Teamsters' Election Funding Is Subject To Federal Inquiry

By GLENN R. SIMPSON
Staff Reporter of THE WALL STREET JOURNAL
Friday, August 8, 1997 Page A1

WASHINGTON -- For Teamsters President Ron Carey, Martin Davis is both a blessing and a curse.

It was Mr. Davis, then a 30-year-old political adviser, who helped Mr. Carey, then the obscure leader of a Teamsters local of United Parcel Service drivers in New York, win an upset victory in a 1991 race for the Teamsters presidency supervised by the Justice Department. The victory catapulted Mr. Carey into one of the most powerful union positions in America and Mr. Davis into a lucrative political-consulting business with lots of union clients.

Now Mr. Davis is at the center of a campaign-finance investigation that threatens to engulf Mr. Carey. Mr. Davis and an associate have been charged with fraud in financing the Teamsters leader's re-election campaign last year. And while Mr. Carey hasn't been implicated, a federal grand-jury inquiry in New York City could undercut his position in the union. A federally appointed Teamsters election officer, Barbara Zack Quindel, has refused to certify Mr. Carey's re-election because of the allegations, and may order a new election. If that happens, the outcome of the current standoff with UPS could well determine whether Mr. Carey keeps his post.

Federal investigators, as reported by The Wall Street Journal two weeks ago, also are looking into whether Mr. Davis was involved in an unusual agreement with the Democratic National Committee to donate Teamster funds to state Democratic parties in return for help in Mr. Carey's re-election.

A 1996 memo from a former top Democratic official calls for the distribution of nearly $1 million in Teamsters political-action-committee contributions to affiliates of the DNC nationwide. A separate note, written by Mr. Davis, refers to an unspecified "commitment" by the DNC to help the Teamsters in return. The authenticity of the DNC memo has been confirmed by a former DNC official, who says the commitment was that the DNC would encourage some of its donors to contribute to the Carey campaign.

Mr. Davis and his lawyer have declined to comment. He has pleaded not guilty and is free on bail.

Mr. Carey and his defenders suggest that if Mr. Davis did what he is accused of he was a rogue operative; defenders say the Teamsters president was unaware of any improper fund raising on his behalf. They also point out that the federal inquiry started because of information fed to prosecutors by associates of James P. Hoffa, whom Mr. Carey defeated last November. "Much of this is fantasy-spinning by Hoffa campaign operatives who want Ron Carey's head on a platter," says John Bell, a Carey spokesman. "It's just the old guard starkly at work."

Mr. Davis got started in politics in 1982, campaigning for then-mayor Tom Bradley of Los Angeles in a California gubernatorial race. After the Carey victory six years ago, Mr. Davis and his partners at the November Group consulting firm acquired a long roster of union clients and also did considerable work for the Democratic Party. Mr. Davis has addresses in Aspen, Colo., and Venice Beach, Calif., in addition to his townhouse in the Dupont Circle area of downtown Washington, D.C.

The events that brought him to the attention of the U.S. attorney's office in Manhattan began in July of last year, when the Teamsters gathered for their annual convention in Philadelphia. Mr. Carey had won praise for his aggressive efforts to clean up the union. Talking to reporters, the former van driver confidently predicted that convention delegates would endorse him for a new term as president.

But as the convention was coming to a close a week later, Mr. Carey and his advisers, including Mr. Davis, were shocked to watch as a majority of delegates backed Mr. Hoffa, son of the late Teamsters president Jimmy Hoffa, in a straw poll. It was an unmistakable sign that Mr. Carey faced a tough fight in the unionwide election slated for late November, shortly after the U.S. presidential voting.

Seeking to counter the well-financed Hoffa threat, Mr. Carey and his allies launched a huge effort to ensure that his own campaign was well-funded, the details of which are only now emerging. Its centerpiece was a fund, whose existence only came to light after the election, with the name Teamsters for a Corruption Free Union.

Federal prosecutors have alleged in court that Mr. Davis swung into action to round up contributions to the fund. According to a Federal Bureau of Investigation agent's sworn complaint, filed June 6 in federal court in New York, Mr. Davis launched an intricate plan to take money from the Teamsters treasury and other sources, launder it through his own company and those of some business associates, and eventually funnel the money into Mr. Carey's campaign.

One person allegedly involved was Michael Ansara, a former activist in the 1960s radical group Students for a Democratic Society, who now owns a Boston telemarketing firm called Share Group. Mr. Ansara is cooperating with prosecutors. The FBI complaint says Mr. Ansara has told the agency that on Sept. 30, Mr. Davis called him to discuss a plan for getting money to the Carey campaign. Mr. Davis allegedly instructed Mr. Ansara to submit phony invoices to Delancey Printing, a Washington firm that does work for both the Democratic National Committee and the Teamsters. According to the FBI agent's statement, the printing firm then paid Share Group $11,250. The funds went into a pot destined for the Carey campaign. The printing firm didn't return calls seeking comment.

A few weeks later, the FBI complaint says, Mr. Davis allegedly told Mr. Ansara that Share Group would be getting a large contract from the International Brotherhood of Teamsters, or IBT, to make telephone calls to turn out voters in the November congressional elections. Mr. Ansara then negotiated a $97,000 contract with William Hamilton, then the Teamsters' top Washington lobbyist.

Mr. Davis allegedly instructed Mr. Ansara not to make all of the congressional-election calls that had been paid for, and instead to put the money aside for Mr. Carey's campaign. According to the complaint, Mr. Davis "stated that the client, the IBT, knew of the plan, and wanted it done this way."

Still more funds -- $75,000 -- came to Share Group around this time from the liberal group Citizen Action, which has close ties to both the Teamsters and the Democratic Party, according to the FBI affidavit. These funds, the FBI says Mr. Ansara told it, were obtained through a phony consulting invoice and were also destined for the Carey campaign. Citizen Action couldn't immediately be reached for comment.

Mr. Ansara told the FBI agent, Joseph Phelan, that Mr. Ansara's wife, Barbara Arnold, made $95,000 in contributions on his behalf to Teamsters for a Corruption Free Union, using the funds set aside by Share Group.

Ms. Arnold, who hasn't been charged in the New York case, is described in the FBI complaint as a cooperating witness. Mr. Ansara has pleaded guilty to fraud and is awaiting sentencing. Since Mr. Davis was arraigned in June, there has been no action on his case. But in a sign of where the probe may be heading, prosecutors have served sweeping subpoenas on the Teamsters and the Democratic National Committee, seeking all records of financial connections between the two entities. A number of businesses with ties to Mr. Davis, including Delancey Printing and Share Group, received contracts from both the Teamsters and the DNC.

Under Mr. Carey, the Teamsters, who had supported President Reagan and other Republicans in the 1980s, have returned with fervor to the Democratic fold, becoming strong supporters of President Clinton. After the July 1996 Teamsters convention, that relationship apparently became closer than ever. A memo to Mr. Davis, written a few weeks after the convention under the name of Richard Sullivan, then the DNC's finance chairman, asks that contributions from the Teamsters PAC be distributed to Democratic parties in more than a dozen states.

A former DNC official says Mr. Sullivan didn't draft the memo himself but learned of its existence shortly after it was sent and acknowledges that it was sent by Democratic campaign officials. Certain officials of Mr. Clinton's re-election campaign were also involved in the discussions with Mr. Davis, according to some former DNC and Clinton campaign officials. Their understanding was that Mr. Davis expected the DNC to ask some of its donors to give to Mr. Carey's campaign, although it isn't clear whether any such agreement was ever carried out.

The Teamsters' former top Washington lobbyist, Mr. Hamilton, who handled the union's contract with Mr. Ansara, is emerging as a major figure in the inquiry. He resigned from the Teamsters last week, saying he would no longer cooperate with the grand-jury inquiry. Mr. Hamilton and his lawyer couldn't be reached Thursday. In his resignation letter, he said he didn't "knowingly" do anything wrong.

Obscure Account

Mr. Hamilton administered the Teamsters' Drive political-action committee, one the biggest in American politics. Records show that he directed that more than $700,000 in Teamsters PAC funds be poured into an obscure account called the Education and Legislative Fund, which previously had contained only small amounts. The books of this fund, unlike those of the Teamsters PAC, aren't available for public inspection.

The Teamsters say no money in the Education and Legislative Fund went to help Mr. Carey's campaign. "The Drive E&L fund is used for nonfederal expenditures, generally things that are sort of peripheral to campaigns, for example, Drive hats," a Teamsters spokeswoman says. "Or if a local has pulled some people off the job to work on a campaign, we reimburse them for lost time. We had a Teamsters summer program out in the field, and we reimbursed locals out in the field. That kind of stuff."

But while some of the money in the fund paid for routine expenses, internal Teamsters financial documents provided to The Wall Street Journal by people sympathetic to Mr. Hoffa also show that much of the money in the fund went to Mr. Davis's company and other entities associated with Mr. Carey's campaign. In addition, Federal Election Committee records show the DNC received more than $75,000 from the Education and Legislative Fund.

Nancy Stella, a spokeswoman for the Teamsters, says the payments to Mr. Davis's November Group and to the DNC were to finance "get out the vote" activities for the congressional elections. "To our knowledge, there were no expenditures from this fund that were improper," she says.

Key Law Firm

One party that has received little attention in the affair is a New York law firm, Cohen, Weiss & Simon, that has long ties to Mr. Carey. They go back to his days at Local 804 in New York, which used Cohen Weiss as its counsel. Records indicate the firm bills more than $1 million annually to Teamsters headquarters. In addition, it is frequently brought in to work with Teamsters locals that Mr. Carey orders taken over because of corruption allegations. The firm acted as counsel to the Carey campaign, making more than $300,000 of "in-kind" contributions to the campaign.

According to FBI agent Phelan's affidavit, two donations to Teamsters for a Corruption Free Union were sent to the offices of Cohen Weiss.

Shortly after the Carey campaign came under law-enforcement scrutiny, a Cohen Weiss associate named Nathaniel Charny, who did work on the Carey campaign, resigned from the firm. Richard Leebove, a Hoffa aide who has investigated Mr. Carey's campaign finances and helped bring the Davis-Ansara connection to light, says he frequently came across Mr. Charny. "I did some interviews early on with some of the contributors, including Barbara Arnold," said Richard Leebove, "and they all said, "The guy who we dealt with was Nathan Charny." " Mr. Charny's lawyer declined comment.

Carey spokesman Mr. Bell, who is also a spokesman for Cohen Weiss, says the law firm wasn't involved in soliciting Carey contributions and just accepted contributions mistakenly sent to it by the Carey campaign itself. Mr. Bell says that Mr. Charny's departure from the firm is related to a mistake he made during the inquiry but that he committed no impropriety the firm is aware of.

Fighting Back

As the investigation continues, Mr. Carey's allies are responding by attacking irregularities in the financing of Mr. Hoffa's campaign last year. They allege, for instance, that about $200,000 of improper contributions were accepted by the Hoffa forces. A number of other allegations of financial impropriety have been lodged against the Hoffa effort. Mike Belzer, a former Teamster now at Cornell University, says all the allegations could wind up as "offsetting technicals" in the eyes of the election officer.

Ken Paff, a prominent Teamster who founded the union's first major reform movement, Teamsters for a Democratic Union, says he continues to believe Mr. Carey is reforming the union and hasn't been tainted by the fraud in his campaign. If evidence emerges to the contrary, "I'm going to change my opinion of what's happening in the Teamsters," he says.