Claiming leaders of the Secaucus-based Local 69 Hotel Employees and Restaurant Employees Union have too many mob ties, the federal government has installed a federal monitor to run union operations for the foreseeable future.
The union represents 3,000 workers in the Meadowlands area. It has had three presidents since 1994 when federal probes began.
A ruling was reached in federal district court on April 17 regarding a suit filed by the U.S. Attorney’s office in 1998 to take over the local union. The suit complained that members of the Genovese crime family have used fear tactics and other means to maintain control of the union since the mid-1980s.
According to a 1998 report issued to the federal government and the international union by former Justice Department Investigator Kurt Muellenberg, John N. Agathos Sr., the one-time union president, and his son, John R. Agathos, one-time union vice president, both of Secaucus, “knowingly associated with certain members or associates of an organized crime group during the period of the late 1970s until at least 1996.”
This was part of a series of reports on numerous union locals throughout the country that had begun in September 1995. The father and son were among officials in Chicago, Cleveland, Pittsburgh, Milwaukee and other cities who were banned for life from the international union in 1996. Others suffered 13-year suspensions from union activity.
In 1996, with the cooperation of the international union, the U.S. Attorney General’s office won a court order to rid the union of organized crime.
But according to the 1998 report, the Agathoses continued to operate behind the scenes through a series of presidents and local union officials they controlled. In order to counter this, a Federal Court in Trenton has just appointed Muellenberg, the former Justice Department investigator, to a four-year term overseeing the union’s revenues, payroll, operations and membership.
A historic union
The Local 69 is one of the older unions in the nation. Its international office started in Chicago in 1891 as the Waiters and Bartenders Union. In the 1940s and 1950s, the union had a membership of about 400,000. It adopted its present name, the International Union of Hotel and Restaurant Employees, at the 39th General Convention in 1981. Based in Washington D.C., it currently has a membership of 244,423.
“Criminal infiltration has been an ongoing problem with the union,” Muellenberg said in a 1998 report. “During the 1930s, a Special Commission on Crime headed by Thomas Dewey of New York revealed massive racketeering in the restaurant business in New York, including criminal influence in local labor unions. In 1958, the Select Committee on Improper Activities in the Labor or Management Field, chaired by United States Senator John L. McClellan, established that organized crime figures in Chicago, Illinois and elsewhere had assumed control of some local unions. Again in 1983, the Permanent Subcommittee on Investigations of the United States Senate conducted lengthy hearings that, again, indicated the influence of criminal elements in union affairs.”
On September 5, 1995, the United States Government filed suit against the International Union and its General Executive Board seeking equitable relief under the Racketeer Influenced and Corrupt Organizations (RICO) statute. The complaint alleged that “[f]or over 25 years, various members and associates of organized crime groups have exercised influence over the HEREIU and [its] various constituent entities.” The federal government claimed that the union showed “a pattern of racketeering activity.”
On September 5, 1995, the union and the government entered into a Consent Decree, which, among other things, agreed to rid the union of anyone connected with known crime families and to promote democratic practices in all of the locals.
“My office conducted reviews at the International Union’s headquarters and at 16 local unions,” Muellenberg said in his 1998 report. “The local unions were selected for review because of their location in an area or region historically known to be susceptible to the influence of organized crime. Others were reviewed as a result of specific allegations or known problems.”
Numerous problems found
In investigating various locals, Muellenberg said the international union had been very cooperative in submitting materials for his review and gave his staff unfettered access to records.
The report claimed that there was a lack of obedience by locals to their own by-laws, lack of quorums at general membership meetings, and failure to present expense sheets for membership approval or explanations as to how money was expended. The report showed that raises and bonuses to individuals in the union were often not voted on, and that personal expenses of officers were charged to union credit cards, including beverage expenses. In many cases, there was little or no documentation of the expenditures. And officers for locals received little or no training, the report said.
In the case of Local 69, Muellenberg noted that “severance and insurance programs are set up for the officers, which are not in the best interest of the membership” and that “Executive Board members have little or no understanding of their fiduciary obligation to ensure that the local’s funds are spent solely in the best interests of the membership.”
Federal authorities have apparently been monitoring the Agathoses’ residences off Radio Avenue in Secaucus for some time.
But the move to change leadership came after federal auditors found that the two Agathoses had received $524,000 in severance pay in 1996. The local also failed to account for about $300,000 in money spent on meals and other expenses. No charges, however, have been filed against either man in the case.
John won’t talk, sources say
Messages left at the union for John N. Agathos were unsuccessful, and in fact, discouraged by people close to the union, all of whom suggested he would not take well to questions about the union or other probes. No criminal charges have been filed in the union takeover. Both John N. and his son have been convicted in union-related violence in the past.
While no one from Local 69 would comment for attribution about the investigation, several agreed to talk about the probe if their names were not used.
Two members said John N. Agathos did request the severance package when he was forced out of the union in 1996. Local 69 officials apparently checked with international representatives for the union in Washington D.C. and got the go-ahead.
“Agathos thought he was entitled to the money,” one of the sources said. “The local got an international opinion in a letter.”
Shortly afterwards, another faction, apparently higher up in the organization, objected to the payment and ordered Agathos to pay the money back, which he did, according to two sources.
“He [John N. Agathos] had the money all of three months,” a source said.
John Wilhelm, president of the international union in Washington since 1998, told the Reporter that Local 69 was an exception in that most of the other locals have cleaned up their act over the last decade. The international did not object to the installation of a monitor, he said.
Secaucus Town Administrator Anthony Iacono was a member of Local 69 for 17 years until last year. He also served on the local’s Executive Board for about a year. “But I wasn’t on the executive board that gave the severance,” he said.
Iacono, who works as the host at Pegasus in the Meadowlands Sports Complex, said he resigned from Local 69 last year for reasons unrelated to the federal probe.
“I’ve never been questioned by the FBI or the international about it,” Iacono said.
Why did the Feds act now?
Although federal authorities have been monitoring the activities of Local 69 for years and in particular the Agathos family, some union people wondered why the government picked this moment to act. They suggested that the take-over of the union came because of the failure of the federal government to prove wrongdoing against the Agathoses in a late-1990s case involving a medical insurance operation. Federal authorities charged John N. Agathos and a doctor who was a Secaucus resident in 1996, claiming they and others had conspired to defraud the government and insurance companies through a company called Tri-Con. But they were never able to prove wrongdoing and the case was dropped.
This was part of a massive federal investigation during the 1990s designed to root out secret mobster partnerships to lawful industries such as food distribution, trucking, trash hauling, clothing manufacture, construction and entertainment.
Peter G. Verniero, then the attorney general of New Jersey, was part of the investigation into the medical scam allegedly hatched in Secaucus. Among the 12 people arrested was a doctor who was accused of submitting fraudulent medical claims for a union official who prosecutors said had links to the Genovese crime family.
In criminal complaints filed in the 1990s, prosecutors said that the Genovese crew influenced two unions in Northern New Jersey, Local 560 of the United Brotherhood of Teamsters in Union City and Local 69 of the Hotel, Restaurant and Bartenders Employees in Secaucus. John R. Agathos was named as one of the defendants.
The case fell apart in 2000 when the key witness, Nicholas Agathos – John N. Agathos’ son and a former Secaucus police officer – refused to testify in the case, according to the U.S. Attorney’s office and a state official.
Sources claim Nicholas had sought a deal with federal authorities for events unrelated to his father. Nicholas had been a key witness in the conviction of two Bergen County mobsters in 2000, according to law enforcement officials.
He was supposed to testify against suspected mobsters in Secaucus, Hoboken, Fort Lee and other parts of the state that same year, but suddenly refused to continue in the role as a witness for the state, according to officials.
At the same time he refused to testify against his father in the Tri-Con case, Nicholas Agathos also withdrew from the federal witness protection program, and – according to several sources in Secaucus – he is now in hiding.
Last year, Chuck Davis, a spokesperson for the state Attorney General’s Office, said Nicholas had refused to cooperate with investigators and had left the witness protection program on his own.
Deputy Chief David Brody, of the state’s organization crime and racketeering bureau, said at the time that he was at a loss to understand Agathos’ decision. He said he had warned Agathos against returning to his real identity.
According to sources in Hoboken and Secaucus, a mob contract has been taken out on Nicholas Agathos’ life.