UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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UNITED STATES OF AMERICA,

Plaintiff,
90 Civ. 5722 (CSH)
v.

DISTRICT COUNCIL OF NEW YORK CITY

AND VICINITY OF THE UNITED
BROTHERHOOD OF CARPENTERS AND
JOINERS OF AMERICA, et al.,

Defendants.
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Joint Memorandum in Support of Entry of the Proposed Stipulation and Order

Regarding the Appointment of a Review Officer

DeCARLO, CONNOR & SHANLEY PREET BHARARA

Attorney for the District Council of United States Attorney for the
New York City and Vicinity of the Southern District of New York
United Brotherhood of Carpenters Attorney for the United States
and Joiners of America

JOHN T. DeCARLO BENJAMIN H. TORRANCE

BRIAN F. QUINN TARA M. La MORTE
533 South Fremont Avenue, 9th floor Assistant United States Attorneys
Los Angeles, California 90071 86 Chambers Street
Telephone: 213.488.4100 New York, New York 10007
Fax: 213.488.4180 Telephone: 212.637.2703, .2746
E-mail: jdecarlo@deconsel.com Fax: 212.637.2702
bquinn@deconsel.com E-mail: benjamin.torrance@usdoj.gov
tara.lamorte2@usdoj.gov
 The government and the District Council of Carpenters1 respectfully submit this

memorandum in support of their joint application for entry of the proposed Stipulation and Order

Regarding the Appointment of a Review Officer (the “Stipulation”).2

After months of careful consideration, the parties have reached this broad agreement,

designed to effectuate far-reaching and long-lasting reform in response to numerous incidents:

among them, drug use by former officers and employees of the District Council, out-of-work list

violations, embezzlement from local unions, and the indictment unsealed in August 2009. That

indictment—which charged the union’s top officer, the president of its largest local, the

executive director of a major employer’s association (all three of whom were also trustees of the

union’s Benefit Funds), and seven others with extensive and longstanding racketeering

schemes—has resulted in guilty pleas from two union shop stewards to date, which follow on the

numerous other convictions involving the District Council in recent years. The indictment, the

convictions, the evidence behind them, the drug use, and the findings of the United Brotherhood

of Carpenters since it assumed trusteeship of the District Council all demonstrate that corruption

and racketeering continue to pervade the union.

Major reform is required, but has not been achieved with the current oversight by the

government and the Court. The agreement now presented is the most effective means available

to begin that reform. It would institute a new Court-appointed Review Officer, with significant

powers not only to investigate and remedy wrongdoing, but to implement systemic and structural

1
Although the District Council’s Benefit Funds have agreed to the Stipulation, as
described below, this Joint Memorandum is submitted on behalf of the government and the
District Council alone.
2
The Stipulation has been submitted to this Court’s orders and judgments clerk, and a
copy is attached to this memorandum for the Court’s reference.
reforms to prevent and deter corruption. And with the agreement of the union’s Benefit Funds, it

extends the Review Officer’s investigative and assessment authority to the Funds, whose moneys

have been the target of much of the racketeering that has led to criminal charges and convictions.

In short, and as further detailed below, the agreement now before the Court will move toward

eradicating the corruption that has plagued the union and the construction industry as a whole for

decades. For that reason, the parties respectfully urge the Court to enter the Stipulation

forthwith.

The Forde Indictment and the Parties’ Response

Both the government and the United Brotherhood of Carpenters (“UBC”) viewed the

indictment against Michael Forde, John Greaney, Joseph Olivieri, and others as a strong

indication that the objectives of the 1994 consent decree have not been achieved. As the UBC

stated in assuming trusteeship of the District Council, the “very serious criminal charges” against

“shop stewards, business agents/managers, and the Executive Secretary-Treasurer” alleged a

fourteen-year period in which approximately one million dollars in bribes were received by union

officials, running up to the date of the indictment, in exchange for allowing corrupt contractors to

defraud the union and the Benefit Funds through a pattern of “pay[ing] union members cash at

below-union rates, without benefits; . . . and avoid[ing] payment to the union benefit funds in

violation of applicable [collective bargaining agreements].” Letter from Douglas McCarron to

Peter Thomassen, Aug. 10, 2009, at 1–2. That pattern is well known to the Court: it is what the

government and the Court have on many occasions described as “job site corruption.” United

States v. District Council, 2007 WL 3256841, at *2, *6–*7 (S.D.N.Y. Oct. 26, 2007). Such job

site corruption takes money out of the pockets of union members and unfairly increases costs and

decreases work opportunities for honest contractors.

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 At the same time, the UBC and the government saw the indictment as a rare chance to

achieve sorely needed reforms: not simply to oust identifiably corrupt individuals, but to address

systemic, structural, and cultural issues that have permitted corruption to thrive. As described in

the government’s memorandum to the Court of February 5, 2010, the government, after

consulting with people knowledgeable about the District Council’s affairs, reached out to the

UBC in its capacity as District Council trustee. In the meetings that followed, the UBC and the

government discussed the UBC’s findings during its supervision of the District Council—

including evidence of corruption, extensive drug use by employees and officers (including while

on union business or on union premises), and other illegality within the union—and the union’s

short- and long-term plans for responding to and remedying these widespread and longstanding

problems.

By late October, the government proposed that it and the union agree to seek a court-

appointed officer—one with broad powers to investigate and remedy wrongdoing regarding both

the union and its Benefits Funds, but also one whose powers and responsibilities would be

designed to take advantage of the UBC’s participation, mesh with the UBC’s long-term structural

proposals for reform, and focus not only on particular acts of corruption but on systemic reforms

to achieve the goal of a non-corrupt, self-policing, democratic union in the future. The union

agreed in principle and began a process of searching for a candidate. Eventually the union

proposed Dennis Walsh to the government, largely on the strength of the recommendation of

Judge Kenneth Conboy, formerly the Investigation and Review Officer; Walsh’s experience with

the District Council and the UBC as an aide to Judge Conboy; his work as a prosecutor,

especially on matters involving corruption within other labor unions; and Walsh’s continuing

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knowledge, as demonstrated in interviews, of the union’s history and affairs and of the common

means of racketeering that have victimized the union’s members and honest employers.

The government and the union then worked to achieve agreement on a proposed stipulation,

which was reached by the end of January 2010. At that point, the parties agreed that the best

course was to seek to have the Benefit Funds join the agreement as well,3 and began discussions

with counsel for the employer trustees of the Funds.4 All three entities—the government, the

District Council, and the Benefit Funds—have now reached agreement on the proposed

Stipulation now presented to the Court.

The Agreement

That final agreement embodies a cooperative approach between the government, the

District Council, and the Benefit Funds. It represents a substantial and important advance toward

achieving the widely shared (and statutorily mandated) goal of eradicating racketeering and

corruption, to the ultimate benefit of the union members, the Funds’ beneficiaries, honest

employers, and the public interest. The agreement is carefully crafted to meet the demands and

opportunities presented by the Forde indictment, the UBC trusteeship, and the Funds’

3
As expressed in its February 5, 2010, memorandum to the Court, the government was
and remains of the view that the Funds have been held by the Court to be bound by the 1994
Consent Decree, 1996 WL 221584, at *4–*5 (S.D.N.Y. 1996), and therefore should be bound by
a stipulation that enforces and implements that Decree. However, the agreement of the Funds to
the current Stipulation (in which the Funds expressly decline to concede that they are bound by
the Consent Decree) obviates the need for litigating that issue, and the government does not
contend in this application that the Decree applies to the Funds.
4
Pursuant to 29 U.S.C. § 186(c)(5)(B), the Funds’ boards are divided equally between
employer-appointed and union-appointed trustees. As specified in the Funds’ governing
documents, each half of the board is entitled to one vote; a matter may be approved on a two-to-
zero vote or, if there is a one-to-one deadlock, proceed to an impartial umpire.

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cooperation, and contains several unique provisions tailored to the current situation. Of

particular note:

• By their consent, the proposal applies to the Benefit Funds. The Forde indictment

named as defendants three of the Funds’ then-trustees—fully one quarter of the board—and

described how those defendants participated in the affairs of the District Council and the

Funds5 to embezzle from and defraud the Funds; how they accepted bribes to influence

their decisions related to the Funds, particularly related to the collection of required

contributions; and how another defendant offered to have his daughter, a Funds employee,

destroy records at the Funds to cover up wrongdoing. United States v. Forde, Indictment

S3 08 Cr. 828 (S.D.N.Y.), e.g. ¶¶ 25–29, 39–40, 43–44, 77.

The importance of the Stipulation’s application to the Funds is manifest. Besides the

indictment of the board members, as described above, many of the criminal charges over

the years have involved embezzlement from the Funds, often through corrupt evasion of the

collection of contributions mandated by collective bargaining agreements. E.g., United

States v. Moscatiello, 03 Cr. 229 (S.D.N.Y.); United States v. Alvarez, 04 Cr. 343

(S.D.N.Y.); United States v. Annucci, 06 Cr. 982 (S.D.N.Y.). The employer trustees of the

Funds maintain that the Funds are the victim of, rather than a participant in, these crimes,

and that bad acts, if any, committed by employees or trustees are aberrations that cannot be

fairly attributed to the Funds themselves. But regardless, the Review Officer’s ability to

investigate matters concerning the Funds and to assess their process for collection of

5
The enterprise defined in the Forde indictment for RICO purposes included the same
entities covered by the proposed Stipulation: the District Council, its locals, and the Benefit
Funds. United States v. Forde, Indictment S4 08 Cr. 828 (S.D.N.Y.) ¶ 8.

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 contributions is critical to preventing this type of embezzlement and, more generally, to the

elimination of racketeering for the benefit of union members and legitimate employers.

• To maximize the UBC’s role as trustee and to take advantage of the investigations it

has already performed and the changes it has made, and to maximize the participation of

the Funds and to protect the Funds’ trustees’ role as fiduciaries, the proposed Stipulation

expressly provides that the District Council and the Benefit Funds retain responsibility for

the elimination of criminality and eradication of unlawful outside influence, and that in

furtherance of that general principle the new officer should consult with District Council

and Benefit Funds officials before taking action, and permit them to act first when possible.

Stipulation ¶¶ 4, 5.a.

• The proposed officer has broad review and investigatory powers and access to

information, which will permit him to exercise the traditional authority of court-appointed

monitors: to detect corruption and discipline the perpetrators. Id. ¶ 5.b–e. To that end,

also, the union is directed to propose a revamped disciplinary system for the Review

Officer’s approval, which will ensure a process that is both fair to accused carpenters and

effective in disciplining and deterring union members from participating or acquiescing in

corruption or illegality. Id. ¶ 5.f.

• With an eye toward longer-term and more systemic reform, the proposed officer is

directed to conduct thorough assessments of many issues, including the job referral rules,

the electoral process, the structure of the local unions, and the Funds’ collection processes.

Id. ¶ 5.h. These assessments, and the reports and recommendations they generate, will

allow the Review Officer to go beyond simply purging those who would enrich themselves

at the expense of union carpenters, but to assist in reshaping the union and implementing

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 changes to prevent criminals from again controlling or influencing the union and stealing

from its members.

• The proposed officer is given authority to supervise District Council elections,

including the power to prescribe candidate qualifications and to approve candidates, in

order to prevent the perpetuation of corruption at the top level of the union through the

election of racketeers or those influenced by racketeers. Id. ¶ 5.k.

• In addition, to permit the UBC to implement a long-term reform proposal they have

made to the government, the Stipulation provides that the union and its signatory employers

may establish a permanent labor-management committee with the job of combating

corruption in the industry, and contemplates that some of the functions described in the

Stipulation may be transferred to such a committee. Id. ¶ 10.b. While inchoate at this

stage, the prospect of a permanent (and permanently funded) entity that enlists the resources

and cooperation of both the union and legitimate employers to investigate and prevent

corruption holds out the promise of lasting reform, and of ensuring that whatever the

Review Officer accomplishes will be retained and built upon, rather than reversed once his

term expires. The UBC has noted that a similar labor-management entity has been effective

in enforcing contracts in other parts of the country, particularly Southern California.

Importation of that successful model to New York, in cooperation with the government and

the Review Officer, could achieve enduring results in eradicating entrenched corruption.

Dissolution of Independent Investigator’s Office

To permit the new officer to operate freely, the agreement provides that the Independent

Investigator’s functions should be transferred to the new officer, and the Independent Investigator

office disbanded after a transition period. Id. ¶ 6. But as the government noted in its February 5

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memorandum, this is a secondary part of the agreement. The goal of the Stipulation is to

restructure the very system of Court and government oversight of the union, rather than to simply

replace one Independent Investigator with another within the same system—a system that failed

to prevent the conduct described in the Forde indictment or the conduct since uncovered by the

UBC acting as trustee. The Independent Investigator office is proposed to be disbanded because

the new officer must have far broader powers. To execute those powers, the new officer must

have clear authority, not subject to any jurisdictional disputes with an existing officer or any

confusion among the membership as to which officer is responsible for what. Moreover,

overlapping offices will impose an unnecessary and substantial cost on the union, a cost

ultimately borne by the union’s members (who are, after all, mostly innocent victims of the

frauds and racketeering described in the Forde indictment).

The government and the union share the view that there is no one better able to fill the role

of a court-appointed officer at this time than Walsh. Walsh earlier sent the Court a summary of

his experience, and has appeared before the Court in his role assisting the Investigation and

Review Officer a decade ago. In interviews with the government and the union, Walsh has

demonstrated a tremendous depth of knowledge regarding the District Council and the people

involved in the union, both in the past and at present. He has also shown a grasp of the schemes

utilized by labor racketeers and the ways they are concealed. And, of great importance, he has

proposed innovative and thoughtful solutions to prevent widespread racketeering from occurring,

and shown a commitment to the goal of a truly self-governing union. Moreover, he worked with

the UBC during the prior trusteeship and is acquainted with key personnel there. Finally, Walsh

has met with the trustees and representatives of the Benefit Funds, who have agreed to his

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selection. Walsh is thus an ideal choice for the role of Review Officer, and his appointment will

further the goal of eliminating corrupt influences in both the near and distant futures.

The Court’s Authority to Enter the Stipulation

As recited in the proposed Stipulation, the Court has the authority to enter the agreement by

virtue of any or all of the following: the Court’s inherent power to enforce the Consent Decree;

Fed. R. Civ. P. 60(b); RICO’s remedial provision, 18 U.S.C. § 1964; and the Court’s contempt

power. Indeed, both the Court’s authority to enter the Stipulation, as well as the advisability of

the Stipulation itself, are uncontested.

With respect to the 1994 Consent Decree, “[i]f a federal court can validly enter a consent

decree, it can surely enforce that decree.” Kozlowski v. Coughlin, 871 F.2d 241, 244 (2d Cir.

1989). The current Stipulation does just that. The Consent Decree, among other things,

contained a permanent injunction against acts of racketeering as defined in 18 U.S.C. § 1961,

which in turn incorporates the federal criminal prohibitions on various types of fraud, bribery,

embezzlement, obstruction of justice, and violations of labor law that were alleged in the Forde

indictment. The Stipulation serves to remedy those acts of racketeering (to which two defendants

have already pleaded guilty) and ensure that they do not recur, and thus enforce the injunctive

provisions of the Consent Decree. Indeed, the Stipulation expressly states that the Review

Officer’s powers include the authority to “ensure compliance with the injunctions set forth in the

Consent Decree,” Stipulation ¶ 5.a; requires violations of the Consent Decree to be reported to

the Review Officer, ¶ 5.e.i; reforms the union’s disciplinary process to address (among other

things) violations of the Decree, ¶ 5.f; requires supervision and enforcement of the Decree’s job

referral rules and an assessment of their operation, ¶¶ 5.h.ii & 5.j; and in numerous other places

refers to achieving or furthering the objectives of the Decree, e.g., ¶¶ 5.h, 5.k, 8.c.iii, 10.a, 12.g.

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The Decree itself, of course, was a settlement of a RICO action and thus was grounded in the

Court’s statutory authority to impose equitable remedies under 18 U.S.C. § 1964; that same

authority permits the Court to act again to address racketeering, as alleged in the Forde

indictment, by extending the Decree’s remedies as spelled out in the Stipulation. Finally, Rule

60(b)—which “reflects and confirms” the Court’s inherent power to modify judgments, Plaut v.

Spendthrift Farm, Inc., 514 U.S. 211, 233–34 (1995)—applies to consent decrees, and

implements a “flexible” standard for modifying them. Rufo v. Inmates of Suffolk County Jail,

502 U.S. 367, 378, 380 (1992).

Additionally, the Court has the inherent power to find and remedy contempt. United States

v. International Brotherhood of Teamsters, 899 F.2d 143, 146 (2d Cir. 1990); Vuitton et Fils S.A.

v. Carousel Handbags, 592 F.2d 126, 130 (2d Cir. 1979); Shillitani v. United States, 384 U.S.

364, 370 (1966). Were the government to proceed with litigation, rather than by this consensual

resolution, it would surely charge the Forde defendants, as well as associated entities, with

contempt of the 1994 Consent Decree; the Stipulation serves to remedy the past noncompliance

with the Decree and to coerce future compliance by instituting the Review Officer with his ability

to implement reform and to detect and discipline violators.

Finally, with respect to the effect of the Stipulation on prior orders of the Court, particularly

that appointing the Independent Investigator, the Court has the power to modify those orders in

the manner set out in the Stipulation. Unlike the Consent Decree, which as a “final” order is

subject to restrictions on modification, a non-final order is “subject to the complete power of the

court” to modify or vacate it. Fed. R. Civ. P. 60 1946 advisory comm. note; accord Fed. R. Civ.

P. 54(b); United States v. Lauersen, 348 F.3d 329, 338 (2d Cir. 2003); Sierra Club v. U.S. Army

Corps of Engineers, 732 F.2d 253, 256–57 (2d Cir. 1984); Zhou v. Peng, 286 F. Supp. 2d 255,

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260–61 (S.D.N.Y. 2003). Indeed, the Court, in reappointing the current Independent

Investigator, specifically noted that his term might be ended early by further order. United States

v. District Council, 571 F. Supp. 2d 571, 579–80 (S.D.N.Y. 2008).6

Under these authorities, the Court should enter the Stipulation. There is a “strong judicial

policy in favor of settlements.” McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir.

2009) (internal quotation marks omitted); Davis v. Blige, 505 F.3d 90, 104 (2d Cir. 2007). One

reason for that policy is to avoid needless and costly litigation, thus promoting both “financial

and judicial economy.” Bano v. Union Carbide Corp., 273 F.3d 120, 129–30 (2d Cir. 2001)

(internal quotation marks omitted); Janneh v. GAF Corp., 887 F.2d 432, 434–35 (2d Cir. 1989)

(under “strong judicial and public policies favoring out-of-court settlement . . . costs of litigation

are reduced and crowded dockets are relieved”), abrogated on other grounds, 511 U.S. 863

(1994). The Stipulation here achieves that, avoiding possibly years worth of litigation over such

issues as the facts underlying the Forde indictment and other potential violations of the Consent

Decree or relevant laws; alleged contempt of court by the union or the Benefit Funds; appropriate

remedies for violations of the Decree and the need for further enforcement of the Decree; the

effect of the Decree on the Benefit Funds; and possibly many more. In addition, the presumption

in favor of settlement is particularly strong where, as here, “ ‘a government agency committed to

6
The Court contemplated doing so based on the possibility that the District Council
might be successful in moving to terminate the Consent Decree. 571 F. Supp. 2d 555, 568
(S.D.N.Y. 2008) (order denying union’s motion to terminate Decree for at least one year); see
571 F. Supp. 2d at 573, 579–80 (order of same day reappointing Independent Investigator and
referring to one-year continuance of Decree). However, the parties now agree that rather than
being ripe for termination, the Consent Decree requires further enforcement as provided in the
Stipulation. Nevertheless, the legal principle underlying the Court’s warning that the
Independent Investigator’s term might be cut short—that the Court has inherent power to later
modify its orders—remains the same.

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the protection of the public interest’ has participated in and endorsed the agreement.” City of

New York v. Exxon Corp., 697 F. Supp. 677, 692 (S.D.N.Y. 1988) (quoting Wellman v.

Dickinson, 497 F. Supp. 824, 830 (S.D.N.Y. 1980), aff ’d, 647 F.2d 163 (2d Cir. 1981). The

public interest here in strong anti-corruption, anti-racketeering measures is undeniable and of

paramount importance. United States v. Int’l Bhd. of Teamsters (“Senese & Talerico”), 941 F.2d

1292, 1297 (2d Cir. 1991) (“public has a compelling interest in eliminating the public evils of

crime, corruption, and racketeering in union activity”).

The Stipulation advances that public interest with the government’s endorsement.

Moreover, both the union and the Benefit Funds have agreed to the far-reaching remedies

embodied in the Stipulation to advance the shared interest in eradicating racketeering. For those

reasons, the Stipulation should be approved.

The Parties Request Entry of the Stipulation at the Earliest Opportunity

The government and the union respectfully request that the Court consider and enter the

Stipulation at the earliest opportunity. The parties certainly recognize that eight months have

passed since the Forde indictment, and two and a half months since the union and the

government agreed to an earlier version of this Stipulation; the urgency of this matter may

therefore not be apparent, and at first glance the union and government could be seen as

themselves less than dedicated to a speedy resolution. However, the delays have not been a

result of any lack of diligence by the parties. The Stipulation is a long and complex document,

and its terms, and candidates for the Review Officer position, both required careful

consideration. Moreover, since the union and government reached agreement, both also agreed

that the best course was to seek the consent of the Benefit Funds as well, which required further

consideration by the Funds and their counsel followed by lengthy negotiations.

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