Razzle Dazzle: Union Defense Hung on Spike

Razzle Dazzle

Union Defense Hung on Spike

By RICHARD STEIER

It was easy enough for Local 1181 of the Amalgamated Transit Union to ignore reporters' inquiries about Federal prosecutors' charges that the union was part of the stable of Genovese crime family boss Matty (The Horse) Ianniello.

A column in this space last month that raised questions about what had happened to the union's defense and pension funds and suggested Local 1181's 15,000 members were being shortchanged on pension benefits was a little harder to side-step, however.

Being associated with organized crime isn't necessarily a bad thing in terms of internal union politics, given its deterrent effect when it comes to members protesting too vigorously. That sort of caution is sometimes cast aside, however, when members start wondering whether they're being swindled. The anger that can be generated among the rank and file by such suspicions is particularly unwelcome at a time when Local 1181 President Sal Battaglia is threatening a strike as part of his effort to win a new contract for school bus drivers by the end of this month.

Lets Adviser Do the Talking

The Chief-Leader/Alana Marcu GOT THE HORSE RIGHT HERE, UNFORTUNATELY: Veteran union organizer Eddie Kay, speaking at City Hall on behalf of dissident members of Amalgamated Transit Union Local 1181, charges that the influence of Genovese crime family boss Matty 'The Horse' Ianniello over the union has many members reluctant to speak out and left the International ATU afraid to investigate questionable financial practices.

And so shortly after that May 12 column appeared, Local 1181 retained a veteran public-relations executive, Steve Mangione, to counter some of the negative publicity that was being generated by a group of dissident union members. Despite an initial pledge to produce Mr. Battaglia for a sit-down interview to rebut some of the terrible things the dissidents are saying about him, Mr. Mangione last week said the local president's recent cataract surgery and the urgency of the contract talks rendered him unable to spare the time.

Mr. Mangione did, however, produce a detailing of the finances of the defense and pension funds that suggested that they weren't being rampantly plundered, even if some questions remain about their operation.

The dissidents had complained that the maximum pension for a 25-year member was $15,000. When the union declined comment on any aspect of its operations last month, I asked a pension expert to calculate what an appropriate benefit might be for a veteran school bus driver making the maximum salary of $50,908 and paying $33 a week toward their pensions. With no data from the union, I asked him to figure that the average pension deduction during the past 25 years was $25 a week.

His response was that even using conservative estimates on the interest the money would have earned from pension fund investments, Local 1181 members with that length of service should have been getting pensions of as much as three times what they were actually receiving.

Mr. Mangione has since produced figures that would bring those calculations down significantly. Data from Local 1181 indicates that the average pension payment for a senior employee during the past 25 years would be closer to $20 a week. He also noted that union members make pension contributions for only 40 weeks of the year; as employees working in the school system they are not required to contribute during the Christmas and Easter recesses and for 10 weeks during the summer.

Payment 'In the Ballpark'

When I asked the pension expert, who did not want to be identified, to recalculate using that information, he said that while an exact payout could not be determined without knowing the earnings on investments during the 25-year period, $15,000 was "in the ballpark" as an appropriate retirement allowance.

Owen Rumelt, an attorney specializing in employee benefits whose firm, Levy Ratner P.C., is working with the dissidents, said an examination of the union's financial filings in recent years raised other questions, however.

The pension fund for Local 1181, he said, in the most recent filing covering its operations in 2004 showed an unfunded accrued liability - what it is obligated to pay to pensioners over the long term - of $86 million, more than 25 percent of the total accrued liability of $330 million for the fund.

"We don't know why" there's that large an underfunding, Mr. Rumelt said.

One of the peculiarities he discovered was that one recent financial statement from Local 1181 indicated that its welfare fund owed the pension fund $170,000. What makes this unusual is that the "1181" welfare fund acts as the local's paymaster, raising questions about whether it borrowed money from the pension fund, and why. That statement also shows the welfare fund paying money to the union itself, with no explanation.

Typically, filings from welfare funds will detail how much money is being spent for individual union operations, from staff salaries to utility bills to arbitration expenses. In the case of the Local 1181 welfare fund's $4 million expenditure in 2004, as well as its spending in previous years, Mr. Rumelt said, "They don't break down what the administrative expenses of the fund went for."

Mr. Mangione did not respond by presstime to the issues raised by Mr. Rumelt.

One dissident, Thomas Nero, said last month that he believed there should be $21 million in a union defense fund that was formed a quarter-century ago, but the fund actually had just $9 million.

Erroneous Assumptions

Mr. Mangione said that estimate was the result of several erroneous assumptions, one of them a simple multiplying of the number of union members times the $2 per paycheck deduction that is made to the defense fund, which is used to cover strike benefits and union organizing efforts.

Less than 60 percent of Local 1181's members actually contribute to the fund, Mr. Mangione said. He explained that about 5,000 others do not contribute - most of them employed by Nassau County and the remainder under the direct control of the Metropolitan Transportation Authority - because they are public workers and therefore prohibited from striking under the Taylor Law. Among the employees who contribute - 8,400 employed by the Department of Education and more than 1,000 who drive the Para-Transit buses - their fund payments, Mr. Mangione noted, are on the same 40-week annual schedule as their pension contributions.

Put those details together with the fact that contributions in earlier years were lighter because the union membership was much smaller (it was 3,500 at the time the fund was launched and stood at 7,000 as recently as 1990) and payments were actually discontinued for a three-year period in the mid-1980s, and the fund's assets are precisely what they should be, Mr. Mangione said.

Boosted Earnings

He also noted that the union leadership prior to Mr. Battaglia taking office in mid-2002 had invested the fund's assets in certificates of deposit and money market accounts that were yielding income of just 1.5 percent a year while the fund was being charged broker's fees. Under Mr. Battaglia, Mr. Mangione said, most of the fund's assets were transferred to Vanguard mutual funds that are producing an annual return of 4.5 percent, and assets have increased from $7.1 million to $10.9 million.

The dissidents had cited a longtime union practice of collecting $1 per member whenever a member died and said it was rife with abuses, from collecting for phantom members to not giving deceased workers' families the full amount collected. Mr. Mangione said such collections were discontinued after 1998 - four years before Mr. Battaglia became president - and that the union provides life insurance policies of $15,000 for active members and $8,500 for retirees.

He questioned the claim by dissidents that Local 1181 has failed to protect their rights when bus companies are sold or their operations transferred to other firms, noting that under their contract all seniority rights are guaranteed with the exception of those governing the picking of bus routes.

Lose 'Pick' Seniority

Under an agreement hammered out by former Judge Milton Mollen in the wake of a 14-week strike in 1979, Mr. Mangione said, while those rights are protected, it is the seniority rights of an employee at a particular company that determine the order in which routes are picked, regardless of whether a displaced worker from the firm that reduced or disbanded its operation has more time on the job than co-workers at his or her new firm. That provision was reaffirmed by Judge Mollen, Mr. Mangione said, when it was challenged by one of the dissidents, John Vecchione.

Another dissident, Raymond LaRoche, last month complained about the status of Mr. Battaglia's two sons, Anthony Battaglia, who receives a salary of $104,000 and serves on Local 1181's executive board even though he never drove a school bus, and Salvatore Jr., who Mr. LaRoche said earned his $54,650 salary primarily by blocking access to the part of the building where the union's medical office is located.

Mr. Mangione said that Salvatore Battaglia Jr. worked for the welfare fund and also served as a building maintenance attendant, adding, "He is not a security guard." He denied that union members were restricted from entering parts of the union's Ozone Park offices, stating that it "isn't unreasonable to be asked to schedule an appointment, rather than expect to walk in and immediately see the union president."

Ex-Bus Driver

Anthony Battaglia, he said, may not have ever driven a school bus, but he is not on the board to represent Department of Education employees. Rather, Mr. Mangione said, he represents Local 1181 members employed by the MTA and Para-Transit, and the 14 years during which he drove a commuter bus for Command Bus Company left him fully versed in those employees' issues.

In fact, Mr. Mangione said, just one of the Local 1181 board members does not have prior experience: Julius "Spike" Bernstein, the union's secretary-treasurer. He contended that Mr. Bernstein's past background with the International Brotherhood of Teamsters and the 33 years he has spent at Local 1181, beginning as an organizer and continuing as a leader of strike activities in 1979, made him "a valuable asset" on the board.

That reference brought a sardonic laugh from Eddie Kay, a veteran union organizer who has been assisting union dissidents for the past year. "He's invaluable; the most valuable person there," Mr. Kay said of Mr. Bernstein. "He's the direct link to keeping everyone under control."

Conduit to 'The Horse'

Mr. Kay was alluding to the rumored longtime association between Mr. Bernstein and Mr. Ianniello. The Federal indictment brought last July against Salvatore Battaglia Sr., Mr. Bernstein, and Ann Chiarovano, another union officer who is Mr. Bernstein's girlfriend, charged that Mr. Ianniello and his subordinates in the Genovese family had infiltrated Local 1181 and influenced its activities and those of its pension and welfare funds. Mr. Bernstein was the union official identified in the indictment as having the leading role in the racketeering conspiracy, and he was charged with acting on Mr. Ianniello's behalf in extorting $100,000 from the operators of the medical center in the union's Woodhaven Blvd. headquarters in return for extending their lease.

Mr. Mangione noted that all three Local 1181 officials have pleaded not guilty to the charges and said they could not comment on them pending their scheduled trial in September.

Mr. Kay said that Mr. Bernstein was essentially Mr. Ianniello's man on the inside at Local 1181. "You're dealing with a very serious bunch of people that views this [union] as a cash cow," he said.

Alleged Bag Man

Village Voice reporter Tom Robbins in April wrote that Federal investigators alleged that Mr. Bernstein, during visits to Mr. Ianniello at the Metropolitan Correctional Center in lower Manhattan, got instructions on "collecting and dispersing payoffs from bus companies to corrupt union officials and the Genovese family."

Mr. Robbins stated in the article that Mr. Bernstein's relationship with Mr. Ianniello dated back to the 1970s, when the Federal Government identified him as the Genovese family powerhouse's bagman in a garment industry corruption case. Mr. Bernstein was not convicted of criminal wrongdoing in that matter.

But his ties to Mr. Ianniello have long made Mr. Bernstein a fearsome figure in the union, Mr. Kay asserted. He said it explained why eight of the 13 dissidents who challenged last year's Local 1181 officer elections for alleged irregularities didn't appear at the hearings on the matter after Mr. Bernstein was appointed chairman of the union committee reviewing the charges. "They were scared [witless]," Mr. Kay said.

Denies Intimidation

Mr. Mangione denied that the union's leadership had engaged in intimidation tactics to stifle dissent. "On the contrary," he said, "the dissidents are disruptive to the point where other members attending the meeting want to take matters into their own hands." Mr. Battaglia, he added, "has kept the calm at meetings by urging members not to resort to violence."

Carl Levine, another attorney from Levy Ratner, said that if the dissidents sometimes became overheated, it was because of frustration at how their initial remarks were handled, with microphones being turned off and critical comments shouted down. "The meetings are run very imperiously, and they try to stop our guys from talking," he said.

After Mr. LaRoche's picture appeared in this column, Mr. Levine said, five of Mr. Battaglia's supporters approached him in a menacing fashion and berated him for his comments about the Local 1181 defense fund. Mr. LaRoche also reported that he overheard a union shop steward using a cell phone to give someone at the other end his car's license plate number.

Trial Moves Strike Plans?

The legal troubles of Mr. Battaglia and Mr. Bernstein have also become an issue in a disagreement the dissidents have about the timing of a possible strike. Mr. Kay said that the dissidents questioned why Local 1181 would threaten a walkout that would begin in July, when a relatively small contingent of school bus drivers being deployed for summer school would be working. A walkout at that time, he noted, would have far less impact on the private bus companies, and would cost the drivers not doing summer school duty their right to unemployment benefits for the duration of the strike.

Mr. Kay suggested the union's leadership wanted to strike next month rather than when a walkout would have maximum impact in September because that is when their trial is scheduled to begin. Besides being preoccupied with their criminal defenses, Mr. Battaglia and Mr. Bernstein would face a public-relations roasting in the media if they were leading a walkout at the same time that they were sharing the defense bench with Matty the Horse.

'No Connection to Case'

Mr. Mangione retorted in an angry e-mail, "Who says there will be a strike in July? They can stop the clock; they can continue negotiating. A strike authorization vote must be taken before the contract expires because it gives the union leverage at the bargaining table. [The timing] has nothing to do with the Federal case."

A spokeswoman for the bus companies, which are bargaining with Local 1181 as a single entity, said June 16 that the two sides remain "very stuck on health care."

A prime issue, said the spokeswoman, Carolyn Daly, is the companies' demand that Local 1181 members pay 1.5 percent of their earnings toward their health insurance premiums, mirroring a proposal agreed to by the transit unions with the MTA last December.

The companies are also asking that the union's health-benefit plan, which is currently administered by Local 1181's welfare fund, be transferred to an outside health-care provider, similar to the way that health benefits for city employees are administered. Ms. Daly explained, "The costs are getting greater and greater, and we don't see any attempt [by the union] to control them."

A bargaining session is scheduled for June 22, she added, eight days before the current pact expires.

Claims Few Dissidents

Mr. Mangione said the overwhelming support of the 3,000-plus union members who took part in the strike authorization vote makes clear that the dissidents represent just a handful of disgruntled employees. Mr. Kay scoffed at that claim, saying that the dissidents also supported the strike authorization vote as a way to pressure management for a better contract.

And while Mr. Mangione noted that the dissidents had trouble fielding enough candidates to run a full slate in the union election a year ago, their ranks seemed to have grown noticeably at a press conference June 4, where close to 200 people gave up part of their Sunday afternoon to come to City Hall to voice their grievances with Local 1181's leadership.

One of the dissidents, Gloria Flaherty, questioned why the International ATU had not taken control of the local following the indictments of Mr. Battaglia and Mr. Bernstein, noting that it had intervened in other locals - including one in Queens - even before criminal charges were brought.

'Turned a Deaf Ear'

"This is no media hype," she said of the dissidents' grievances. "This is fact, and this is a shame. For some unknown reason, [the International has] turned a deaf ear on the concerns of the members of '1181.'''

"Fear," someone in the crowd called out.

ATU International President Warren George has declined comment on the Local 1181 situation.

Several other dissidents complained about their pensions and their health benefits, with Brijida Pilgrim, a veteran bus matron, declaring, "We need stronger [union officials] that are going to fight for the workers."

The protesters were joined by a dozen of the roughly 100 elected officials who have written the International ATU asking it to hold hearings regarding the allegations against Local 1181's leaders and remove them from office if warranted.

'Gives Labor Bad Name'

Queens City Council Member David I. Weprin, who noted that 25 of his colleagues had joined him in sending letters, said that the linking of Local 1181 to organized crime had wider implications because it was "giving labor a bad name."

That point was echoed by Brooklyn Congressman Major Owens, who said that the Bush Administration had shortchanged job training and worker safety programs in the Federal budget but found the money to hire an additional 40 auditors to look over labor unions' financial records.

"George Bush's administration has used corruption as an excuse to destroy unions," Mr. Owens said. "Anybody who is corrupt inside the labor movement becomes an ally."

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