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1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 3 UNITED STATES OF AMERICA, 4 Plaintiff, 5 v. 90 Civ. 5722 (RMB) 6 DISTRICT COUNCIL OF NEW YORK 7 CITY and VICINITY OF THE UNITED BROTHERHOOD OF 8 CARPENTERS and JOINERS OF AMERICA, et al., 9 Defendants. 10 ------------------------------x 11 New York, N.Y. August 8, 2011 12 2:10 p.m. 13 Before: 14 15 HON. RICHARD M. BERMAN, 16 District Judge 17 APPEARANCES 18 PREET BHARARA 19 United States Attorney for the Southern District of New York 20 BY: BENJAMIN H. TORRANCE Assistant United States Attorney 21 WEISS & WEISS LLC 22 Attorneys for Michael Bilello BY: SCOTT A. WEISS 23 24 25

Page 3 1 2 (Case called) THE COURT: So on my list, although the first topic is

3 status of the funds, this is not the right day to ask about 4 status of funds, but we will do it anyway. The order of topics 5 that I am interested in, and then I will hear what you want to 6 talk about, is the funds, and I think there were a couple of 7 funds that we did not hear about last time. Then the status of 8 the bylaws proposed, and also the status of the proposed 9 restructuring. If Mr. Conboy wanted to bring us up-to-date on 10 collective bargaining, that was in progress last time, and if 11 there is anything about year end elections that anybody wants 12 to talk about. 13 15 16 18 20 21 Anybody have anything else that they want to talk Do we have somebody to talk about the funds? MR. McGUIRE: Raymond McGuire, your Honor, counsel for THE COURT: We don't have that fellow that was here MR. McGUIRE: No. Mr. Urbank is not here, your Honor. THE COURT: OK. The last time we talked about two of 14 about? No.

17 the fringe benefit funds. 19 the last time?

22 the four funds, and I thought we would get brought up-to-date 23 about the other two today. 24 MR. McGUIRE: I believe we talked about the welfare 25 fund and the pension fund, your Honor. Page 2 Page 4 1 2 THE COURT: That's exactly what we did. MR. McGUIRE: Then we also have, as you know, the

1 APPEARANCES CONTINUED 2 FITZMAURICE & WALSH, LLP BY: DENNIS WALSH 3 Review Officer - and 4 MINTZ LEVIN Attorneys for Review Officer 5 BY: BRIDGET ROHDE 6 LATHAM & WATKINS LLP Attorneys for UBC 7 BY: KENNETH CONBOY WILLIAM RECKLER 8 NATHANAEL YALE 9 McELROY, DEUTSCH, MULVANEY & CARPENTER, LLP Attorneys for Intervenor 10 General Contractors Association BY: MARK A. ROSEN 11 CARY KANE, LLP 12 Attorneys for Carpenters Committee for Democracy and Workers Rights 13 BY: LARRY CARY ANDREW M. KATZ 14 HOLLAND & KNIGHT 15 Attorneys for Building Contractors Association BY: LOREN L. FORREST JR. 16 KAUFF McGUIRE & MARGOLIS LLP 17 Attorneys for District Council Fringe Benefit Funds BY: RAYMOND G. McGUIRE 18 ELIZABETH O'LEARY 19 20 21 22 23 24 25

3 annuity fund, which is a 401(k) type fund, to which employers 4 and union members make contributions and these are invested in 5 various -- they are invested in various fund families and each 6 individual annuitant directs his own investments. So they are 7 probably not, any of them, doing very well today. But in the 8 past the types of funds we have made available, and the choices 9 made by the members of the District Council, have produced very 10 good results, really ahead of the market. 11 13 THE COURT: What are the funds that are available to MR. McGUIRE: The spectrum is pretty much the same for 12 participants? 14 any 401(k), any union sponsored 401(k) plan. You have a major 15 large cap fund. You have usually a mid cap, a balanced fund. 16 You have fixed income, including government bonds. Usually we 17 have 14 or 15 funds. There is also what is known as a safe 18 haven, where you can invest and get a guaranteed rate of return 19 from an insurance company that basically provides the guarantee 20 in exchange for contributions. So that's doing well for some, 21 not doing so well for people with a heavy investment in 22 equities. It's self-directed so the trustees do not have a lot 23 to do with it, except to ensure that the funds that are 24 selected and made available to the annuitants are performing 25 well. We have an investment adviser that tracks them daily and

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Page 5 1 lets us know when they are underperforming the market, and we 2 usually move pretty quickly to replace those funds. 3 5 7 THE COURT: Does every union member participate or do MR. McGUIRE: Every union member participates from the The next fund is the training fund, which basically 4 you have to be a union member for a certain amount of time? 6 date of hire. 8 funds the apprenticeship program and ongoing journeymen 9 training that's provided by the Labor Technical College, which 10 is in the basement of 395 Hudson Street. It's a technical 11 college that is considered an exemplar for New York City 12 apprenticeship programs and journeymen training programs. It's 13 run by Martin Daly. He has been there for a number of years 14 and has received numerous awards. 15 Its budget has been cut because, as you know, hours 16 have been reduced from 20 million to 15 million, and there has 17 been a corresponding reduction in the amounts of money 18 contributed by employers to fund the college. So we have cut 19 back on a lot of sort of extra expenses that don't affect the 20 core of the training. For example, we used to have a fairly 21 lavish graduation party for the apprentices and their families. 22 This year that became cheese and crackers and soda pop at the 23 District Council headquarters. So we are doing things like 24 that to try and conserve funds at the technical college. 25 Again, we invest those moneys mostly in short-term Page 6 1 fixed income type investments, and we have done reasonably 2 well, stayed ahead of the market there as well. 3 4 6 7 THE COURT: What is the size of that fund? MR. McGUIRE: I am not sure of the numbers of dollars THE COURT: Are we talking about millions, thousands? MR. McGUIRE: I think we are talking around $5 1 hours of discussion and e-mails back and forth between my 2 office, counsel for the UBC, and also benefited from the 3 comments that I received, both written and verbally, from 4 rank-and-file members. 5 I don't think that there was any issue that was raised 1 enable this conspiracy to succeed. 2 3 4 6 THE COURT: It's filed in federal court here? MR. McGUIRE: Yes.

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THE COURT: Unless anybody has anything further on the MR. WALSH: Judge, Mr. McGuire alluded to past

5 funds, should we talk about the bylaws? 7 practices of the Labor Technical College in honoring the 8 graduates. I think the record should reflect that the trustees 9 through counsel are in discussions with the United States 10 Department of Labor to actually address what the Department of 11 Labor considers significant expenditures which were not 12 authorized under ERISA for those parties. The number that I 13 saw, which may be contested by the United States Department of 14 Labor, is in the hundreds of thousands of dollars, conduct 15 going back I believe to the mid part of 2005, 2006. They have 16 in fact ended the practice of the lavish graduation 17 festivities, but I think it is a notable number that the 18 trustees of that particular fund will have to reckon with 19 through counsel in their ongoing discussions with the United 20 States Department of Labor. 21 With respect to the bylaws, I have, pursuant to 22 paragraph 12(b) of the stipulation and order, authorized the 23 District Council and the UBC to publish the bylaws, which is a 24 process that was contemplated by the parties to the stipulation 25 and order. The bylaws are the product of, I think, hundreds of Page 8

5 in that fund, your Honor.

6 by the commenters, which was a reasonable issue, which was not 7 addressed by the negotiations, and at the very least reflects 8 some compromise agreement between my office and the UBC with 9 respect to propositions, like provisions for a gallery for 10 delegate meetings, for an audio recording to be made at 11 delegate meetings. Perhaps most importantly to many, the fact 12 that there is no cap on the number of delegates which each 13 local union will have; it will be a strict proportional 14 representation by the United States House of Representatives. 15 There will be 100 delegates and they will be apportioned 16 according to the size of the local unions. 17 The bylaws also provide for an inspector general's 18 office, a compliance officer and a compliance program, a 19 director of human resources, and many other provisions which 20 provide redundancy in oversight, particularly in a post review 21 officer environment, and gives the United States attorney 22 important opportunities to exercise its discretion in a post 23 review officer environment for various appointments and other 24 acts, not the least of which is any proposed amendments of the 25 bylaws after the tenure of the review officer expires.

8 million, which is basically a reserve that we draw against in 9 tough times. We try to fund it with current contributions. 10 11 THE COURT: Is that it? MR. McGUIRE: That's it. I would just make one point.

12 We filed on Friday, that is, the District Council fringe 13 benefit funds, a civil RICO action against four companies and 14 14 individuals, including three former trustees, four company 15 principals, and seven union officials. That is being served as 16 we speak on the defendants, and we intend to pursue that 17 vigorously. 18 19 THE COURT: What does it allege? MR. McGUIRE: It's a civil RICO claim. It alleges a

20 pattern of racketeering activity that resulted in massive 21 losses to the funds. There were, of course, as we all know, 22 conspiracies among certain employers to either not report 23 workers or to pay cash to workers and not make contributions to 24 the funds. This involved several union officials including 25 shop stewards who falsified their shop steward reports to

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Page 9 1 3 4 6 8 With the Court's permission, I would like to hand up a THE COURT: When you say published, is it on -MR. WALSH: It's on the District Council Web site, There is, I think, a natural connection in this part There is no issue that jeopardizes the election 1 Council, and the authority of the executive committee is set 2 out in the bylaws. 3 With the Court's permission, I would also like to hand 2 copy of the bylaws that were published.

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4 up the election rules, which begins with two pages showing the 5 schedule, which we are doing everything we can to stick to in 6 order to make sure that the election is completed by December 7 15 and certified by December 17. 8 For the sake of completeness, I will also offer the 9 letter that was mailed to all 23,000-plus members on August 1 10 announcing pendency of the various events and draft rules. 11 The restructuring which I alluded to, Judge, is 12 different from what was originally proposed in a letter 13 Mr. Conboy distributed some time ago. In principal part, the 14 areas that I thought needed closest review were the plan of the 15 UBC to cede certain jurisdictions, for instance, in New Jersey 16 or in counties outside New York City, which the dock builders 17 had, which the floor covers Local 2287 had. I asked in early 18 July the UBC to quantify the effect of the lost hours on the 19 benefit funds, and I posed a second question in that first week 20 of July, which was, if the jurisdictions were ceded, what force 21 and effect a consent decree would have on work which continued 22 to be performed in those jurisdictions? 23 I had conversations with Mr. Conboy and his team, and 24 I was, after some detailed discussion, ultimately informed of 25 the UBC's plan to drop the ceding of the jurisdictions. So Page 10 Page 12 1 that there is no impact whatsoever by the dissolution of 1456 2 and 1536 on the contributions or the flow of contributions to 3 the benefit funds. 4 And the question of the force and effect of the 5 consent decree did not have to be reached, but it is my 6 understanding that the UBC concedes the force and effect of the 7 consent decree in any area which may be effected going forward, 8 which had been outlined by the plan, including the plan to 9 reorganize the millwrights into a Syracuse local. It had been 10 my presumption, which the UBC agreed with, that in the current 11 jurisdiction which the millwrights have, any reconfiguration 12 would concede the continued force and effect of the consent 13 decree and related court orders on the jurisdiction that the 14 millwrights have now. So that's the benchmark for any other 15 situation which might arise which affects jurisdiction. 16 The latest information I have may not be as current as 17 what Mr. Conboy may be able to offer. I am sure he will 18 correct me if I misspeak. I do understand that they plan on 19 going forward with constituting a so-called interior systems 20 Local 395, that they do intend to go forward with the 21 dissolution of Local 926 and Local 20, and inserting those 22 members into Local 45. The floor covers will remain as they 23 are. Local 157 will remain as it is. The two so-called shop 24 locals 2870 and 2090 will be merged into a new local union. 25 Ultimately we will have approximately six local unions

5 your Honor. 7 of the status conference to the status on the election process. 9 schedule that the parties have contemplated. I have 10 promulgated as of August 1st a notice, which was mailed to all 11 23,000-plus members of the union, announcing that the election 12 rules are available for their review by accessing them on the 13 District Council Web site, by going to the District Council 14 office or going to the local union to which they belong so that 15 they may read the election rules, and if they like, comment on 16 them or otherwise take the benefit of the rules in deciding 17 whether they would like to run for District Council office. 18 The positions are executive secretary-treasurer, 19 president and vice president, warden, conductor, and three 20 trustees. The top three positions will be elected directly by 21 the rank-and-file members in mail balloting, which will 22 conclude by December 15. The mail ballot process will be run 23 by the American Arbitration Association which has vast 24 experience in conducting these types of elections. 25 The warden, the conductor and three trustees will be

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elected by newly elected delegates to the District Council. So the 100 delegates elected by October 21 to the District Council will then gather on December 15, and in that caucus, by secret ballot election, select those five officials to serve at the District Council. The delegate elections at the local unions must conform to the schedule put out in the election rules, which generally contemplates that in order to comport with the rules, the notices which are required under federal law announcing nominations for the local union delegate positions must go out in September, generally speaking, and those elections must be held in October so that we have a fresh set of delegates. I have also received assurance from the UBC and an acknowledgement of their understanding that if there is to be a phase two of restructuring, that which might follow the dissolution of Local 1456 and Local 1536 to create a new Local 1556, that it must occur within this schedule, and I have been assured that if it is going to happen, it will happen within that schedule. So that the first order of business for any newly constituted locals, such as the proposed 395, or any other local that may absorb other dissolved locals, will be to send out the notices to the rank-and-file members informing them of their right to nominate delegates to the District Council, as well as a representative that each local union is entitled to have to the executive committee of the District

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Page 13 1 if they do decide to do this second phase of the restructuring. 2 There is a representation that I have received that membership 3 in Local 395 will be voluntary. For instance, a member of 4 Local 45 who specializes in interior systems, or Local 157, 5 will not be compelled to join Local 395. So I think it's 6 anybody's guess as to how many current members may of their own 7 volition decide to join Local 395 should it be constituted. 8 10 12 I will yield to Mr. Conboy if he has any further MR. CONBOY: Good afternoon, your Honor. Kenneth I wanted to, first of all, with respect to the dock 9 detail which he would like to bring to the Court's attention. 11 Conboy for the UBC. 13 builders and the timbermen, we did have extensive discussions, 14 as Mr. Walsh has indicated, with his office and the United 15 States attorney's office. We also had very valuable 16 conversations and one highly productive meeting with 17 Mr. Bisceglie. As a consequence of concerns expressed by all 18 of these orders, Mr. Walsh is correct, the UBC did indeed 19 determine that it would not proceed with the planned 20 jurisdictional changes, which would in effect have exported a 21 portion of the New York City District Council jurisdiction to 22 New Jersey. 23 I should say that Mr. Walsh is quite correct, a 24 crucial factor in driving this decision was the impact of such 25 a determination and action upon the benefit funds. Page 14 1 I should also say that Mr. Bisceglie very effectively 1 suffered as a result of violations of federal law to the 2 detriment of those funds. 3 4 MR. McGUIRE: That's the theory, your Honor. THE COURT: Is there an amount? Has an audit been 2 pointed out that there were significant economic factors that 3 would disadvantage the members should that program be pursued, 4 and under the circumstances we concluded that, in light of this 5 very constructive dialogue, that that portion of the proposed 6 restructuring plan would be withdrawn. 7 I did want to indicate, Judge, though, that although a 8 number of components in the plan remain under consideration, I 9 do want to temper, and perhaps this is my fault, I haven't been 10 keeping Mr. Walsh as up-to-date as perhaps I should have, there 11 is no determination made as of now with respect to any other 12 part of this proposed restructuring. That includes 13 millwrights. It includes the various potential mergers and 14 reconfigurations within the five borough jurisdiction 15 presently. 16 Certainly, if it turns out that the District Council 17 does finally conclude that a change in the millwright 18 configuration is appropriate, Mr. Walsh is quite right. We 19 have assured him, and we have assured the United States 20 attorney, that should that be done, it will in no way undermine 21 the jurisdictional oversight of this court and of the consent 22 decree and of the previous orders on record. But I do want to 23 emphasize, we had a discussion this morning with our client, 24 that no decision has been made and there is no inclination at 25 this point that is in any way weighted toward either doing the 1 other parts of this restructuring plan or not. 2 Now, I understand that the Court and particularly Mr.

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3 Walsh are concerned that the election schedule not in any way 4 be injured by a delay in terms of a final judgment as to what 5 additional, if anything, should be done in terms of the 6 restructuring proposal, but I have assured Mr. Walsh and the 7 United States attorney that this will be resolved well in 8 advance of the planned sequencing election processes as spelled 9 out in his formal advice to the Court and to the membership. 10 11 THE COURT: Practically speaking, what does that mean? MR. CONBOY: Mr. Walsh and I had a conversation

12 yesterday and we are optimistic that a final resolution of this 13 can be done by the middle of September. 14 16 18 THE COURT: If it were, that would not interrupt the MR. WALSH: The first order of business would have to THE COURT: OK. That pretty much covers the agenda. 15 fairly tight time schedule. 17 be to formally get the notice of nominations out. 19 Anything else anybody wanted to at the front two tables talk 20 about? 21 23 24 25 So just for a minute, if we could go back to that MR. McGUIRE: It might be helpful if I hand up a copy. THE COURT: Sure. The theory is that the benefit funds obviously Page 16 22 civil RICO action.

5 done? Are these defendants -- I am just looking at the 6 caption. I see Mr. Forde is at the top of the list. I don't 7 know these other defendants, what their current status is. 8 MR. McGUIRE: Mr. Forde, as you know, is incarcerated. 9 Mr. Greaney is I think in protective custody. He is 10 cooperating. Mr. Olivieri is incarcerated. I don't think any 11 of the others are in jail. I know some of the employer 12 principals are cooperating. My partner has been working with 13 Ms. Zornberg at the U.S. Attorney's Office to identify these 14 people and try to get access to them and information from them. 15 We anticipate, your Honor, there will be several individuals 16 and companies added to this list of defendants as we learn more 17 from some of the cooperating witnesses. 18 20 THE COURT: These corporate defendants in particular, MR. McGUIRE: Most of them are not. We are not 19 these are ongoing entities? 21 certain whether they have assets, but most of them are no 22 longer functional. 23 25 THE COURT: So is anybody in this group deep pocket, MR. McGUIRE: We think there are pockets, no question. 24 as they say? Are there any pockets at all?

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Page 17 1 We have several lawsuits going on now independently that will 2 probably be consolidated, one against Turbo and one against 3 Pitcohn, and we have had offers in the hundreds of thousands of 4 dollars range to settle those cases. We think there is money 5 here. The trust funds at one point estimated that this 6 conspiracy had deprived it of over $18 million in 7 contributions, and we are going to go after as much of that as 8 we can find. 9 THE COURT: Mr. Walsh, could you just for my 10 benefit -- you all probably know this better than I do -- just 11 summarize the timetable of what has to happen, so to speak, and 12 in what time frame? 13 MR. WALSH: Well, beginning today, your Honor, members 14 can begin getting signatures for their nominating petitions. 15 This is a process designed to determine if a member has bona 16 fide support, which would entitle him or her to the significant 17 benefits of the free mailing that the District Council will pay 18 for of election literature, of space in the special election 19 edition of the carpenter magazine, posting his or her 20 literature on the District Council Web site at no cost to the 21 member. 22 23 THE COURT: These are again for which offices? MR. WALSH: For all offices, whether people are 1 The receipt deadline is December 15 for the AAA to 2 receive the ballots back. They will do the counting. All

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3 candidates may be present through their observers. There will 4 be an election committee designated for various tasks. And we 5 contemplate being able to certify the results of the election 6 by December 17, doing insulation in the second week of January, 7 and at that time the trusteeship will be, in effect, concluded 8 and the democratic control of the District Council will be 9 restored to the members here in New York City. 10 11 THE COURT: Thank you. MR. WALSH: I also wanted to mention that both the

12 funds Web site and the District Council Web site now contain 13 the Form 5500 filed by the benefit funds at the end of the 14 previous fiscal year, and I expect that the posting will 15 continue when the next Form 5500, and the many exhibits to the 16 Form 5500 which are also available, is filed in fairly short 17 order in the weeks ahead. 18 19 21 THE COURT: Great. Some people have indicated they wanted to speak. MR. CLARKE: Good afternoon, your Honor. My name is

20 Anybody in the audience? Now is your time. 22 Gene Clarke. I have been a member of this union for 52 years. 23 Since I joined this union the mob has always controlled it. 24 When I came in, it was Pete DeFeo. He died in the late 80s. 25 Then in came Gotti with his angels, and they started robbing Page 18 Page 20 1 us. The robbery has always been continuous. Full mobilization 2 would mean the mob taking over again. You will be handing this 3 union back to the mob, because whereas the membership has been 4 cleaned up to a certain degree, we have not cleaned up the 5 contractors; a lot of the contractors are just dying to get 6 ahold of us. 7 Now, also, we have this election. The election is we 8 have to get 250 signatures from members in good standing. A 9 lot of our members are not in good standing. The reason for 10 that is economics, they are not working, and everything else 11 that goes with it. It was also tried years back 250. It 12 didn't matter. The same garbage got in and ran the union into 13 the ground. So, therefore, I would ask you to just put that 14 aside. That's gerrymandering. That was done to the Irish with 15 the English rule; they just had the sign up. 16 Also, a lot of people have told me they are not going 17 to sign because they feel the mob is still present, and they 18 don't want to work for a boss that has that kind of influence. 19 They don't want their name on anything. So, therefore, I think 20 we should drop that. 21 Also, I would like to know, I attended Mike Ford's 22 sentence. Mike Forde was sentenced and nobody from the 23 International was at that, nobody from the New York City 24 District Council, or no one from Mr. McGuire's office. I don't 25 know if he was on the payroll. At that time he might have been

24 running together as a slate, which is a combination of two or 25 more members running with a unity of interest, or individual

1 candidates. The rules do contemplate a distinction in the 2 number of signatures. An individual candidate needs to acquire 3 250 bona fide signatures, the slate needs to acquire 500 4 signatures because of their greater numbers. 5 But then the schedule basically contemplates various 6 financial disclosures. There is a special nominations meeting 7 to be held at the District Council on October 12. It has the 8 dates within which bona fide candidates must provide their copy 9 to the District Council for mailing by the long-standing bulk 10 mailing house used by the council. There is a provision for 11 the filing of election complaints for immediate investigation 12 and response. An appellate process, once a decision by the 13 election officer, who is my law partner, is made, it can be 14 appealed to me and ultimately there are appellate opportunities 15 with the district court, which you will want to make note of. 16 The election balloting process will begin in later 17 November when the AAA sends out the ballots to members in good 18 standing after a vetting process. We will be relying on the 19 UBC's computer system, the so-called ULTRA system, with the 20 direction to all local unions that any member who is in arrears 21 and makes good on that and pays his or her dues, that that 22 information get into the ULTRA system within 24 to 48 hours so 23 that members up to the very end can do everything they can to 24 get in good standing so that they can fill out their ballot and 25 mail it back.

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on the payroll for the contractors, who he represents also, 1 which makes me think it may be a conflict of interest when he 2 goes to court with two hats on, if you understand what I mean. 3 Therefore, I would like to know why Mike Forde was 4 allowed that day to receive a pension of $96,000 a year. 5 That's what he is getting now, plus medical, plus the left-over 6 amount of his pension 32,000 he pays towards the debt. Now, 7 that 32,000 after 206 years will be paid back on what he owes. 8 I think it's a joke. Therefore, I would ask Mr. McGuire to 9 remove that pension. ERISA has nothing to do with it because 10 Mr. Forde signed the blue card. 11 Now, the blue card was a conspiracy of our 12 International as well as our District Council to shake down the 13 membership. If you did not sign the card, you would have to 14 sit without your check. It's a vacation check. Actually, the 15 trustees only had the right to keep that money for 13 weeks so 16 the interest accumulated could be used to fund expenses. 17 Now, that wasn't done. Till this day the fine is 18 still $500, when it should be only 250. Many people notified 19 the International about this problem, but they were just told 20 take a walk. Mr. Walsh cannot do anything about it because he 21 hasn't got the authority and it's not in his jurisdiction. 22 Therefore, I ask you to appoint a law firm, please, to help us 23 get these people into jail where they belong because they 24 robbed the membership. 25
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have to be looked into. Also, I think it's time that we move this from a civil to a criminal case because it's terrible what has gone on here. The robbery won't stop. It's not going to stop. How can we even tell people, come on, sign this. People tell me, I ain't signing, you kidding, they're still there, and I guess they are right. That's all I am going to say, your Honor. THE COURT: OK. MR. NEE: My name is Patrick Nee. The first thing I would like to point out is these bylaws were only put on the council Web site sometime late Friday night. I absolutely disagree with Mr. Walsh. Nothing that we asked for is in here, nothing. I would like someone to explain to me why we need one officer who controls all the power. The other thing that hasn't been addressed in here is if you go to District Council powers generally. This council shall be the central governing body over and shall have legislative and executive powers on all matters relating to the general interest and welfare of affiliated local unions and their members. In other words, local unions will continue to do nothing but collect dues. Now, there are federal laws which prohibit this. The UBC is trying to claim the District Council is an intermediate
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Now, I am going to cut this short. That's it? THE COURT: No. What aspects of the election are you critical of? Are you saying that being in good standing is not a proper criteria? MR. CLARKE: It should be. The only person that should be in good standing and should be perfect for the job is an honest man. That's where I worry. The right guy has to get the job this time, not 250 signatures. It's ridiculous. It's gerrymandering in plain English. THE COURT: You think the requirement of 250 signatures is improper? MR. CLARKE: It's moot. It has no presence really. Walter Mack did a great job. He was going after the mob. He was really doing his job. Judge Haight saw fit to have him removed and then came in Bill Callahan. Bill Callahan, for some reason, years went by, nothing happened. There was no more mob. There was no more robberies. Everything was just Shangri-La in plain English. Now we have Stuart GraBois. Stuart GraBois went to a mob clubhouse in the late 80s and asked for help from the mob to find out who killed Etan Patz, and that's how we got him a few years later. In 1993 he got up and he was the head of our funds. Now, in 1998, in the funds they got rid of all the good people and they kept everybody that was associated with the mob. This has to be looked into. We have so many areas that

1 body, which means there has to be a labor organization beneath 2 it. A local which only collects dues and that is its only 3 purpose does not fulfill their requirements to be a labor 4 organization. They are a fiction. They are not a bona fide 5 labor organization. Therefore, the council is not an 6 intermediate body. It's in the bylaws. If you go through them 7 and go to local unions, it says local unions may only hire 8 clerical staff, nobody else. We may only have clerical staff, 9 which means we can't be involved in anything else. 10 I am currently the president of 157, and all we do is 11 collect dues. If a member calls on any other issue, we simply 12 transfer them to the correct department in the council to speak 13 to. We have nothing to do with anything in relation to 14 employers or anything else. We do not serve a purpose. There 15 is nothing in these bylaws which brings any information back to 16 the members. There is no involvement of the members whatsoever 17 in any of this. There is no reason to have one person running 18 the entire show. We have 22,000 members. We can afford to 19 have more than one officer and we can elect them. 20 Everybody is saying that this timeline for the 21 election is so crucial. I still disagree. We are not ready to 22 put forward and schedule for elections when we can't even 23 decide what should be put on the table, what positions should 24 be elected. I would like the opportunity to go further. We 25 already did a submission on the previous bylaws. I would like

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Page 25 1 to do it on these bylaws, to give you a submission on where we 2 see major problems, and there are major problems in these. 3 He has all safeguards and fallbacks. I want someone 4 to look into the supervision over 157 that was imposed by the 5 independent investigator Callahan which had no basis that I 6 know of. The local union was put under supervision because of 7 what council employees were doing. Their employer Mike Forde 8 was put in charge of local 157, which made no sense since it 9 was his employees who had the wrongdoing. 10 I would like my members to have a chance to respond to 11 these bylaws which don't work. We are doing this for 20 years. 12 We can give this another 30 days. We do not have to end this 13 in January. If we can in 30 days do something to correct this, 14 which is just an utter mess, which does nothing to attack 15 corruption, then I think it is well worth it. 16 This thing has been going on for two years and 17 suddenly on the last day, when it's all coming down to the end, 18 I have to put in for nominations at the next meeting for 19 delegates. They are talking about merging locals. They're 20 going to put two locals together of members who have no idea 21 who each other are. Put forward delegates. All that is going 22 to happen is the larger local is going to elect all the 23 delegates. If you get the dock builders and the timbermen, if 24 things go to the way they normally would, the dock builders are 25 twice the number of members as the timbermen so the dock Page 26 1 builders are going to elect all of the delegates for the two 2 bodies. So if they're going to merge them, at least the 3 timbermen should have their quota of delegates just for this 4 election. In the future, when they know each other, then you 5 can put them all in as one slate or as one body. But right 6 now, when you have two groups who do not know each other, have 7 never sat in a meeting together, it's unfair to the timbermen 8 that they don't get to elect their own delegates that they 9 would be entitled to. 10 I would like if we could get a chance to put a 11 submission in on these bylaws on what we see as being wrong, 12 and to get a response from somebody as to why our ideas don't 13 work. That's about it. 14 15 THE COURT: Thank you. MR. ARANA: My name is Donny Arana. I would like to 1 paid officials present that have control and power, and ask

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and I thank you for recognizing us. Two quick issues. I didn't come here to speak about it, but since the subject came up about the signatures to run for delegates, EST, whatever those positions may be, I find it very off the wall, because I am a very active union member. I go to all of my union meetings. At our local union meetings, there's only maybe 150 members. So I find it quite impossible for me, as a person that wants to run for office, to get 250 signatures. Then I would have to go to other locals, I would assume all over the five boroughs, while I am still working 9 to 5 on my job every day, supporting my five kids and my family. I find that would be almost impossible to get 250 signatures. At my local meeting, let's say there was 500 members there, which there's not, I feel it's breaking the members' anonymity to go up to them in public and get them to sign a petition that they want to run for me. That goes against the whole privacy of running and your voter rights. So that becomes a popularity contest, whoever is most popular and currently in authority, they should be able to get the 250 signatures, not the person like me who is against the rules proposed by the UBC. I'm not in favor of Doug McCarron. THE COURT: You're not in favor of? MR. ARANA: Doug McCarron. I don't agree with his leadership. And me to stand at a local union meeting, with
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2 rank-and-file members to sign my petition so I can be nominated 3 would be a death sentence for the people that were to sign 4 those. So I think it's absolutely ludicrous. That's my 5 opinion, as well as, I am pretty sure, the rank-and-file 6 members because I am very much in touch with them. 7 Another subject was on the bylaws. I heard Mr. Walsh 8 say, correct me if I am wrong, something that the bylaws have 9 been amended and sent back to us and they pretty much adhered 10 to the comments that the rank-and-file members made; they 11 addressed some of those issues and made some changes. The most 12 important issue to me, and I can only speak for myself, is the 13 delegates to the District Council, that they shouldn't be paid 14 employees of the District Council, because the delegates to the 15 District Council are nominated and elected by the rank-and-file 16 members to represent their interests. Now, if that person is a 17 paid employee of the District Council, truth to be known, it 18 doesn't sound nice, but the truth is he is going to protect his 19 best interests to continue to stay a paid employee. 20 Now, I am active on the Internet, and we have 21 discussions on all these issues, and a small example that I 22 made is, let's say I was to run for EST and I was to become EST 23 of the District Council, one of the first things I would like 24 to do is have the delegates to the District Council analyze 25 salaries of the employees that are working there. There's

16 thank you for recognizing the membership. We are the 17 rank-and-file members of the union that work with the tools. 18 What is most important to us as members, we are the union. We 19 run the union. We contribute to everybody's salaries. 20 Everybody sitting here, taking on all these very important 21 issues that are crucial to us, the membership, to our blood, 22 sweat and tears and our hard work, that's how all these 23 salaries get paid here. We don't sell a product and make 24 profit on it. How this place runs, it's through our work and 25 our services. We are the union. This is very important to us,

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inflated salaries there. Carpenters like myself that climbed the ranks that now currently work for the District Council are making $250,000 a year, $300,000 a year. So if those delegates are paid employees of the District Council, and I ask them to vote and make a conscious decision to maybe decrease their salaries, no one likes salary decreases, but I heard Mr. Conboy just saying he is trying to consolidate moneys and cut down on parties for the graduation apprenticeships, this would be a consideration, that some people are overpaid in these hard times and their salaries would have to be cut. Now, if I asked these delegates to the District Council to vote on this, if they are paid employees, what do you think the outcome of that vote is going to be? They probably will not go against it but make a suggestion that they get paid even more. So that's a conflict of interest, it's a clear conflict of interest. So their amendment to that was, the UBC, OK, only 50 percent of the delegates to the District Council be paid employees. If it's a conflict of interest, no percentage is acceptable, and if we give them 50 percent of paid employees and they vote in the manner for the UBC and salary, to make that stronger and squeeze the membership higher, we are automatically going against 50 percent of the votes. That's a unified vote. So the rest of the employers, the delegates that are not paid employees, would have 50 percent less. What are
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benefit funds are nearly in the red or projected to be in the red in the near future is to due to the lack of hours being contributed to the funds. I have heard estimates of the loss of a million man-hours for this proposed restructuring. The threat of chartering 395 still hangs over our heads. There has been no definitive explanation of what 395 will be other than an interior systems local. The creation of 395 will only strip existing locals of members, reducing the number of elected delegates and create more appointed officers and delegates by the UBC. Frank Spencer spoke at our local meeting in January about chartering 395. Yet here in August they still haven't been able to tell us anything about it at this time, yet counsel Conboy still tells the Court this will be settled in a timely fashion, less than a month before the scheduled elections for delegates of the DC. It seems that this will cause major problems, if not total chaos. How then will the number of delegates be determined while we are in this transition? On full mobility. Full mobility will open the door to corruption wider than ever. This will put the working men and women in a position where they will have no alternative but to bend to the contractors' demands, whether it to be to work for cash, defraud the benefit fund, or violate other working rules, such as starting early, working for straight time, work through
Page 32 lunch, bringing your own personal power tools or jeopardize their health and safety. Workers will have nowhere to turn for employment or incentive to terminate employers and burn their bridges. The men will turn on each other to protect their own livelihoods. Older workers will find it even harder to obtain any kind of work. As we all know, this is a young person's game. The older workers will find it harder and harder to obtain pension credits and medical coverage. Business reps will once again become the backdoor for the chosen few to get work. The same as it was when the contractors could request everyone they wanted, bringing us back to the same shenanigans we had under the Forde administration. This whole argument that full mobility will increase man-hours is a farce. If anything, it will decrease man-hours through fraud. These jobs are projected to take a certain amount of hours and giving them full mobility for lowering wages will not change those numbers. Thank you. THE COURT: Thank you. MR. NOONAN: Hello, your Honor. My name is James Noonan, and again, I apologize for my attire. A number of points. I didn't hear Mr. McGuire talk about the vacation fund. It's one of the funds. THE COURT: Is that a separate fund? MR. McGUIRE: It's been merged into the welfare fund,

the odds that all 50 percent of them make a conscious decision 1 to vote one way? We are defeated before the election. 2 THE COURT: I hear you. 3 MR. ARANA: Thank you very much. 4 MR. KELTY: Greg Kelty of Local 157. 5 As long as we are on the election, I would just like 6 to bring up something real quick. Section 31, paragraph D of 7 the constitution and bylaws, it prevents retirees from holding 8 office or delegate positions. I say retirees have a vested 9 interest in the viability and stability of the District 10 Council. They have years of experience on the tools and 11 dealing with union politics. I feel this is a discriminatory 12 rule against the older members of the union. This rule should 13 be scratched from the bylaws and the retirees should be able to 14 run for office seeing that they have a vested interest in the 15 future of this union. 16 I want to keep on point here. The International, and 17 I know you guys hit this in the presentation, but the 18 International proposed a reorganization plan that will 19 strengthen jurisdiction of the dock builders, the floor 20 coverers and the millwrights. This will also reduce the 21 man-hours going into the District Council benefit funds and the 22 pension fund without reducing the head count, therefore putting 23 a greater burden on these funds. Yet their legal 24 representative stood here and argued that the reason the 25

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Page 33 1 your Honor, and it's basically just, we hold the moneys and 2 distribute them periodically, don't really invest them except 3 in cash instruments. 4 5 THE COURT: What does it mean vacation fund? MR. McGUIRE: The employer, at the conclusion of 1 when I talk to them one on one, I would suggest to the new 2 delegates that one of the first orders of business be to take a

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3 good, hard look and make a record as to what is actually needed 4 to adequately fund the organizing department, and then consider 5 whether there ought to be some give-back to the members or some 6 other more prudent use of the money if that is to remain an 7 assessment. But that 60 cents is a District Council 8 assessment, it's not related to the benefit funds. 9 MR. NOONAN: I was just confused with that statement 10 because he said that's a District Council assessment, not 11 related to the benefit funds. And Mr. McGuire just said that 12 all that money is in the benefit funds. So you're taking money 13 out of the benefit funds from the District Council assessment. 14 Anyway, that's for another time. 15 There is an issue with the blue card that was brought 16 up. We were told if we didn't sign it, we weren't getting our 17 check, vacation check. They held out as long as they could. 18 There's many stories about why we had that blue card signed. 19 Apparently now Mr. McGuire started a civil RICO. I believe, 20 based on that blue card, if you sign that blue card, you gave 21 permission for them to access any moneys that the Council had. 22 So that's what I would imagine they are going to try to take 23 the money from. 24 The full mobility. Pat Nee brought up about our union 25 not being a union, our locals. It does state in there, the new Page 34 Page 36 1 bylaws, it says that local unions will hire nobody but clerical 2 workers. What for? Apparently, there is a Department of Labor 3 law saying there has to be an intermediate body. If that's 4 what the District Council is, and since it's not, you have to 5 elect its officials, meaning that we would elect our business 6 agents that represent us. 7 Why I'm standing here? I'm a carpenter. I don't do 8 this. My brother is a lawyer. I didn't want to do that. But 9 all I get is -- like what I loved about you was, you said, OK, 10 what's going on, when are the members going to be heard? Thank 11 you. Because we were never being heard. And I don't think we 12 are -- well, we are being heard to some extent, but it's all on 13 you. 14 This is the word on the street about the contracts. 15 This is what they did going into a contract. Our last raise, 16 they gave back 2.13, they said they'll keep it. In the 17 meantime, the contractors bid the jobs at a rate plus 2.13. So 18 they made 2.13 on every hour right away. Now they are working 19 at the lesser rate, and now we're going into contract 20 negotiations and they think the world is going in the toilet, 21 which is not necessarily true, and they want 20 percent. But 22 the operating engineers, they didn't get 20 percent. The 23 electricians a year ago didn't get 20 percent. The 24 steamfitters didn't get 20 percent. I am telling you, go on 25 the job, wear regular clothes, go on the job and see who is

6 collective bargaining agreement, agrees to contribute X number 7 of dollars to the wages and benefits. The District Council 8 then makes the determination how much goes into wages, 9 benefits, including vacation. That allocation is then followed 10 by the fund's office in distributing the moneys. It's also 11 distributed quarterly. 12 MR. NOONAN: We have an assessment to our vacation 13 fund. I believe we get 6.60 an hour in our vacation, I'm not 14 positive, and they take 1 percent. It's 1 percent of the hours 15 you worked of that vacation fund plus. That was voted on a 16 long time ago and the delegate body voted on over the last ten 17 years 60 cents assessment. When I get my check, when I get the 18 statement about it, instead of multiplying by six and change, I 19 multiply by five and change, so they are taking a dollar an 20 hour. In a quarter, I may work, say, 350 hours. Out of 1500 21 hours, they are taking whatever, 350 hours. 22 23 THE COURT: Is it an administrative fee? MR. NOONAN: No. Most of that 60 cents goes to an

24 organizing department which has in excess of $10 million 25 sitting there.

1 2 3

SPEAKER: 20. MR. NOONAN: $20 million sitting there. Since Dennis Walsh got involved and is watching it,

4 someone said to me, what is it doing sitting there, waiting for 5 what? And I said waiting to be robbed. 6 7 THE COURT: Mr. Walsh, what is it? MR. WALSH: I think Mr. Noonan has some of the

8 assessments mixed up. The moneys that are collected that fund 9 the organizing department are part of a 60 cents per hour 10 assessment that is divided between the political action 11 committee, the organizing department, and there is another 12 component that gets a nickel. An overwhelming percentage of 13 that 60 cents is sent to the organizing department. I did talk 14 about it in my report. It was revealed in the report, and I 15 have raised the question of why the number is so great. 16 It does have an account of approximately $20 million. 17 They have recently embarked on a procedure where any organizing 18 department expense covered by the District Council is 19 reimbursed by the organizing department, but by my 20 calculations, if they reimbursed every expense that they are 21 covering, including salaries, they are still not going to spend 22 more than $2 million or so per year. So that the current 23 number of 50 cents an hour for organizing, the pot will 24 continue to grow. 25 I would recommend, and anybody who cares to listen

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working the hardest. The carpenters are killing themselves, and we are going to give them 20 percent? They say, OK, this is how they are going to work it out with some great magical scheme on the money. They are going to get a raise, none this year, 2 percent next year based on millions of hours. But in the meantime, we are going to get four dollars out of the benefit funds. But like Mr. McGuire just said, they don't do that. This is what they are going to pay. I don't know the exact number. We are going to pay you $70 an hour. You split it up. That's who splits it up. The District Council splits it up. The contractors don't split it up. So who is taking the four dollars out of the benefits? Our guys, and they are telling us that that's a deal that they are making with the benefits. Now, I also have a problem because the benefits are in dire straits. I am a little confused. I spoke to a lawyer and she said, I'm not taking this case, it's very complicated. I said, I'm a carpenter, how am I supposed to do this? The elections is all going to be by mail? The United States does not do their elections by mail. They go to a polling place. If you want to have mail-in ballots, have mail-in ballots, but you know what, I think there is something to go in there, voting, meeting a couple of the candidates, and so forth. The lawyer Mr. McGuire, I do know he represents
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related in the rules, people don't want to do it, simply because their foreman says they have to do this and that's the bottom line. If I try to say something against it, it's pretty much going to go the other way. No one actually wants to do pretty much anything, just what the foreman or the contractor says, and that's the bottom line. There has to be rules, and if they are not followed, everything else will go down the drain. There is nothing new. It's just a change of name. And we know the request system just never worked. So I think it's just putting undue burden on all the regular members. My point of view that I am trying to make honestly is being an African-American or a minority, and for me implementing a system, for example, of full mobility would simply mean that the contractors control who gets to work, the bosses control who gets to work, the foreman controls who gets to work. First of all, if I don't live in your neighborhood, I don't work. If I don't ride the train with you, I don't work. If I don't go to the bar with you, I don't work. And that's the bottom line. Let's stop trying to kid around and fool each other about this full mobility. It simply means that people who are associated with those people in control gets to work and that's the bottom line. That's it, cut and dry. Let's stop this kidding around about this full mobility. The white Americans or the white owners are the ones who own the companies, and
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1 general contractors. We are not; we are the other side. I 2 have to take off to come here and not get paid. Like I said 3 the last time, if I came here, I would know my number. If this 4 was my job, I would know my numbers. If I didn't know my 5 numbers, I would be fired in a heartbeat. How much money is in 6 the apprenticeship fund? You know what, take your tools and go 7 home. 8 Full mobility I told you is going to kill us, because 9 you know what, if the guy says, go climb up three stories on 10 that metal ladder, and I say no, go home, and good luck getting 11 a job with anybody else because I just called everybody and 12 told them that you won't do what you have to do to work. 13 14 16 Again, please help us. Thanks. MR. HOLNESS: Good afternoon, your Honor. My name is I am trustee 157, also a shop steward. I must say

1 they are the ones who say who go to work. I love my brothers. 2 Don't take this any way offensive, but that's the bottom line. 3 Let's get it straight. Let's stop kidding each other. 4 I have four pages here written down on things I wanted 5 to say, but usually when I speak about these things I get so 6 aggravated, because a lot of members are on the verge of losing 7 their houses simply because they cannot go to work, period. 8 This thing about giving companies the request system pretty 9 much kills the coverage of business. When they are able to do 10 that, like I said, all these guys, there's 100 percent of guys 11 on the job and just one shop steward. 12 I can't understand how the UBC, who is supposed to be 13 protecting the membership interest, not some membership 14 interest but all the membership, is advocating giving companies 15 what they call full mobility to take a group of guys from one 16 job to the next to the next to the next. What the hell is 17 going on? Equal opportunity. Where does that come in anyway? 18 Am I missing something here? Am I in the wrong country? How 19 can your governing body be implementing something like that? I 20 am at a loss. 21 Another thing that's bothering me honestly is -- what 22 the hell is going on? Honestly, your Honor, I have a dear 23 friend and to see what he has been going through in the past 24 year and a half, I just want to do something crazy. I need to 25 go.

15 Gauntlett Holness. 17 there's hundreds of members I have spoken to over the past 18 maybe year and a half. The conversation with regard to this 19 full mobility idea, as most of us know, is not a new 20 experience. This experience actually was there when they had 21 the request system, because I worked at many jobs where I was 22 pretty much the only one on the job representing the union and 23 everyone else representing the contractor. I was in many 24 situation where, not that I got in fights, but pretty much 25 almost come to that because when I am saying things that are

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Page 41 1 2 MR. LEBO: My name is Bill Lebo. What you just saw is something we are all feeling.

Page 43 1 they will give us a 401(k) plan or maybe some medical benefit. 2 It's nonsense. We got stuck with the 67/33 under Judge Haight. 3 The out-of-work list didn't work. Ten years ago we knew the 4 out-of-work list didn't work. It wasn't working then and it 5 certainly isn't working now. And finally the contractors got 6 sick of it and said, we don't want this anymore, we want full 7 mobility. I understand that concept. But it doesn't help the 8 member who is a good working carpenter who is stuck in the 9 middle of this thing. It's not fair to them in any way, shape, 10 means or form. In my opinion, we were better off going back to 11 a system where someone can look at your tools and look at your 12 record and say this is what you can do. It's not that hard of 13 a concept and it's not that hard for something to be 14 accomplished. 15 Now, when we started this this afternoon you said you 16 were going to go over the status of the funds, the bylaws, 17 restructuring, collective bargaining, and the year end 18 election. We did everything but collective bargaining. This 19 is where full mobility strikes us. I know for a fact that in 20 this room there are those guys who work for the companies that 21 are all for this because they think it's going to be a good 22 thing. They don't see that down the line, when their 23 contractor says to them, listen, I got this little job over 24 here on the weekend, I need you to go ahead and work on this 25 job, and they say, OK, no problem. But it's going to be for

3 What we have gone through through the years, with the changes 4 in the way we send people out to work, has destroyed our union. 5 It was bad back in the day when the locals -- business agents 6 sent men out and there was favoritism. There was favoritism, 7 but the contractors themselves in a sense -- it was a fairer 8 system. The contractors wouldn't be complaining and asking for 9 full mobility, which is what they are asking for now. The 10 business agents, whether or not they had certain favorites that 11 they would send out, still were able to know what each man can 12 accomplish on the job, whether a man was a concrete worker, 13 whether he was a finish carpenter. You also got a sense of, 14 they were able to send you out on jobs that maybe you weren't 15 so good on. A contractor needed to get a job done. I need ten 16 good guys. OK. Here's the ten good guys, but I have got a 17 couple of guys here that aren't so good, they are about to 18 retire or they need to learn that aspect of the trade, and the 19 contractor would take them because they got the ten good guys 20 that they needed to accomplish the job. So there was some 21 equity in it. The problem lied in the fact that there was the 22 favoritism. Guys were getting sent out in front of other guys 23 for whatever reasons, they were buddies with the business 24 agents, and the other members were getting, for lack of a 25 better term, screwed. Page 42 1 Well, now comes along the court mandated out-of-work 2 list. It sounds good. Everybody is going to go out fairly, 3 one after the other after the other. There is no favoritism 4 involved. There is none of that. Well, the problem lied in 5 the computer doesn't know what each member can or can't do. I 6 as a carpenter could put down that I am a concrete worker, a 7 finish worker. I do furniture, I do hardware, and all the rest 8 of the aspects of the trade. I put that all on my list. 9 Nobody questions it. Nobody proves it. Now, I get sent out to 10 a job to do ceilings, for argument sake, and I don't know how 11 to do the ceiling, but I try to fudge it. Now the contractor 12 sees that I have no clue. He just lost a day's wages on me. 13 Now he sends me back to the list. The out-of-work list now 14 sends a man out the next day, if they are lucky the next day, 15 usually it takes two. So now you have lost that time of money 16 going into the funds. So you have lost hours into the funds. 17 From what I understand, in my local alone, which just covers 18 Queens, we are losing 500 man-hours a week because of this 19 reason, because the out-of-work list is not sending men out 20 properly and they are getting sent back. 21 Now, the contractors are asking for full mobility. He 22 is 100 percent right. Full mobility is going to kill us even 23 further. All it does is make this not a union, but a 24 company-based structure. We might as well just hang it up, do 25 away with the union and just go work for the company and hope

Page 44 1 cash, or you're going to be working with nonunion guys, or any 2 of the other possibilities. And you say no. OK, no problem. 3 Monday you get your check. 4 I know that Mr. Walsh, Mr. Conboy are working on this 5 labor management cooperation corporation, which is all good, to 6 make sure that corruption doesn't happen. IG's office. We 7 have all these redundant systems, scanners for shop stewards on 8 jobs, people checking out the shop stewards to make sure they 9 are scanning everybody. I would like to be told that 10 absolutely none of this corruption can happen, that there is no 11 way the contractor can cheat. It's just an impossibility, it's 12 an absolute impossibility. Meanwhile, with all this going on, 13 we have been through this system before. The last 14 restructuring the court was told that this is going to end 15 corruption in New York City District Council Carpenters. It 16 didn't happen. We don't want to go through this a second time. 17 This should be the end and it shouldn't be on the backs of the 18 members. The members should be taken into consideration, which 19 is something -- I see here in the courtroom, I see at Dennis's 20 forums, I don't see at all when it comes down to our parent 21 organization. 22 Enough of that. The other issue I want to speak to 23 you about, I don't know if Mike Bilello is going to talk to you 24 about it at all, but at the last hearing Mr. Urbank from the 25 Segal Corporation said that the pension plan was in the green

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Page 45 1 zone. Mr. Walsh had the UBC put 5500 reports for 2009 to 2010 2 on the Web site, and we pulled it off and went over it and had 3 somebody look at it. It turns out that, yes, depending on how 4 you look at the pension plan itself, forget the welfare annuity 5 and all the rest, but the pension plan itself, because of the 6 way -- and I believe Mr. Urbank explained this to a degree -7 the way it's looked at, since the stock market crashed it 8 allowed a little more of a stretch, but in reality, where the 9 fund has to be 80 or 85 percent funded, in reality the fund, 10 the pension fund is only 45 percent funded, and it could be in 11 danger of losing its tax exempt status. 12 Now, I believe Mr. McGuire was in some sense 13 indicating that it's worse than it sounds, and it turns out, at 14 least that was the impression I got, it turns out that that 15 would be the case. I think it needs to be addressed, and I 16 have to wonder, since we have been in trusteeship for over 18 17 months now, how did this come to be with the welfare fund, all 18 of a sudden we realize it's in such dire straits, the pension 19 fund is in dire straits as well, and how did this go on for 18 20 months and the UBC didn't pick it up and didn't at least try to 21 start fixing it? 22 23 24 Thank you, your Honor. THE COURT: Thank you. Quickly two more and then we are going to come back to

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25 Mr. Conboy. We didn't hear about the labor negotiation. Page 46 1 2 4 5 6 7 MR. CORRIGAN: My name is Peter Corrigan. My first question is for Mr. McGuire. Was Pete THE COURT: If you know. MR. McGUIRE: Mr. Thomason was not named, your Honor. MR. CORRIGAN: Thank you. Your Honor, I am the financial secretary for Local

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

80 or 90,000 people that this union affects, not just the 22,000 members. And also look out for the future generations, guys like myself. Where is this going to be in 30 years? Am I still going to be in this in 30 years and provide for a family? That's all I ask. Thank you. THE COURT: Last speaker. MR. FRANCO: Good afternoon, your Honor. My name is Dan Franco, Local 157. My first question is, who are the persons and the companies named in the civil RICO suit? THE COURT: We will put this on the docket if you like. MR. FRANCO: What is the docket number? THE COURT: 11 Cv. 5474. MR. FRANCO: Thank you very much, your Honor. My next point is about mobility. THE COURT: It's a 44 page complaint. MR. FRANCO: I feel that full mobility or 100 percent contractor request or control of the members would allow the contractor to greatly insulate themselves against wrongdoing being discovered and it would allow them to have ultimate control over the members eventually. The District Council bylaws, I don't think the District Council bylaws should be able to dictate to the locals who they may or may not hire or who may or may not represent
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1 them. It's wrong. 2 I agree with many members, in particular, Donny Arana, 3 about no delegate may be a paid employee of the Council. I 4 feel strongly about that too. That's an absolute, that they 5 must not be paid employees of the Council. 6 The blue card. We have quite a bit of feeling about 7 the blue card. When I got my first blue card -- I got three of 8 them, all of which I have not signed yet and will not sign -9 the letter that accompanied the blue card felt like an 10 extortion letter. We were told we were not going to get our 11 money if we did not sign the card. And the card is worded 12 open-endedly so that they can put additional assessments upon 13 us without asking for further approval from us. That's the 14 reason why I never signed those cards. 15 Local 395, I feel that they are going to charter it at 16 the last second, if not late. They are going to have appointed 17 officers, that's an absolute given. I would like to know what 18 the penalty would be, if they chartered it late after the 19 requirement for delegate elections, how would they be penalized 20 or what would be the complications if they chartered it late? 21 Because I see them chartering it late intentionally so that 22 they can have appointed officers and appointed delegates. It's 23 not going to be voluntary as it's been stated by Spencer. I am 24 very certain it's going to be more as Newkirk had put in his 25 report. It will be mandatory and they will come up with some

3 Thomason named in that civil RICO case? Can I ask that?

8 157. My family has had people in this business for over 100 9 years combined. What has gone on in this organization the last 10 30 years is a disgrace. Your Honor, I firmly believe that you 11 are the only person that can truly look out for the membership. 12 Everybody else over here has an agenda in some form or another. 13 They are not really looking out for us. Our union is a cash 14 cow for a lot of these lawyers, to put it quite frankly. 15 Full mobility would be the death of this union and 16 basically force generations to leave this business and find 17 other opportunities, thus leaving the pension fund in even 18 worse condition in the future. If full mobility goes into 19 effect, in essence, Latham & Watkins, the UBC lawyer, will have 20 broken this union, something, from what I have read on their 21 Web site, that they specialize in. 22 Your Honor, in making your decisions, I please ask 23 that you look out for not only the 22,000 members of this 24 union, but the countless other thousands, the family members. 25 All these guys, when you really think about it, it's closer to

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Page 49 1 system, some criteria to transfer members out of 157 or other 2 locals into 395. I think it's going to be in the thousands. 3 And they will have a certain number of delegates that will be 4 appointed by the International. 5 The last thing is the EST salary. I have always felt 6 that it should be based upon our rates as carpenters, the 7 general foreman rate, certain number of hours per week 8 estimated to come up with a salary, and maybe modified by the 9 number of hours brought into the benefit funds. 10 11 12 13 Thank you very much. THE COURT: Thank you. MR. BILELLO: Michael Bilello. Your Honor, I just wanted to speak on the free

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14 mobility issue. Free mobility is the same as the request 15 system that we had, and that went away when Judge Haight ruled 16 that we would have the 67/33 manning provision. Prior to that 17 it was the 50/50 manning provision. I have been in the union 18 for 36 years and some people who spoke here have been in the 19 union for quite a few years. The 50/50 manning provision was 20 the best system that I have seen. People who haven't been 21 around don't really understand it and the whole concept of how 22 it prevents corruption on the job site. The suit that Ray 23 McGuire presented to you, by and large, the majority of those 24 jobs were during request. A lot of that corruption occurred 25 during that request. The 50/50 manning was one of the main Page 50 1 anti-corruption tools that I have witnessed over my years. I 2 speak to a lot of members, foremen. Foremen are not in favor 3 of free mobility. Company men, who would fall into that 67 4 percent right now, they are not in favor of it. They say to 5 me, well, if there is free mobility, that's just going to make 6 me a slave, and they are right. 7 9 10 12 If it comes before you, I just want you to know that Thank you. THE COURT: Mr. Walsh, would you comment, if you MR. WALSH: There is a difference of opinion clearly 8 the membership is not in favor of it and there is good reason.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

I think within that framework the rank-and-file members have the political choice in their local union delegate elections to decide, with full knowledge of whether someone works at the Council, as to whether they want to send that person as their representative to the District Council. I have tried to urge members who came to my last forum last week that they take special heed of the responsibility and the burden that shifts to them in January to address so many of these issues. I fully recognize and I am sympathetic with the immense frustration that they feel when something like the 50/50 rule, which is traditionally decided upon in a collaborative political context in the union, is now beyond their grasp. It is within the grasp of the UBC who under the law is the fiduciary of the District Council. But it is difficult to come to grips with that frustration when there is such ardent opinion against, for instance, this concept of employers being able to select up to 100 percent of the crew except for a steward sent by the union. But that is the reality of the situation and to date no one has filed a lawsuit or sought any injunctive relief to challenge that posture of the UBC at the negotiating table. One point that I want to make about the election rules. The petitions that are being filled out only go to me. That is not a list for anybody to see but me and my staff in order to determine if the signatures have been gained and if a
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1 representative member has sufficient support to get the free 2 mailing. You can sign as many petitions as you like. I would 3 encourage members to go to the District Council picnic, where 4 there are potentially many thousands of members, and spend a 5 day gaining signatures. And the election rules themselves are 6 significantly and substantively modeled on the rules that were 7 used in 1995, which were approved by Judge Haight, among them a 8 petition component which is exactly what we have here, but for 9 an alteration of the number of signatures in question. 10 12 THE COURT: Just going back to my first question. MR. WALSH: There are people who perform important 11 What is the theory of paid versus nonpaid? 13 jobs at the District Council. They may be representatives. 14 They may be in the organizing department. The UBC's position, 15 and the position of many of the employees that I have talked 16 to, is that there is tremendous institutional knowledge that 17 those people bring to the scene, that they have the right to be 18 heard in a political context, and it was my thinking that if we 19 could balance out people who were not affiliated with the 20 District Council, that we might actually foster a type of 21 political party, be it a left or a right view, or however you 22 want to look at it. There was also some other heartfelt and 23 visceral reactions on the part of good honest employees of the 24 District Council who feel that it's discriminatory not to be 25 able to run for District Council delegate.

11 would, on the paid delegate issue versus nonpaid? 13 with respect to the UBC's position and many of the members here 14 today as to whether people who are in the employ of the 15 District Council should be eligible to serve as delegates to 16 the District Council. 17 The bylaws reached a compromise position, which in my 18 view may in fact foster a type of political party system within 19 the union. It caps the number of District Council employees 20 who may serve as a delegate from a local union at no greater 21 than 50 percent of the delegates elected by a local union. 22 There is also a grandfather provision in the bylaws that allows 23 those few people who are currently in the employ of the 24 District Council to run for delegate and face the political 25 system.

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Page 53 1 There is an important amendment in the bylaws from 1 negotiations. Judge, let me say at the outset that it's no 2 secret that the concept of full mobility is a critical function 3 and component of these negotiations. As your Honor can 4 appreciate, there has been a fairly significant lapse of time 5 since the initial deadline which was June 30. I understand 6 that the current extension of the contract negotiations expires 7 on Friday night. 8 9 11 THE COURT: So there was an interim extension. MR. CONBOY: A number of them. Indeed, I think the There is an intense negotiation going on by 2 what had been previously been posted. I am mindful of the 3 constraints that delegates who may work for the Council feel in 4 questioning the authority of the EST. We have put in this 5 bylaw that has been posted a whistle-blower provision, where if 6 they feel that there has been any unfair determination on the 7 part of the EST or the executive committee, that they can file 8 a complaint with the chairman of the trial committee, Mr. Mack, 9 and then an arbitration will be held, chaired by Mr. Mack, the 10 vice chairman James Zazali, a third arbitrator that they would 11 select, and they would be empowered to reinstate a delegate who 12 blew the whistle and was fired and suffered the consequences of 13 that and receive their back pay. 14 So I was mindful of the criticism of the situation 15 where delegates who work for the Council could not criticize 16 the EST, for instance, and not feel secure. So that's why I 17 asked the UBC to put that in, and they have agreed to it. 18 THE COURT: Mr. Conboy, going back to the 19 restructuring before we get to the labor negotiations, what is 20 the internal process? You said it is going to be determined by 21 September 15 what the restructuring is, for example. But what 22 is the theory of it and what steps remain internally before 23 there is a result? 24 MR. CONBOY: Judge, as I indicated in connection with 25 the dock builders issue, that obviously involved a significant Page 54 1 amount of consultation with interested parties. There has 2 been, of course, a long period where the plan has in fact been 3 promulgated and on the record. There are issues that one hears 4 from the contractors. I have to tell you, there is absolutely 5 no question that the immediate present full-time commitment of 6 Mr. Spencer and the senior colleagues are the collective 7 bargaining proceedings. As I indicated, there are a number of 8 issues associated with the restructuring plan which we have 9 committed to you and to Mr. Walsh will be resolved in the short 10 term. 11 There is a structural issue that has to be dealt with 12 with respect to each of these, and under the circumstances, 13 that is ultimately a decision made by the general president, 14 but Mr. Spencer and his colleagues obviously have a very 15 substantial role to play in terms of the advice they give. 16 So the bottom line is, these are complicated 17 determinations. There are a variety of constituencies that 18 have to be considered, and I think the example of the 19 disposition of the issue associated with the dock builders is 20 an example of how constructively that process can evolve. I 21 regret to say that I cannot be any more definitive than I 22 already have been that these remaining issues will be resolved 23 quickly within a month, well in advance of the requirement that 24 Mr. Walsh has expressed to us. 25 Let me turn, though, to the collective bargaining

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10 first one was only ten days. 12 Mr. Spencer and the senior colleagues with five separate 13 contractor associations. Of those five, and I hope your Honor 14 appreciates that I think it would be highly imprudent for me to 15 give a characterization of the likelihood of a contract with 16 respect to any one of them, but there is some cautious optimism 17 that a contract may be reached with some of these contractors 18 by the end of this week. Indeed, the current extension expires 19 on Friday of this week. 20 Let me just say, and I hope your Honor appreciates, 21 because the full mobility is highly controversial and at the 22 center of these negotiations, I do not feel it is constructive 23 for me to respond to a number of the comments that have been 24 made here by the membership, but I do want to point out a 25 number of things. Page 56

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Judge Haight in Section 10(b) of his order several years ago recognized the need for good-faith collective bargaining with respect to the formation of a labor management committee. Now, what this labor management committee means is a buy-in on the part of the contractors to the crucial aided corruption program oversight, an electronic oversight, as to the activities at the various job sites throughout this city. And these job sites, I think, from time to time have exceeded a thousand in number. As your Honor knows from the prior discussions we have had, there has been extensive deliberation and discussion with both Mr. Walsh and with Mr. Torrance about the viability of carrying out Judge Haight's expectation. Indeed, as I mentioned in our last appearance, we had a formal meeting at the United States Attorney's Office with Mr. Spencer and Mr. McCarron in attendance, where a very constructive discussion was had about how this full mobility concept was to be introduced in the collective bargaining negotiations. Indeed, further, Mr. Walsh asked us to include in the ultimate collective bargaining agreement language that would in fact confirm the ongoing role of Mr. Walsh with respect to that labor management committee. As your Honor can appreciate, without me going into further detail as to these negotiations, this is a highly

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Page 57 1 controversial matter, and all I can do is tell you, with the 2 affirmance of Mr. Torrance and the affirmance of Mr. Walsh, we 3 have moved forward to aggressively press the issue of full 4 mobility. Now, there is no question that the full mobility is 5 tied to the 66/33 issue. How it will emerge I cannot say. 6 Indeed, the United States attorney, the review officer and the 7 UBC recognize that there are a very broad range of details that 8 are going to have to be worked out after the collective 9 bargaining process ends. But I want to assure you, Judge 10 Berman, as I have assured Mr. Torrance and Mr. Walsh, that UBC 11 and Mr. Spencer, who is the trustee here, are fully committed 12 to realize Judge Haight's hope and expectation with respect to 13 what this may mean to the ongoing integrity of the operations 14 of this labor organization. 15 16 18 20 21 22 held? 23 25 MR. CONBOY: I would suggest reconvening of the court THE COURT: How is the 26th of September? Is that too Page 58 24 on or about September 15. THE COURT: Thank you. Mr. Torrance, did you want to add anything to what has MR. TORRANCE: No. I think I will not. Thank you, THE COURT: I think that's it for today. When next do you think a court conference should be

17 been said today? 19 your Honor.

1 late? I have a trial the week that you're talking about. 2 MR. CONBOY: That would certainly be fine with us. 3 THE COURT: That's a Monday, 9/26. It would best for 4 me to do it early that day if it works for you, at 9:00. 5 MR. CONBOY: It certainly works for me. 6 THE COURT: You've got it. 7 Thanks very much. We are adjourned. 8 (Adjourned) 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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