A former high-level figure in organized crime said yesterday that pension and health benefit funds all over the country are being influenced and even controlled by criminals and that the U.S. Department of Labor has done little to stand in their way.
Jimmy (The Weasel) Fratianno, a self-confessed Mafia hit man who is now in the federal Witness Protection Program, told a House committee, "The only way you can stop it is to have the government control the money." If not, he said, crime figures will "put front men in. There are so many ways they can do it."
Surrounded by U.S. marshals and concealed behind a screen, Fratianno outlined how he had been able to control the selection of several union dental plans and collect large payoffs while he headed a Los Angeles organized crime family.
"There are billions of dollars sitting around in trust funds set up by employers and unions," he said. "All you do is find out who controls the money. Then you go see them and see if you can work out a deal. You do something for them and they do something for you.... The sad part is that the average employe doesn't have any remote idea of how much money is being stolen."
Fratianno said he operated with bribes, kickbacks, favors, even physical violence.
"The technique is the same whether you are selling a dental plan, a medical plan, life insurance or whether you are out to get a loan on highly favorable terms," he said. "It's very lucrative, and very few people would know I had any involvement in it."
Fratianno said the Teamsters have been controlled by organized crime for 50 years. "I was one of the founders of the Teamsters union, and they've controlled the union as far as I can remember--since the '30s."
He added that he knows the problem extends to other unions and even to nonunion employers.
Fratianno's testimony was presented as the House Select Committee on Aging opened hearings into fraud and abuse in pensions and employe benefit programs.
Chairman Claude Pepper (D-Fla.) said there are about 1.5 million employe benefit plans in the United States, with combined assets of $600 billion, "the largest reservoir of private capital in the United States today." He said "this tremendous pool of money is inviting prey for the sharks of the financial world."
Sen. Sam Nunn (D-Ga.), ranking minority member of the Senate Permanent Subcommittee on Investigations, which has looked into pension fraud, warned that continued criminal expansion could lead to reduced benefits or even complete bankruptcy of some plans. He criticized the Labor Department's handling of the problem, saying, "No matter who was in office--Democrat or Republican--it did a consistently poor job."
Ted Katsaros, a New York member of Teamsters Local 282, testified that he and others had banded together to fight efforts by the leadership to invest pension money in questionable ventures--including a failing Chicago bank and a Las Vegas gambling casino--but that repeated attempts to bring the Labor Department in to investigate produced no results.