New York Chief-Leader

McLaughlin Out As CLC Head After Indictment;
Allege Part of $2.2M Theft Came From Union Funds

By RICHARD STEIER

The AFL-CIO New York City Central Labor Council, its image bludgeoned by a Federal indictment Oct. 17 charging that its leader stole $2.2 million from operations ranging from the organization itself to a Queens Little League, took the first step toward repairing the damage two days later when it suspended President Brian McLaughlin without pay.

Mr. McLaughlin had been on a paid leave of absence since Sept. 1 because of the Federal probe of his activities, which exploded into public attention in March when investigators raided the CLC's Manhattan offices.

'Had to Suspend Him'

Denis Hughes, the president of the State AFL-CIO who chairs the CLC board, announced the suspension following a lengthy conference call in which he said none of the dozen-plus board members who participated questioned the need to act strongly.

Notwithstanding the presumption of innocence to which Mr. McLaughlin is entitled, he said, the "serious allegations in the indictment, which included financial impropriety involving assets of the Central Labor Council," warranted the suspension. "We have a fiduciary obligation to do this," he explained.

Mr. McLaughlin, a Queens Assemblyman who had announced he would not seek re-election even before the CLC office raid, pleaded not guilty before U.S. Magistrate Judge James Francis in Manhattan. His attorney, Jonathan P. Bach, did not return a call seeking comment on the charges contained in the massive indictment.

'Case About Greed'

U.S. Attorney Michael J. Garcia, during a press conference in his lower Manhattan offices after Mr. McLaughlin was arraigned, called it "a case about greed - about a high-ranking union official ripping off" his own members as well as other entities including a CLC program meant to benefit immigrants and a Little League in the Electchester section of Queens that is both Mr. McLaughlin's power base and his former home.

'Stole From All Those He Served':

City Investigation Commissioner Rose Gill Hearn says Brian McLaughlin committed theft 'of enormous amounts of money from the very people he was supposed to serve - his constituents, members of the public, his union brothers and sisters and even a Little League program set up for the children of union members.' Looking on is U.S. Attorney Michael J. Garcia, whose office will prosecute the case.

City Investigation Commissioner Rose Gill Hearn was no less caustic, saying that among the tainted fruits of Mr. McLaughlin's alleged corruption were "a Mercedes-Benz, envelopes stuffed with cash, union workers used like personal servants." She accused him of the "theft of enormous amounts of money from the various people he was elected to serve."

Pondered Mayoral Run

Mr. McLaughlin in the past was credited with reviving the CLC after it grew moribund under his predecessor, Thomas van Arsdale, whose father, Harry, had made it a dynamic force in municipal life during the 1960s and 1970s. He became the face of organized labor in the city after he took the CLC reins in 1995, even as he served in the Assembly, and at one point later in the decade seriously considered running for Mayor.

According to the indictment, however, Mr. McLaughlin's ascension to power coincided with his engaging in multiple acts of racketeering that included taking part in a bid-rigging scheme involving the contracts to repair and maintain city street-lights, accepting payoffs to allow contractors to use nonunion labor, and generating other sources of cash for himself from both his union jobs and his Assembly post.

This allowed him, according to prosecutors, to finance a lifestyle that was in a different universe from the employees for whom he was advocating.

Country-Club Lifestyle

It included a luxurious home in Nissequogue, L.I. - allegedly renovated by union subordinates - and residences in Queens and Albany; a country-club membership which had an initiation fee of nearly $25,000; marina fees for his boat; school tuition for one of his children; the tab for his son's wedding; and the Mercedes for his wife and other cars for himself, his son, and a person described in the indictment as a female friend. He was accused of giving money under questionable circumstances to, or arranging jobs for, three different women whom the indictment described as friends. Mr. McLaughlin is an electrician who early on became a protégé of Harry van Arsdale and later served as Tom van Arsdale's top aide at the CLC. Even as he headed the umbrella group for organized labor in the city and performed his Assembly duties, he remained the business representative for the J Division of Local 3 of the International Brotherhood of Electrical Workers.

The indictment accuses him of enlisting four unidentified corrupt associates, one of them a relative, in his schemes and giving them ranking positions in the J Division as well as in either his Assembly office, the athletic association that ran the Electchester Little League, or a CLC panel known as the Commission on the Dignity of Immigrants.

Harpoons His Image

It spells out in unusually graphic detail alleged behavior that, if true, would harpoon Mr. McLaughlin's public image as a devoted family man who was particularly attuned to the needs of young people and immigrants in his Assembly district.

In August 2005, it charges, Mr. McLaughlin chose as the head of the immigrant commission a foreman in the J Division to whom he was related, even though the man "had no training or professional experience relating to immigration issues." This official was already working as a full-time supervisor for a street-lighting contractor, had a private practice as a chiropractor, was a consultant and event planner for the CLC, and served as a part-time aide in Mr. McLaughlin's Assembly office in Queens. When the foreman told Mr. McLaughlin that he didn't have time for the immigrant panel duties, he allegedly responded that it wouldn't require much time.

The indictment alleges that after instructing the man to set up a special bank account to which his checks from the CLC for that work could be transmitted, and securing a pay raise for the position, Mr. McLaughlin had the relative sign over $55,000 in checks from the account to him, using the money for expenditures including mortgage and rental payments, credit-card bills, and country-club dues.

In June 2004, Mr. McLaughlin is alleged to have met with one of his corrupt confederates and told him he wanted $6,000 from a special account set up in the name of the Little League in order to pay the rent on his Albany apartment for the rest of the year. He was told in response, according to the indictment, that another confederate had already spent $2,800 "for softball and other expenses and was not willing to part with the remaining funds in the account."

'That's My Money'

The indictment quotes Mr. McLaughlin saying in response to tell the other associate that "all that f------ money he's f------ spending on other stuff, that ain't his money ... that's mine." He then told the man to generate additional money by asking street-lighting contractors and the CLC to write checks to the Little League.

The allegations of that kind of personal behavior, as well as the scope of the crimes imputed to Mr. McLaughlin, combined to shock several prominent labor officials who dealt extensively with him, including United Federation of Teachers President Randi Weingarten.

"It was a tragic day," she said Oct. 19 of his indictment two days earlier. "I worked with this guy for a long time, and I was stunned. If the charges are true, it's a real betrayal. But there's a presumption of innocence that operates in this country."

Allege CLC Out $185G

According to prosecutors, Mr. McLaughlin improperly received $185,000 from the CLC, using a variety of corrupt schemes. It was hardly his biggest victim, they noted: he is accused of illicitly obtaining $1.4 million from street-lighting contractors - and allegedly had a secret interest in one firm - and other industry companies; $330,000 from his own campaign committee; $140,000 from the J Division of Local 3, $95,000 from the Little League - which was described as constantly scrambling to make ends meet - and $35,000 from the Assembly.

DOI Commissioner Hearn announced Oct. 19 that her agency has for months deployed monitors to ensure that there is no further bid-rigging among vendors holding street-light contracts with the Department of Transportation, with the vendors paying the costs. No contractors have been charged yet in connection with the scheme.

Mr. Hughes said the CLC had set up a constitutional committee to examine the 400-union organization's constitution and governance system, with an eye toward reducing the power of whoever is president.

In his opinion, Mr. Hughes said, "The best play would be to move the president to a part-time position" and rotate the job among prominent labor leaders. For the moment, he will serve as acting CLC president. Such a shift in the function of that post would mean continuing to increase the power vested with the position of executive director. That job was recently created for Ed Ott, a veteran CLC staffer who has assumed many of Mr. McLaughlin's old duties over the past eight months.

No Commitment Yet

Asked whether Mr. Ott would be given that role on a more permanent basis, Mr. Hughes replied, "Ed is a very capable guy, and he's doing a great job now, but we haven't really gotten into that yet." Among the matters the CLC is grappling with, he said, is developing a long-term strategic plan for how it deals with its member unions.

An essential component of that plan, Mr. Hughes noted, is to rehabilitate an image that was tarnished by the charges against Mr. McLaughlin, which triggered frontpage headlines of "Boss Hog" in the New York Post and "King of Greed" in the Daily News.

"It's going to be very hard, and we have our work cut out for us," Mr. Hughes said. "But we're going to do our jobs until we get it straight."

Cleaning Up the CLC's Act

Reeling from an indictment of its longtime leader that includes charges that his $2.2 million worth of plundering included $185,000 from its own coffers, the AFL-CIO New York City Central Labor Council last week began trying to repair the damage to its operations and its reputation. The suspension of President Brian McLaughlin following his indictment on 44 different counts by Federal prosecutors was inevitable. So was the decision by CLC board chairman Denis Hughes, who also heads the State AFL-CIO, to order a review of the CLC's governance, including its financial procedures.

Mr. Hughes last week said he believed that in the future, the CLC president should serve part-time, and the position should be rotated among labor leaders. One reason the alleged misdeeds of Mr. McLaughlin may have gone undetected internally for his entire 11-year tenure, according to the timeline given by the 186- page indictment, was that the job as presently constituted allowed him to accumulate too much power with virtually no controls.

That would explain the checks written by the CLC that, according to prosecutors, allowed Mr. McLaughlin to rip off a Queens Little League and commit what appears to be a violation of the city's Campaign Finance Law by using CLC checks to reimburse "donors" for checks they wrote to two City Council candidates. Even more so, it would explain how, according to the U.S. Attorney's Office, a no-show job at the CLC could have been created without anyone questioning the payments to that individual.

The indictment charges that Mr. McLaughlin enlisted numerous employees to perform work for him and his family while they were getting paid by contractors. It indicates he was able to manage this in part by deploying four unidentified lieutenants who drew multiple salaries from organizations where he was in charge: from the CLC to one branch of Local 3 of the International Brotherhood of Electrical Workers; from his Queens Assembly office to his campaign committee.

Most labor leaders believed having a prominent union leader serve simultaneously as an elected official was an asset. This wasn't always the case, since there were times when labor's interests were not necessarily in sync with Mr. McLaughlin's political ambitions.

The allegations that he used the salaries of his multiple posts to build loyalty among his corrupt confederates further show the danger for empire-building if the CLC leader holds too much power.

Several CLC officials, even as they expressed chagrin about the alleged thievery and the damage it would do to labor's reputation, emphasized that the charges involved a single individual rather than a cabal of union leaders. Unfortunately, however, the CLC over the years has been home to more than a few corrupt unions, a matter about which it has seemed neutral, so long as those organizations made their dues payments. That attitude produced twin ironies in the 1986 election for president of the CLC following the death of longtime leader Harry van Arsdale Jr. Victor Gotbaum, the then-leader of District Council 37, had his bid for the job short-circuited when it was discovered that two of his larger locals had failed to remain current on their CLC dues and their votes were nullified.

During his campaign Mr. Gotbaum sought to cut into the huge support that Harry's son, Tom van Arsdale, had among the trades unions by appealing for help to William Cutolo. Mr. Cutolo had just a few hundred bakery and confectionary workers in his union; his influence stretched beyond his membership numbers, however, because he was a comer in the Colombo Crime Family. He did not deliver for Mr. Gotbaum, however, and seven years ago Mr. Cutolo, known as Wild Bill, disappeared from his union job and all other business, believed to be the casualty of an internal crime family war.

Fifteen years ago, a prominent official of the CLC, who is still active there, complained to a newspaper publisher about columns that had appeared criticizing two presidents of the Carpenters union and the head of the building service workers union. Federal investigators had identified the Carpenters union officials as associates of the Gambino and Genovese families, respectively, and the building workers union leader, the thuggish Gus Bevona, would later be identified as a Genovese associate. Why in the world would a ranking official in the city labor movement be protesting negative references to such people?

If the CLC is going to redeem its reputation, it can't stop with a few internal controls. It has to take stronger steps to indicate it is not blind when it comes to criminal activity by its members.

A good place to start would be Local 1181 of the Amalgamated Transit Union. Over the past two months, two officials of the union have pleaded guilty in a labor-racketeering case, and Matty "The Horse" Ianniello, identified by the Federal Government as one of the leaders of the Genovese family, has admitted to exerting control over the local. Local 1181's international inexplicably has yet to act; perhaps it is waiting for the criminal conviction of the local's president, Sal Battaglia, who goes on trial in three weeks.

Mr. Ianniello's guilty plea by itself is proof of Local 1181's corruption, and should be reason enough for the CLC to expel the local from its ranks until it is operating under new, honest leadership. That is the kind of action needed if the CLC wants send a clear signal of an absolute intolerance for corruption.