World News Digest

July 21, 1978


Union Insurance Scheme Charged


A federal grand jury in Phoenix, Ariz. indicted four persons June 15 on racketeering charges involving the theft of about $5.5 million from health and pension funds of the Teamsters and other unions.


Joseph Hauser, 46, a millionaire Beverly Hills insurance broker, was one of those indicted. The others were two associates of Hauser -- George Ralph Herrera, 46, of Lakewood, Calif. and Brian Kavanagh, 40, of Chicago – and Bernard G. Rubin, 57, of Miami Beach, Fla., a former official of the Laborers' Union.


The men were accused of operating numerous "shell corporations" to conceal their identities and purposes.


Using these, plus legitimate insurance companies, according to the indictment, the defendants sold health and welfare insurance policies to various unions and provided bribes and kickbacks to obtain sales.


The indictment indicated that the activity resulted in the loss of millions of dollars to the union trust funds.


The largest loss cited in the indictment was approximately $3.1 million from the Teamsters Central States, Southeast and Southwest Health and Welfare Fund.


Other unions cited as having sustained losses were the Massachusetts Laborers' Health and Welfare Fund ($1 million), the Arizona Laborers', Teamsters and Cement Masons Local 395 Health and Welfare Funds ($725,000) and the Southeast Florida Laborers' District Counsel Pension Plan ($705,000).


The specific charges brought against the men were:


conspiracy to conduct racketeering activities, conducting a racketeering activity, interstate transportation of stolen property and receiving and disposing of stolen property.


The investigation was conducted by special agents of the Federal Bureau of Investigation and lawyers with the Justice Department's organized crime and racketeering section.


The indictment mentioned, without accusing them of any wrongdoing, former U.S. Attorney General Richard Kleindienst and Teamsters union President Frank Fitzsimmons.


It said the defendants hired Kleindients to approach Fitzsimmons in an attempt to obtain business worth $24 million in annual premiums from the Teamsters fund.


Kleindienst and Fitzsimmons had testified about their dealings in the matter during a 1977 Senate investigation focusing on Hauser's activities. [See 1977, p. 837E1]

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