Feds probe union pension scam

Federal law enforcement officials have issued subpoenas and opened a criminal investigation to determine how union officials were able to work one day as a substitute teacher yet be eligible for $100,000 pension plan — for life.

From the Chicago Tribune:

Federal authorities have begun a criminal investigation into how nearly a dozen union officials became eligible for inflated city pensions, according to subpoenas obtained by the Tribune and WGN-TV through an open-records request.

The Chicago municipal employees and laborers pension funds each received subpoenas from a federal grand jury in October seeking “records pursuant to an official criminal investigation.” The request seeks documentation on 11 labor leaders who appeared in reports from a joint Tribune/WGN-TV investigation.

The reports focused on a 1991 law that allowed union leaders who once worked for the city to receive credit in public pension plans for their private union work. When they retire, the union officials’ pensions aren’t based on their old city paychecks but on their much higher union salaries.

That opened the door for them to land public pensions that far exceeded their pay as city employees — even as they continued to earn lucrative salaries from their unions.

At least eight union officials named in the subpoena who either receive city pensions or are eligible for them also earned credit in union pension funds for the same period of work, despite a state law that was supposed to prevent that. The joint investigation found that some of those labor leaders were participating in up to three pension funds at the same time, accruing retirement benefits that reached as high $500,000 a year.

Last month, the state Legislature sent a bill to Gov. Pat Quinn that would eliminate labor leaders’ ability to base their city pensions on their union salaries. It also made it clear that union officials who receive city pensions cannot get union pension benefits.

Among those named in the subpoenas are some of Chicago’s highest-ranking union leaders during the past decade. They include Dennis Gannon, the former president of the Chicago Federation of Labor, an umbrella organization that represents 320 unions and more than a half-million members.

Gannon became eligible for a $158,000 municipal employees pension after being rehired at the Department of Streets and Sanitation for one day in 1994. He was then granted an indefinite leave of absence to work for Operating Engineers Local 150.

Gannon retired from his city job in 2004 at the age of 50 and began collecting a public pension even as he continued at the helm of the CFL, which paid him about $260,000 a year.

Attempts by the Tribune and WGN-TV to reach Gannon and the others named in the subpoenas were unsuccessful.

Thomas Villanova, president of the Chicago and Cook County Building and Construction Trades Council, was also named in the subpoenas. The council represents 33 trade unions that have collective bargaining agreements with the city and the county.

It turned out that other Local 134 officials also signed documents stating they weren’t getting credit toward union pensions. Tim Foley, then the business manager of Local 134, as well as business agents Michael Nugent and Michael Fedanzo, also collected city pensions while earning credit in the Local 134’s pension fund. All three are named in the subpoenas.In October, Foley resigned his leadership positions at Local 134, one of the largest locals in the state with more than 14,000 members.

Five officials from unions affiliated with the Laborers’ International Union of North America, or LIUNA, were also named in the subpoenas. Among them was Liberato “Al” Naimoli, president of Cement Workers Local 76. In 2010, Naimoli retired from a $15,000-a-year city job from which he took leave 25 years earlier and began collecting a $158,000 city laborers pension based on his nearly $300,000 union salary.

James McNally, vice president of the International Union of Operating Engineers Local 150, is also named in the subpoenas. He’s receiving a city laborers pension that pays about $115,000 a year.