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1 UNITED STATES DISTRICT COURT

1 SOUTHERN DISTRICT OF NEW YORK

2 ------------------------------x

2 UNITED STATES OF AMERICA,

3

3 Petitioner,

4

4 v. 90 CV 5722 (RMB)

5

5 DISTRICT COUNCIL, et al.,

6

6 Respondents.

7 ------------------------------x

7 New York, N.Y.

8 December 4, 2013

8 9:37 a.m.

9

9 Before:

10 HON. RICHARD M. BERMAN,10

11 District Judge

11

12 APPEARANCES

12

13 UNITED STATES ATTORNEY'S OFFICE

13 SOUTHERN DISTRICT OF NEW YORK

14 BY: BENJAMIN H. TORRANCE

14 Assistant United States Attorney

15

15 DENNIS M. WALSH, Esq.

16 Review Officer

16

17 MINTZ LEVIN

17 BY: BRIDGET M. ROHDE

18

18 ZUCKERMAN SPAEDER LLP

19 Attorneys for Respondent District Council

19 BY: BARBARA S. JONES

20 -and-

20 SPIVAK LIPTON LLP

21 BY: JAMES M. MURPHY

21 ADRIAN HEALY

22

22 KAUFF MCGUIRE & MARGOLIS LLP

23 Attorneys for Respondent District Council Benefit Funds

23 BY: ELIZABETH O'LEARY24

24 HOLLAND & KNIGHT LLP

25 Attorneys for Intervenor Building Contractors Assoc.

25 BY: LOREN L. FORREST, JR.

SOUTHERN DISTRICT REPORTERS, P.C.

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1 (In open court)

2 THE COURT: So following our last session I was quite

3 concerned about some of the issues that we discussed and that

4 appear to be going on here, and for that reason I issued the

5 November 25, 2013 order and have received some helpful

6 submissions from all of you, including the Mr. Walsh's latest

7 report, the seventh interim report of the review officer, which

8 I think is very helpful. It also raises some issues or perhaps

9 they've been bubbling under the surface which I'm quite

10 concerned about in addition to the issue of the technology and

11 the technology fixes which I want to discuss today.

12 So I'd like to get right to it. In a subsequent memo

13 endorsement of mine dated November 27, I indicated an order in

14 which I would like to proceed today and I indicated that I'd

15 like to hear from the government first and then the district

16 council and then Mr. Walsh. And let me just tell you why I

17 think that's the appropriate order and mechanism.

18 So first, obviously, this is the government's case

19 historically and currently. It's U.S. v. District Council, et20 al., and the origin of the case has to do with, among other

21 things, what were undeniably a history of bad practices and

22 corruption in the union.

23 So I thought that given that context and given that

24 one of the central problems I'm concerned about now is the

25 implementation, the very belated in my opinion implementation


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1 of these electronic reporting systems which were, as I

2 indicated in my order, part and parcel of approval of the

3 collective bargaining agreements going back over the last

4 month, given the fact that those very reporting requirements

5 were presented to me and described by you all -- and by "you

6 all" I mean, for example, Mr. Murphy and others -- as

7 anticorruption measures, I wanted to start and get the

8 government's take on this particular issue about how these

9 collective bargaining agreement aspects are being implemented

10 from the bigger perspective of what this case has been all

11 about.

12 And I don't have to remind you as I indicated in the

13 order dated November 25 that there was on my part, and others,

14 as well, there was an enormous change in these collective

15 bargaining agreements which was the implementation of what is

16 described as full mobility. And that was done with

17 considerable thought, but it did represent a sea change in how

18 hiring took place with these contractors. These contractors

19 got a huge benefit in that regard in my opinion. And the quid20 pro quo for that full mobility was the implementation of -- one

21 of the quid pro quos was implementation of these anticorruption

22 measures. And so clearly the full mobility was implemented but

23 the measures were not.

24 And as I read these materials -- by the way, I haven't

25 read all of them in detail, but I've read most of them in the


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1 main including the seventh interim report, including Judge

2 Jones' letter dated December 3, and including the additional

3 supplemental letter dated December 3, 2013 from Kauff McGuire &

4 Margolis that has to do with pension issues.

5 So before I just turn to all of you because I don't

6 want to monopolize the conversation, but there was one other

7 point that I would like to make. And I don't know if it's

8 become obvious, but from my point of view when we have these

9 proceedings and hearings, one of the most beneficial aspects

10 from my point of view is to hear actually from the people who

11 implement whatever it is we're talking about.

12 So, for example, when we're talking about the benefit

13 funds, you know, we have the most talented lawyers in the world

14 sitting right here in front of us, but sometimes it's

15 preferable to get beyond the lawyers and to hear from the

16 people who are actually doing the work and I would like to

17 continue to do that going forward. We had that experience

18 particularly with the benefit funds, and I think that has

19 worked quite well actually hearing from those people who are in20 charge of investments and the benefit funds as employees, not

21 just as lawyers.

22 And I would like -- there's a lot of mention in both

23 Judge Jones' letter and in the seventh interim report of the

24 people who were actually implementing these technology changes.

25 It would be useful and beneficial for me to hear directly from


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1 them. And I'm always happy to hear from lawyers as well, but

2 those are the people who really are doing the job and so I

3 would like to hear from them as well.

4 But anyway, enough said by me. I would start with

5 Mr. Torrance.

6 MR. TORRANCE: Thank you, your Honor. Good morning.

7 Benjamin Torrance for the United States.

8 Your Honor has it precisely right. This action was

9 brought by the government as an anticorruption lawsuit,

10 obviously brought under the Racketeer Influenced and Corrupt

11 Organizations Act in order to eliminate racketeering and

12 corruption. We were motivated by a long history of Cosa Nostra

13 control, organized crime influence in this union. We've made

14 great progress since that time. The suit obviously dates to

15 1990, and in the interim we've had three court-appointed

16 officers: Judge Conboy, Mr. Mack, and Mr. Walsh. And, as I

17 said, they've made great strides to eliminate that.

18 But it's not enough in the government's view to push

19 out individual racketeers. It's not enough to eliminate20 specific practices of racketeering. The point in a sense of a

21 civil RICO action is to create structures that will prevent

22 corruption going forward, that will prevent this problem from

23 returning to the union. We can prosecute individuals and, in

24 fact, have prosecuted individuals for criminal actions. But if

25 the system of the union and if the culture and the structure of


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1 the union remain open to corruption, then corruption will

2 return.

3 In recent years the form of corruption that we've seen

4 has been what Mr. Mack and Judge Haight referred to as job site

5 corruption. This is the practice of manipulating the presence

6 and the hours and the reporting of carpenters, paying them off

7 the books in order to commit fraud.

8 THE COURT: And underreport benefits and underpay

9 benefits that might otherwise.

10 MR. TORRANCE: Yes, that practice being concealed by

11 the off-books payments that we saw so much of particularly as

12 detailed in Mr. Mack's reports.

13 For years we fought for the 50/50 rule. We viewed

14 that as an anticorruption measure. We viewed it as positive

15 for the union to have people on the jobs who were not beholden

16 to contractors, potentially corrupt contractors, who would then

17 not have the incentive to conceal that kind of job site

18 corruption.

19 But under Mr. Walsh's tenure we have agreed, as the20 Court knows, to essentially make a trade. We agreed to forgo

21 that 50/50 mechanism in order to achieve what we hoped would be

22 a more effective way of monitoring who is on the job, who is

23 being paid, what benefits were being paid; and that, of course,

24 was the electronic reporting that Mr. Walsh has recommended and

25 worked to implement.


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1 But it should of course go without saying that that

2 has to be an effective system. We would not have made that

3 trade had we thought that this system would not work; and it

4 will require efforts by, of course, Mr. Walsh and the union to

5 make sure that it does work. We need the data to be current

6 and accurate in order for it to be tracked and monitored to

7 prevent that kind of job site corruption and that is our

8 motivating principle here.

9 It seems from the recent record that the information

10 technology failures and the failures of accurate reporting by

11 shop stewards are a threat to the effectiveness of that system

12 and that is of great concern for us.

13 THE COURT: That is of great concern to me as well,

14 just so you know.

15 MR. TORRANCE: Right.

16 THE COURT: Because it's not clear to me from these

17 submissions that this is a technological problem exclusively

18 which can be resolved by an RFP and bringing in some

19 consultant. It appears, reading not only between the lines but20 the lines themselves, that there's more to it than that and I'd

21 like your opinion on that as well.

22 MR. TORRANCE: Well, the shop steward reporting, we

23 understand that there is going to be some inertia and that

24 people need to relearn practices that perhaps they've been

25 following for years. I have not had a chance to talk with


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1 Mr. Walsh about Judge Jones's latest letter, but we do note

2 that there are promises of essentially putting more pressure on

3 shop stewards to change more quickly. And I'd very much like

4 to hear Mr. Walsh's view on whether he thinks that will be

5 enough or whether more is required. Obviously, the record will

6 be what the record is. Say a month from now we'll know more

7 about exactly how effective it is.

8 But it's heartening to hear that they are addressing

9 that problem, but we do need to have, we do need to have the

10 people out in the field, the shop stewards, make sure that that

11 data is accurately entered and accurately reported and done so

12 quickly so that the opportunities for job site corruption are

13 eliminated. So whether on that problem or on the IT problem,

14 we do see the need to fix it as pressing. As I said, we view

15 the latest letter from Judge Jones as hopeful. We hope that it

16 will serve as a promise to quickly address these problems.

17 Hopefully, we'll be fleshing that out somewhat more this

18 morning.

19 But our bottom line is that we need these problems to20 be solved and we need them to be solved quickly and effectively

21 in order to achieve the project of eliminating corruption in

22 general and eliminating job site corruption in particular.

23 THE COURT: Okay. Thank you.

24 I'm going to turn to district council. But before I

25 turn to Judge Jones, I would also like to hear from Mr. Murphy.


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1 He was the primary legal representative, as it were, counsel

2 when all this took place, when the collective bargaining

3 agreements were negotiated and agreed to. And I'm not quite

4 understanding, which I indicated in my November 25 order and I

5 think may have included some give and take between Mr. Murphy

6 and the Court and others, why we are where we are right now

7 and, you know, why things are taking so long and why we need --

8 well, just that. I'd like Mr. Murphy's take on the situation.

9 Mr. Murphy, you made some considerable sort of

10 assurances to me months and months ago that seem, you know, I

11 don't have that assurance today, I'll promise you that. And I

12 don't understand -- I just don't understand.

13 MR. MURPHY: I certainly understand your concerns. I

14 share those concerns.

15 It appears as this process has unfolded, as we've

16 implemented one contract after another and where district

17 council has instituted anticorruption measures, for instance,

18 the job site integrity inspectors on the one- and two-person

19 jobs, that we find or we discover different glitches in the20 system.

21 One of the most notable ones as far as the statistics

22 are concerned is the inability electronically to account for

23 jobs being closed and then being reopened and then being closed

24 and so that when you look at the statistics, there appear to be

25 a number of jobs in which there is no reporting and that we've


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1 then had to manually with people drill down and follow up on

2 that.

3 As Judge Jones explains in her letter, there's now a

4 permanent team made up of six people at the district council

5 who are charged with at least in the interim figuring out what

6 jobs are actually closed and then being able to clear those

7 statistically.

8 THE COURT: I get all that. I read Judge Jones'

9 letter. I think it's a very good letter. I don't understand

10 how it squares with what you said to me months ago in this

11 courtroom that we tested the system, it looks like it works,

12 and you strongly urged me to prove full mobility on the

13 understanding that these anticorruption measures were up and

14 ready to go. And, frankly, that is the basis or substantial

15 basis for which I did approve full mobility, notwithstanding

16 some of the members of the union said, you know, Judge, don't,

17 don't approve full mobility. So I did, but in large measure

18 based on assurances from you in particular as the counsel for

19 the district council that this other piece of the pie was, you20 know, in place and now all of a sudden it's dramatically

21 different.

22 And, by the way, Mr. Walsh has been ringing this bell,

23 so to speak, right from the get-go. He on each occasion that

24 we've had a conference over the last I can't remember how many

25 months, each time he said that he had a concern that things


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1 were not happening as they were promised. And, honestly,

2 that's what I don't understand. And I don't think, as I said

3 to Mr. Torrance, that these are only, although I do respect

4 that there are some technological problems, I don't think

5 that's the whole story.

6 MR. MURPHY: Again, your Honor, I share your concern.

7 The representations that have been made to the Court were based

8 upon the information that we had at the time, going back I

9 believe my first letter to the Court as sort of a preview was

10 filed back in February of this year based upon information

11 received from the IG's office, received from the representation

12 center, from the union itself. And as this has unfolded, I

13 believe the first contract was implemented in, was actually

14 starting to go online in May and June of this year.

15 THE COURT: But this process went way before that.

16 MR. MURPHY: I understand that.

17 THE COURT: There was a whole series of negotiations

18 where, by the way, the rank and file rejected the collective

19 bargaining agreements, so, and that discussion was happening20 months and months before.

21 MR. MURPHY: Rank and file voted in February/March of

22 2012 to reject all but one of the collective bargaining

23 agreements that had been negotiated by the international union

24 during the trusteeship that provided for full mobility. So the

25 union went back into negotiations and concluded at least


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1 tentatively the first agreement on August 22, 2012. That

2 agreement frankly had, as far as I can tell, really nothing

3 about the anticorruption compliance.

4 And literally on August 22, 2012, I met with the

5 review officer. We discussed what would be necessary and I

6 typed that up, reviewed it with him, he agreed, the union

7 leadership agreed. They sent it to the first association with

8 whom we had the deal which was the largest one, the wall

9 ceiling association, and they were on board. And then from

10 that time we went through in the fall and winter 2012/2013 to

11 testing -- initially I guess alpha testing and beta testing in

12 the field -- the reporting system.

13 THE COURT: That's my recollection too that it goes

14 back to 2012, August, September of 2012 for sure. So anyway.

15 MR. MURPHY: Anyway, if I may, I think that the review

16 officer, and also in Judge Jones's letter, the review officer

17 in his previous interim report and this interim report more

18 than touch upon an issue and it's an issue that I've had since

19 arriving on the scene in late January 2012, and based upon20 being in the trade union movements for literally slightly more

21 than 40 years, since I was an undergraduate student in college,

22 that I think that the district council really needs to upgrade

23 the number of personnel and the training of personnel.

24 I think the district council is woefully understaffed

25 at the clerical level, the administrative level, and at the


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1 business rep level. They're making efforts now to upgrade that

2 and change that, but it's a very slow process to add additional

3 business representatives, to add additional clerical people, to

4 add additional administrative staff in order just to function.

5 It's a 20,000 member district council, $60 million in net

6 assets, and it needs to function like an organization of that

7 size.

8 THE COURT: And so why doesn't it?

9 MR. MURPHY: Why doesn't it?

10 THE COURT: Yeah. It's got a billion six or more in

11 one benefit fund. This is not a mom-and-pop operation. So why

12 doesn't it? And why doesn't, for example, one issue that has

13 concerned me since these discussion began, why doesn't it have

14 an in-house person that has IT capability and who can supervise

15 even the contractors who are working on this project? Why in

16 your opinion is that not already in place? We've got -- and I

17 don't mean to be critical -- we've got enough lawyers here, you

18 know, to fill the hiring hall at the district council. So why

19 don't you have the staff to be able to administer these20 programs?

21 MR. MURPHY: My personal opinion, based upon 40 plus

22 years?

23 THE COURT: Yeah, you're the counsel, your opinion.

24 MR. MURPHY: I think there's an inertia that's hard to

25 overcome. I think that one of the issues is because of the


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1 staffing levels that the officers and the staff, who do I think

2 really tremendous yeoman's work, are at most times completely

3 overwhelmed by just doing administrative functions. The RO has

4 mentioned it in detail in his interim reports where you have

5 business reps rather than out doing jobs are waylaid to do

6 clerical administrative filing types of functions.

7 So the lack of staffing is sort of like a feedback

8 group onto itself and once an organization sort of stumbles by

9 on that kind of staffing and getting along, it's hard to break

10 out of that mold.

11 THE COURT: Do we have present today anybody from the

12 district council, the EST, for example, the interim EST or

13 somebody else who could address that?

14 MS. JONES: Yes, your Honor.

15 MR. MURPHY: Yes, your Honor.

16 THE COURT: Could he address this issue?

17 Nice to meet you. Wherever you're comfortable. At

18 the podium if you like or there.

19 MS. JONES: Your Honor, I should also tell you that20 vice president Mike Cavanaugh is here and a number of other

21 representatives from the district council.

22 THE COURT: Thank you. If you could state your name

23 for the record.

24 MR. McINNIS: Steven McInnis. How you doing, your

25 Honor.


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1 Currently we have a process for hiring that's required

2 by the bylaws. We have six names that have been sent to the

3 review officer for review to put six more representatives in

4 the field.

5 When it comes to administrative staff, we've actually

6 added four additional admin staffs temporarily to deal with

7 this issue.

8 THE COURT: Do you have an IT person?

9 MR. McINNIS: We use Red Eye to handle the basic IT

10 stuff.

11 THE COURT: That's a contractor?

12 MR. McINNIS: Correct.

13 THE COURT: I'm talking about in-house.

14 MR. McINNIS: Red Eye is in-house four days a week.

15 THE COURT: You don't have anybody on your staff?

16 MR. McINNIS: Right. We began the process and I think

17 that the delegate body wanted to take on the process to bring

18 in a consultant in IT and we want to do it ourselves. If we're

19 going to be a democratic organization and stand on our own20 two feet, we need to take on the responsibility of doing it

21 right the way.

22 So we actually have interviews with five different

23 firms this week, and we hope to have a recommendation to the

24 delegate body next Wednesday. It's a process. The review

25 officer mentioned what the funds have done. That's been a


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1 two-year process. I don't think it's going to take us two

2 years to get where we need to go. I think we have a very

3 expedited process and we're addressing it and we're addressing

4 a lot of different issues.

5 THE COURT: What's your take about why it hasn't

6 happened since August of 2012? That's when the issue was first

7 put on the table or maybe even before that.

8 MR. McINNIS: Which particular issue?

9 THE COURT: Technology.

10 MR. McINNIS: Technology?

11 THE COURT: Yeah.

12 MR. McINNIS: You know, we've used contractors. Down

13 the road, I don't know if we're going to use contractors.

14 We're going to see what the consultant has to say.

15 It's very difficult to move things at the district

16 council. We deal with a lot of different issues. This is, as

17 Jim Murphy would state, this is a large organization. I think

18 when it comes down to it, and Judge Jones will go into it, when

19 it comes to the rolling out of the compliance piece regarding20 full mobility, our intention was to incrementally roll it out.

21 In discussions with the bureau office, we didn't wanted to jump

22 in the pool the same day.

23 I think our numbers are above 95 percent of our people

24 are doing this the right way. You know, it's something that

25 our goal and the vision here is to get it to a hundred percent.


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1 THE COURT: You think you're at 95 percent compliance,

2 as it were, with the electronic anticorruption measures at this

3 point?

4 MS. JONES: Judge, in terms of actually reporting

5 hours worked, we think we are somewhere between 90 and

6 95 percent.

7 In terms of the accuracy of the underreported jobs

8 because shop stewards -- that's only one reason -- are not

9 calling in a job when it's closed, we carry all of these open

10 jobs where there really is no reporting that could be done.

11 There are no hours being worked. I know you understand that --

12 THE COURT: I do.

13 MS. JONES: -- from my letter.

14 THE COURT: I do.

15 MR. McINNIS: So we've taken the measures to drill

16 down and identify these false negatives and to implement

17 different pieces.

18 Whenever you're going to roll out something -- and

19 this is a fundamental change institutionally and20 organizationally and culturally about how we report hours --

21 and it's something that takes a little bit of time. We've seen

22 a lot of technological rollouts with their issues out there,

23 and I don't think we're anywhere near some of the CityTime for

24 New York City or the Affordable Care Act website. I think

25 we're doing a good job.


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1 THE COURT: I don't think these things are comparable

2 to that. I don't think this is in any way comparable to

3 Affordable Care Act issues and problems. I don't think it's

4 anywhere comparable to the CityTime, which is the subject of a

5 criminal court proceeding as we sit here right now. I think

6 this is far more finite.

7 And it didn't take any, it didn't take any time to

8 implement full mobility, right? That was a fundamental change

9 that a lot of the people who are in your union were not happy

10 about. That you did overnight. That was also a big change.

11 So this, you know, I'm just.

12 MR. McINNIS: Your Honor, I can tell you that there is

13 on the union side, you know, we are in unchartered territory,

14 this new technology. We do believe we need assistance.

15 THE COURT: I don't get it. You're either at

16 95 percent compliance or you're in unchartered territory. You

17 can't be in both places at the same time.

18 MR. McINNIS: I do believe you can be in both places

19 at the same time. This is a new system and a new system that20 is working at 95 percent, with the goal to get it to a hundred;

21 and we're committed to put the additional resources to get it

22 to a hundred percent, to be at full compliance.

23 THE COURT: And what's your view about having a

24 technology person on staff?

25 MR. McINNIS: I believe that, you know, it's something


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1 that's not my expertise and that's why we're going to bring

2 somebody in. We feel the consultant is an architect and if

3 we're going to build something, we need an architect who's

4 going to come in. And if they say we need two in-house people

5 and that's the recommendation, I think that's the direction we

6 should head into.

7 THE COURT: You don't have an opinion as to whether

8 you need anybody in-house?

9 MR. McINNIS: I'd like to have an educated opinion.

10 We had the first interview. I think it was very informative.

11 I'd like to make educated opinions in regard to that, and it's

12 not something that's common nature and knowledge to me. But

13 I'm looking to educate myself and the executive committee and

14 the delegate body so that when these decisions are represented,

15 it's transparent, people understand what we're spending money

16 on, and it's something that the members can buy into. And

17 that's the process we've signed on for and that's the process

18 we hope to follow.

19 MS. JONES: Your Honor, if I could just add one thing.20 THE COURT: Sure.

21 MS. JONES: So you do know what's going on in the

22 background, the district council is not interviewing these

23 candidates without anyone there who has expertise in

24 technology. We have an arrangement which we're very

25 appreciative of with the funds, and we have two members of the


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1 IT department, the head of it, and another.

2 THE COURT: From the funds?

3 MS. JONES: From the funds who are attending all of

4 these interviews, or at least so far, and we have their

5 guidance and we've used it on other occasions as well.

6 THE COURT: Do you, in particular, would you think

7 that just as they have IT people on their staff that it would

8 be a useful thing for the district council to have? Most

9 organizations, that's like the No. 1 person these days.

10 MS. JONES: My own opinion, and I'm not an IT person,

11 it would seem to me that going forward it would make perfect

12 sense to have an IT director. But, again, we don't have it

13 now. We're using a great deal of help from the funds, and

14 we're going to take the advice of the technology consultant

15 that we get.

16 THE COURT: Great. Thanks.

17 Judge Jones, did you want to comment? I have your

18 letter and I think it's well done.

19 MS. JONES: I guess, Judge, I do want to say that it20 is a promise. We understand. And you're right, some of the

21 problem is technology but some of it is human. The fact that

22 there is a failure to report the closing of jobs is a huge

23 problem and we know that. But there are five or six other

24 reasons why those jobs don't get closed and for all of them we

25 think technology may be helpful.


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1 I know you read the letter so you know that we have a

2 job closing button on the electronic shop steward's report that

3 will be coming, and I know you've seen my other comments.

4 We're not sure, in fact, we don't believe telephone reporting,

5 nonelectronic reporting has actually gone up. We are enhancing

6 steward, shop steward discipline, and Mr. McInnis himself --

7 because we want shop stewards to know that this is coming from

8 the leadership -- has sent out personal emails to each shop

9 steward and done a number of other things.

10 And I guess the most important thing at least to me in

11 the letter, because we do understand that these numbers have to

12 be accurate if the electronic reporting system is going to mean

13 anything, but the most important thing that I learned after I

14 spoke with actually three of our business reps, all of whom

15 have been working on this project for the last two weeks and

16 one of whom who's been working on it since July full-time, is

17 that there are not work hours that are not being put into or

18 not a great many work hours that are not being put into

19 Watchdog. We have a lot of hours we're looking for that were20 never worked because the jobs aren't getting closed.

21 I know you've heard about our inability to close jobs.

22 I'm hopeful that the closure box will help. But I think it may

23 be equally helpful, maybe more helpful to get the attention of

24 the stewards and that's what we're about.

25 THE COURT: That struck me from your letter, from all


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1 the letters, to be a really crucial and open issue.

2 MS. JONES: And that's what we're about now. We're

3 making sure -- and this began before the November 18

4 conference -- that we keep records of stewards who are not

5 reporting, and after two failures to report and a warning,

6 they'll be brought up for shop steward review.

7 THE COURT: Do we have, Judge Jones --

8 MS. JONES: Vendors? I'm sorry, Judge.

9 THE COURT: I was going to ask, some of the people

10 mentioned in your letter, Mr. DiNapoli, for example, we've

11 heard from Mr. McInnis, Mr. Danielson, Mr. Caperso, are they

12 here?

13 MS. JONES: Judge, I think it would be, and let me

14 tell you, Stephen McCann, Jeremy Millen, and Andrew Macaria are

15 the three gentlemen seated in the first row to the left. I

16 think Mr. McCann has the most knowledge about what they're

17 doing now, and I think it would be very helpful if he could

18 explain to you how he's going about his job.

19 THE COURT: Yeah, I'd like that. If you could state20 and spell your name for the court reporter and indicate what

21 your title is.

22 MR. McCANN: Good morning. Stephen McCann. I'm a

23 business representative for the New York City District Council

24 of Carpenters.

25 For the last few months I've been working on the


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1 electronic reporting, going through the reports, sorting them

2 out, trying to identify problems. Some problems we resolve

3 right away, some occur as we resolve other problems with the

4 computer, we change one thing and another door opens type of

5 situation.

6 But overall most people are reporting, 90, 95 percent

7 of the people out of the gate are reporting the jobs. They

8 work the hours they work. We run into technical difficulties

9 with new members on the job who are unable to be logged into

10 the system until a different division of the union sends up

11 paperwork and it gets processed through. So you run into

12 problems on that front.

13 As far as the other problems, the closeouts, the job

14 lingers on where it shows up on the report. The job is over.

15 All the hours from the job have been captured. There's no

16 outstanding hours, but the computer still looks for it until we

17 manually go in and tell it not to look for it.

18 THE COURT: And what's your technology background?

19 MR. McCANN: As far as I'm just -- I don't really have20 any formal education. From growing up being around computers

21 and the age group I'm in, I'm pretty well knowledgeable of a

22 computer.

23 THE COURT: Okay. That's helpful. Thank you.

24 MS. JONES: Your Honor, I would only add to what

25 Mr. McCann said which is that he as well as the other two reps


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1 who are here have indicated to me that when they get their list

2 of jobs that appear to be open but are actually closed, they

3 call almost every steward and they have each told me -- and

4 we're going to track this going forward so we have precise

5 statistics for the Court, we'll use a form -- they have

6 discovered at least six different reasons why the jobs weren't

7 closed.

8 THE COURT: Were not.

9 MS. JONES: Were not, and why hours that we're looking

10 for for entry into Watchdog were never put in.

11 I guess my only point is this. This will help us.

12 It's something that we should have investigated before, but at

13 least we now know why we have these crazy numbers in the

14 unreported job category. But what each one of them said was

15 virtually the number of times that they had a steward that

16 needed to report hours was under --

17 THE COURT: Minuscule.

18 MS. JONES: Minuscule, absolutely minuscule, Judge.

19 So for what it's worth, we do believe that all along Watchdog20 has had the data in it for carpenters, working carpenters, to

21 check hours and crew sizes.

22 THE COURT: Anybody -- I don't know who everybody is

23 back there.

24 MS. JONES: Your Honor, we did ask representatives

25 from Standard Data, Red Eye, and AT&T. And we had thought we


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1 had a representative from Motorola, but at the last minute last

2 night we were not able to get that person.

3 THE COURT: Somebody from Standard Data might be

4 helpful. They were originally online, as it were, for

5 implementing this system. In fact, I think at one of the early

6 conferences we had here in court somebody from Standard Data

7 spoke.

8 MS. JONES: Mr. Andretta, Tony Andretta is here.

9 THE COURT: So maybe he could shed some light on what

10 problems exist.

11 MS. JONES: Sure.

12 THE COURT: And actually why they exist and where

13 we're headed.

14 MR. ANDRETTA: My name is Anthony Andretta, President

15 of Standard Data Corporation.

16 THE COURT: So you've been on board with this project

17 as a contractor, consultant, right, for some considerable

18 amount of time?

19 MR. ANDRETTA: Yes. I've actually been working with20 the district council for over ten years. And this particular

21 process that they're going through actually began like maybe

22 five years ago with a different type of technology and so

23 forth, which you're probably aware.

24 THE COURT: I am. And, in fact, I remember, I think

25 you were on that side of the courtroom and spoke at one of our


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1 fairly recent, in the last six months or so, about what was

2 going on. So what is going on?

3 MR. ANDRETTA: I was about to say, frankly, we're a

4 bit surprised to hear this being described as a technology

5 problem when in reality it's more of a procedure problem for

6 which the technology has to be maintained, enhanced, and

7 modified to meet the changes that we're learning about what's

8 happening in the field.

9 THE COURT: When you say procedure problem, you mean a

10 human problem?

11 MR. ANDRETTA: The procedures that exist out in the

12 field for the carpenters and how they enter the hours, how they

13 open and close jobs, and utilizing the existing technology that

14 was already at the district council to be able to be integrated

15 with this new technology. So we've been doing that, and we

16 really don't understand that there's any problem that exists.

17 A problem does come up though when a procedure has to

18 change. We have to modify or enhance that program, all the

19 integration part of the program, we have to train the people20 that are going to use the updated system. And one of the

21 biggest problems we have in this regard is we can't test it, so

22 we have to roll it out in a production environment. So I will

23 say that when we roll out a change in production, it's not

24 always working properly, but that could be for a day or two.

25 So, again, going back to what I said earlier, I don't


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1 see this as a technology problem.

2 THE COURT: Well, it's kind of mystifying to me

3 because I think there are at least one or two RFPs that are

4 available in which people are being interviewed and potentially

5 hired to solve technology problems. So am I wrong about that?

6 MR. ANDRETTA: No. Again, I don't know much about

7 that other than what I read or what I'm being told. I know

8 they're outside looking for a consultant to come in and analyze

9 the existing technology.

10 Understand that some of the technology in place was

11 put in ten years ago, okay, and trying to integrate a ten-year

12 old technology with a new technology such as this is difficult

13 to do. But I feel that we've done that, okay. Should the old

14 technology be replaced? I can give you an example.

15 There's a product in place called Liberty. It is an

16 imaging document management system that's been in place for

17 close to ten years. Liberty is no longer supported in the

18 industry. Liberty was bought by a company called Onbase. They

19 continued to support it for a number of years. We are now20 supporting that product on our own. Does it work? Yes, it

21 works. Can we enhance it? No, we can't. There are certain

22 limitations to it. So as a result of that limitation, we have

23 to make changes to the electronic reporting to make up for the

24 deficiencies within that system.

25 So should that system be replaced? Yes. Is it


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1 expensive? Extremely, and it's not something that I believe

2 the district council wanted to get into at this point based on

3 the issues they're dealing with today with the full mobility.

4 THE COURT: Okay. Thank you.

5 MS. JONES: Your Honor, the district council is

6 getting into these issues with the IT consultant that we intend

7 to hire and that person will lead us into the next stage

8 because we'll then have an IT vendor. He will come in and put

9 our systems in place. So that's exactly where we're going.

10 THE COURT: Is that intended to supersede Standard

11 Data? Is this a new era of vendor/contractor/consultant?

12 MS. JONES: We're not at the stage where we're putting

13 out the RFP for the Standard Data type vendor or the Red Eye

14 type vendor for that matter. That will come out in March.

15 THE COURT: So what RFP are we at?

16 MS. JONES: The RFP that we're doing now is to get us

17 an IT consultant who can examine business practices and work

18 flow, look at what we have now, our hardware and our software,

19 and actually with us design a system that will serve our20 purposes and also be integrated not just internally within the

21 district council, but also with the funds. That's what the

22 purpose of this person is. They're going to remain on when we

23 go through the phrase of trying to bring in the actual people

24 who are going to produce our hardware and design the software

25 and they will help us select those vendors.


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1 THE COURT: So these are the entities being

2 interviewed currently?

3 MS. JONES: No, neither are.

4 THE COURT: I thought they were. I thought the first

5 RFP was to select.

6 MS. JONES: I'm sorry, neither who is being

7 interviewed?

8 THE COURT: I'm trying to figure out who you are

9 interviewing in this first round, RFP round.

10 MS. JONES: Okay. We have five firms who are IT

11 consultants.

12 THE COURT: Correct.

13 MS. JONES: None of them -- I thought you were asking

14 me if they included either Red Eye or Standard.

15 THE COURT: No, no. I'm wondering who they are.

16 MS. JONES: They're a variety of firms. One is Segal

17 that has done prior work of this nature with unions. Another

18 is called MeetUs. Another is Aquist. There's been one

19 interview. The other four are going to be accomplished by the20 end of the week. There's a range of costs, as you might

21 expect, with them. And as I think Mr. McInnis said, they were

22 very happy with the first interview because they felt that the

23 person they interviewed there could be quite helpful. It's

24 only the first interview. We have four to go.

25 THE COURT: When you say range of cost, what are we


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1 talking?

2 MS. JONES: I think one was as low as a hundred

3 thousand dollars and one that was over $300,000.

4 THE COURT: This is just for a consultant to advise

5 you about what the problem is.

6 MS. JONES: Right. But we think this is a very

7 important phase because this consultant is going to hope us

8 figure out our work flow and business practices and then figure

9 out what the technology is that goes with them -- and, again,

10 that couldn't be more important -- and then ultimately

11 selecting the vendors who can provide us with the hardware and

12 software. They'll stay on to help us do that.

13 THE COURT: Yeah. And that now is anticipated, that

14 second RFP, in March or something?

15 MS. JONES: Yes.

16 THE COURT: It can't be any sooner than that?

17 MS. JONES: You know, Judge, it could turn out to be

18 not as big a question or difficult as we think. I've heard

19 opinions saying that this might take us as long as it took the20 funds. I've heard other people say these are really not that

21 difficult. We should be able to do it in six months. I don't

22 know, but that's why we're getting these consultants in.

23 THE COURT: To tell you.

24 MS. JONES: To tell us.

25 THE COURT: Maybe we should turn to Mr. Walsh.


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1 MR. WALSH: Thank you, your Honor. Dennis Walsh, the

2 review officer.

3 The frustrating thing about the District Council of

4 Carpenters is that it only responds to negative inducement.

5 One would have thought that after all these years of oversight,

6 the pendency of a consent decree since 1994, and the

7 stipulation and order since June of 2010 that the leadership at

8 the union would have decided, finally, we must engage in

9 rigorous self-analysis. We must figure out how to improve this

10 institution so that it is perfected, so that not only is

11 corruption eradicated, but that it functions as the modern,

12 efficient, compliant business that it must be to benefit its

13 20,000 members and their families.

14 We had here this morning because the Sword of Damocles

15 is palpable on the head of this union. Nothing has changed in

16 terms of the quintessential horse who not only will not be led

17 to sweet water, but falls down and says drag me to that sweet

18 water, to valleys of green grass that will make him strong,

19 like a child who won't eat his spinach, and that's all crazy.20 When is it going to end? When is the district council going to

21 step up and say we understand these problems and, with

22 alacrity, we are going to solve them?

23 I think that among the options that the Court has is

24 to set a rigorous deadline for perfection of this system, no

25 matter how many human beings they have to throw at it, so that


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1 they can come back to this Court and say we have 100 percent of

2 the information in this system that the members will need to

3 use Operation Watchdog. And if that is not achieved quickly, I

4 think it's fair to abolish the contracts, to set the parties

5 back to the table, but to hold on to the imperative of --

6 THE COURT: So abolish --

7 MR. WALSH: -- electronic reporting.

8 THE COURT: -- which contracts?

9 MR. WALSH: All of the contracts previously approved

10 by the Court on the promise that this compliance program would

11 work.

12 THE COURT: You mean the collective bargaining

13 agreements.

14 MR. WALSH: Yes, the collective bargaining agreements

15 is what I mean by the contracts.

16 I think that it would be entirely fair for the Court

17 to request that the district council affirm within 30 days that

18 they are at least at 90 percent accuracy and without too much

19 advocacy, relying exclusively on facts, be able to demonstrate20 to the Court, to the government, and to my office that this is

21 a reliable representation.

22 THE COURT: So there is one other issue that's

23 troubling me that's not so subtle, actually, in the seventh

24 interim report that you mentioned, and that is whether and why,

25 if the answer is no, the district council is not responding to


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1 your suggestions, in particular with respect to these issues,

2 and I think we need to air that too. I don't quite get it.

3 The report even suggests, or doesn't suggest, it states that

4 Judge Jones was hired to speak to you as if Mr. Murphy couldn't

5 or didn't or wouldn't. I don't quite get that whole dynamic

6 here. But it is, it is contained in this report, and I'm not

7 sure I'm understanding that element.

8 MR. WALSH: Judge, what was clear a few months ago was

9 I thought that I had reached agreement with this union to give

10 them an opportunity to take on the challenge of upgrading their

11 IT platform and their business systems. I addressed, as you

12 know, the delegate body on two occasions. I addressed the

13 executive committee. And I thought that all their concerns had

14 been addressed, yet the executive committee voted against the

15 recommendation to upgrade. The delegate body confirmed that

16 they didn't want to upgrade.

17 There was then a movement to hire counsel to fight me,

18 in plain English. I observed delegate meetings and listened to

19 recordings of others where the sentiment of the delegates was20 very clearly expressed that they'd had enough of Dennis Walsh,

21 that they had enough of the review officer suggesting or even

22 demanding that certain change be effected, that they wanted to

23 hire a lawyer to fight me on that.

24 Now, thankfully, Judge Jones has been selected and she

25 has been immensely helpful in I think cutting to the chase with


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1 her clients and discussing reality and various imperatives on

2 an objective basis. She has never intimated that it is ever

3 her intention to be adversarial, and I am grateful for and

4 respect her efforts every day at the district council.

5 The sentiments though that led to this chain of event

6 is still there, and I expressly remark that there are people

7 who absolutely chafe at the notion that they have to deal with

8 the review officer and the oversight of this Court and that's

9 going to be an ongoing problem and I don't know how it's going

10 to play out.

11 MS. JONES: Your Honor, there is a lot of sentiment at

12 the district council with respect to the relationship with

13 Mr. Walsh and I think that that's a fuller conversation that

14 can be had on another occasion and I think it's something that

15 is profitably discussed with the government, Mr. Walsh, and

16 myself before we air it before the Court.

17 THE COURT: And what about Mr. Murphy? Where is

18 Mr. Murphy in this?

19 MS. JONES: Well, you know, Mr. Murphy is general20 counsel, and I don't know anything about labor law.

21 Thankfully, he's handling all those issues. I was hired to

22 come in to counsel the district council with respect to their

23 obligations under the consent decree and particularly with

24 respect to dealing with the RO. And I appreciate Mr. Walsh's

25 statement.


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1 THE COURT: You know, we don't have to go into all the

2 details now, but that's precisely what I don't get. I mean

3 it's clear that's what it was, but.

4 MS. JONES: The ability for -- I'm sorry, Judge, I

5 didn't hear you.

6 THE COURT: I just mean why does the general counsel

7 have to hire a general counsel to talk to Mr. Walsh? It makes

8 no sense to me. I mean you're a wonderful person to have in

9 that role and I have great respect for you, but I don't

10 understand. It sounds so dysfunctional, frankly.

11 MS. JONES: Communications are not good, period.

12 Mr. Murphy has plenty to do without also having to discuss

13 initiatives with Mr. Walsh and make efforts to counsel the

14 district council as we go along in terms of this compliance.

15 I would like to add, just make this one comment

16 because I read, obviously, I read Mr. Walsh's seventh interim

17 report and, you know, I agree with him that if a union is going

18 to succeed on its own and be free of corruption and democratic,

19 that impetus has to come from within. And I guess what I20 didn't understand after he talked about democracy was his

21 criticism of the council's IT program, which I know your Honor

22 is totally familiar with. I was hired. I assessed the

23 situation. I counseled my clients, and an IT program was voted

24 and approved by the delegate body.

25 THE COURT: But it was first rejected when he proposed


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1 it.

2 MS. JONES: Well, there are two things.

3 THE COURT: It's the way it seems.

4 MS. JONES: Right. There are two things. First of

5 all, it wasn't precisely the same program. Regardless of who's

6 right or wrong, the district council wanted to get consultants

7 first and decide about an IT director and a project director

8 second. That was the only difference between the two

9 proposals, I grant you. What I don't understand is why

10 Mr. Walsh would say the starkest transgression against common

11 sense was the rejection of my recommendations regarding

12 information technology and business practices and the

13 subsequent vote to pursue everything I recommended regarding IT

14 in the first place.

15 THE COURT: You mean it's hyperbolic?

16 MS. JONES: I mean it's hyperbolic. I guess my

17 question --

18 THE COURT: It sounds true.

19 MS. JONES: Well, my question is what's wrong with the20 union wanting to own its own technology program? And

21 especially one that Mr. Walsh doesn't even criticize and, in

22 fact, he did not object to the distinction of hiring a

23 consultant first; I don't understand why that's a cause of

24 concern. If this union is going to stand on its own two feet

25 and reject one plan by Mr. Walsh but comes back with one that


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1 he now claims is totally satisfactory, albeit a little

2 different --

3 THE COURT: Not much.

4 MS. JONES: No, I'm saying --

5 THE COURT: No, it's not much different.

6 MS. JONES: You know, Judge, I think they wanted to

7 vote their own IT program.

8 THE COURT: Well, yeah, I sort of understand that.

9 But it strikes me that or what perplexes me is why everybody

10 isn't on the same page here. Sure, everybody's got different

11 personalities and some people are easier to talk to than

12 others. But nobody -- he, for example, his suggestion which

13 are in the main, not even in the main, but you're talking about

14 95 percent before, I would say his proposal is 95 percent of

15 the same proposal that when he proposed it was rejected and

16 it's now implemented.

17 So there is that problem that, frankly, I think needs

18 to be resolved as much as the IT program as to how people are

19 communicating and why they're fighting with each other over the20 4 percent, so to speak. I just don't get it. I was so

21 surprised, to be perfectly honest with you, and I'm surprised

22 that this issue, there it is. It couldn't be clearer. So

23 Mr. Walsh I might characterize as a tough taskmaster or

24 whatever the expression is, but there's a history to this union

25 which would lead one to believe that that's appropriate.


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1 MS. JONES: Let me just say this because the

2 government talked about corruption earlier. I think we all

3 know what happened in 2009 with Forde and the corruption that

4 existed. We are four years later. Mr. Walsh has eradicated

5 any organized crime members or connections, at least to the

6 extent that he's able to investigate and we know. There are no

7 more drugs. There are no more bribes. People are not blowing

8 out expense accounts. They're not driving around in fancy

9 cars. Those abuses and that corruption -- and I think

10 Mr. Walsh has said this himself and fairly recently -- no

11 longer exist.

12 I know we need a structure going forward to assure

13 everything, but I think this monitorship has to go into a new

14 phase because the people in the district council are people who

15 are hardworking, they would like to achieve the goals of the

16 union, but --

17 THE COURT: I think you all need to go into a new

18 phase. I don't think just the trusteeship or the monitorship;

19 I think everybody has to go into a new phase.20 MS. JONES: That's right. We need to have a district

21 council that does feel that it can speak its mind, disagree

22 with proposals without fear of veto, where we can find another

23 enforcement mechanism that would keep this in order. We need

24 this monitorship to transition into a structure where people

25 who are not criminals and are working carpenters and business


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1 reps are treated differently than the union was treated four or

2 five years ago. There is a very big problem with communication

3 because of the atmosphere that exists at the district council.

4 THE COURT: Well, I get it. I get that there is, but

5 I don't quite get why. And I do think we should have or you

6 should have --

7 MS. JONES: I think, as I said, your Honor, I think it

8 would be very profitable for the government, Mr. Walsh, and

9 myself to continue these conversations. I've discussed that

10 with Mr. Torrance, and I believe Mr. Walsh and I discussed it

11 sometime ago that we should get together.

12 THE COURT: Yeah, I think it is a good idea because I

13 think it's getting in the way of business.

14 MS. JONES: It most definitely is.

15 MR. FORREST: Your Honor, if I may be heard, Loren

16 Forrest from Holland Knight for the Building Contractors

17 Association.

18 I've just heard some discussion today and your Honor

19 has also intimated discussion, the negotiations between the20 parties whereby full mobility was gained by the contractors in

21 exchange for anticorruption measures. I would just want to

22 state and I think I'm not going too far afield here to say that

23 for the Building Contractors Association and as far as the

24 other contractors association, I don't think abolishing the

25 CBAs or unwinding them would help all the parties. I think all


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1 possible other options should be explored. As your Honor

2 probably knows, that previously happened in 2007 and 2008 and

3 that resulted in two years of litigation including a Second

4 Circuit appeal, motion practice.

5 THE COURT: I frankly don't care about that.

6 What do you think is needed to get these

7 anticorruption technology measures implemented ASAP, and do you

8 think the contractors have a role in doing that? The

9 contractors got full mobility. And so what's your specific

10 position about implementing these technology changes, why

11 hasn't it happened?

12 MR. FORREST: Your Honor, I read the seventh interim

13 report by Mr. Walsh, I read the letters by Judge Jones and the

14 parties here. I believe that most of this from everything that

15 I've read and I've seen are internal workings with the union.

16 There's obviously updates and things that need to be

17 implemented better. The parties I think have obviously all got

18 to speak and communicate better. But I think the contractors

19 really don't have a say in a lot of the internal workings of20 the union and that would be unfair to unwind the agreements

21 that were negotiated, as you know, and it took a long time,

22 over two years.

23 So I think most of it is internal. The contractors

24 are willing, if there's anything we need to come to the table

25 and talk to the parties about, if it affects the CBA in any


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1 way, I think all the contractors associations would be willing

2 to discuss that with Judge Jones, U.S. Attorney's Office, the

3 Review Officer Walsh, and obviously Mr. Murphy.

4 So I think right now the contractors are on the

5 outside, I think as you can see from Mr. Walsh's report, on the

6 outside of all this. They're not being implicated that they've

7 done anything wrong. So we stand ready to do whatever is

8 necessary to help the process along.

9 I just wanted to state for the record that I don't

10 think unwinding the CBA would help the process because, as

11 you've probably already heard, it would actually hurt the

12 contractors in terms of time and expense.

13 THE COURT: I get it.

14 MR. FORREST: Thank you.

15 THE COURT: Anything else? There was a hand before.

16 MR. KELTY: Greg Kelty, Local 157.

17 Your Honor, in regards to the compliance issues with

18 this machine and what we're having here with the council is I

19 think one of the biggest issues here is there's really no set20 in stone requirements that have been going out to the shop

21 stewards, to the contractors, or anyone else. I constantly get

22 phone calls from people asking me what's going on with this,

23 what's going on with that, how come we have to do this and now

24 they're telling us we have to do that. And if you don't have

25 that built into your software, how can you possibly have it


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1 work?

2 I mean, as you said, this has been going on from about

3 March 2012. And when that memorandum for the contract went to

4 the delegate body, we had about a paragraph and a half of what

5 the compliance issues were going to cover and we have yet to

6 see anything since then exactly what the rules and requirements

7 of the compliance were going to be still to this day.

8 I had somebody call me last night and say, you know,

9 they just told us if we have a two-man job and one of the guys

10 leaves, we have to call the job back in as a one-man job and

11 otherwise they're going to bring us up on charges. It's almost

12 like they're putting the onus on the contractor and on the shop

13 stewards to get this thing right when it should be on the

14 council to get this thing right.

15 THE COURT: That's the last thing we need is to have

16 lawyers out in the field.

17 MR. KELTY: What I'm saying is they put the cart

18 before the horse. They put this system in place without really

19 having -- nobody knows what the parameters are.20 THE COURT: I thought there were trainings.

21 MR. KELTY: They train you how to use the device

22 essentially.

23 THE COURT: Okay.

24 MR. KELTY: As far as the transparency goes, counsel

25 Murphy referred to the transparency. As a delegate, and I


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1 think I missed maybe half a meeting in the last two and a half

2 years, there has been really no transparency between the

3 council and the delegates as to what's going on with this

4 system. We asked many times what's going on and they just

5 allude to we got it going, it's good, it's this, it's that; and

6 it's been an absolute disaster. We've had many delegates get

7 up and make suggestions; they've just fallen on deaf ears from

8 day one.

9 THE COURT: Suggestions about the technology?

10 MR. KELTY: You have the tablets. Say you have the

11 tablets. We're spending $1,200 on the tablets. I myself and

12 some of the others said why don't we just order smartphones?

13 You can get an iPhone 4 for $200. You know, for whatever

14 reason and what I've been told that more people are using their

15 phones and going home and using their computers to put the

16 hours in than are actually using the tablets.

17 The tablets have been a total disaster right from the

18 start. One of our former delegates, Bill Walsh, took a

19 picture. He was down at the rep center. They had a whole cart20 full of broken tablets in there that didn't work. I know guys

21 that, you know, they're like I can't get through with this

22 thing. You know what they do? They leave it at home or they

23 just leave it in their tool bag and they go home and do it on

24 the computer. It's just been an absolute disaster.

25 There's been no leadership from the council on taking


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1 the bull by the horns and straightening out this whole

2 technology thing. Like Dennis said, he's been mentioning it

3 from his first interim report we need to upgrade the

4 technology. You have the benefit fund upgraded their whole

5 system. Last we heard from Rick was they were testing the

6 system. And yet here we are, until Barbara Jones came in --

7 and I commend her because nothing was done until Barbara Jones

8 came in and got the ball rolling on this whole thing. It's

9 just the whole thing is an absolute disgrace.

10 THE COURT: Thank you. Anybody else?

11 MR. CLARKE: Good morning, your Honor.

12 THE COURT: Good morning.

13 MR. CLARKE: I don't have to tell you my name, Gene

14 Clarke.

15 I'd like to say, first of all, everything that's said

16 is wonderful. Only one thing. The membership has no dental

17 and it has no eyeglass prescription. They're paying all these

18 bills. These people get salaries that are outrageous. They

19 just keep on dumping on the membership. The membership is20 getting nothing. They're getting not a dime out of this. They

21 just keep on losing benefits. All right. Kind of dirty.

22 I'd like to talk to you about the trusteeship of the

23 New York City district council, how it was about.

24 Fred Devine and myself had breakfast one morning and

25 we talked about how McCarron called him up and asked him to


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1 give six cents an hour to him from the labor management fund.

2 Fred Devine said to him 6 cents today, 25 cents tomorrow. So

3 he got a stonewall, McCarron was out. He knew he couldn't get

4 into New York to get out our money and he figured another way.

5 So he went and got ahold of his old friend Paschal

6 McGuinness, who is an associate of the Gambino crime family,

7 and he got Doug McCarron the deal he wanted. They sat down and

8 they brokered a deal, okay. That deal was a nightmare. The

9 school funds were taken for about six to $12 million. If

10 McCarron got the 6 cents, I don't know. I brought it to the

11 attention of Dennis Walsh and also I brought it to the

12 attention of our U.S. attorney, but that's another story in

13 itself.

14 Also, McCarron took $2 million from 608 treasury.

15 That's why it doesn't shock me to see the treasury of 608 and

16 all the books gone, the charter thrown away. I wonder why. Is

17 it because of all the money that went south? I'd like to know

18 myself.

19 Now, the statute of limitations limits us in the20 discovery of what went on with all this money, but we'll never

21 find out unless we get into a RICO criminal again. That's the

22 only way we're going to find out how this money disappeared.

23 All right.

24 Now, Hunter College, who was in charge of giving money

25 to the school, they turned down the school for funding because


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1 of the money that left the school and went out to Washington,

2 D.C. to Bob Georgine. What happened? Who knows.

3 Now, we have other problems. Now they get Harvey

4 Torrack in the late nineties. He comes in to clean up the

5 mess. He's doing a great job. Harvey is doing good. He's out

6 of the labor department. He's doing the job. You know what

7 happened to Harvey? They got rid of him. They gave him a

8 pension, a car, and some money and sent him on his way.

9 Then in 2005 we have Mike Forde in the hotel out in

10 the international convention. He's walking around. He has --

11 who goes down and gets him out of it? Our friend Brian

12 O'Dwyer. Brian O'Dwyer with his associate, they tell the

13 international he's coming back to New York with us. We take

14 care of New York. You have nothing to say. He's not going in

15 rehab. He's got his problems, but he's got other problems.

16 And this goes on and on and on.

17 THE COURT: I get it.

18 MR. CLARKE: We are owned and still are part of

19 organized crime. And we're never going to get rid of it unless20 we get rid of the international and keep them out of all of the

21 affairs of this union. Then maybe we'll have a shot at

22 cleaning the mess up. Until then, nothing.

23 THE COURT: I got it. Thanks, Mr. Clarke.

24 We have one more speaker.

25 MR. MAKOWSKI: Robert Makowski, Local 157. Thank you,


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1 your Honor, good morning.

2 Three things. In short, one, if you think this is

3 dysfunction, imagine what the membership thinks of this.

4 No. 2, Dennis Walsh mentioned the Sword of Damocles. Well,

5 it's already slicing the members because of this. It might not

6 have affected the council in such regard as it has the

7 membership, but we are suffering because of it.

8 THE COURT: How?

9 MR. MAKOWSKI: That was my third explanation. Just

10 recently, and this is personal experience from being dispatched

11 to job sites within the last couple months, is that we have

12 repeated manning violations taking place on job sites and we

13 were assured that if it was repeated, this mobility factor

14 would be revoked or whatever we collectively bargained for

15 would be negated if there was a second infraction. Well, I

16 don't see the enforcement because if there was enforcement

17 after the first one, there wouldn't be a second infraction.

18 I personally have been dispatched to job sites and not

19 working in one year working a total of 40 hours, I have 12 to20 14 skill sets on my hour list, my work list dispatch. When I'm

21 sent out to a job in 12 months, I get one week because I

22 complain about collective bargaining things and I go to the

23 IG's office and grievances are filed, but that's on a repeated

24 basis, not just the first instance of a report. So I wonder

25 again if there is enforcement why are we having repeated


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1 violations.

2 Now, someone like me that doesn't work that often

3 because of the mobility and the new contracts, when you get to

4 a job site and you see four- to five-month work ahead of you,

5 you're thrilled. Right before the holidays, it gives you an

6 uplift. It helps you. It makes you give some faith to the

7 system. But when they send you home without even opening up

8 your tool bag because of a repeated violation, you've just been

9 disenfranchised again. Like I said, the Sword of Damocles

10 might be hanging over the head of the district council, but it

11 is now at present slicing up the membership.

12 Thank you very much.

13 THE COURT: Anybody else?

14 So what I would like, I think it would be useful if

15 you had that meeting or conversation, that is to say, Judge

16 Jones and Mr. Walsh and Mr. Torrance, sooner rather than later

17 so maybe there could be better communications.

18 And then I would like to know though in the relatively

19 near future, I guess when you finish your interviews, if there20 isn't or can't be some more expedited time table.

21 MS. JONES: Very well, your Honor.

22 THE COURT: So perhaps, it could even be a joint

23 letter from Mr. Walsh and Judge Jones and Mr. Torrance.

24 However, and that interview process seems to me -- it is going

25 to be concluded did you say this week?


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1 MS. JONES: The last two interviews are Friday.

2 THE COURT: So presumably next week or sometime

3 thereafter you're going to make a determination.

4 MS. JONES: Right. We have to present our candidate

5 to Mr. Walsh for his approval. And then assuming that we have

6 it or that he selects someone else, we'll go forward among our

7 candidates.

8 THE COURT: Okay. Anybody else want to be heard? I

9 think that's good progress for today as far as I'm concerned.

10 Anybody else? No.

11 Nice to see you all.

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