Bureau Of National Affairs
Fosco Fined, LIUNA Membership Revoked In Ruling From Independent Hearing Officer
By Brian Lockett
Monday, October 18, 1999
Peter J. Fosco, a regional vice president for the Laborers' International Union of North America, has been ordered to repay various union entities amounts totaling $80,286 for his work as a "consultant" and has been stripped of union membership in an Oct. 14 ruling by LIUNA's independent hearing officer.
Hearing officer Peter F. Vaira found Fosco guilty of 11 of 13 counts of conduct proscribed by federal law and LIUNA 's ethical practices code. The charges arose over consulting fees he allegedly charged to several of the union's district councils and local unions for work he did not perform or for which he already was being paid.
"This case is a classic example of the abusive and corrupt practices in union administration" that led to passage of the Labor-Management Reporting and Disclosure Act, Vaira said in his 70-page opinion.
Vaira found it "disturbing" that such practices still exist and said it was "more disturbing that the perpetrator is a high-ranking international union officer and a member of the general executive board."
Fosco's actions are "blatant examples of misuse of power, manipulation of subordinates, and greed," according to Vaira. "No one can seriously doubt ... that these abuses would not have been exposed and prosecuted," he said, without passage by the union of its ethical practices code and its ethical and disciplinary procedure.
The case also is "an argument for the necessity of the LIUNA reform machinery," Vaira said. The disciplinary charges are a function of a four-year-old internal reform effort established under an agreement between the Department of Justice and the union. Under the agreement, the Justice Department agreed not to sue the union under the Racketeer Influenced and Corrupt Organizations Act if it proceeded to rid itself of the influence of organized crime.
The disciplinary charges were filed Nov. 24, 1998, against Fosco by Robert Luskin, the prosecuting attorney for LIUNA's general executive board. Vaira conducted hearings in New Orleans on April 6-9, 1999, and May 3-6, 1999.
Luskin said Oct. 15 he was "gratified by the decision" and believes it is "strongly supported the evidence."
LIUNA announced Oct. 15 that the opinion had been released but made no further comment.
Fosco has the right to appeal the decision within 10 days to W. Neil Eggleston, LIUNA's appellate officer. James O'Connor, the attorney representing Fosco, did not return calls seeking a comment on the ruling.
The misconduct was alleged while Fosco was regional manager of LIUNA's south central region. Fosco is the son Angelo Fosco and grandson of Peter Fosco, both of whom served as union presidents.
Fosco joined LIUNA Local 2 in Chicago in 1966 and moved up through the union ranks to become an assistant regional manager of the Chicago region in 1976. He held the position until he resigned in 1984 and was inactive in the union for several years.
Regional Office in New Orleans
When his father was re-elected to another term as president in 1986, Fosco resumed his active role in the union and opened a regional office in New Orleans at his father's recommendation, according to Vaira. He transferred his membership to Local 692 in Baton Rouge. He was elected in 1996 as one of the union's vice presidents. At all times covered by the charges, he received a full-time salary from LIUNA as a regional manager, most recently $165,000 per year, and was covered by the union's staff pension plan. There was no written job description for his position.
Vaira found that during this period Fosco "devised a scheme" in which the union's district councils in Kentucky and Louisiana and Local 692 paid him consulting fees and pension contributions for which he performed no services. Vaira further found that Fosco created a plan in which the three organizations paid him outside compensation by other methods, "in direct contradiction of the General President's directive" to stop receiving consulting fees.
These payments, Vaira said, included cash and pension fund contributions for services not performed as a sergeant at arms, payment of cellular phone bills, and payment for delegate fees. The GEB attorney presented evidence that consulting fees and outside compensation to Fosco between 1990 and 1999 totaled $93,829.
Vaira also found that Fosco sought monthly cash payments from his staff for a "staff fund" that started at $25 a month per person and increased to $50, "clearly a breach of fiduciary duty." According to Vaira, Fosco "pursued those who fell in arrears" and "made all decisions regarding how much money to collect and how to spend the funds.
In addition, Vaira found that between 1989 and 1997 Fosco received "substantial personal gifts" from the three organizations that asked Fosco to select a gift of his choice. "Fosco well knew that the gifts were excessive, and the gift givers well know that Fosco expected them to provide significant gifts," Vaira said. Vaira added that he found the practice of a senior executive selecting his own gift "an affront" to the union's ethical practices code.
Vaira upheld charges that Fosco obstructed the investigation of his case by LIUNA's inspector general and misled an inspector regarding work he claimed to have performed in exchange for his consulting fees.
As a penalty, Vaira determined that Fosco must repay the three labor organization $53,340 for fees he collected as a consultant and $26,946, the total salary paid to him for serving as a sergeant-at-arms for the Kentucky Laborers District Council.
Discretion was left with the GEB attorney to negotiate a repayment schedule. The union's inspector general was assigned to determine whether Fosco is entitled to pension fund credits resulting from the unauthorized consulting agreements.
Vaira "permanently revoked" Fosco's membership in LIUNA and permanently barred him from holding an office or being employed by LIUNA or any affiliated entity.