2005-05-02 revised boom report ocr

8/14/2019 2005-05-02 Revised Boom Report Ocr

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CONFIDENTIAL: NOT FOR PUBLIC FILINGPENDING COURT REVIEW

UNITED STATES DISTRICT COURTSOUTHER N DISTRICT OF NEW YORKUNITED STATES OF AMERICA,

Plaintiff,

-against-DISTRICT COUNCIL OF NEW YO RK CITY ANDVICINITY OF THE UNITED BROTHERHOOD OFCARPEN TERS AND JOINERS OF AMERICA, et al.,

Defendants.

90 Civ. 5722 (CSH)

INDEPENDENT IIYVESTIGATOR'S REPORT ON0Y BOOM CONSTRUCTION ENTERPRISES, INC


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TABLEOF CONTENTS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ntroduction 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Jacobi Hospital Jobsite 2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Cash Payments at O'Shea's Emerald Bar 20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 The Boom Job at Columbia Medical Center 21

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11. The Boom Job at Brooklyn Tabernacle 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .V . Other Boom Jobs 26

. . . . . . . . . . . . . . . . . . . . . . .. Oversight by the District Coun cil and its Business Agents 27VI. The Impact of the Request S ystem on Contractors' Ability to Violate the CBA and theLawbyPay ingCash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9


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Introduction

The following report to the Court, my fourth since my appointment as Independent

Investigator for the District Council of New York City and Vicinity of the UnitedBrotherhood of Carpenters and Joiners ("the District Council"), summarizes the findingsof my investigation into one contractor's practice of paying cash, "off the books," to somenumber of Carpenters it employed. My conclusion is that Boom ConstructionEnterprises, Inc. ("Boom") routinely paid a number of its Carpenters off the books. This

practice was dependent on the cooperation of corrupt shop stewards who agreed to omitfrom their shop steward reports names of some of the Carpenters working at Boom jobsites in exchange for additional, unreported compensation.' Although this corrupt activityexisted at many Boom job sites, my investigation focused primarily on Boom's JacobiHospital job site because of the large number of Carpenters who worked off the books at

this site. Because of the pervasiveness of this conduct and the District Council's failureor inability to address it, I also include in this report a cursory discussion of other jobs forwhich Boom paid cash to Carpenters.

The direct result of this corrupt conduct is that Carpenters whose names areomitted from the shop steward reports are not paid their health and pension benefits, are

The shop steward reports are filed with the Local Union and transmitted to the DistrictCouncil for record-keeping purposes. They are used to account for the identity and hours ofCarpenters on a job site, to determine whether Carpenters are being paid the wages and benefitsto which they are entitled under the CBA, and to monitor whether the "50/50" requirement isbeing met. Because of the significance of shop steward reports to the job referral system, thesubject of how they are maintained and accounted for- a subject about which serious questionshave arisen during my investigation of Tri-Built Construction- should be addressed in a separatereport, whether written by me or a successor.


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usually paid less than the union wage, and can avoid income tax on the unreportedincome. There are several indirect results of this practice and they are devastating to theprotections that the District Council - or any union - s expected to provide. I discussthese results - which seriously undermine, if not eviscerate, the job referral provisions ofthe 1994Consent Decree - n the final section of this report.I. The Jacobi Hospital Jobsite

I began to take a preliminary look at Boom in June of 2003, after receiving a callon my dedicated Carpenter "Hot Line" advising that a business agent for one of the localDistrict Council unions had received an anonymous call from a Carpenter saying thatBoom was paying Carpenters at the Jacobi Hospital job site in cash. Donald Sobocienski,the Chief Investigator for the Independent Investigator ("II"), visited the job site alongwith another investigator working on the I1 team at the end of June, 2003. They visitedthe Jacboi office of the prime contractor,T. A. Ahern Contractors Corp.("Ahernv), whichhad retained Boom as a subcontractor. Ahern made available records it maintained at thesite pertaining to Boom's w~ rkfo rc e. ~

The Ahern records shown to the I1 team consisted of "headcount" records made byAhern's project superintendent and a few certified payroll reports submitted by Boom, viaAhern, to the Dormitory Authority of the State of New York ("DASNY"), the overseer of

I serve as Monitor of Ahern and the investigative team has a good working relationshipwith Ahern personnel.


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the Jacobi project.3 The investigators compared the Ahern headcounts and the certifiedpayroll reports with corresponding District Council shop steward reports, and foundsignificant discrepancies. In comparing the documents available from Ahern to the shopsteward reports, we found that Ahern's headcount documentation and certified payrollreports showed more Boom Carpenters at the site than were reflected on the Boom shopsteward report^.^

I made this information available to the District Council, which met with DASNYrepresentatives and shared with them the discrepancies between the certified payroll

Because DASNY is a state agency, it requires contractors and sub-contractors it retainsto submit all payroll rosters, certified as to accuracy. The primary purpose of this is to insure thatthe contractors are complying with the prevailing wage statute.By contrast, the certified payroll reports showed more Carpenters on the site than Ahernhad counted. Because DASNY pays its contractors and subcontractors on a flat fee basis,regardless of the number of workers employed, it is not clear to me why Boom padded thecertified payroll reports. However, it is possible that the Boom owners needed more names on

the payroll reports in order to camouflage the discrepancy between the headcounts and thenumber of Carpenters listed on the shop steward reports. (The additional names on the payrollreports were those of Boom workers at other sites. Therefore, an auditor might be satisfied inconfirming that the workers listed on the headcount reports worked for Boom, withoutidentifying the specific Boom job site at which those workers had been employed.) The DASNYInspector General provided another possible explanation for Boom's padding of its certifiedpayroll. He explained that dishonest contractors may do this in anticipation of claiming, at theend of a job, additional compensation for hiring "extra7' workers who assertedly were forced tosit idle while another trade delayed the contractor's work. Or, he theorized, the additionalexpense of the extra workers on the certified payroll report might have been an attempt togenerate false additional business expenses for tax purposes.Contrary to the comment in n.3 of Gary Silverman's April 21 letter to the Court, we donot say here that the Ahern headcounts contained names. But the headcount reports do show

numbers of Carpenters and those numbers can be compared to the numbers of names listed onthe shop steward reports. In any event, some of the Ahern headcount reports did contain names.And where they did not, our interviews of the Ahern foreman allowed us to obtain names.


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reports that had been submitted to DASNY and the shop steward reports. At that point inmy tenure as Independent Investigator (roughly six months into it), I still was of the view

that the District Council and its Anti-Comption Program should be capable ofundertaking and resolving information of this kind. I therefore deferred to the union'sinvestigative process for some months. While Chief Investigator Sobocienski consultedwith and kept himself apprized of the steps taken by the District Council (for instance,Mr. Sobocienski attended the meeting between the District Council and DASNY

representatives), we did not aggressively pursue this investigation until November of2003, when I became frustrated with the pace of the District Council's inquiry. I noticedthe deposition of Jason Flaherty ("Flaherty"), the Carpenter who had served as the shopsteward for Boom at the Jacobi site from almost the beginning of the job until mid-August, 2003, when the District Council removed him as shop steward.*

In the interim, the District Council had taken several steps. In midJuly of 2003,the District Council interviewed Flaherty and obtained fiom him an affidavit in which he

The District Council is unclear concerning the precise basis upon which it removedFlaherty fiom the shop steward position. Mr. Flaherty testified that he was told that the reasonsfor his removal were that: (1) he did not maintain a written daily headcount and (2) he permitteda non-union Boom employee to be present in the shanty used by the Carpenters to store theirtools. (Deposition of Jason Flaherty, taken January 8,2004 and June 9,2004 ["FlahertyDeposition"], submitted herewith as Exhibit 1 A and B, respectively, at A 140, 146.) TheDistrict Council has not provided me with any paperwork associated with this action and hasconceded that it did not have any written (or oral) criteria or procedures for removing a shopsteward. With input from me, the District Council is in the process of drafting a proceduralprotocol. In any event, as detailed below, I have no doubt that Jason Flaherty was submittingfraudulent shop steward reports by omitting the names of Boom Carpenters working at Jacobi.


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asserted that his shop steward reports were accurate to the best of his knowledge. InAugust of 2003 interns working at the District Council constructed a chart tracking thoseCarpenters reported in Boom's certified payroll records for Jacobi with shop stewardreports for all of Boom's jobs, and benefit payments made by Boom to the Benefit Funds.These data confirmed that certain Carpenters Boom listed for the Jacobi site had in factworked at Boom job sites other than Jacobi. At the end of October, the District Councilinterviewed three Carpenters who had worked for Boom as shop stewards on sites otherthan Jacobi; Mr. Sobocienski attended these interviews. Meanwhile, in August of 2003, Ireceived an anonymous call on the Hot Line, informing me that Boom was payingCarpenters cash at a job at Macy's in Brooklyn.

Also in August of 2003, as noted above, the District Council removed JasonFlaherty as the shop steward at Jacobi. The District Council points out in footnote 3 toMr. Silverman's April 2 1,2005 letter to the Court, that I may not have expressedsufficiently my appreciation of the efforts of Thomas McKeon, one the business agentsresponsible for the Jacobi site. I take this opportunity to commend him for his attention tohis responsibilities. I believe that his diligence stemmed in part from the fact that he(alone, among all of the District Council business agents) was willing to meet directlywith me and I1 staff to review evidence and exhibits that were relevant to the performanceof his duties. 1would encourage the next Independent Investigator to be more vigorous inforging close relationships with the business agents and to insist that they communicate


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directly with him concerning Hot Line matters which he refers to the union. I believe thatsuch meetings would enhance business agents' understanding of how to detect corruptionat the jobs they supervise and would underscore the agents' appreciation for theimportance of this aspect of their jobs.

By November of 2003, as noted above, I decided that the I1 team should becomemore actively involved and that sworn testimony was appropriate. After a lengthyadjournment over the holidays, I deposed Jason Flaherty in early January 2004. Flahertylied to me under oath, insisting that his shop steward reports had been accurate and thathe was unaware of any improprieties on the Jacobi job site. (Flaherty Depostion, Exhibit1, at A 9 1,94, 1 13 ) Flaherty persisted in this untruth even after he returned to giveadditional testimony five months later, when I gave him the opportunity to purge his falsetestimony (Exhibit 1 at B 214-1 5,218-19, 229.)6 Given Flaherty's refusal to tell the truth

even after he was given a second chance to do so, I respecthlly recommend that the Courtrefer Flaherty's conduct to the Government for criminal prosecution.

At the end of January 2004, I subpoenaed DASNY for all documents relating toBoom's work at Jacobi and in early May 2004, Mr. Sobocienski and I traveled to Albany

Once I had irrefutable proof that Carpenters had been working for Boom at Jacobi offthe shop steward reports, I gave each of the witnesses who I believed had committed perjury andobstruction of justice in their initial depositions an opportunity to return for another depositionsession at which they might correct their testimony. I did so in a letter explaining myconclusions about their testimony, my intention to recommend a criminal referral and aninvitation to return to my office for another deposition. A sample of this form letter is submittedherewith as Exhibit 2.


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to review DASNY's documents and meet with the DASNY Inspector General. Mr.Sobocienski and I were then able to compare several months worth of headcount recordssubmitted to DASNY by Bovis Lend Lease ("Bovis"), the construction manager for theJacobi project; the certified payroll reports submitted to DASNY; and the shop stewardreports that we had obtained from the District Council. This comparison confirmedmypreliminary conclusion that the shop steward reports did not list all of the Carpentersworking for Boom at the Jacobi job site.

In February of 2004 I deposed Derek McKenna ("McKenna"), the owner of Boomwho oversaw the Jacobi job site.' At that time McKenna, too, lied when I asked him toexplain the discrepancies I found between: (a) the shop steward reports and the certifiedpayroll forms filed with the DASNY and (b) the shop steward reports and the generalcontractor's headcount. He swore that Boom did not pay Carpenters cash (Deposition ofDerek McKenna, taken February 26,2004, July 13,2004 and December 6,2004["McKenna Deposition"], submitted herewith as Exhibit 3 A, B and C, respectively, at A78-79, 80-81)' and that discrepancies between the shop steward reports and the certified

'Boom's other 50% owner, Sean Doherty, appears not to have had a substantial presenceat the Jacobi job site.

I am providing the last two instalments of McKenna's deposition (Exhibit 3 B and C)only to the Court and to McKenna's counsel, pending the Court's review of this report andcounsel's opportunity to be heard, before the Court determines what, if any, action it wishes totake with respect to McKenna. I am treating these transcripts in this fashion because of myrepresentation to McKenna and his counsel that, although I cannot commit either the Court or theGovernment, I would recommend that McKenna not be prosecuted forperjury or obstruction ofjustice as long as he testified truthfully in his second and thud deposition instalments. I believe

TI


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payroll reports were due to "clerical errors" caused, for example, by the fact that Boomworkers sometimes were sent back and forth between the Jacobi job site and the job site

at the Columbia Medical Center. (Exhibit 3 at A 185, 191-93.) At this first depositionsession, Mr. McKenna claimed that he could not explain how these "clerical errors" couldhave occurred, asserting that he simply signed the documents that were given to him anddid not know how they were prepared. (Id. at 193.)

On March 12,2004, the Hot Line received an anonymous voicemail message

stating that the Boom shop steward at the Jacobi site and other Carpenters working therewere "on the take." On March 18, the OWL supervisor related the substance of a call hehad received that day from a union member who provided more detailed informationobtained from an unidentified Jacobi Carpenter. On March 19, the I1 team received fromthe District Council a shop steward report prepared by a substitute shop steward, Horace

Kerr, for a week during which the then-shop steward, Delroy Haughton, was on vacation.Mr. Kerr's shop steward report for the week of February 23,2004 (the only full week hewas on the job) showed 987 Carpenter hours. By comparison, Mr. Haughton's shopsteward reports for March 1 (which the I1 team received on April 20) showed only 735Carpenter hours and his shop steward reports for the full week prior to his vacation, the

that McKennaYsubsequent testimony was substantially truthful (see n. 18, below) and Irespectfullyrequest that the Court hear from McKenna's counsel and from me before permittingthese transcripts to be used for criminal prosecution of McKenna.


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week of February 9 , showed only 695 C arpenter hours.9Mr. K err's shop steward reports also contained several names that had not

appeared on Mr. Haughton's previous sho p steward reports. The D istrict Council servednotices to appear and began interviewing those Carpenters suspected of working for c ashin late March a nd early April. M r. Sobocienski participated in these interviews. I servednotices o f deposition o n most of the sam e Carpenters and began taking their depositionsin early April.

Just before the depositions began, on M arch 3 1,20 04, the H ot Line received ananonymous call from a union member w ho repeated the allegation that Bo om had cashworkers at Jacobi and that the shop stew ard was aware of this. M ore importantly, thiscaller also told us that the cash payments were made on Fridays at a bar in the Bronx anddescribed its location. The caller further advised that the Boom C arpe nters received theirpay from Boom 's foreman in the back o f the bar. This allowed the I1 team to arrange forvideo surveillance inside and outside the ba r in question on the next Friday, April 2. The

McK enna testified, on his second visit to my office when he decided to admit that hepaid cash at Jacobi, that Horace Kerr performed his job diligently and attempted to list all of theCarpenters on his shop steward report but that he m issed two or three workers because he did notsee them. (McKenna Deposition, Exhibit 3, at B 306-07.) Other honest District Council shopstewards whose names were mentioned by Boom foreman Mark M cMorrow o r other Carpentersare: Vincent C iararnella at a Boom job at P.S. 129; Mark Landesberg at P.S. 128;Edward Ortegaat Brooklyn Tabernacle (Deposition of Mark M cMorrow, ["Mark McMorrow Deposition"]submitted herewith as Exhibit 6, at B 251-5 3,288 -89); Eldridge Brown at the Verizon job on12ShStreet (D eposition of C. Simon, r 'C. Simon Deposition"] submitted herewith as Exhibit 7,at B 91 -92); and an unidentified Afiican-Am erican shop steward at aVerizon job in Brooklyn(Deposition of Hank Simon, ["H. Simon Deposition"] submitted herewith as Exhibit 8, at 57-58).


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videotape of the outside of the bar (submitted herewith as Exhibit 4) shows several Boomemployees entering the bar and then exiting within minutes. The videotape of the bar'sinterior (submitted herewith as Exhibit 5 ) , coupled with the observations of theinvestigator inside the bar, show that "Shanty Martin"" obtained envelopes from thebartender and walked, carrying a sheet of paper, into a backroom into which he wasfollowed, one by one, by several BoornIJacobi workers who then quickly exited thatroom, sometimes clutching envelopes.

As noted above, I began taking depositions of Carpenter journeymen in earlyApril, 2004. Between April 9 and June 22,I conducted seven depositions of Carpenterjourneymen working at Boom's Jacobi site. 1selected these Carpenters because I hadinformation leading me to believe that they had worked at the site for cash; some of themhad appeared in the video made during surveillance of Shea's Emerald Bar. During thesedepositions, I played the videotape that had been had made outside O'Shea's Emerald Baron April 2, showing Boom Carpenters entering and then quickly leaving the bar.

Just as there had been an increase in the number of Carpenter hours on theBoomlJacobi shop steward reports during the full week for which Horace Kerr was thetemporary shop steward, once Carpenters were shown this videotape, the shop stewardreports started to become more complete. The number of names on the shop steward

lo "Shanty Martin" was the nickname assigned to a non-union Boom worker namedMartin Murray, to distinguish him from the Martin Murray who was a Carpenter working forBoom (frequently off the shop steward reports) at Jacobi.


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reports continued to increase as more Boom Carpenters were called in to testify.Also during this period, I deposed shop steward Delroy Haughton (and, as noted

above, former shop steward Jason Flaherty); Mark McMorrow, the Boom foreman at theJacobi site (and a District Council member); and "Shanty Martin", the non-union Boomemployee who worked in the Jacobi "shanty" from which he dispensed and collectedtools.

It was my hope that these witnesses, or at least some of them, when confrontedwith the warnings I gave with respect to perjury and obstruction of justice, would testifytruthfully about cash payments by Boom. However, to a person, these witnesses liedunder oath. They each said that they had been paid their proper wages and benefits,denied having been paid in cash (or, in the case of Mark McMorrow and Shanty Martin,denied having delivered any cash payments), and denied having any reason to suspect thaanyone else on this job was kept off the shop steward reports and paid cash. Even whenconfronted with the videotape showing themselves and/or co-workers entering and exitinthe bar we surveilled within time spans as short as ninety seconds, these witnesses deniedthat there had been cash payments made at the bar. Rather, they maintained that they ortheir colleagues had been at the bar purely for social reasons. (See, Depositions ofJeremiah Casey, ["Casey Deposition"] submitted herewith as Exhibit 9, at A 35, 60,79;Alex Frederick Deposition, ["Frederick Deposition"] submitted herewith as Exhibit 10, aA 67,96- 100; C. Simon Deposition, Exhibit 7, at A 65-60, 117-21; Glensworth Culzac,


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["Culzac Deposition"] herewith submitted as Exhibit 11, at A 39,71; "Carpenter" MartinMurray Deposition, ["Carpenter Murray Deposition"] herewith submitted as Exhibit 12 ,

at A 100, 133, 136; and Recaldo Joseph, ["Joseph Deposition"] herewith submitted asExhibit 13, at A 93, 130-3 1, 139; see also, Mark McMorrow Deposition, Exhibit 6, atA122.)

I am pleased to report that eventually each of these witnesses, with the exceptionof Delroy Haughton and Jason Flaherty, returned and purged their perjury." It is clear to

me that the only reason these workers were finally willing to admit the truth was that thei~employer, Boom co-owner Derek McKenna, had already done so and then advised themto the same.12

Although Mr. Haughton did not accept my invitation to return to my office to givetruthful testimony, he did submit to an interview with the District Council on January 17,2004. The District Council's summary of that interview is submitted as Exhibit 16. Inthat interview, Haughton admits to have taken cash in exchange for keeping Carpentersoff the shop steward reports. Not surprisingly, there are discrepancies between McKenna

"The depositions of Delroy Haughton and Jason Flaherty are submitted as Exhibits 14Aand B, and 1A andB, respectively. On October 27,2004, the District Council filed chargesagainst Flaherty, alleging that he had violated the union's constitution by submitting fraudulentshop steward reports and lying to me. I submit a copy of those charges as Exhibit 15 .

'* n fact, McKenna met with each of the Carpenter journeymen who had worked atJacobi and been deposed by me, in an attempt to reconstruct the number of hours they hadworked off the books.


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and Haughton as to who initiated the subject of money and how much money was paid.13McKenna returned to my office to correct his testimony in mid-July, 2004, several

weeks after I telephoned the attorney who had represented him at the time of his initialtestimony. I had explained to McKenna's attorney that I intended to recommend to theCourt that it make a criminal referral of this matter because I believed there to besubstantial evidence that McKenna had committed pe ury, obstruction of justice andperhaps other criminal acts. At this point, McKenna retained a criminal defense attorneyand came in to revise his testimony.

When McKenna came back to testify in July of 2004,14 he admitted that there hadbeen a cash payroll at Jacobi. He testified that there were as many as two to fiveCarpenters omitted from the shop steward report each day. (McKenna Deposition at B350-51.) Three weeks into Flaherty's tenure as shop steward, in November of 2002(shortly after the Jacobi job began), McKenna approached him with the request that

l3 Haughton told the District Council that he had lied in his testimony before me becauseof a hostile attitude onmy part and because he did not like the way I asked him questions. GaryRothrnan, counsel for the District Council, who was present at the deposition and at theinterview, stated that I had treated Haughton professionally and like a gentleman. Haughtonresponded that he was unhappy with the way I had spoken with him outside Mr. Rothrnan'spresence prior to the deposition. (Exhibit 16 at 3.)

l 4 Contrary to my usual practice of inviting representatives of the Government and theDistrict Council to attend the depositions I take in this matter, I did not invite either of the partiesto be present when Mr. McKenna returned on July 13 (and again on December 6). Experience inthe I1 position has taught me that there are occasions on which, in order to get at the truth, I needto limit a witness' direct exposure to other parties in order to alleviate the witness' fears orfeelings of intimidation andlor to protect the confidentiality of the investigative process. I takefull responsibility for these decisions and am prepared to discuss them hrther at the Court'sconvenience and in whatever setting the Court deems appropriate.


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"Shanty Martin," the non-union worker who gave out and collected tools and didpaperwork, be allowed to get the Carpenters' coffee sometimes and to help unload truckswhen there were deliveries, contrary to the CBA. ( Id . at 278, 280.) Flaherty agreed.Within two weeks he asked for money in exchange for permitting these deviations fromthe CBA. McKenna began to give Flaherty an additional $300 per week. ( Id . at 279.)

McKenna then hired five or six Carpenters to be paid in cash, based on anunderstanding with Flaherty that these workers' names would not appear on the shopsteward reports. Flaherty demanded more money for this additional deception and beganto receive between $500 and $700 per week. These payments were made in cash andsometimes were made off-site, usually on Fridays. ( Id . at 279-83,348-39.) McKennatestified that he believes that he paid Flaherty a total of approximately $7000 in exchangefor keeping two to five Carpenters per day off the shop steward reports each week andallowing "Shanty Martin" to perform Carpenters7 work.'' ( Id . at 347-35 1 )

Delroy Haughton, the shop steward assigned to Boom's Jacobi site after Flahertywas removed, was paid substantial cash bribes to keep Carpenter journeymen off the shopsteward reports. (Id. at 346.) McKenna testified that three or four weeks after Haughtonbegan as shop steward, Boom's foreman at Jacobi, Mark McMorrow, told McKenna that

'' ometimes Carpenters were on the shop steward reports and therefore paid properwages and benefits for some days of the week but not others. This typically occurred after abusiness agent had been to the job site and was aware how many Carpenters had been there.Casey Deposition, Exhibit 9, at B 178-79; Deposition of ShornPink ["Pink Deposition"],herewith submitted as Exhibit 17, at 89-90; Deposition of Greg Duhig ["Duhig Deposition"],herewith submitted as Exhibit 18 at B 250.)


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Haughton was not working, interfering with other Carpenters7 work, and leaving early.(Id. at 362-63.) When McKenna confronted Haughton about this, Haughton said "you

help me, I'll help you."McKenna told Haughton that he knew two Carpenters whom he wanted to hire and

keep off the shop steward reports: Haughton7s nitial demand, McKenna testified, washalf the money that Boom would save by not paying benefits and full wages for theseworkers. Ultimately, McKenna paid Haughton $300 to $500 per week for each Carpenter

kept off the shop steward reports. (Id. At 366.) Haughton began to maintain two sets ofshop steward reports: an accurate one to serve as a payroll sheet for McKenna and aninaccurate, abridged, version for the District Council, omitting the names of Carpenterswho were getting paid cash, lower wages and no benefits. (Id. at 369.) In addition to thecash he received, Haughton took the liberty of doing little work and often arriving lateand leaving early. (Id. at 370-71 )I6 McKenna testified that he paid Haughton a total ofmore than $60,000. (Id. at 448.)

Indeed, Haughton apparently was so aggressive and persistent in his demands uponMcKenna that he was charged by the United States Attorney's Office with acceptingbribes from an employer in exchange for permitting the employer to contravene the CBA,

l6 Haughton7s asual attitude about work irritated other Carpenters on the job site (Id. at363,] and even led to a physical confrontation between Haughton and Shanty Martin whenHaughton, trying to leave early one day, tried forcibly to take from Shanty Martin the key to theshanty in which Haughton's personal belongings were locked. Duhig Deposition, Exhibit 18, atB 252-53,255-56; Deposition of "Shantf7 Martin Murray ["Shanty Martin Murray Deposition"],herewith submitted as Exhibit 19, at B 178-81.)


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in violation of 29 U.S.C. 5 186. A copy of the criminal complaint, sworn on O ctober 15,2004, is submitted as Exhibit 20 . ' ~Because of his unpurged perjury and obstruction ofjustice, I respectfully recomm end that the Court refer this matter to the United StatesAttorney 's office for consideration of possible criminal charges in addition to those withwhich Haugton has thus far been charged.

Aggressive conduct toward M cKenna aside, the most egregious aspect ofHaughton's conduct was his betrayal of the Carpenters on the job site. Haughton made amockery of his shop steward 's obligation to report to the District Council the names ofall Carpenters on the job site so that they would be paid their proper w ages and benefits.In fact, according to McK enna, there were occasions when H aughton left off even moreCarpenters than McKenna had requested so that he could demand a larger cash pay-off.(Id.at 368.) Several Carpenters testified that when they asked H aughton to include themon the shop steward reports, Haughton either gave them an evasive answer or told themthat they would have to get McK enna's approval first. (Pink Deposition, Exhibit 17, at96-97; Frederick Deposition, Exhibit 10 , at B 163,166-67; C. Simon Deposition, Exhibit7 at B 107-08.) One Carpenter journeyman testified that Haughton laughed in his facewhen confronted about the issue. (Deposition of Recaldo Joseph ["Joseph Deposition"]at C 223-24.) Haughton's conduct is a disgrace to good Carpenter shop stewards and

l7 Flaherty, too, was no shrinking violet. He continued to demand cash f?om McKennaeven aRer he had been removed as shop steward. (Id. at 405-07; C at 502-06.)


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deserves the harshest form of Carpenter justice.Consistent with McKenna's testimony that he had also paid off Haughton's

predecessor, Jason Flaherty, one journeyman testified that when he asked Flaherty if hecould be listed on the shop steward reports, Flaherty told him that only McKenna couldmake that decision. (Pink Deposition, Exhibit 17, at 88-89.) Similarly, Hank Simontestified that he knew it was pointless to talk to Flaherty about being listed on the shopsteward reports because that decision rested with McKenna. (H . Simon Deposition,

Exhibit 8 at 51-53 )Clearly, it is outrageous for a Carpenter to have to obtain his employer's

permission to obtain his basic CBA right to proper wages and benefits. And sadly, as Idiscuss in more detail below, the fact that Carpenters accepted this perversion or rather,evisceration, of the CBA and did not demand the union protection to which they were

entitled, speaks volumes about the problems with the OWL as it is impacted by therequest system discussed at length in my report entitled, "Independent Investigator'sReport on the "50150" Rule and the Referral System" ("Request Report"). Asjourneyman Carpenter Jeremiah Casey testified during his return appearance, he believesthat he would have lost his job with Boom if he had insisted on being listed on the shopsteward reports and being paid the proper union wage and benefits. (Casey Deposition,Exhibit 9, at B 199-200.) In fact, he believes that he has been able to get as much work ashe has because he is willing to work for cash, off the books. (Id. at 201 .) Similarly,


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other journeyman testified that although it was not explicitly stated, they knew that if theyinsisted on being listed on the shop steward reports they would be laid off. (H . SimonDeposition, Exhibit 8, at 35-36); Frederick Deposition, Exhibit 10, at B 196; CaseyDeposition, Exhibit 9, at B 125; C. Simon Deposition, Exhibit 8, at B 22-23.)

Carpenters cannot afford to take lightly the threat of losing a job - particularly alarge, long-term job such as Boom's jobs at Jacobi, Columbia Medical Center andBrooklyn Tabernacle. Because contractors are permitted to select the journeymen theywant from the OWL, the waits on the OWL are many months long. (H. SimonDeposition, Exhibit 8, at 92,95; C. Simon Deposition, Exhibit 7, at B 41-42; CulzacDeposition, Exhibit 11, at B228; Shorn Deposition, Exhibit 17, at 134; see also, FrederickDeposition, Exhibit 10, at B 185-86.) Recaldo Joseph testified that he had never obtaineda job from the OWL, adding that " [tlhe way the union is structured, they will keep youon that list for God knows how long." (Joseph Deposition, Exhibit 13, at C 41-42.)

These workers cannot afford to be idle for such long periods of time. Thus,without a shop steward who will stand up for their rights under the CBA, the journeymenare powerless. As one Carpenter put it:

. . .I never wanted to take cash in the first place. But if you didn't takecash, then you could just sit home. And I sat home plenty of times . . . . t'seasy to have high moral character when you don't have to worry aboutbills." (Carpenter Murray Deposition at B 100.) . . .The 50150 used to be50 from the hall and 50 company men. [Now, coupled with the requestsystem] . . . he list doesn't move because you just request everybody so youdon't go off the list.


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("Carpenter" Martin Murray Deposition, Exhibit 12, at 100, 102.)Mr. Casey asked the disturbing rhetorical question, ". . . if the shop steward is

going to let it go on, you as a member, what can you do?" (Casey Deposition, Exhibit 9at B 207.) Two other Carpenters expressed similar views. Alex Frederick asked,"[slhoppie is there; where's the circle around me to protect me? . . . If he is not, whowill?" (Frederick Deposition, Exhibit 10 at B 170), and Recaldo Joseph said, "[hlere I gowatching my representative, the shop steward, being the one that is basically . . . [nlot justignoring me. Where's my representation. Who do I complain to?" (Joseph Deposition,Exhibit 13, at C 224). (See below Section V, "Oversight by the District Council and itsBusiness Agents.)

At least one journeymen, who asked McKenna directly, rather than through theshop steward, whether he could be listed on the shop steward reports was rebuffed. (H.Simon Deposition, Exhibit 8 at 35.) Rohan Farquhar, another Carpenter who complainedto the shop steward about being paid cash, was told that it was McKenna7sdecision.(Deposition of Rohan Farquhar ["Farquhar Deposition"], submitted herewith as Exhibit2 1 at 16-17.) (Eventually, however, after complaining directly to McKenna about beingkept off the shop steward reports, Mr. Farquhar was paid properly. Id. at 18- 19.) Otherstestified that McKenna had told them that they would have to accept non-union wages incash, without benefits, at least for some period of time. (Pink Deposition, Exhibit 17, at69-70; Frederick Deposition, Exhibit 10, at B 161-62; Casey Deposition, Exhibit 9, at B


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126-27; C . Sim on Deposition, Exhibit 7, at B 22, 106; Culza c Deposition, Exhibit 1 la t B188-89.)18

A. Cash Payments at O'Shea's Emerald BarTypically, Boo m Carpenters wh o were omitted from the Jacobi shop steward

reports were pa id on Fridays rather than on W ednesdays, when those o n the payroll weregiven checks. Sometimes the "cash" Carpenters were given envelopes of cash at theJacobi job site. Bu t more often they were instructed to visit the nearby 07S he a' s Emerald

'' This testimo ny squarely contradicts the testimony Derek McK enna gave during hissecond depo sition session. At this second session, in July of 2004, McKenna testified that withone exception, everyone who wanted to be on the shop steward reports was permitted to belisted. McKenna Deposition, Exhibit 3, at B 440-41. I also believe, based on the testimony ofseveral Carpenters, that McKenna was not c andid when he testified, also in July of 2004, that hedid not suggest to the Carpenters how to testify when they first were subp oenaed, except to tellthem that they were all in this mess together. Id. at B 403-04. Journeymen Carpenters testifieddifferently. Chester Sim on testified that McKenna told him that if he told the truth about havingreceived cash h e would lose his union card and that M cKenna would let other contractors knowthat he had "ratted [himlout" (C. Simon Deposition, Exhibit 7 at B 36-37). Jeremiah Caseytestified that M cKenna had cautioned him that if he told the truth he would be kicked out of theunion; that the job would be closed down and all the Carpenters would lose their jobs; that heshould testify that he did not know Jason Flaherty, the first Jacobi shop steward; and that he hadnot been at work for the days he w as off the shop steward reports because he had taken time offto spend with hi s parents (Casey Deposition, Exhibit 9, at B 101-93, 195-96). Hank Simontestified that McKenna had coerced and coached the other Carpenters about their testimony (H.Simon D eposition, Exhibit 8 at 89-92). Martin Murray testified that McKenna had asked him notto testify truthfully and implied, though not stated, that he would lose his job if he did.("Carpenter" Martin Murray Deposition, Exhibit 12, at B 29-30.) See also, Pink Deposition,Exhibit 17, at 89-91 (McKenna coached and coerced Carpenters to lie under oath to me).

While I believe that McKenna was not fully honest even in his revised testimony, it is myview that he told the truth regarding the most c ritical issues and that without his testimony andcooperation this investigation would never have got as far as it did. Additionally, I believe thatthe civil consequences of M cKenna7sconduct a re substantial and ap propriately punitive.Moreover, I know that at some risk to himself he has assisted the criminal authorities in theirendeavors. Therefore, I do not recomm end that M cKenna be criminally prosecuted for perjury.


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Bar, where they would be given an envelope by the bartender or by the job foreman, MarkMcMorrow, with either cash or a check in a fictitious name, which the bartender wouldthen cash.19 (Culzac Deposition, Exhibit 11, at 3 1,32; C. Simon Deposition, Exhibit 7, atB 28-32; Carpenter Murray Deposition, Exhibit 12, at B 16- 17; Duhig Deposition, Exhibit18, at B 258; Mark McMorrow Deposition, Exhibit 6, at B 277-79; Shanty MurrayDeposition, Exhibit 19, at B 190-94.) There was some testimony that the bartender took asmall percentage of the check for performing this service. (Culzac Deposition, Exhibit11, at B 27; C. Simon Deposition, Exhibit 7, at B 27.) Some Carpenters were unwillingto go the bar and contrived to obtain their cash wages some other way. (CaseyDeposition, Exhibit 9, at B 168-69; Joseph Deposition, Exhibit 13, at C 208-09.)11.The B oom Job at Columbia Medical Center

Boom also had Carpenters working off the books regularly at another large project:the Columbia Medical Center. Some of the Carpenters who worked regularly at Jacobialso worked at C ~ l u m b i a . ~ ~ccording to McKenna, only one shop steward at this site

l9 On April 2,2004, the day of the videotaping, Shanty Martin distributed the envelopes atO'Shea's; but it appears that he performed this hc t ion on only one occasion. (McKennaDeposition, Exhibit 3 at B 323,326, 389-90; "Shanty" Martin Murray Deposition, Exhibit 19, atB 189; Mark McMorrow Deposition, Exhibit 6, atB 279-80.)

20 There were times that Jacobi workers were sent back and forth between Jacobi andColumbia or between other sites. (Culzac Deposition, Exhibit 11, at B 187-88; CaseyDeposition, Exhibit 9, at B 142, 144, 146;H. Simon Deposition, Exhibit 8, at 61) When this wasdone, the Carpenter was instructed to put his name on the OWL so that he could be requested thefollowing day for the other site. (Duhig Deposition, Exhlbit 18, atA 126;H. Simon Deposition,Exhibit 8, at 67, 111) This enabled Boom to have these workers, already in its employ, deemeddispatched from the union hall for purposes of the 50150 rule. (Duhig Deposition, Exhibit 18, atA 114-15, 119;H. Simon Deposition, Exhibit 8, at 69; see also Request Report at 5-9.)


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(which was a large site with several buildings and several shop stewards) took cash andkept Carpenters off the shop steward reports (McKenna Deposition, Exhibit 3, at C 593.)That shop steward was Noel Creaney ("Creaney"). (Id. at C 595-96.) According toMcKenna, he paid Creaney a total of approximately $5,000- between $200 and $800 perweek, depending on how many Carpenters were kept off the shop steward reports. Thework at Columbia was stop-and-go and Creaney would keep one or two entire days ofCarpenters' hours off the reports each week. ( Id .at 596-97.)21

Carpenters whose names had been kept off Creaney's shop steward reportsconfirmed this. Glensworth Culzac testified that he was always paid cash for theovertime he worked at Columbia. Creaney was clearly aware of his presence becauseCreaney was the one to tell Culzac what work he was expected to perform after hours.(Culzac Deposition, Exhibit 1 1, at 190-194.) Hank Simon testified that he worked at theColumbia Medical Center on-and-off (because he was intermittently assigned to otherBoom locations) for approximately four months and that he was never paid his properunion wage and benefits, despite the fact that Creaney was aware of his presence. (H.Simon Deposition, Exhibit 8, at 55-56,6 1 ) Similar testimony was given by otherjourneymen Carpenters. ("Carpenter" Martin Murray Deposition, Exhibit 12 , at B 51-53,59; Pink Deposition, Exhibit 17, at 79, 80, 83; Deposition of Michael McMorrow

* ' This may well have been an understatement because therewas testimony fromCarpenters working at the Columbia job site to the effkct that they were never or almost never onthe shop steward reports. (Culzac Deposition, Exhibit 11, at B 194; Casey Deposition, Exhibit 9,at B 163; "Carpenter" Martin Murray Deposition, Exhibit 12, at B 53.)


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["Michael McMorrow Deposition"], submitted herewith as Exhibit 22, at B 147, 149,150; C. Simon Deposition, Exhibit 7, at 78, 84.)

Creaney, like Flaherty and Haughton at Jacobi, disregarded Carpenters' requeststhat he honor their right to work on the books and be paid a union wage and benefits.Like Flaherty and Haughton, when told that a Carpenter wanted to be listed on the shopsteward reports that it was his obligation to maintain, Creaney replied that the Carpenterwould have to ask the boss. (Pink Deposition, Exhibit 17, at 83.) In furtherance of hisdeal with the Boom owners, Creaney would tell Carpenters not on the shop stewardreports to hide when a business agent visited the site. (Duhig Deposition, Exhibit 18, at B2 15,216- 17.) And, as at Jacobi, after business agents had visited the job site anddiscovered Carpenters who typically worked off the books, Creaney would include thoseCarpenters on the shop steward reports for a few days. (Michael McMorrow Deposition,Exhibit 22, at 150.)

Although Creaney began his testimony by lymg, he eventually admitted that he hadkept Carpenters at the Columbia Medical Center off his shop steward reports in exchangefor cash payments totaling approximately $5,000. (Deposition of Noel Creaney["Creaney Deposition"], submitted herewith as Exhibit 23, at 45-48, 53.) Creaneyexplained that he had been approached by Sean Moran ("Moran"), a Boom managementemployee, about keeping Carpenters off the shop steward reports after he had confided inMoran that he was going through a contentions divorce. According to Creaney, Moran


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explained that some of the other Carpenters were also in situations in which it was helpfulfor them to be able to understate their reported income. (Id. at 51 ) In addition to thecash he received, Creaney was allowed to come in half an hour late, take a long lunchhour and leave half an hour early without being docked any pay. (Id. at 61-62.)

While Creaney initially testified that he kept Carpenters off the shop stewardreports only if they did not object (id. at 47), he subsequently conceded that it wasMcKenna, via Moran, who decided which Carpenters would be listed on the shop stewardreports. Creaney related how McKenna had refused him permission to include ChesterSimon, who wanted to be listed, on the reports. (Id. at 74-76, 106.) Creaney echoed thetestimony of many other Carpenters that anyone who insisted on being on the shopsteward reports would be out of a job. (Id. at 75.) The consequences of losing a job -especially a large job that could mean lengthy employment-were serious because beingon the out-of-work list is likely to mean six months of unemployment. (See id.)111.The Boom Job at Brooklvn Tabernacle

McKenna testified about three Carpenter shop stewards at the BrooklynTabernacle job site who accepted cash in exchange for keeping names off their shopsteward reports. Shop steward John Thompson ("Thompson") was paid approximately$2,000; shop steward Eric Lynch was paid between $3,000 and $5,000 and allowed tohave his father, who was probably not a union member, hired (McKenna Deposition,Exhibit 3 at C. 578-86.); and shop steward Dwayne Horsely was paid for days he did not


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work in addition to a cash bribe of approximately $1,000 (Id. at C 588-590).McKenna testified that Thompson initially refused to keep names off the shop

steward reports but finally did so once Boom agreed to hire a friend of his who was not aunion member. Additionally, Boom brought on another two or three men whomThompson agreed to keep off the sheets in exchange for $300 per week. (Id. at C 58 1 )When I deposed Thompson, he conceded that he had compromised his obligations to theunion by leaving names off the shop steward reports, but insisted that he never had takencash. Instead, he testified, Boom hired his friend (who, he said, is a union member) andpaid Thompson for overtime work that he did not actually perform. He said that heinsisted on receiving a proper payroll check for this. (Deposition of John Thompson["Thompson Deposition"], submitted herewith as Exhibit 24, at 55, 5 7 - 5 ~ . ~ ~

Some Carpenter journeymen I deposed confirmed that they had worked off thebooks at least part of the time they worked at Brooklyn Tabernacle. (C. SimonDeposition, Exhibit 7, at 53-54,65-66,73; Culzac Deposition, Exhibit 11, at 203;"Carpenter" Martin Murray Deposition, Exhibit 12, at B 54; Frederick Deposition,Exhibit 10, at B 180-81; Michael McMorrow Deposition, Exhibit 22, at B 147.)Carpenter journeyman Feanny testified that he worked at the Brooklyn Tabernacle sitedaily for approximately nine months and was always paid cash, even after receiving his

22 I did not depose either of the other two Brooklyn Tabernacle shop stewards identifiedby McKenna as corrupt. Mr. Lynch has relocated to Florida and Mr. Horsely, I am informed, isincarcerated.


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union card. (He had worked there for several months without a union card,notwithstanding the presence of a shop steward who as aware of his presence.)(Deposition of Feanny Smith ["Smith Deposition"], submitted herewith as Exhibit 29, at15, 18,30.)IV . Other Boom Jobs

McKenna admitted that he had paid several shop stewards at other job sites to keepCarpenters off shop steward reports. Those shop stewards included: Raymond Demarest,a shop steward at the Cambridge House in Brooklyn, who took cash five or six times (C.622-23);23 oseph Cacioppo, the shop steward at P.S. 129, who would not work and tookbribes of approximately $5,000; and Tommy Robinson, the shop steward at an MTA jobon Ninth Avenue (C. 6 12-15).24

Beyond those McKenna admitted to, there was testimony about additional "cashjob sites. Chester Simon testified that he was paid cash at several small jobs: Verizon inElmhurst Queens (though he was put on the shop steward reports for the last two or three

23 Mr. Demarest recently testified that he did not omit any names fiom the shop stewardreports or receive any cash while at Cambridge House. (Deposition of Raymond Demarest["Demarest Deposition"], submitted herewith as Exhibit 25, at 28, 36.) I was unable todetermine definitively whether Mr. Demarest lied, because he evidenced very poor recollectionthroughout his deposition. However, given McKenna's admissions and their corroboration byother witnesses, I am disinclined to accept Mr. Demarest's denials as truthful.

24 An additionally disturbing aspect of the Tommy Robinson pay-off was not only that hewas often a no-show, but he also was known to show up at work drunk. Indeed, McKennatestified, the construction manager on that job wanted Robinson removed for drinking. AsMcKenna, himself, testified, "He is a liability for us because he could fall on top of someoneelse, or fall." (McKenna Deposition, Exhibit 3, at C 614.) Apparently McKenna was willing toaccept this risk in order to have a corrupt shop steward.


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weeks of this four or five week job); Verizon on 12ShStreet in Manhattan; Verizon onSixth Avenue in the 60s; a Brooklyn Public Library site in early 2004 and a CVS storenear Pelham Parkway. (C. Simon Deposition, Exhibit 7, B at 86-95.) There were no shopstewards at most of these jobs, at which two or more Carpenters were employed, eventhough the CBA requires a shop steward for jobs employing at least two Carpenters. (Id.)"Carpenter" Martin Murray testified that he was paid cash for his work at the Boom job atOne Park Avenue and for Boom work at two Verizon locations (two weeks in FlushingMeadows and two weeks in Long Island City). There were no shop stewards on the twoVerizon jobs and Murray never saw a business agent while he worked at these sites.("Carpenter" Murray Deposition, Exhibit 12, at B 55-56,62.)V. Oversight by the D istrict Council and its Business Agents

McKenna testified that he has never paid money to a District Council businessagent or to a District Council Benefit Fund auditor. (McKenna Deposition, Exhibit 3, atC 654,536.) And I have no evidence that District Council business agents or other unionrepresentatives took bribes from Boom or any other contractor. However, I do havesubstantial evidence that business agents failed adequately to supervise Boom job sitesand the assigned shop stewards. Because of business agents' critical supervisory role,these failures are significant.

There was some Carpenter testimony that business agents who visited the Boomsites did not ask for their union cards. ("Carpenter" Martin Murray Deposition, Exhibit


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12, at B 5 1 see also, Thompson Deposition, Exhibit 24, at 62.) Taking the names ofunion members at a job site and comparing them to the shop steward reports would havebeen a good way of verifying the reports' accuracy. This, it seems to me, is a task that isfundamental to a business agent's supervisory responsibilities, particularly for those jobslasting months and even years.

In any event, even a casual walk-through of a job site should give a business agentan idea of how many journeymen are on the job ("cash" Carpenters do not always hidewhen a business agent inspects the site. [Farquhar Deposition, Exhibit 21, at 30-3 1; seeCasey Deposition, Exhibit 9, at 178-79; Duhig Deposition, Exhibit 18, at B 2501.) Atleast one Carpenter testified that he could not understand how the business agents whoobserved him and other cash Carpenters at Jacobi could have failed to notice thediscrepancy between the number of journeymen at the site and the number that appearedon the shop steward reports. (C. Simon Deposition, Exhibit 7, at B 121-22.) And, as hisbrother Hank Simon explained, business agents should be able to know that more than thereported number of Carpenters are working on a job when they see the work progressmuch faster than it would with the number of workers reported. (H. Simon Deposition,Exhibit 8, at 102.)

As discussed above, several Carpenters testified that they were put on the Jacobishop steward reports for just a few days or a week after a business agent discovered themon a job site. I find it striking that business agents, who are charged with reviewing shop


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steward reports weekly, apparently did not, for the job sites I have investigated, probedthe dramatic surges in the reported number of Carpenters on shop steward reports for thedays or weeks in which the business agent visited a job site. It seems to me that even asemi-alert business agent would notice these spikes and the fact that they coincide withthe business agent's visit to the job.25

The evidence points to the conclusion that at least in some cases business agents'examinations of job sites are infrequent and superficial. Rohan Farquhar testified thatduring the approximately two years he worked at the Jacobi site (less a total of six to eightweeks vacation weeks per year), he saw a business agent at the site only two or threetimes. (Farquhar Deposition, Exhibit 21, at 28-29.) Brooklyn Tabernacle shop stewardJohn Thompson testified that the business agent responsible for that job did not come tothat job site as often as Thompson requested, giving the excuse that parking near the jobsite (which was accessible by public transportation and located near parking garages) wasdifficult. (Thompson Deposition, Exhibit 24, at 86-87.) When business agents did come,Thompson testified, they did not walk the site, but rather asked him if everything was allright. (Id. at 62.)

My interview of George Memon ("Memon") confirmed that his supervision of the

25 Because I have yet not scrutinized the business agents' activity records (and may neverbe able to, given the District Council's record-keeping practices), I have not been able todocument how often business agents' visits to a job site coincided with spikes in reportedCarpenter hours. So far the evidence of this phenomenon is anecdotal. I have only begunrecently to focus on the business agents' activities and, if I have the opportunity, intend to submita supplemental report once I have completed this task.


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Brooklyn Tabernacle site was less than rigorous. First of all, Memon typically visited thejob site only on notice to the shop steward. This allowed him to have the shop stewardbring his reports down to the sidewalk for Memon to collect. (April 4, 2005Memorandum of George Memon interview ["Memon Interview"], herewith submitted asExhibit 26 at 4-5.) Unfortunately, giving the shop steward advance notice of his sitevisits is not an effective means of detecting unreported, cash workers. Although Memonstated that he walked the site (Memon Interview at 5), he apparently did not do so onthose occasions when he had Thompson bring the shop steward reports to the outside ofthe site (id.). Additionally, Thompson testified that he does not recall a business agentwalking the site or checking union cards. (Thompson Deposition, Exhibit 24, at 62, 89.)

Consistent with Farquhar's testimony that he seldom saw a business agent at theJacobi job site, foreman Mark McMorrow testified that he did not think that businessagents were at the Jacobi site often enough to do their jobs properly. (Mark McMorrowDeposition, Exhibit 6, at B 258.)

It appears to me that the journeymen who are unhappy about being paid in casheither do not have confidence in or are uncomfortable with the business agents7 ole. Ifthey did, they would report shop steward misconduct. Carpenter journeymen testified thatthey were afraid of losing their jobs if they went to a business agent. (See JosephDeposition, Exhibit 13, at C 71-72; Frederick Deposition, Exhibit 10 at B 84-85.)Indeed, one shop steward reported in an interview conducted by the District Council that


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while working for Boom in March or April of 2003, he reported to his business agentsthat one of the journeymen had complained to him that he was being paid cash. Insteadof expressing interest in this information, or referring it to my office, the business agentschastised this shop steward for making unsubstantiated accusations against a contractor.

In my discussions with the District Council's Anti-Corruption Committee, I havebeen offered several arguments as to why the business agents cannot shoulder the anti-corruption responsibilities I believe that they owe the membership:

(A) Business agents are not criminal investigators, but union officialswhose primary duty is to represent members, not be fact-gatherers;corruption work should be left to law enforcement authorities.

My response: Business agents must be the guardians of the DistrictCouncil's integrity and the rights of their members. They musttherefore learn to be hands-on, keen observers and accurate record-keepers so that they can uncover and take or recommendenforcement action against corrupt contractors and Carpenters. Lawenforcement authorities have their own priorities and cannot berelied upon to combat every instance of union corruption.

(B) Business agents are too busy to follow up on allegations of wrongdoingat specific job sites and, in any event, lack the resources to do so.

My response: Businessagents should never be too busy to uncover

3 1


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and defeat corruption. My experience has dem onstrated that theidentities of the dishonest contractors are generally known . And,since the D istrict Council espouses the view that the vast ma jority ojcontractors are honest, those contractors requiring special scrutinyshould be easy to identify and focus upon.

(C) Business agents will not be able to discover wrongdoing on job sitesbecause those Carpenter journeymen and shop stewards com mitting orpermitting it w ill hide from or m islead union representatives.

My response: The I1 team's experience demonstrates thatinformation relating to wrongdoing is readily available fromjourneymen willing, and often eager, to expose corruption. Our HotLine callers have provided us with information that permitted us todiscover the wrongdoing described in this report. And, as will bedemonstrated in my report on Tri-Built Construction, Hot Linecallers, often anonymous, provide adequate information to enable adiligent observer to get onto the job site at a propitious time and inthe manner necessary to observe wrongful conduct. Sadly, when OUIHot Line "minders" have asked callers whether they have providedtheir information to a D istrict Council official, we have been toldeither that: (a) the information was p rovided and disregarded, or (b)


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the caller fears that such information, if conveyed to a unionofficial, would be disregarded or would be "leaked" and thereforecompromised or, (c) the callers fear that making a complaint to theDistrict Council would have an adverse impact on their careers.

(D) As Independent Investigator, I am a court officer with special powersand authority which enhanced my ability to discover the truth about Boomand Tri-Built.

My response: It is not necessary to be a court officer to uncover thecorruption discussed in this and in my next (Tri-Built Construction)report. Given the fact that the District Council has been under thisCourt's supervision for more than a decade, it is difficult to believethat the Court would not have issued subpoenas or other ordersaimed at unearthing corruption, had they been requested. Indeed,given the legal and investigative resources available to the DistrictCouncil throughout the life of the Consent Decree, I am confidentthat the District Council could have and should have identified boththe Boom and Tri-Built corruption before the I1 staff conducted orparticipated in the investigations leading to these reports.

Apart from informal reports I have received indicating that the District Councilhad identified Boom as a corrupt contractor, there were numerous tangible indicia of


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Boom's corrupt conduct, most of which pre-date my appointment. These were ignored orforgotten by the District Council. Indeed, the District Council squandered at least fiveopportunities to address Boom Construction's job site wrongdoing.

(1) In or about January of 2003, at the time of my appointment, Barry Security, theDistrict Council's then-investigator, provided me with a memorandum it had written to anAssistant District Attorney, dated October 23, 2001, describing, inter alia, allegationsprovided by a shop steward working for Boom at P.S. 178. (A copy of the first threepages of that memorandum, those relating to Boom, is submitted herewith as Exhibit 27.)The shop steward had reported that Boom was paying cash on the job and workingwithout him on a weekend. The information about cash payments was corroborated byanother Boom worker at that site. Despite the fact that the District Council had thisinformation as far back as October of 2001, I found no record of any District Councilfollow-up. Apparently, the District Council thought it sufficient to refer the matter to theDistrict Attorney's office and take no steps on behalf of the union's membership.

(2) In early 2002, a union Carpenter complained to Local 926 that Boom waspaying him in cash for work at its Brooklyn Tabernacle job site. Although a Local 926business agent filed a grievance on his behalf, when, according to the business agent, theCarpenter-witness failed to appear at the grievance hearing, the District Council took nofurther action against ~ o o m . ' ~his is particularly disturbing in light of the business

26 The Carpenter-witness, Feanny Smith, tells a somewhat different version of this story.According to Mr. Smith, he arrived late for the hearing and was told by a District Council


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agent 's statements to me that he was convinced that Boo m was a corrupt contractor.(Memorandum of Interview o f Paul Tyzner , Exhibi t 28, pp. 4,5 .) I am also concernedabou t the fact that neither the Loc al, the District Cou ncil , or the business agent himselfhave been able to produce an y daily activity reports or other paperwork regarding thebusiness agent 's visi ts to this si te. (Id. at 2-3, 6.)

(3) There is union documentation sho wing that Bo om 's B rooklyn Tabernacle shopsteward w as disciplined by the District Council in 200 2 for omitt ing names from his sho psteward reports. Although the sh op steward did receive three months' suspension of his

executive whom he iden tified to me that McK enna had com e and gone, after claiming that Smithhad w orked at the Brooklyn Tabernacle site for only one day. (Sm ith Deposition, Exhibit 29, at61-6 2,66 -67.) Smith testified that he sat in the office of a District Council executive and toldhim tha t he had been working for Boom for cash for several months and even provided copies ofthe paperwork given to him by B oom, showing some of the am ounts he was paid. (Id. at 45-47,49, 69 and Exh ibit FS-2 thereto.) Sm ith was told to com e back on a later date. When he did,expecting a continuation of the grievance hearing against Boom, it turned out to be a disciplinaryhearing ag ainst him. (He was told, however, that he would receive no punishment because hetold the truth.) At this hearing, Smith admitted to eight District Council representatives,including business agents Tyzner and Dun bar, that he had worked for Boom for cash as a unionmem ber for six months; he had already provided som e corroborating documen tation. (Id. at 53,57-59.) Although the disciplinary hearing lasted for an hour to an hour and a half, and astenograp her was present, the on ly transcript produ ced (su bm itted herewith as Exhib it 30) isbarely four pages long and co nsists solely of Sm ith's adm ission of guilt. I suppo se that, given thefact that no action appears to have been taken ag ainst Boo m fo r failing to pay S mith a unionwage (Smith Deposition at 8 4-85 ,87), and the District Council seems to have been concernedsolely with Sm ith's wron gdoing , it was not neces sary to transcribe the facts that Smith offeredrelating to Boom's practice of paying him off the book s. I hope that now that this has come to thefore, the new Independent Investigator will work w ith the D istrict Council to see that disciplineagainst its members d oes not oversh adow its enforcem ent efforts against contractors who exploitunion mem bers and violate the CB As.Desp ite this evidence, obtained in early 2002, the District Council took no inve stigative orenforcem ent action, prior to my ap pointm ent, against Boom .


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steward credentials, I found no record of the evidence against him and, most disturbingly,no evidence that there was any investigative or enforcement follow-up with respect toBoom.

(4) In November of 2003, a Local 926 business agent filed another grievanceagainst Boom for failure to notify the Local that Boom had resumed work, which hadassuredly been discontinued, at the Brooklyn Tabernacle job site. The grievance alsoalleged that the job had no shop steward and that the 50150 requirement was not beingmet. Although the business agent estimated that the shop steward had been wrongfullylaid off for 2 10 hours, the grievance was settled, in January of 2004, for wages andbenefits for only 2 1 hours. I have not been able to obtain an explanation for why theunion compromised at such a drastically reduced amount. In any event, Boom has notpaid even this reduced amount; it was only recently, by notice dated March 22,2005, thatthe District Council demanded arbitration in order to collect the funds owed. Even moredisturbing is the apparent absence of any documentation showing an investigation orother follow-up activity regarding this CBA violation by Boom.

Additionally, Brooklyn Tabernacle shop steward John Thompson testified that heregularly complained to the Local 926 business agents about Boom's misconduct. Yet theunion has been unable to produce for me any documentation either of Mr. Thompson'scomplaints or any related investigation. I believe that this shop steward testifiedtruthfblly and, once again, am concerned about the District Council's failure to take any


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investigative or enforcement action against Bo om prior to the time I was appointed 1 1 . ~ ~(5) Noel C reaney testified that after a business agent fou nd an unreported

Carpenter, one Miloc Ochtebec, at Boom's Columbia job site, Creaney listed Mr.Ochtebec on the shop steward forju st that one day. (Id. at 65.) W hen the business agentreviewed the sho p steward report for that week, M r. Ochtebec's one-day appearanceshould have been noteworthy and indeed striking. Even Creaney had to adm it that thesecircumstances were suspicious. In fact, the business agent apparently did make som einquiry about O chtebec because he ascertained that although Ochtebec had been a unionmem ber for a year, there was no record of any benefit payments made for him. (Id. at56.) Evidently, howe ver, the matter wa s drop ped there because there is no record of theDistrict Cou ncil having delved into this matter any further or taking a ny action againsteither the sho p steward or Boom. In a similar vein, Feanny Sm ith testified that whenbusiness agent Dunba r discovered him working at the Brooklyn Tabernacle job site

27 In his April 21,20 05 letter to the Court, at page 3, Mr. Rothman takes issue with myhaving credited Thompson's testimony that he had regularly complained about Boom'smisconduct to Local 926 business agents, despite the proven violation of his shop stewardobligations. First of all, there was no direct contrast between Thomas' testimony and thestatement of the supervising business agent, George Memon. Memon said that he did not recallThom pson making complaints other than the two he had addressed; he did not deny thatThom pson had made such complaints. (Memon Interview at 8 .) Second of all, based on the factthat Thompson kept a daily diary, or "book," containing an accurate list of C arpenters on the site(Exhibit JTH-1 to Thompson Deposition), and on h s demeanor while testifjmg, I believe that Ihad good reason to credit his testimony that he had m ade detailed complaints in an attempt toalert the local union to problems on this job site. In my view, had this job site been monitoredmore carefully, and had Thompson's daily shop steward book been reviewed before I saw it onFebruary 4,2 00 5, Boom's wrongdoing would have been identified at a much earlier date.


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without a union card, he did not ask questions about how Smith came to be working at thesite or for how long he had worked there.28 (Smith Deposition, Exhibit 29, at 23-25.)Rather, Dunbar simply told him to speak to someone at Local 926 (id. at 24-25); asrelated above in n. 26, the information Smith provided to union officials did not lead toany significant investigative or enforcement measures with respect to Boom.

My own review of shop steward reports submitted for the Columbia job show thatfor the week that Noel Creaney was on vacation, the shop steward reports list four timesas many Carpenters as were included on Creaney's reports for the weeks immediatelybefore and after his vacation. (See Creaney Deposition, Exhibit 23, at 63.) This shouldhave been a bright red flag to anyone reviewing the shop steward reports. Similarly, thesituation at Jacobi Hospital, discussed above, where there was a dramatic rise in thenumber of Carpenter hours for the one full week during which Horace Kerr was shopsteward, should have alerted someone at the District Council to the possibility thatsomething was seriously amiss, especially after the Hot Line calls regarding Boom, notesof which my office promptly telefaxed to the union.

In sum, inexplicably, on several occasions, despite its possession of informationthat should have led to aggressive investigations and proceedings to enforce members'rights under the CBA, the District Council simply dropped the ball.

*' Smith testified that he had worked at the site for five or six months before beingdiscovered. He said that he and as many as fourteen to sixteen other "cash" workers would hideon the roof or in a dark room when the business agent made routine site visits. (SmithDeposition, Exhibit 29, at 16-17,20- 21,97.)


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VI. Th e Impa ct of the Request Syste m on Contractors' Ability to Violate the CBAand the Law b v Pavinp CashI believe that the situation presented by Boom (and by other contractors,

about whom I have yet to report) cannot be fully understood without reference to therequest system's debilitating impact on the OWL. As I discussed in my Request Report,the impact of the request system, whereby a contractor can choose anyone he wishes fromthe OWL even if the Carpenter has been on the list for no more than five minutes, is topermit the contractor to hand-select all of the Carpenters on the site. (Request Report at2-5.) (The only exception is the shop steward assignment, a subject addressed in myJune 29,2004 report titled "Independent Investigator's Report Concerning Shop StewardAssignments Obtained by Local 608 Member John Corrigan.") As I stated in theRequest Report, contractors' routine practice of jumping their selectees over the names ofjourneyman who have been on the list for lengthy periods of time renders the term "out-of-work" list a misnomer. (Id. at 2.)

I believe this to be a situation of the utmost seriousness because it eviscerates thejob referral provisions of the 1994 Consent Decree. And, as I understand it, the purposeof the job referral provisions was not only to eliminate simple unfairness, but also tominimize the potential for abuse and corruption. Yet the request system as it currentlyoperates nurtures abuse because lengthy waits for jobs that are often short-term (ascontrasted with the choice jobs offered to contractors' selectees), makes it extremelydifficult if not impossible for Carpenters to fend off violations of the CBA. In particular,


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Carpenters often do not have a realistic choice to refuse contractors' demands that they bepaid off the books - at least not if their shop steward (who, as contrasted withjourneymen, cannot be easily terminated under the terms of the CBA) chooses to becorrupted by the contractor.

Clearly, the shop steward is the Carpenter's first line of defense on the job site.The evidence I have thus far obtained, primarily through depositions of shop stewards,contractors and journeymen, demonstrates that shop stewards who do not appearreceptive to bribes typically are not approached by contractors. Or, if an approach ismade and rebuffed, the contractor has no choice but to abide by the CBA.

In sum, the bribery of shop stewards and off-the-books compensation of Carpenterjourneymen documented in this report are made possible because the union has allowedthe out-of-work list to be rendered meaningless. The result is fear and desperation on thepart of many Carpenters. This, in turn, causes them to participate in their own victirnhoodby accepting their wages (usually below the union wage) in cash.29I urge, in the strongestterms, that the OWL procedures (and any CBA provisions that support the request systemas it currently operates) be reviewed by the

29 I acknowledge that some Carpenters are pleased to accept cash even if it is less thantheir union wage and unaccompanied by benefits. However, I believe that the majority ofCarpenters want and need the medical and other insurance benefits they obtain when paid inaccordancewith the CBA.30I do not accept the District Council's recently articulated arguments that IRO Conboyapproved the request system as it currently operates or that changes in the constructionmarketplace permitted the District Council to alter the job referral rules without the consent of


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Walter MackIndependent InvestigatorAmy RothsteinOf CounselDated: New York, New York

May 2,2005

2005-05-02 revised boom report ocr

Documents