IN RE: CERTAIN CAMPAIGN CONTRIBUTIONS BY OFFICERS AND EMPLOYEES OF LOCAL UNION 78
Protest Decision 2006 ESD 376
Issued: October 26, 2006
Pursuant to authority granted under Article I, Article XI, Section 2(b)(2), and Article XIII, Section 4, the Election Supervisor conducted an investigation of certain campaign contributions made by officers and employees of Local Union 78.
In Certain Campaign Contributions by Officers and Employees of Local Union 78, 2006 ESD 363 (October 3, 2006), we found Rules violations in the following particulars: 1) funds that were not raised under the Rules were nonetheless contributed to candidates for International office in the current election cycle; 2) such funds were pooled into a single account but insufficient records were maintained to identify the amounts the members contributed and the dates the funds were contributed; 3) the pooled account was improperly concealed as the source of contributions made to the Hoffa-Mack campaign through a process of contributing cash withdrawn from the pooled account to the campaign and attributing the cash contributions to members who had contributed to the pooled account; 4) personnel and facilities of the local union were improperly used to manage the pooled account and contributions to and withdrawals from it; 5) year-end bonuses were awarded to full-time officers and business agents of the local union in 2000, 2001, 2002, 2003 and 2005 for the purpose of funding contributions to the pooled account, which then was used to make campaign contributions to the Hoffa-Mack campaign in 2005 and 2006, thereby passing union funds through to a candidate for International office; and 6) the pooled account was used to reimburse Steve Mack for a contribution he made in June 2006 to the Hoffa-Mack Legal and Accounting fund. Separately, we found that Hoffa-Mack campaign treasurer Ronald Horner violated the Rules when he reported cash collected from unknown contributors received at the Elk Grove Crab Feed on February 10, 2006 as his own contribution and thereby knowingly created a false CCER filing for the Hoffa-Mack campaign.
We ordered a comprehensive remedy as follows: 1) we ordered the Hoffa-Mack campaign to return the impermissible contributions to the pooled account and to pay a fine to the Election Office; 2) we ordered the pooled account in turn to refund to the local union the contributions refunded to it by the Hoffa-Mack campaign; 3) we prohibited the officers and employees of Local Union 78 implicated in this contribution scheme from making any further campaign contributions for the balance of this election cycle; 4) we ordered Local Union 78 principal officer Steve Mack to mail a notice to all local union members and to post that notice on all union bulletin boards; and 5) we referred to the Independent Review Board "all issues that are documented in or arise from this matter … includ[ing] the granting and use of the December bonuses by Local Union 78 and Horner's conduct in connection with preparing CCERs."
Local Union 78, the Hoffa-Mack campaign, and campaign treasurer Horner appealed certain aspects of our decision. Oral hearing on the appeal was conducted before Election Appeals Master Kenneth Conboy on Wednesday, October 18, 2006. In discussions that followed the oral hearing, appellants, through their counsel, requested that we modify the remedy to withdraw our referral of the conduct of Ronald Horner to the Independent Review Board for appropriate action on the two issues that the appeal raised. We have agreed.
Accordingly, we order the following remedy for the violations we found. This remedy replaces the remedy ordered in 2006 ESD 363. However, no aspect of the decision issued in 2006 ESD 363 is modified or varied except as expressly indicated here. Horner, the Hoffa-Mack campaign, and Local Union 78 have withdrawn their appeals of the decision in 2006 ESD 363, and, for that reason, we deem this matter RESOLVED.
Remedy
When the Election Supervisor determines that the Rules have been violated, he "may take whatever remedial action is deemed appropriate." Article XIII, Section 4. In fashioning the appropriate remedy, the Election Supervisor views the nature and seriousness of the violation as well as its potential for interfering with the election process. In addition, Article XI, Section 1(d) states that "[t]he remedy that may be imposed by the Election Supervisor in resolving any protest concerning a candidate's or campaign's receipt or use of improper contributions will be influenced by the manner in which the contribution was solicited and/or accepted …"
We order the following relief:
1. We refer to the Independent Review Board for whatever action it deems appropriate, including further investigation, all issues that are documented in or arise from this matter. These include the granting and use of the December bonuses by Local Union 78. We expressly do not refer any matters relating to Ronald Horner's conduct to the Independent Review Board.
2. The Hoffa-Mack Campaign must refund to the CAF the $14,000.00 in funds it received as itemized in this ruling. If there are any other funds it received from CAF, it shall account for those funds and disgorge them to CAF.
3. Upon receipt by the CAF account of the disgorged campaign contributions identified in paragraph 1 of this remedy, we order Mack to refund to Local Union 78 the sum of $14,000.00. We further order Local Union 78 to hold the sum of $14,000.00 in escrow until such time as the Independent Review Board completes any proceedings it may undertake in this matter.
4. For the balance of the period the Rules remain in effect, we prohibit the CAF and Mack and all full-time business agents and officers of Local Union 78 from making any campaign contribution or legal and accounting contribution to any candidate for International office or for reimbursing any individual from contributions made to the Hoffa-Mack Legal and Accounting Fund. This is a strictly remedial measure that is necessary to protect the integrity of the electoral process.
5. Hoffa-Mack shall pay to the OES a fine of $8,750.00. In Certain Campaign Contributions By Officers and Employees of Local 853, 2006 ESD 341 (August 23, 2006) Supplemental Decision 2006 ESD 350 (September 15, 2006), we found that Horner recorded specific individuals as the source of $3,500 in contributions to Hoffa-Mack even though he knew the money came from a pooled account and not the individuals he named on the CCER. We ordered the Hoffa-Mack campaign to disgorge those contributions, and others, in the Local Union 853 case. Here, we find a similar case of intentional, improper reporting of a greater total sum, and we have ordered the campaign to disgorge $14,000. Disgorgement in these cases is, however, an insufficient remedy against the Hoffa-Mack campaign and we impose a fine equal to one-half the disgorged sum. As we noted in the Local Union 853 case, the funds Hoffa-Mack received from the improper contributions scheme at that local union "came early in the election cycle and provided money the Hoffa-Mack campaign used to hold fund-raising events that produced substantial campaign contributions. The Hoffa-Mack campaign was able to reap a significant harvest using the improper contributions as "seed." Here, Horner, the designated agent for the campaign, knew the contributions to the campaign were from the Local Union 78 pooled account but, instead, recorded each one as if it had been received from an individual and paid with that individual's own funds. This is not a case where a campaign received contributions about which it had doubts regarding their source. Horner himself was an active participant in the scheme to attribute to individuals contributions he knew came from the pooled account, and he hid the source of money by recording the contributions to Hoffa-Mack not as donations from the CAF, but as multiple donations from a collection of individuals. The fine we assess here is strictly remedial. It is intended to deter improper conduct by the Hoffa-Mack campaign, and by all other campaigns under our Rules, from receiving improper contributions of this nature.
6. We order Mack to post the notice attached to this decision on all union bulletin boards under the local union's jurisdiction for a period of 30 consecutive days. We further order Mack to mail the notice attached to this decision to all Local 78 members via first class mail no later than October 30, 2006. The cost of such mailing, including photocopying or printing expense, postage expense, and mailhouse fees, shall be paid by the CAF. The purpose of the notice is to advise the local union membership that its elected leadership impermissibly used union funds to support candidates for International office and that those funds have been ordered returned to the local union treasury.
All remedies imposed by this decision that require persons to take affirmative steps must be completed within three (3) working days of receipt of this decision, except as expressly indicated otherwise. Affidavits of compliance must be forwarded to our office in Washington, D.C. within two (2) working days of compliance.
Any interested party not satisfied with this determination may request a hearing before the Election Appeals Master within two (2) working days of receipt of this decision. The parties are reminded that, absent extraordinary circumstances, no party may rely upon evidence that was not presented to the Office of the Election Supervisor in any such appeal. Requests for a hearing shall be made in writing, shall specify the basis for the appeal and shall be served upon:
Kenneth Conboy
Election Appeals Master
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Fax: (212) 751-4864
Copies of the request for hearing must be served upon the parties, as well as upon the Election Supervisor for the International Brotherhood of Teamsters, 1725 K Street, N.W., Suite 1400, Washington, D.C. 20007-5135, all within the time prescribed above. A copy of the protest must accompany the request for hearing.
Richard W. Mark
Election Supervisor
cc: Kenneth Conboy
2006 ESD 376
NOTICE TO ALL MEMBERS OF LOCAL UNION 78
FROM IBT ELECTION SUPERVISOR
RICHARD W. MARK
The Rules for the 2005-2006 IBT International Union Delegate and International Officer Election ("Rules") permit members to make campaign contributions to any candidate for International office. The Rules require candidates to report all contributions in the name of the member that made the contributions, and the Rules prohibit use of union funds, personnel and facilities to support any candidate for International office.
The Election Supervisor has found evidence that Local Union 78 expended local union funds to support the 2005-2006 Hoffa-Mack campaign. Those funds were in the form of annual employee bonuses which the employees used to make payments to a pooled account. In 2005 and 2006, cash from that account of pooled money was donated to the Hoffa-Mack campaign and reported as contributions from individual donors. The contribution of cash from the pooled account violated the Rules because it concealed the true source of the funds. The Election Supervisor has referred this conduct to the Independent Review Board for further investigation and action, as appropriate.
The Election Supervisor has found that the pooled account into which the bonus payment contributions were deposited was maintained by local union personnel on time paid for by the local union and with equipment owned by the local union. The Election Supervisor will not tolerate such improper use of union funds, personnel and facilities.
You can read the Election Supervisor's decision, and the detailed findings at www.ibtvote.org
Accordingly, the Election Supervisor has ordered the Hoffa-Mack campaign to pay back $14,000.00 in improper contributions to Local Union 78, and imposed an additional fine of $8,750.00 on the Hoffa-Mack campaign.
The Election Supervisor has also ordered this notice to be mailed to all members of Local Union 78, and posted on all union bulletin boards under the local union's jurisdiction for a period through November 14, 2006.
__________________________________
Richard W. Mark
IBT Election Supervisor
Dated:
DISTRIBUTION LIST (BY EMAIL UNLESS OTHERWISE SPECIFIED):
Bradley T. Raymond, General Counsel
International Brotherhood of Teamsters
25 Louisiana Avenue, NW
Washington, DC 20001-2198
braymond@teamster.org
David J. Hoffa
Hoffa 2006
30300 Northwestern Highway, Suite 324
Farmington Hills, MI 48834
David@hoffapllc.com
Barbara Harvey
645 Griswold Street
Suite 3060
Detroit, MI 48226
blmharvey@sbcglobal.net
Ken Paff
Teamsters for a Democratic Union
P.O. Box 10128
Detroit, MI 48210
ken@tdu.org
Daniel E. Clifton
Lewis, Clifton & Nikolaidis, P.C.
275 Seventh Avenue, Suite 2300
New York, NY 10001
dclifton@lcnlaw.com
Stephen Ostrach
1863 Pioneer Parkway East, #217
Springfield, OR 97477-3907
saostrach@gmail.com
Duane Beeson
Counsel for Ron Horner
Beeson, Tayer & Bodine
1404 Franklin Street, 5th floor
Oakland, CA 94612
dbeeson@beesontayer.com
Geoff Piller
Counsel for Various Officers and Business Agents of Local Union 78
Beeson Tayer & Bodine
1404 Franklin Street, Fifth Floor
Oakland, CA 94612-3208
GPiller@beesontayer.com
Hoffa-Mack 2006
3295 Monika Lane
Hayward, California 94541
T70ronh@aol.com
Bruce Dubinsky
Klausner Dubinsky & Associates
4520 East West Hwy, Suite 640
Bethesda, MD 20814
bdubinsky@kd-cpa.com
Keith Neus
Klausner Dubinsky & Associates
4520 East West Hwy, Suite 640
Bethesda, MD 20814
kneus@kd-cpa.com
Christine Mrak
2357 Hobart Avenue, SW
Seattle, WA 98116
cmm@wmblaw.net
Maureen Geraghty
The Geraghty Law Firm
426 Old Salem Road
Winston-Salem, NC 27101
mg@geraghtylawfirm.com
Jeffrey Ellison
510 Highland Avenue, #325
Milford, MI 48381
EllisonEsq@aol.com