Teamster Pension Fund Probe Looks at Returned Money
The fees have been the subject of a federal investigation and the source of recriminations within the divided union.
The money was returned voluntarily in June by Fleet Financial Group Inc., which said a review of records kept by a bank Fleet acquired in 1996 indicated that fees paid to East West Capital Corp., in Harper Woods, Mich., may have been improper.
An attorney representing fund participants is pushing for a fuller explanation of what happened with the funds and a closer examination of ties between East West, Teamsters officials and alleged associates of organized crime in Detroit. Word of the fee return surfaced this week.
ast West reportedly received the brokerage business as a favor for introducing investment advisers from Shawmut National Corp. — acquired by Fleet in 1996 — to officials at the Local 710 pension fund.
Attorneys for the pension fund had denied any connection between East West and the fund, but Fleet's records showed that pension fund money had passed through the broker-age.
Marvin Gitler, an attorney for the Local 710 fund, said Shawmut failed to inform the fund's trustees of any transactions involving East West. "We had no knowledge whatsoever of the involvement of East West," he said. "We never knowingly did business with them."
Mr. Gitler said that the repayment by Fleet did not close the door on possibilities that the fund will seek additional penalties or payments from anyone who earned money on the misdirected funds.
Christopher Roach, a principal at East West, also held what some Teamsters officials have described as a "sham" union contract with Teamsters Local 337 in Detroit.
In a letter to fund administrators that also was sent to a court-appointed board tasked with rooting out union corruption, Chicago attorney Thomas Geoghegan noted that the leaders of both Local 337 and Local 710 were key supporters of Teamsters presidential candidate James P. Hoffa.
r. Geoghegan also said Roach has had business dealings with alleged elements of a Detroit organized crime family in Detroit.
"To say the least, it is a very grave matter that a fund asset in the amount of $729,400 came into the hands of Mr. Roach for no apparent service rendered," Mr. Geoghegan wrote. "It is also a very grave matter that the fund was bestowing a very large sum on a man with such disturbing Teamster connections."
But George Geller, an attorney for Local 337 and a supporter of Mr. Hoffa, said that Mr. Roach's contract had been canceled and that federal investigators who examined the transaction have dismissed the idea that there was a "Local 710-Local 337 nexus."
Mr. Roach has declined to respond to telephone calls in the past. East West's telephone has been disconnected.
Agents from the Securities and Exchange Commission, the Labor Department and the FBI have been examining whether brokers and pension managers received kickbacks or gifts in exchange for steering investments to the former Shawmut National Corp.
After Fleet acquired Shawmut, two Shawmut officials were forced to resign when an audit raised concerns that deals between the bank and several brokers inflated the cost of trades to investors through a prohibited practice known as "soft dollars."
Mr. Mahoney said that Fleet had returned approximately $1 million in fees, including the money repaid to Local 710's pension.
