A Labor Department trial lawyer told a Senate committee yesterday that he recently discovered evidence in a five-year-old civil suit indicating "a possible cover-up" of fraudulent land sales financed by Las Vegas casino owner Morris Shenker.
Testifying at a hearing on the lax enforcement of federal laws governing union pension funds, John Hardin Young, who was hired last year to press the long-stalled case, said he turned the "disturbing" documentation over to the head of the Justice Department's organized crime section last month but has yet to get a response.
The records, concerning allegedly fraudulent land sales in Mexico for a Shenker-owned corporation, were unearthed last year with thousands of other documents in a complex lawsuit over the Southern Nevada Culinary Workers and Bartenders Pension Trust.
Young told the Senate Labor Committee that he thinks the case, which involves unpaid and allegedly unlawful pension trust loans of $24 million to companies owned by Shenker and his family, should have been sent to Justice for possible criminal proscecution in 1976 or 1977.
Instead, officials in the solicitor's office at the Labor Department insisted on filing a civil suit. The action was initially brought against Shenker, several of his companies and the trustees of the culinary workers fund in March, 1977, but has yet to come to trial.
Associate solicitor of labor Monica Gallagher, head of the section in charge of pension fund litigation, testified that during the last administration, under Labor Secretary Ray Marshall, "throwing the bad guys in jail" always took third place.
Protecting pension fund assets was supposed to come first and removal of pension fund trustees who weren't doing their jobs was next most important, she said.
Young suggested that the records he found indicating a possible "cover-up" should have been unearthed years ago. They referred to "a risky venture" of the Shenker-owned Murietta Hot Springs company whereby, according to Young, salesmen in Mexico were paid commissions of 20 to 40 percent for selling plots of land upon receiving down payments of only 10 percent.