New York Teamsters union official Harry Gross was indicted yesterday on charges of shaking down Secretary of Labor Raymond J. Donovan's former construction company by forcing the firm to hire his chauffeur as a "ghost employe" on a Manhattan subway project.
Gross, 63, a business agent for Teamsters Local 282, pleaded innocent at his arraignment on racketeering charges and was released by a federal magistrate on $25,000 bond.
Questioned about the episode before his Senate confirmation hearings earlier this year, Donovan said he had no knowledge of it, and stated flatly that his firm, the Schiavone Construction Co. of Secaucus, N.J., was "not extortable."
At a hearing Jan. 12, Donovan said he had by then investigated the incident, but instead that his company had no choice but to hire the no-show Teamster, Joseph Murray, as a "walkaround foreman" from November, 1977, through June, 1978.
Murray was paid about $13,000, although he never showed up for work. Donovan continued to contend, however, that no extortion was involved and that such foremen were required by a New York metropolitan area contract between construction companies and the union.
"If you call that extortion, you would be very incorrect," Donovan told the Senate Labor Committee. He acknowledged, however, "I don't like it one bit."
The indictment against Gross, returned in U.S. District Court in Brooklyn, charged that he "willfully and unlawfully" demanded and got a job for Murray from Schiavone and allied companies on the East 63rd Street subway project.
Three Schiavone Construction Co. officials, including a close friend of Conovan, were called before a federal grand jury in December, 1978, and questioned about the hiring of the chauffeur, but Donovan testified that none of them ever told him about it.
"Ray, it was such an insignificant matter," Donovan quoted Schiavone Senior Vice President Joseph DiCarolis as having told him after Senate investigators started digging. DiCarolis did not even think it was a grand jury he had appeared before, Donovan said.
The three-count racketeering indictment also accused Gross of taking a 1973 Lincoln Continental worth $4,000 from DeSimone Excavation and Foundation Corp., the general contractor for a Port Authority Bus Terminal project in Manhattan.
Later, the grand jury said, Gross unlawfully accepted a 1977 Lincoln Continental worth $15,000 from a Bronx excavation company and $2,500 in cash from another contractor.