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Thanks for the update. These union thugs leaders are something else.

In 1998 and 1999, Mr. Georgine secretly offered directors and officers exclusive opportunities to purchase a total of 8,000 shares of ULLICO stock before the annual adjustment of its stock price was made. (Union pension funds, which held the vast majority of ULLICO's stock, were virtually shut out of the surefire get-rich-quick scheme.) In a Dec. 17, 1999 confidential memo, for example, Mr. Georgine offered the union directors and officers the opportunity to purchase 4,000 shares of ULLICO stock at $54 per share. Global Crossing closed at $52.56 (nearly two-and-a-half times its year-earlier price of $22.50) on Dec. 16, 1999, the day before Mr. Georgine wrote his confidential memo. Thus, it was a certainty that ULLICO's share price would soar when it was reassessed two weeks later. As it happened, the ULLICO shares purchased for $54 jumped in value to $146 after the annual share-price adjustment.

In March 2000, however, Global Crossing's stock price began to fall. By December 2000, it had plummeted below $15 a share. Global Crossing's collapse would adversely affect ULLICO's share price in a very big way. (But, not to worry if you were a ULLICO officer or director.) During December 2000 and January 2001, ULLICO repurchased more than 200,000 shares from its union-boss directors and officers at $146 per share. Shares purchased by the bosses a year earlier at $54 were redeemed at $146, yielding a profit of nearly $100 per share, even though Global Crossing's share price had plunged, necessitating a huge markdown in ULLICO's share price. Mr. Georgine netted a pre-tax profit of $840,000, while Mr. McCarron collected $420,000. Mr. Maddaloni reportedly pocketed nearly $250,000.

BACKSTORY BACKSTORY BACKSTORY BACKSTORY BACKSTORY

LaborTalk for January 29, 2003 / www.laboreducator.org

Investigators Subpoena ULLICO Records; Union Leaders on Board Back Coverup By Harry Kelber

The ULLICO insiders’ stock-trading scandal has become a time-bomb waiting to explode, and when it does, it will damage the reputations of more than a dozen national union leaders and the labor movement itself.

The latest group to investigate the union-owned insurance company is the Maryland Insurance Administration, which has subpoenaed its records, including a highly critical report of ULLICO’s board of directors by former Illinois Gov. James Thompson.

Thompson was hired by the company’s directors last May to conduct an internal investigation, after their self-enriching stock scheme became public and drew the attention of a Washington grand jury. Thompson interviewed some 50 individuals and examined thousands of documents over a period of several months.

To the surprise of the directors, who had expected a whitewash, Thompson’s 70-page report was highly critical, suggesting they return a total of more than $6.5 million of the profits they gained from their insiders’ stock transactions.

The company’s directors are under fire because they gave themselves the privilege of buying up to 4,000 shares at $53.04 each and then selling them back to the company at $146 a share. And then when they knew that the stock was going to slump to $75, they resold their shares to the company at $146 a share. Union pension funds were excluded from this lucrative deal.

Robert Georgine, ULLICO’s president and chief executive officer, is refusing to release the Thompson report on the grounds that it is protected by attorney-client privilege. Georgine was president of the AFL-CIO Building and Construction Trades Department for 25 years, part of which he also served as ULLICO’s chief officer.

Georgine, who created the shady stock scheme and allegedly pocketed several million in profits, is supported by a majority of the board, consisting mostly of current and retired national labor leaders who were given seats on the board by Georgine because they are his cronies.

Anger Rising Within AFL-CIO Unions

The ULLICO scandal was kept hush-hush within the labor movement for many months until Dec. 2, 2002, when AFL-CIO President John Sweeney and Frank Hanley, president of the International Union of Operating Engineers, resigned as directors in protest against Georgine’s refusal to release the Thompson report.

Since then, there has been mounting resentment from pension fund shareholders, demanding that Georgine and board members return the profits they made from their stock-trading scheme. Douglas McCarron, president of the United Brotherhood of Carpenters, said he would return to ULLICO an estimated $276,000 which he said he made in profit as one of the board directors.

Several international union presidents are considering whether to introduce a resolution calling for Georgine to resign and that the Thompson report be made public, when the AFL-CIO Executive Council meets Feb. 25-27 in Hollywood, Fla.

ULLICO lawyers argue that Georgine and other board members did nothing wrong in profiting from buying and selling company stock, which, they say, is fairly common in privately-held firms.

The stock scandal is the subject of other investigations. The U.S. Labor Department is conducting an independent inquiry to determine whether the union leaders on the board, in their management roles, breached their fiduciary responsibilities to their own union pension funds.

The anti-union National Right to Work Legal Defense Fund has also asked for an investigation of ULLICO’s activities by the National Labor Relations Board, and the Securities and Exchange Commission has questions it wants answered by the company’s directors.

Here is a list of current international union presidents who have decided to remain on the ULLICO board and are going along with Georgine’s efforts to keep the Thompson report under wraps:

Morton Bahr, president, Communications Workers of America; Frank D. Hurt, president, Bakery, Confectionery and Tobacco Workers; Earl J. Kruse, president, United Union of Roofers and Waterproofers; James LaSala, president, Amalgamated Transit Union; Martin J. Maddaloni, president, United Association of Pipefitters; Terence O’Sullivan, president, Laborers’ International Union; Eugene Upshaw, president, Federation of Professional Athletes; and John W. Wilhelm, president, Hotel Employees and Restaurant Employees.