also had a financial impact for the IBT. Twenty cents per member per month went from the IBT to the conferences. That was a net five percent income increase to the IBT. Together the $17 million from the assessment and the $3.4 million from closing the conferences meant a 30 percent more discretionary income to fund veiled campaign activity at the IBT.

On top of the $20 million unilaterally taken from the IBT locals, the Carey administration got another $11.5 million by freezing the pension plan for all local union employees. For a total of well over $30 million per year. The Teamster's Affiliate Pension Fund is cosponsored by all 550 plus local unions. I refer to this plan by it's initials, TAPF.

The TAPF fund accounting in 1996 shows that the plan had $48 million more in assets than it needed to meet it's liabilities. Yet, the IBT lists the TAPF as a $28 million liability on it's books. On the books of the TAPF, there is no receivable for $28 million, however. This purposeful use of the TAPF is in violation of the legal requirement that it be solely operated for the benefit of it's participants and their beneficiaries. That's the exclusive benefit rule of ERISA; that is the heart of ERISA. It is being violated here in a very big way.

In 1995, we had $17.25 million coming in from an assessment, saving $3.4 million from the conferences, the TAPF saved $11.62 million, for a total of $32.31 million. The IBT did not get the $40 million dues increase it tried to get by a direct ballot referendum, but it did get 75 percent of the money through the back door, without any votes. At the beginning of 1995, IBT leaders had to keep the cash flow coming in to continue large numbers of people on the IBT payroll and prepared to hire more field operatives and PR staff, while simultaneously appearing to have deficit spending under control. It was absolutely essential to keep the staff huge and local unions financially hurting. Making local leaders insecure about their finances produces a conducive environment for pledges of political support in return for pledges of financial assistance.

There is pension fraud at the IBT in immense proportion.

On February 26, 1998, we filed charges with the Courts' Overseers. These are the charges. We filed them with the Independent Review Board, the financial monitor, the election officer, as well as the United States Attorney's Office, and the Pension and Welfare Department of the Department of Labor. We filed them against each Teamster affiliate's pension fund trustee; Ronald Carey, the IBT General President; Thomas Sever, the IBT General Secretary-Treasurer, who now also acts in the stead of the IBT president, who is on leave; Aaron Belk, IBT Vice President; and every general executive board vice president who is responsible for this fraud. We've charged them with violating ERISA pension laws, violations of their fiduciary duties under the LMRDA, and gross violations of the election rules and the IBT constitution. That analysis of the TAPF is long and complicated. I'm not going to try to explain it right now. I included it as part of my written testimony for the record.

The IBT leaders sought to guarantee their ability to carry increased staff in order to get reelected. This scheme bore fruit in 1996, the election year. In that year, the payroll numbers swelled to 536 people; 210 of those people are shown on the LM-2 as getting field work expenses for most of the year. That excludes 41 people with clerical type titles, which I assume were hired for the convention. That compares to 480 people

in 1995 as total payroll; only 145 of them showing field work expenses, and 141 in the field in 1994, and 139 operatives in 1993, as you can see on the chart.

That's an increase of 44 percent of field staff for the 1996-election year from the year before. Forty-four percent more professional field operators, 65 professional persuaders is an enormous campaign asset. If they were deliberately added to the staff to assist the election campaign, then it is an illegal act.

As reported in the press the papers of Jere Nash, former campaign manager, contain a March 10th memo to Aaron Belk, suggesting that targeted budget increases and added personnel will help the campaign. These extra bodies could not be hired without the assessment. On March 11, 1998, at an IRB hearing on Mr. Carey, Mr. Nash testified under oath that he had let President Carey know in writing whom to thank for his campaign. That memorandum, dated January 27, 1997, from Nash to Carey states that it is the, “summary of who did what."

I am sure the committee will be looking into the details of that memorandum, so I'm going to move off the discussion of the memorandum, simply to say that almost the entire building, I conclude from studying the memorandum, was converted into a campaign apparatus. All of those persons in the memo had full time jobs at the IBT, yet they were all campaigning full time and all of that is illegal and all of it was funded by theft, the deceitful accounting of union dues, and pension money.

I'm here to respectfully request that you monitor this situation. If the inaction evidenced to date continues in the face of the charges filed on February 26th, then the federally appointed monitors will appear complicit in felonious acts. We have provided documentary evidence and written analysis to this committee and to the court appointed IRB, the Independent Review Board; the election officer; the financial monitor of a massive fraud involving the Teamster's Affiliate Pension Fund. That this multimillion thievery started during the prior election, I have been informed, that it will not be considered seriously by today's election officer. So the illusion of reform under government supervision continues.

In order to pay for their huge campaigns the IBT's officers bamboozled the union's rank and file. The officers of the Federal court in the Southern District and the American public. They were only able to do this because everybody watching this election believed that the incumbent Carey Administration was honest. And at the outset, so did I. Capitalizing on this fact the incumbent's chief campaign strategy was to label their political opponents in the union “old guard, Mafia-connected, corrupt officials."

I have firsthand experience with this. In the interest of time, maybe I should skip most of it, except perhaps to say that during the convention, they put out a press release saying that those who supported local autonomy, were supporters of the Mafia. I wrote the amendment on local autonomy and tried to get the convention to expand on that concept. If Bill Neuchau were still alive, whose local I today head, who taught me what it meant to be locally autonomous, were here to say a few things, I'm afraid we would have to sensor what he would have to say.

I'm secure enough in my relationship--and I was threatened with death. I've got to throw that in there.

I'm secure of enough in my relationship with my local members that through of all that, we held ourselves together. We have negotiated every contract, we have improved our benefit plans. What I sought to do was simply exercise my opinion to freely associate. I wasn't interested in running for IBT office and I am not running for IBT office.

On October 15th, 1997, this committee took testimony about the Teamster's union, including from persons whose purpose on the payroll was to get the incumbents reelected. That same day the General Secretary-Treasurer, Tom Sever, signed the TAPF IRS Form 5500 for 1996, proving that he's violated Federal law. That same day a White House press release was issues from Rio de Janeiro, Brazil, where the President was traveling, announcing that the former general counsel of the Teamster's union and close advisor to the Teamster General President Ron Carey, had been appointed by the U.S. President to the Pension Benefit Guarantee Corporation's Advisory Board. That was a very busy day, but this is a different day.

When the membership of this union is told of the government's continued inaction in the face of knowing about these illegal acts, their confidence in the election process will utterly collapse. The popular imagery of corruption and Teamster pension funds will become the image of the government's oversight of the union. The reflected light from campaign finance embezzlement now illuminates the government's supervision of the union. In the coming weeks, add the tale of the reformers rigging pension funds, while the government's monitors sit by and do nothing. In this atmosphere, no free and fair election can occur unless the persons responsible for this are thoroughly and quickly investigated and punished. The linchpin of reform in the union is the practice of democracy, but the system is being strangled. My short history is one small window on the rape of a labor organization. That's what occurred in the last eight years.

Under the banner of eliminating corruption, some of the worst abuses of the right to freely choose representation have been tolerated. While rooting out corruption has been trumpeted by the incumbent IBT officers, the very abuses of power, they were elected to eliminate continued unabated.

We desperately need you intervention to focus the spotlight on the corruption and failures on the part of the International union's officers and the government's monitors to halt the wholesale violations of both members rights and pension laws. We want the restoration of democracy. Make no mistake, we are reformers, but we are strangled. We are desperate to breath the oxygen of reform that democracy is supposed to bring us. But we are running out of air.

This is just one window on the trashing of the IBT constitution and the wholesale violation of ERISA that have been rampant since 1994. It's time, we believe, for the government's investigators to permanently remove the rose colored tint from their magnifying glass.

Thank you for your time, Mr. Chairman.

WRITTEN STATEMENT OF JOEL LEFEVRE, SECRETARY

TREASURER/PRINCIPAL OFFICER, INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, LOCAL 840 - SEE APPENDIX E

Chairman Hoekstra. Thank you very much to the panel. I believe we're in the process, or the rose colored glasses have been removed. As we will see in the second panel, the numbers are staggering. Not only has the net worth of the Teamsters gone from $150 plus million to $700,000, but I think when you take the dues and all of those types of things that have come in, we're talking in the neighborhood of somewhere to $600 to $700 million of expenditures by the IBT during that time. And that doesn't even take into consideration, Mr. LeFevre, all the numbers that you're talking about with the pensions. My background has always said you go where the money is and I've got to believe there's a lot of money there, and if the behavior that we've seen in these other areas overlaps into pensions, who knows where we end up.

Mr. Simpson and Mr. DeRusha, you brought this concern about the finances to the General Executive Board in early 1993. Is that correct? Is this in full meetings? Are there minutes or records of these meetings that tell us what went on?

Mr. DeRusha. There certainly should be, but knowing how things were done there, they don't always reflect what happened. But there were General Executive Board meetings where both Mr. Simpson, Leal, myself, got up and spoke about the financial things we were seeing, recommending that a convention be held--trying to stop the hemorrhage, as we called it, of the funds. Most of the time we were ridiculed, laughed at and sneered at, or whatever, and a "Sit down, we don't want to hear it" type of thing.

Chairman Hoekstra. That would be recorded in? Did you ever get minutes of the meetings?

Mr. DeRusha. From after the letter of August 3, 1993, we got nothing out of that executive board meeting.

Chairman Hoekstra. Are there other ways that you could find out what went on in those meetings?

Mr. DeRusha. Much of them were taped.

Chairman Hoekstra. Excuse me?

Mr. DeRusha. Much of them were taped and then transcribed into a manuscript or minutes.

Chairman Hoekstra. The meetings were actually taped?

Mr. DeRusha. They were--by the International.

Chairman Hoekstra. So the executive board meetings are on tape? So-

Mr. DeRusha. Well, they were.

Chairman Hoekstra. They were, at least at one--those meetings are on tape.

Mr. DeRusha. In one phase or another, they were. Yes, that's correct.

Chairman Hoekstra. Interesting. Okay. You don't know what happens to these recordings.

Mr. DeRusha. I have no idea; I have no idea.

Chairman Hoekstra. Okay. What process--you were never given access to--as a trustee, what was your responsibility?

Mr. DeRusha. Well, to look at the books, the records of the financial--twice a year.

Chairman Hoekstra. You're elected?

Mr. DeRusha. I was elected as a trustee; I was appointed as a trustee in January of 1989, and then in the convention of 1991 I was elected.

Chairman Hoekstra. And I believe, Mr. Simpson, you were elected

Mr. DeRusha. Same time.

Chairman Hoekstra. You had the largest majority or plurality of any person elected in that convention?

Mr. Simpson. Yes, I did. That was at the 1991 convention, but I was actually appointed to that position about six months before--December 1990, I think it was.