New ways of thinking about old crimes. Prosecuting corruption and organized criminal groups engaged in labor‐management racketeering
| Pages | 41-59 |
| Published date | 02 January 2009 |
| Date | 02 January 2009 |
| DOI | https://doi.org/10.1108/13590790910924957 |
| Author | Gerald A. Toner |
| Subject Matter | Accounting & finance |
New ways of thinking about
old crimes
Prosecuting corruption and organized criminal
groups engaged in labor-management
racketeering
Gerald A. Toner
Organized Crime and Racketeering Section,
United States Department of Justice, Washington, DC, USA
Abstract
Purpose – The objective of the paper is to describe how criminal prosecutors in the USA have
expanded the reach of federal statutes punishing fraud and extortion to combat the influence of
organized criminal groups in certain American labor unions and employee benefit plans from 1980 to
2006.
Design/methodology/approach – The paper reviews newspaper accounts and published judicial
decisions to explain how prosecutors have used fraud and extortion offenses in novel ways on a
case-by-case basis to prosecute labor-management corruption in the USA.
Findings – Although the American federal prosecutor’s arsenal is limited to statutory crimes,
prosecutors are continually evolving new means of addressing corruption on a case-specific basis in
the best tradition of Anglo-American common law. By diligently persuading trial judges, appellate
courts, and the US Congress of the merit of looking at fraud and extortion in new ways, federal
prosecutors have carried out the intent of the statutory laws which Congress enacted to deal with
corruption in government, business, and labor unions.
Practical implications – The federal criminal offense of “honest service fraud,” which was codified
by Congress only following successful criminal prosecutions of public and private corruption, will
continue to be used to address corruption on the part of persons holding fiduciary duties toward union
members and employee pension and health benefit plan participants as the American retired
population increases and the national government assumes greater oversight of employee health care.
Originality/value – The paper encourages the reader, especially those in law enforcement, to think
creatively about the scope of existing criminal statutes while reviewing or enforcing their application
to all forms of organizational corruption.
Keywords Corruption, Fraud,Crimes, United States of America, Trade unions
Paper type Viewpoint
I appreciate the opportunity to speak today about efforts by prosecutors in the US
Department of Justice to combat corruption and organized crime, specifically, corruption
within labor unions and employee pension and health care benefit plans within the USA [1].
On November 30, 2005,a reputed captain in an organized crime groupwas found shot
to death inside a car trunk outside a diner in Union City, New Jersey (Rashbaum, 2005).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-0790.htm
Gerald A. Toner is the Assistant Chief for Labor-Management Racketeering of the Organized
Crime and Racketeering Section, US Department of Justice (Criminal Division) in Washington,
DC. The views expressed are those of the author and do not necessarily represent the views or
policies of the US Department of Justice.
New ways
of thinking about
old crimes
41
Journal of Financial Crime
Vol. 16 No. 1, 2009
pp. 41-59
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790910924957
He had been missingsince the prior October when he disappeared while standing trial in
Brooklyn, New York, for conspiracy to defraud employee health care plans maintained
for waterfront industry employees by the ir employers and the International
Longshoremen’s Association (ILA)[2]. The reputed mob leader was charged with
having joined in a scheme to defraud the plans and their employee participants of both
property and their intangible right to the “honest service of the plans’ officers, agents,
administrators,and fiduciaries.” Specifically,he was alleged to have conspired withthree
union-designatedtrustees of the health plansand others to have the plans secretlyaward
prescription drug and mental health counseling service contracts to mob-favored
companies,hi return, the plan trustees wouldreceive the organized crime groups’support
of their continued selection and employment as officials in the waterfront union[3].
In earlier related prosecutions involving waterfront corruption, members and
associates of the Gambino and Genovese organized criminal groups in New York had
either pleaded or had been found guilty of having engaged in racketeering while
conspiring to corrupt the process whereby union officials are elected and union-scale
wages and health benefits are provided for union members and their families in
the waterfront industry [4]. And, prior to the trial, one of the plan’s uni on trustees,
whom the indictment alleged was associated with the mob leader’s “crew” of soldiers,
had pleaded guilty to his role in the conspiracy. At the end of the trial, however, the
reputed mob leader and the two other plan trustees in the case were acquitted of these
charges by the jury (Robbins, 2005). Some suspect that reputed mob captainwas in fact
convicted by a jury of his peers for his role in the trial and the events leading to his
indictment. Others have speculated that the slaying was the result of an unrelated
power struggle in the mob crew he allegedly headed (Capeci, 2007). The investigation
of the reputed mob leader’s disappearance and death continues.
But, regardless of the reasons for the alleged mob figure’s disappearance and
demise, the waterfront prosecution in his case demonstrated two important truths.
First, despite the fact that the fictional television series has come to an end, the violent
world of the Sopranos and La Cosa Nostra organized crime groups survives in the USA
despite many successful prosecutions by federal attorneys against organized criminal
activities of the so-called “American Mafia” over the past 30 years. Orga nized criminal
groups may have become increasingly sophisticated in the commission of white-collar
crimes while infiltrating legitimate businesses and labor unions [5]. But, violence
remains a staple in the labor racketeer’s pantry of corruption.
Second, despite the fact that the federal prosecutor’s arsenal is limited to statutory
crimes, this case reflected how American prosecutors are continually evolving new
ways of prosecuting corruption on a case-specific basis in the best tradition of
Anglo-American common law. By diligently persuading trial judges, appellate courts,
and sometimes the US Congress, of the merit of looking at old crimes in new ways,
federal prosecutors have carried out the intent of the statutory laws which Congress
has enacted to deal with corruption in government, in business, and in labor unions.
Of course,the idea of an expandingcriminal law is legal heresyin the USA. The concept
of constitutional checks and balances among the judicial, legislative, and executive
branches of the American national government demands that the Department of Justice
only enforce the criminal laws which the Congress writes. And, unlike state and local
governmental prosecutors who may have a wide variety of inchoate and anticipatory
offenses available to them in relatively well-ordered state criminal codes, the federal
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