Retired labor boss Frank Ervolino, his wife, daughter and two top aides face accusations that they stole hundreds of thousands of dollars from two local unions.
The allegations were made by attorneys appointed by a federal judge to rid the international Hotel Employees and Restaurant Employees Union of corruption.
The Ervolinos and the two aides are charged with embezzlement by giving themselves unauthorized pay raises, severance packages, Christmas bonuses or other perks while the unions -- Local 4 of the hotel and restaurant workers and the affiliated AFL-CIO Hospital and Nursing Home Council -- lost money.
They are civil charges but are based on federal criminal statutes. They could be referred to the U.S. attorney's office here for possible prosecution.
In the charges filed Tuesday, an attorney for the union recommended that a trustee take over daily operation of both unions and that the Ervolinos and two aides be permanently barred from holding office or even belonging to the unions.
Ervolino, 73, collected $37,000 in unauthorized Christmas bonuses alone from the two unions from 1990 to 1995, the investigators charged, a time when he drew $1.4 million in union salaries and pension benefits.
Attorneys for the accused officials denied the charges.
"This boils down to a political complaint that these officials are being paid too much, despite the fact they have represented their members for decades," said Robert L. Boreanaz. "The documents are tailor-made for press releases."
Added Joseph V. Sedita, who represents the Ervolinos: "This may be a lot of sound and fury signifying very little."
Sedita said the fraud and embezzlement charges are lodged by an international union that regularly audited the local's books and never found any impropriety.
He also said the U.S. Department of Labor conducted regular audits, and the relatively high salaries of the Ervolinos have
been reported extensively.
Sixteen formal charges were brought, covering the years 1990-1995 and accusing the officers of bleeding two unions that represent mostly low-paid workers in hotels, restaurants, hospitals and nursing homes. The charges allege:
Ervolino, his wife, Anna May, and daughter, Andrea Ervolino Scibetta, were paid full-time salaries for part-time jobs.
The five officers each year received unauthorized Christmas bonuses of up to four weeks' pay from the two unions.
Ervolino approved a severance package of 12 percent of his pay from the hospital and nursing home council and 6 percent for his wife, without getting approval or amending the union's bylaws as required.
Ervolino, as president of the hospital and nursing home council, approved $58,000 in unauthorized loans to the local laundry and dry cleaners union, which he also served as president.
The Ervolinos received $127,000 as cash value of a life insurance policy never approved by the hospital and nursing home council.
Ervolino's daughter failed to file reports with the Labor Department about copy machines and service she sold to her father's unions from her copier company. Her parents were charged with failing to file reports showing they are stockholders in the company.
While generous pay and perks flowed to the union brass during that time, investigators charged, the 1,233-member Local 4 hotel and restaurant union sank deeper in debt, going from $45,000 in arrears in 1990 to $124,000 in the hole five years later.
During that same period, the hospital and nursing home council, which represents 7,300 workers in Western New York, went from being $196,512 in the black to losing $128,488.
"We have charged them with embezzlement," said Philip D. Smith, the former agent in charge of the Buffalo FBI office who investigated the Ervolino unions for the past year.
This is the third corruption case brought against a hotel and restaurant local by the court-appointed monitor, Kurt W. Muellenberg, a former U.S. Justice Department prosecutor.
Muellenberg, hired by the international union to settle a civil racketeering suit brought by the government, previously removed the officers from a hotel and restaurant local in Milwaukee and another in Secaucus, N.J., on similar corruption charges.
Ervolino, Mrs. Ervolino and Ms. Scibetta also are charged with obstructing the monitor's investigation. They refused to testify when investigators attempted to question them under subpoena on May 27 and invoked their Fifth Amendment protection against self-incrimination.
Union attorney Laurence D. Connor of Detroit, in filing the 16 formal charges, recommended a trustee take over daily operation of both unions "until such time as the financial corruption and malpractice" have been corrected and "democratic procedures restored."
In addition, he recommended the Ervolinos and aides William P. Yarmal and Daniel J. Bielat be expelled and permanently barred from holding office or even belonging to the unions. Yarmal is president of both unions and Bielat is the hospital and nursing home council's secretary-treasurer.
The monitor has the power to fine all five if he finds them guilty and can seek to recover any money found to be embezzled. The law also empowers any member of either union to sue to recoup union dues found to be misspent.
The local union officers have 20 days to request a hearing before Muellenberg.
Boreanaz accused the union monitor, his investigators and the free-lance staff they hire, including Smith in Buffalo, of having to bring charges to justify their paychecks. He said the monitor got approval from the court to extend the Buffalo investigation.
"We need to extend our meal ticket," Boreanaz said of the monitor's extension. "Nobody knows how much the monitor is making or the investigators are making. Whatever they are making per hour is far in excess of what these people made."
"It absolutely appalls me he should make such an irresponsible statement," said Daniel Sullivan, a retired FBI agent in Washington, who is chief investigator for the union monitor. "He represents the union, and we represent the union. What we're doing, we hope, is in the best interests of the union." Said Smith: "We're just doing our job. I don't think money has anything to do with it."
Sedita said the charges are fundamentally flawed because the international hotel workers union has no jurisdiction over the local hospital and nursing home council.
He also questioned how charges could be brought against Frank and Anna May Ervolino, who are both retired.
Smith said the monitor has jurisdiction because the Hotel Employees and Restaurant Employees is one of three international unions that chartered Local 4 and the AFL-CIO Hospital and Nursing Home Council. The two local unions are affiliated, he said.
The charges will be heard by Muellenberg at a hearing, expected to be held in Buffalo.
"We have to show beyond any doubt that these people have done what we've charged them with doing," said Sullivan.
The charges also allege:
Full-time pay for part-time jobs.
Ervolino, in 1995, was paid $93,114 as president of the hospital and nursing home council; $45,732 to lead the hotel and restaurant workers; $36,173 as president of the Laundry and Dry Cleaners Local 168-39; and $55,975 as president of the international laundry and dry cleaners in Pittsburgh. He also drew $50,121 in pension benefits.
During the five-year period, his wife drew $529,610 in multiple union salaries and pension benefits, and his daughter drew $246,000 in multiple salaries.
Unauthorized Christmas bonuses.
Over the five years involved, the two unions paid out $120,908 in yuletide bonuses to the five, including four weeks at full pay for Ervolino, his wife, Yarmal and eventually Bielat from the hospital and nursing home council.
Unauthorized severance package.
When Ervolino and his wife retired from the union in 1995, they left with $67,000 in unauthorized severance benefits.
Yarmal, currently president of the hospital and nursing home council as well as the hotel and restaurant workers local, also is charged with setting up an unauthorized severance package.
Even after they both retired from their union offices, Ervolino and his wife continue to benefit, the investigators charged.
Ervolino was hired last year as pension administrator for the hospital and nursing home council at a salary of $50,000.
His wife was named administrator of the hotel and restaurant workers pension fund at $26,000 a year and assistant administrator of the hospital and nursing home pension fund at $45,000 a year.
"Prior to Jan. 1, 1996, the Hotel Employees and Restaurant Employees did not employ a paid, full-time administrator," according to the charges. "The hospital and nursing home council had not employed a full-time administrator or an assistant since 1991."
Ervolino is drawing a $50,000 yearly pension, and his wife receives $34,000 a year.
Sedita said the monitor has no jurisdiction over which administrators are hired by pension plans, which are administered by both unions and employers and outside the authority of the international.
Even if Muellenberg, the union monitor, approves the charges and the Ervolinos are barred from the two unions, Frank Ervolino will continue to collect a salary from the international dry cleaners and laundry workers.
He currently receives $55,975 a year, plus the use of a new Buick, but the union investigators say Ervolino's big reward will come when he retires from the international.
A severance fund set up for Ervolino and Sam Begler, the Pittsburg union's secretary-treasurer, contains $1 million, the investigators said, or 87 percent of the union's total assets.