A Readers Digest

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Reader's Digest PLEASANTVILLE, NEW YORK 10570 The Mafia Tightens Its Grip on the Teamsters

It has been 15 years since the Senate Committee on Labor Rackets, and the press, exposed the Teamster Union's link to the underworld under James R. Hoffa. Today, Hoffa's successor as Teamster president, Frank E. Fitzsimmons, offers a "new image" for his powerful union. What is the reality behind the image? Here is the first of a series of articles in which Roving Editor Lester Velie, aided by investigative assist ant Jennifer Bolch, shows that our biggest union is deeper in the grip of the underworld than ever.

BY LESTER VELIE How did he get into this fix? By being a man who stands in the N Sunday, June II, 1972, way of organized crime's efforts to Lloyd Hicks announced that extend its hold on the Teamsters. 0 he would run for president Among other things, Dumas has re of Teamster Local 390, Miami. On fused bribes to corral union mem Tuesday, gunmen killed him. bers into shady insurance schemes "They can't kill all of us," Travis and, more dramatically, has been a Dumas, Hicks' best friend and fel roadblock in the path of a New York low business agent, announced. "I'm City gangster invasion of the Miami running in Lloyd's place." International Airport. Dumas hired a guard and set out Through control of Teamster to win control of the local's 2700 Local 295, the New York Mafia members, many of whom had been already oversees the handling of terrorized. Dumas won, but word freight at John F. Kennedy Interna soon came to him through the union tional Airport. This has enabled it grapevine that there was a con to tap two huge rivers of tribute. tract out on his life. So, for the One, according to Congressional tes last 20 months, Dumas has lived the timony, is through a gangster-domi life of the hunted. He has a shotgun nated trucking association which at hand at all times and has told his truckers must join in order to do wife not to let their three children business at the airport-and which out of sight. employs mobster "labor consultants" 2 THE READER'S DIGEST to assure labor peace. The other con derworld support in his drive for sists of organized pillage of air car delegates to the 1956 Teamster goes which, according to New York convention. Waterfront Commission estimates, Elected president, Hoffa found has reached the awesome total of himself with two masters. He $10 million annually. For the last worked 18-hour days for his union several months, Dumas has been members, settling grievances, build fighting Mafia raids from New York ing Teamster membership over the aimed at capturing members of his two million mark, and negotiating union-and, with them, control of ever-higher pay increases and fringe all trucks bringing air freight in and benefits. He did well for his under out of the Miami airport. world constituency, too, paying off Two Bosses. Dumas' struggle for in other people's money and misery. survival at the bottom of the Team He permitted gangsters to turn Ken ster pile reflects a larger struggle at nedy airport into a pillaging pre the top-between former president serve. In Chicago, Hoffa sluiced James R. Hoffa and his successor, Teamster welfare-fund insurance pa Frank E. Fitzsimmons. Many Team tronage to a criminal family linked ster locals are honestly run by dedi to the old Capone mob. All over the cated union leaders. But because of country, Hoffa paid debts to organ the struggle above, the underworld's ized-crime figures with Teamster parasitic hold on the Teamsters is as pension-fund loans that often went pervasive today as it was when Sen unpaid. ate investigators and the press ex Today, the underworld holds the posed it 15 years ago. power balance that may determine To understand why, it is neces who will be elected Teamster presi sary to recognize a basic fact of dent in 1976: Hoffa (providing he political life in the Teamsters. Its wins his legal battle against re president must satisfy two constitu straints that bar him from union encies: union members and the activity) or the incumbent Fitzsim organized-crime bosses of our big mons. "Without support from 'the cities. This obligation was creat boys,'" a Teamster vice president ed by Hoffa when he enlisted un- told me, "Fitz couldn't remain pres ident for one minute." So Fitzsim

L ESTER V ELIE has written about labor af mons, as Hoffa before him, must fa irs fo r many years. He is the author of the also please "the boys" as well as the widely read Labor USA , and his earlier series members. of Digest articles about the Teamsters (be Best Girl. When Hoffa went to ginning with "The Riddle in the Middle of America 's Most Powerful Union, " The Read jail in 1967 for fraudulent use of the er's Digest, December 1955) first exposed Teamsters' biggest pension fund, Jimmy Hoffa's connections with th e under and for jury tampering, he assigned wo rld. Fitzsimmons to act on his behalf. THE MAFIA TIGHTENS ITS GRIP ON THE TEAMSTERS 4 But Fitzsimmons found himself in Bolch the pardon form he signed in the classic posture of the man to prison. It contained stipulations whom a best friend has entrusted a such as, "the parolee will not drink best girl. He fell in love with the to excess" -but no stipulation that girl -the Teamster presidency-and Hoffa refrain from union activity. moved aggressively to keep her. Hoffa said he was astounded to For Fitzsimmons, a phlegmatic, learn on emerging from prison that pumpkin-faced 66-year-old with a another pardon document, signed heavy belly, the girl had many by President Nixon, barred him attractions. First, there was the from union activity until March 6, handsome dowry, a $125,000 yearly 1980-four years beyond the next salary. Then there were three homes Teamster presidential election. Who to live in-one in California, one in was responsible? "Fitzsimmons," Florida and another in Washington says Hoffa -with assists from inside -and a hs million jet plane that the White House. would carry him anywhere in the "Colson [Charles W. Colson, ex world, all expenses paid. To this, Presidential counsel, who has plead finally, was added the courtship of ed guilty to obstruction of justice in the President of the United States. the Ellsberg case] was the master Seeking labor support, President mind," Hoffa added, and part of the - Nixon met with Fitzsimmons' ex payoff was Teamster legal business ecutive board in the summer of for Colson's law firm-at a report 1971, rubbed elbows with mob ed $100,000-a-year fee . Hoffa has connected officials, and let it be spelled out his charges in a suit known that the White House door against the Justice Department, was always open to Fitzsimmons. aimed at removing his union-activ As the time approached for Hof ity restrictions. fa to leave prison, Fitzsimmons Meanwhile, Fitzsimmons is using decided that his own ruddy face his power and patronage to woo his basking in the favor of a President two constituencies: the union and - was better for the Teamster image the big-city hoodlums. As Hoffa than Hoffa's prison pallor. But if spelled it out to us, Fitzsimmons Hoffa, freed, were to resume union builds support within the union by activity, his first move would be a returning to the regional Teamster run for the presidency of his old barons the power Hoffa had taken Local 299 in Detroit. With that as a from them. Teamster organizing power base, he might well regain money, some $7 million yearly, is control of the entire membership at going to Fitzsimmons men only. the 1976 Teamster convention. And he is banishing Hoffa loyalists Blocking Action. At Hoffa's ele to areas where they can't influence gant condominium near Miami, he delegates to the 1976 Teamster con recently showed reporter Jennifer vention. Recently, Fitzsimmons 5 THE READER'S DIGEST abolished the $46,000-a-year union Davidoff. Under the Ostrer plan, job filled by Hoffa's wife. trucking employers paid $40 a week As for the underworld: Teamster per employe to buy individual business patronage has lately had a insurance policies for union mem curious way of turning up in un bers and to build a severance-pay clean hands. For example, when fund. Employers had to go along Fitzsimmons approved a $1.3 mil with the scheme or suffer Davidoff lion public-relations program last reprisals. year to burnish the Teamster image, As the New York State Insurance part of this cash flowed to two "im Department has charged, the em age improvers" with criminal rec ployers' contributions were largely ords, one of whom had served 20 drained away by excessive commis years on a murder charge. And sions and administration fees; for Fitzsimmons became attentive to example, insurance which cost the underworld get-rich-quick schemes severance fund $1,238,274 could have at Teamster expense. Consider the cost but $52,546. Thus the fund was severance-fringe-benefit scheme depleted by $1,185,000. Since the hatched by a New York underworld money was paid by employers in figure and pushed by Fitzsimmons' lieu of wage increases, it was actual son, Don. ly coming out of employes' pockets. Fitzsimmons and Son. The under Ostrer initially sold his scheme to world figure was Louis C. Ostrer, some dozen Teamster locals in New who had pleaded guilty in 1969 to York City and New Jersey. Then he swindling a Canadian insurance extended his operation to Detroit, company of $338,000, and received a where, in 1972, he hired young Don five-year suspended sentence. While Fitzsimmons as "consultant and on probation, Ostrer was convicted public-relations man." Since Don on a federal stock-swindling charge Fitzsimmons had no insurance ex in company with the notorious perience (he had been selling vend "Johnny Dio" Dioguardi-thus ing machines for a hoodlum-owned linking him to the New York Mafia; company), I asked Ostrer why. a New York County indictment "I hired him as a conduit," Ostrer further linked him to Mafia loan said, "in order to meet certain peo sharks and charged he had discussed ple." One of the "certain people" the prospective killing of a delin Ostrer met was the "conduit's" fa quent borrower. ther, Frank Fitzsimmons. Ostrer conceived a union-insur "Frank quickly saw the value of ance scheme whose rich potential as my plan," Ostrer recalled, "and told a ripoff was dramatized by the form me I could go out and sell it to it took in one union Ostrer sold it Teamster locals on its merits." to: New York Teamster Local 295, Here Don Fitzsimmons picks up dominated by labor racketeer Harry the story. "I was looking for some- THE MAFIA TIGHTENS ITS GRIP ON THE TEAMSTERS 6 thing lucrative," he told us. So, with severance funds become general for Ostrer's plan in hand, young Fitz all Teamster trucking employes. simmons said, he solicited unions Rivers of Cash. As these short, in Michigan, California, Nevada, selected examples of underworld Massachusetts, New Jersey and enterprise show, brains within or Illinois. He estimated that some 60 ganized crime are forever buzzing to 70 locals in those states and with schemes to tap the vast rivers Florida eventually adopted Ostrer's of cash that employers pour out year plan. ly to provide benefits for Team Two things, however, crimped ster members. The biggest river of Ostrer's operation. In New York, all is the $200 million that employers the State Department of Insurance of some 430,000 Teamsters channel put a five-percent commission ceil each year into the Central States, ing on insurance sold in bulk to . Southeast and Southwest Area Pen employes, and threatened to force sion Fund. This has created a $1- trustees to make restitution of billion reservoir of lending and drained funds. Elsewhere, local un investing money-putting it, as a ion leaders decided that Ostrer's lending institution, among the coun scheme was too good a thing to try's roo biggest banks. share with the originator. Detroit As a Teamster vice president told Local 299, for example, booted him me, the big-city mobs' chief interest out and turned over the fund to the in the Teamsters lies in loans from local's lawyer, who subsequently the Central States fund-an interest fired young Fitzsimmons. underlined by the recent attempted So Ostrer's scheme goes marching assassination of the man who dic on-in other hands. Meanwhile, it tated loans at the time, the Chicago is persistently reported inside the gang's ambassador to the Teamsters, Teamsters that Frank Fitzsimmons Allen Dorfman. Inside the Team will seek approval of a severance sters, the word was that the Eastern fringe-benefit plan at the next mob was angry at not getting its national bargaining session with share of the action. trucking employers. Severance pay, What does all this say about the of course, is a legitimate union bar underworld's "interest in the Team gaining demand, and some unions sters"? How has it fared during the have been operating severance funds Fitzsimmons reign? Very well, honestly for years, usually under the thank you. In fact, Mafia raids on administration of an insurance com union gold have become more bra pany or actuarial consultant firm. zen than ever. But since many Teamster locals ad minister welfare funds themselves, In his second article, Lester Velie one can imagine the opportunities will explore the Teamsters' role as for crooked leaders and the mobs if banl(ers to the underworld.