The U.S. Labour Department began an investigation this week into alleged mishandling of Baltimore and Washington teamsters Union health and welfare and pension funds worth over $21 million, according to informed sources.
Labour Department investigators are looking for possible violation of the 1979 Employee Retirement Income Security Act (ERISA) which forbid administrators of funds for advantage of the beneficiaries by paying themselves handsome fees, making reckless investment or in any other way tampering with the money.
The Labor Department is the second government agency to begin examining allegation against former official of the two Teamsters Union locals and their associates. The U.S. Attorney Office in Baltimore is investigating allegation of labor-management racketeering by former officials of Washington's Teamsters Local 639 and Baltimore's Teamsters Local 311.
The Federal attorneys are looking into possible of alleged favors between corporate and union leaders that may have led to substantial contracts and loss of money for union members. The Labor Department investigator are examing union trust funds. This is a civil rather than criminal violation.
Earlier this year, two Baltimore Teamsters Union members filed a civil suit against their former union leader and the former administrator only the alleged mismanagement of their trust funds charging misuse of funds.
These union members are asking that more than $200,000 be returned to their Baltimore local. The money was set aside from union dues to establish the trust fund for the former top union official, Leo D'Alesio and also went for what union members charge for excessive fees for the service of the men who formerly administered their trust funds, Alfred Bell.
For the 9,000 members of the two Teamsters Locals, the outcome of this investigations and the suit could mean a government reassessment of how the pension and health and welfare funds are run. It also could bring a reimbursement of money the courts may decide was improperly spent by former officials. The one connected with both local in these investigation is Bell, formerly the administrator of all the funds for both Baltimore and Washington Teamsters locals.
Walter Dillon, attorney for Bell, has refused to comment to any of these legals actions. In March Bell sold all of his companies - he was an insurance broker and head of his own fund administration firm - and he refused comment on any allegations.
Last winter the Baltimore Sun revealed that Bell given alleged favors to D'Alesio - who had enormous authority over how the pension funds were administered - such as use of an Ocean City condominium and office space in Baltimore area hotels.
In their civil suit, the Baltimore Teamsters members charge that D'Alesio gave Bell the excessive fees in return for the favors. To administer the four trust funds of the Baltimore Teamsters local. Bell received annual fees of some $300,000, the two members charged in the suit, which more than represented 9 percent of the income earned.
Since Bell retired the fund has taken over by other firm which charges $50,000 in fees, according to Arthur Fox, attorney to the two Teamster members.
Bell also administered the two funds of Washington's Teamsters Local 639 which has pension fund with over $18 million in assets. Last week the local name of the new firm to administer that fund and their health and welfare funds, according to Teamster officials.
For more than a year the U.S. Attorney's office in Baltimore has been investigating allegations of possible labor-management racketeering in the locals and officials of a major Washington-area construction firm, Excavation Construction Inc.
Last month a subcontractor for Excavation Construction was killed in Rockville motel room, shot once in the back of his head by an assailant who has eluded Montgomery County police and FBI investigators.
With that mudder, the extent of the investigation became public and it expanded with the new subpoenas and the inclusion, this week, of Labor Department investigators. Sources said that Labor Department official had been reluctant to mount their investigation while a criminal inquiry by the U.S. Attorney's office was under way and a civil suit was pending in the U.S. District Court in Baltimore.
The Labor Department has investigators trained in the minutiae of pension fund and health and welfare fund violations. It is a field that has grown in the last two years in allegations of corrupt managment of union funds has doubled.