against his.

Herb Hadad, the spokesman for the U.S. attorney's office, declined to comment on what Carey's aides had told the prosecutors.

One focus of the investigators is a part of Ms. Quindel's 134-page decision invalidating Carey's re-election; it suggests that the president knew that his campaign manager was closely involved in deciding to which groups the union would contribute money.

At one point, Ms. Quindel's decision describes a telephone conversation that Carey's secretary, Monie Simpkins, said she had with him when he was traveling the country to campaign last year. By Ms. Simpkins' account, she told Carey that the campaign manager, Jere Nash, had called to say he needed Carey's immediate approval for a donation to Citizen Action, a progressive grass-roots group that emphasizes consumer and environmental issues.

Altogether, the teamsters donated $475,000 to Citizen Action for its get-out-the-vote drive to help the Democrats in last year's congressional elections. Ms. Quindel's decision said Carey had approved the $475,000 payment, which was more than 15 times what the teamsters had ever given to Citizen Action in any single previous year.

In return, Ms. Quindel found, Citizen Action and several wealthy donors to that group contributed $185,000 toward the Carey campaign.

Officials of the Hoffa campaign assert that Carey's approval of the unusually large donation to Citizen Action demonstrates that he knew about the scheme to give money to that group and then have its donors contribute to his campaign.

Speaking about the Citizen Action episode, John Bell, a spokesman for Carey's campaign, said Friday: "What we have said all along is this is an allegation. It has not been proven. Mr. Carey does not remember it. If it did happen, it was wrong."

Bell said the teamsters' increased donations to Citizen Action paralleled those of other unions, which saw the grass-roots group as an excellent vehicle with which to lend support to Democratic causes.

Bell also said Carey had merely been approving recommendations made by the man he relied on to oversee political spending and strategy, William Hamilton, the union's political director.

"Carey was a known delegater of authority all his career, and had hired Hamilton to make those decisions," Bell said. "I wouldn't say he rubber stamped every one of them. He was inclined to sign off on, put his initials on things Hamilton recommended."

Hamilton quit his post in July, saying he would refuse to cooperate further with prosecutors. He has denied any wrongdoing.

Federal prosecutors are also investigating a $20,000 contribution that Theodore Kheel, the well-known New York lawyer and labor mediator, made to the Carey campaign. Investigators say the donation was never reported by the Carey campaign to the federal election monitor as required by law. Kheel says he did not know that his donation would not be reported.

A Carey adviser, speaking on condition of anonymity, said this donation had been solicited by Charles McDonald, president of Union Privilege, an organization of the AFL-CIO that administers union benefits and the federation's credit-card business.

Investigators suggested that Kheel's donation might have been illegal because it was solicited by someone who, in running a credit-card business, would probably be considered an employer; under federal law, employers may not solicit contributions to union campaigns.

In addition, McDonald's solicitation of the donation flies in the face of AFL-CIO rules that bar federation officials from taking sides in union elections.

Deborah Davis, a spokeswoman for Union Privilege, said McDonald was not available for comment. Asked about his donation, Kheel said:

"Carey was a reform candidate who was on his way to cleaning up the teamsters and getting rid of the mob influences. He was on the losing end of a campaign in which Jimmy Hoffa was supported far better financially, and the fear was that Hoffa might bring back some of the same influences into the union that the U.S. government was trying to get rid of."

Richard Leebove, a Hoffa spokesman, replied that any suggestion that Hoffa had ties to gangsters was "McCarthyism."

Several present and former Carey aides are cooperating with the prosecution.

Paul Enzinna, Ms. Simpkins' lawyer, said that she was one of them, but he would not describe what she had said.

The three men who pleaded guilty last week are also cooperating. They are Nash, the Carey campaign manager; Martin Davis, president of the November Group, a fund-raising and direct-mail firm, and Michael Ansara, former president of a telemarketing firm in Somerville, Mass.

Their lawyers all declined to comment on what the three had told investigators.