- The Washington Times - Sunday, January 27, 2013

The Laborers’ International Union has in its legislative affairs office a lobbyist who pleaded guilty in a fraud case despite a federal law banning convicts from overseeing unions’ finances.

The troubled union also was hit this month with a tax lien from the District of Columbia, which charged that it owes nearly a half-million dollars in unpaid taxes dating back eight years.

According to a former employee, the workers at the nepotism-besieged headquarters felt so mistreated that receptionists and others tried to unionize under the AFL-CIO, only to have the Laborers’ Union headquarters engage in union busting.

Tax arrears

The District’s Office of Tax and Revenue issued a tax lien Jan. 9 against the union’s Connecticut Avenue Northwest headquarters in the amount of $460,736 for unincorporated franchise taxes, penalties and interest on 2004, 2006, 2009 and 2010 taxes, records obtained by The Washington Times show.

“Prevent seizure action by sending full payment today!” the letter says.

The union’s previous headquarters, on Vermont Avenue Northwest, had federal tax liens issued against it in 1991 and 1992 for $70,000 and in 1993 for $25,000, records show. They were settled in 1995 and 1996.

The union has been quick to criticize others for not paying taxes, telling members last year that Republican presidential nominee Mitt Romney “opposes legislation that would ensure corporations pay their fair share of taxes — even though the largest corporations in the U.S. pay no taxes.” The group also slammed Mr. Romney personally for having paid a low effective tax rate of 13.9 percent in 2010.

The Laborers did not respond to requests for comment.

Office of Tax and Revenuespokeswoman Natalie Wilson confirmed that “the lien as filed is accurate.”

Fraudster in charge

The 2011 tax form filed by a union-affiliated trust fund shows Leo J. Gannon employed as head of legislative affairs, making $144,000 from the trust itself plus $64,000 from “related organizations.”

In 2003, however, Mr. Gannon pleaded guilty in federal court to a charge of making false statements to federal investigators. Mr. Gannon remained head of legislative affairs for the Laborers-Employers Cooperation and Education Trust despite his plea.

Mr. Gannon initially was charged with four felony counts of wire fraud and making false statements but pleaded guilty to one lesser count of false statements after prosecutors could not show that wires were used in the commission of fraud and offered him the chance to plead to a charge carrying a far lower penalty. He received probation and a fine.

But even as he faced federal prison, Mr. Gannon continued to carry out Laborers business, asking the judge for permission to leave the District to attend a transportation conference in Florida at the Wyndham Orlando Resort and for trips to Quebec, Hawaii and the Foxwoods Resort Casino in Connecticut, according to court documents.

The trust told The Times last week that Mr. Gannon has since been transferred to the legislative department of the union itself.

Mr. Gannon did not respond to a request for comment.

The law

On Dec. 31, Mr. Gannon terminated his status at the trust as a registered federal lobbyist — the person interacting with lawmakers on its behalf — a position he had held since before pleading guilty, lobbying records show. His lobbying efforts most recently concentrated on a $105 billion, two-year transportation funding bill that was signed into law by President Obama in June.

The Labor-Management Reporting and Disclosure Act bans people convicted of certain crimes — such as lying, stealing or their equivalents — from holding positions of power within unions and related organizations such as trust funds.

Among the crimes that the act defines as excluding a person from a union post are “knowingly making a false statement of material fact or failing to disclose a material fact in any labor organization report,” “abuse or misuse of an individual’s position or employment in a labor organization or employee benefit plan,” or “any crime that is equivalent to the above crimes.”

Under the act, such convicts cannot hold “any officer or employee position” of a union, or be an “officer or executive or administrative employee of any entity devoted to providing goods and services to a labor organization.”

A person convicted of these sorts of crimes cannot hold a union post, elected or appointed, for 13 years after conviction.

It is a criminal offense for the prohibited individual to take such a job or for a union to hire him.

Mr. Gannon is not the first Laborers hire to have had a run-in with the government.

Gordon Green, director of the Laborers’ Service Contract Education and Training Trust Fund, was sentenced to prison after being charged in 2007 with bribery relating to an employee benefit fund and theft of employee benefit plan property.

He sold union information to a contractor managing government buildings’ maintenance for a suitcase containing $150,000 in cash; the government contractor alerted authorities.

“Gordon Green’s criminal actions demonstrate both an astonishing breach of the trust placed in him by the Laborers’ International Union of North America and an intolerable example of corruption and greed,” prosecutors said.

He received six months in prison after getting credit for “substantial assistance in the investigation or prosecution of other persons who have committed criminal offenses.”

Management woes

The Laborers’ Union has one of the most entrenched bureaucracies in the labor movement. Eight of its executive board’s 13 members have been in their posts more than a decade.

The Laborers employed Richard Banel, in 2000 and 2001, at a salary of $50,000, and agreed to hire his wife, Sue Fox Smith, as a receptionist at an affiliated trust as part of the package.

When Ms. Smith, a former lobbyist, sought a transfer to a more challenging job, managers said she could not because she did not belong to a union, even though she worked for one.

“The trust fund which I currently worked for was not a union shop. Can you say hypocrites?” she said.

So she approached the AFL-CIO about unionizing the administrative members of the Laborers headquarters under that union — and said Laborers management was less than pleased with the prospect.

Union President Terry O’Sullivan “called my husband into his office and said ‘what the hell is your wife trying to do?’” she told The Times by email.

The AFL-CIO was eager to set up a vote.

But “when it came lunchtime and the staff was to vote to be members, management decided that was the day they would take all the staff out for pizza, and no one showed up to vote,” Mrs. Smith said.

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