Carey is on trial for allegedly lying to investigators and grand juries about the diversion of funds.
CNN New York Bureau
August 30, 2001
NEW YORK (CNN) -- The campaign manager of Ron Carey's bid for a second term as Teamsters president told a federal jury Thursday the union leader condoned a fund-raising scheme that proved to be illegal and cost Carey his job.
Jere Nash, testifying on the fourth day of Carey's trial, said he told Carey about the proposed cash swap during a telephone conversation in October 1996 and that Carey condoned the scheme.
Carey is on trial for allegedly lying to investigators and grand juries about the diversion of funds. He is not accused of carrying out the scheme.
Nash, a political consultant from Jackson, Mississippi, has admitted he perpetrated the scheme, and pleaded guilty to felony charges in September 1997.
Nash told the jury that he, fellow political consultant Martin Davis, and former union political director William Hamilton devised the plan whereby the Teamsters made large donations to political groups, and those groups in turn arranged for wealthy donors to contribute to Carey's campaign fund or to the November Group consulting firm. The firm was run by Davis and employed Nash.
Davis and three other former Carey associates have also pleaded guilty to charges stemming from the scheme. Hamilton was convicted in a 1999 trial and is serving three years in prison. Nash is testifying as part of a cooperation agreement with the government in the hopes of obtaining a lenient sentence.
With 1.4 million members, the Teamsters are the nation's largest private-sector union. It has been operating under government supervision since a 1989 settlement with the Justice Department ended a racketeering case and implemented measures to rid the union of organized crime's influence.
Carey, a one-time UPS driver who made his reputation as a reformer while leading a Queens local, won the union's first secret ballot election by rank and file in 1991.
Once in office he slashed his own salary, sold off the jets and limousine used to ferry past union leaders, and took over locals tied to organized crime.
The Carey case focuses on a two-week period in October 1996 when the Teamsters gave a total of $885,000 to four groups -- Citizen Action, the American Federation of Labor, the National Council of Senior Citizens and Project Vote -- triggering $360,000 in reciprocal gifts, according to the indictment.
Nash said Carey initially opposed the gift to Citizen Action, totaling $475,000, until they spoke on the phone.
"You need to understand that by making this contribution to Citizen Action, it will help in the fund raising that Martin Davis is doing for the campaign," Nash testified that he told Carey.
"He said something like, 'Well, hell, no one ever explained it to me like that,'" Nash recalled Carey saying.
"Does this mean it's OK?" Nash continued.
"Yes," Carey responded, according to Nash.
But Nash said he never discussed with Carey the specific donations to the other groups -- $175,000 to Project Vote, $150,000 to the AFL, or $85,000 to the NCSC.
Nash testified he advised Carey that if anyone at the union asked questions about the unbudgeted giving, he was to say that it was paid for by "unbudgeted revenues" from a Teamster credit card program.
Beyond the swap scheme, Nash said he disguised cash contributions made by prominent union leaders, including AFL CIO Secretary-Treasurer Richard Trumka.
Nash said he once received an envelope stuffed with $5,000 cash from Trumka, gave it to a campaign staffer, and asked the staffer to write a personal check for the amount so Trumka's gift would not be traceable.
Trumka also raised $16,000 in checks reported to the election officer, Nash said. (Nash testified at Hamilton's trial that Trumka fulfilled a commitment to raise $50,000 for the Carey campaign).
The Teamsters' donations represented a jump in the size of the union's contributions to those groups. For example, documents introduced as evidence show that prior to 1996 the Teamsters gave a high of $15,000 to Citizen Action.
Overall, the union's political contributions increased tenfold between 1992 and 1996, to more than $4 million, according to Joe Selsavage, the Teamsters top accountant until this year.
Selsavage told the jury Wednesday he considered some donations inappropriate given the union's precarious financial condition.
"I questioned whether the union could be making those contributions," Selsavage said, "whether they would be useful, made at the last minute."
Selsavage testified that in the fall of 1996 the Teamsters had only $16 million in the bank. Furthermore, he said, the strike fund was depleted and the union owed millions in loans.
Under cross-examination, Selsavage conceded to Carey's attorney, Reid Weingarten, that more than $5 million in political spending had been planned for national election activities in 1996.
Weingarten suggested the spending was even in line with the Teamsters' constitution, which calls on the union to safeguard its workers and "the security and welfare of all people by political and educational and other activities."
Carey's lawyers have tried to show the jury the revived political agenda was no secret, especially after the Republican takeover of Congress in 1994, and that the October spending spree ought not be viewed with suspicion.
"Ron Carey was leading the Teamsters back into political action," defense attorney Mark Hulkower said in opening statements. "These were not budget-busting contributions."
Carey narrowly defeated challenger James P. Hoffa, son of the legendary Teamsters president of the 1960s, in a mail-in election that ended in December 1996.
After election monitors discovered the illegal fund raising, they nullified Carey's win and barred him from the rerun, which was won by Hoffa, the current union president.
Nash previously testified against Carey before the Teamsters' internal review board, which expelled Carey from the union in 1998.
On cross-examination, Nash told the jury he considered Carey a man of honesty and integrity. "What always impressed me about Mr. Carey was that he wanted to use the resources of the union to benefit the members," he said.
Nash's testimony will continue when the trial resumes next Tuesday, after Labor Day.