Feds find wrongdoing at national Culinary Union

Steven Greenhouse

Monday, Sept. 28, 1998 | 11:10 a.m.

A court-appointed monitor has found widespread financial wrongdoing in the Hotel Employees and Restaurant Employees Union, a group that has long been linked to organized crime, attacking its former president in particular for using union money for personal activities, such as flying his wife to Palm Springs, Calif.

The Hotel Employees and Restaurant Employees Union is better known in Las Vegas as the Culinary Union. It represents Las Vegas hotel-casino workers and is a political force with 35,855 members.

The federal monitor, Kurt Muellenberg, issued a stinging report late Friday that repeatedly faulted the former president, Edward Hanley Sr., who recently resigned. The report noted that Hanley had put relatives on the union payroll and had the union lease a luxury apartment for him that he rarely used.

Muellenberg described a union that was out of control, lacking financial controls and dominated by a man who milked the union treasury to finance a lavish lifestyle and reward his friends.

Muellenberg, who was appointed to root out wrongdoing and organized crime links from the union, forced Hanley to resign on July 31. Although Muellenberg charged more than a dozen lesser officials with links to organized crime, he did not accuse Hanley or other top former or current officers with such ties.

Hanley has repeatedly insisted that he has done nothing wrong and that he retired voluntarily. But Muellenberg pressured Hanley to step down after accusing him of using the union's airplane for personal travel and of having the union lease a Cadillac Allante, a two-seat convertible, and other luxury cars at inflated rates to enable him to buy the cars at a heavy discount when the leases ended. Muellenberg said he agreed to drop his charges against Hanley in exchange for the union official's agreement to retire and to pay back $13,944 relating to his purchase of leased vehicles.

The monitor also accused Hanley of having a $31,000 no-show job at the union's Chicago local, which was run by his son. He was also charged with giving a friend a $48,250-a-year job at a fraudulent local he set up in Wisconsin, near his vacation home.

Muellenberg, former head of the Justice Department's Organized Crime Strike Force, wrote, "The thousands of hard-working men and women members of this union deserve better leadership."

The report comes at an awkward time, embarrassing the 244,000-member union just as the president who succeeded Hanley vowed a new and cleaner chapter in the union's history.

The new president, John Wilhelm, who has a reputation as one of the nation's most successful union organizers, faulted the report for focusing on the negative. He said the report wrongly ignored the union's leadership in organizing thousands of workers in Las Vegas, and elsewhere and in developing innovative organizing tactics.

"It's very important to remember that this monitorship was always about organized crime," Wilhelm said Friday night. "The report verifies that with respect to former president Hanley, the former general officers and the current general officers, there is no organized crime problem. The principal reason we entered into this was to put that allegation, which has dogged us for decades, behind us. It's fundamentally important for the future of this union that this is behind us."

The hotel workers union, along with the teamsters, longshoremen and laborers, has been considered one of the four unions most closely tied to organized crime. Muellenberg was appointed monitor in 1995 as part of a consent decree the hotel employees signed to settle a federal racketeering lawsuit accusing the union of being influenced by mob figures.

Muellenberg's report contained a cavalcade of criticisms. He found that only one of the union's five auditors had a degree in accounting. He said it was wrong for the union to provide leased cars to consultants, especially when he found no paperwork showing what work the consultants had performed.