By Aaron Bernstein, Business Week, November 1, 1997

Ever since a court-appointed official threw out last year's Teamsters election because of campaign abuses by President Ronald Carey's camp, Carey has charged that his rival's backers cheated, too. Now, Carey backers are offering detailed allegations, including charges that union officials funneled kickbacks to James P. Hoffa's campaign from companies that do business with their locals.

Simultaneously, sources close to a Justice Dept. investigation of the Laborers International union say the probe has been told that a top Laborers official with alleged mob ties may have raised money for Hoffa, too. The charges likely will trigger an inquiry into Hoffa's fund-raising, says a source close to the U.S. Attorney's Teamsters probe.


If true, the charges would also throw the already-troubled Teamsters into deeper turmoil. Hoffa allies deny any wrongdoing and say the charges are designed to help Carey in a new election. But court-appointed officials already are trying to decide whether to bar Carey from running in the rematch they ordered for next March. If Hoffa's team cheated, too, the officials may ban them both. That would leave a power vacuum in the AFL-CIO's largest union. ''Neither side has anyone well-known who could step in,'' says University of Michigan labor professor Mike Belzer.

For Hoffa, the allegations raise ominous echoes of the Teamsters past. Carey forces say Hoffa, like his father, may have ties to organized crime.

One link is John A. Matassa Jr., president of Laborers' Local 2 in Chicago, say Carey supporters and sources close to the Justice probe of that union.

In October, Matassa was named as a mob associate by the Chicago Crime Commission. Federal prosecutors are weighing whether his District Council should be placed in trusteeship.

The sources say Matassa bragged about raising money for Hoffa. Matassa couldn't be reached, and his lawyer declined comment. Hoffa spokesman Rich Leebove says the Hoffa campaign ''has no indication that Matassa did anything like that.''

Carey's camp has also brought allegations of kickbacks to the attention of New York prosecutors handling the Carey investigation.

In an Oct. 28 letter, Dan Stefanski, the head of Teamsters Local 726 in Chicago and a Carey supporter, said he could provide testimony from employees who claim their company paid kickbacks.

The allegations involve brokers for American Income Life Insurance Co., a Waco (Tex.) company that caters to union members. Insurance brokers typically ask local union presidents to send members direct-mail offers and endorse their firms as union-friendly. The brokers then follow up with sales calls.

According to Stefanski and Carey associates, Teamsters leaders in several cities, including Detroit, Seattle, Los Angeles, and Edison, N.J., asked AIL brokers to donate to Hoffa's 1996 campaign as a payback for access to members.

The Carey camp has singled out Larry Brennan, head of Teamsters Joint Council 43 in Michigan, as one alleged participant in such schemes.

In 1993, Brennan hired Hoffa, then an outside labor lawyer, as an administrative assistant, making him eligible to run for the union's top post.

Brennan allegedly steered money to Hoffa's campaign from Stan Zydner, an AIL broker in Detroit. Leebove says Brennan and Hoffa ''know nothing about Ron Carey's bizarre allegations.'' Zydner could not be reached.

Prosecutors recently questioned AIL President Bernard Rapoport about allegations that Carey aides had asked his firm for donations. Rapoport denies the charge and says he doesn't know if his brokers helped Hoffa.

No one claims Hoffa himself was aware of any alleged illegality. But after months as the righteous accuser, Hoffa may now join Carey on the hot seat.

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