Millions of dollars in premiums from Laborers and Teamsters union members were siphoned from insurance companies and used by a convicted insurance promoter "for his own purposes," Senate investigators said yesterday.
An elaborate scheme built upon a chain of new union insurance premiums paying off existing claims with nothing in reserve was described by members of the Senate Investigations Subcommittee which begins hearings today.
The panel held hearings in July on how the Teamsters Central States Pension Fund made questionable business investments. This series will focus on the Central States Health and Welfare Fund's purchase of insurance through companies controlled by Joseph Hauser of Beverly Hills, Calif., an don those companies' dealings with various Laborers union trust funds.
Chairman Henry Jackson (D-Wash.) said it appears Hauser, "having run afoul of insurance authorities in one state, was able, nonetheless, to move into other parts of the country, take control of an insurance company, and then obtain millions of dollars of union trust fund insurance business by cultivating relationships with important union officials."
Sen. Sam Nunn (D-Ga.), said investigators documented more than $39 million in premiums paid to Hauser's companies, more than $11 million of which was in "diversions and questionable expenditures" between 1973 and 1976.