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COMMITTEE ON GOVERNMENT OPERATIONS
ABRAHAM RIBICOFF, Connecticut, Chairman JOIN L. MCCLELLAN, Arkansas
CHARLES H. PERCY, Illinois HENRY M. JACKSON, Washington
JACOB K. JAVITS, New York EDMUND S. MUSKIE, Maine
WILLIAM V. ROTH, JR., Delaware LEE METCALF, Montana
BILL BROCK, Tennessee JAMES B. ALLEN, Alabama
LOWELL P. WEICKER, JR., Connecticut LAWTON CHILES, Florida SAM NUNN, Georgia JOHN GLENN, Ohio
RICHARD A. WEGMAN, Chief Counsd and Staff Director
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
HENRY M. JACKSON, Washington, Chairman JOHN L. MCCLELLAN, Arkansas
CHARLES H. PERCY, Mlinois JAMES B. ALLEN, Alabama
JACOB K. JAVITS, New York SAM NUNN, Georgia
WILLIAM V. ROTH, JR., Delaware LAWTON CHILES, Florida
BILL BROCK, Tennessee
HOWARD J. FELDMAN, Chief Counsel
Ruth YOUNG WATT, Chief Clerk
U.S. SENATE, COMMITTEE ON GOVERNMENT OPERATIONS, SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS,
Washington, D.C., May 10, 1976. To: All Members of the Permanent Subcommittee on Investigations. From: Senator Sam Nunn, Acting Chairman.
This staff study deals with the manner in which the severance trust fund and the fund's life insurance benefit were designed and managed for the Teamsters Local 295 in New York.
Information developed by the Subcommittee staff indicated that the severance trust fund and the fund's life insurance benefits were used by persons of questionable background to extract large amounts of money, contributed by management, that rightfully belonged to union members.
The life insurance purchased under the terms of the plan was individual whole life on each member. The whole life concept resulted in excessively high premiums and agent commissions. Administrative and legal fees were also excessively high. A more conventional group life insurance plan would have been far less expensive and the overall benefits to workers and their families far greater.
While this staff study concerns itself solely with the severance trust fund-life insurance benefit of Local 295, independent inquiry by the Subcommittee staff has revealed that similar fringe benefit plans have been designed for other union locals.
It is my view that the potential for abuse in the severance fund area is a subject requiring further examination by the Congress and the Department of Labor. Accordingly, as part of this Subcommittee's jurisdiction to make inquiry into alleged irregular practices in the labor or management field, the staff is continuing its investigation of severance trust funds and related fringe benefit programs in other union locals.
Copies of this staff study are being referred to the Departments of Labor and Justice, the Internal Revenue Service, and the Headquarters of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
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An agreement is reached
The potential for rapid growth of severance funds_
Senate committee investigates Teamsters in 1950's.
The seven "paper" locals and their leaders.
Harry Davidoff's police record...
Ostrer's link with organized crime....
The air freight industry in New York.
Details of the severance plan-insurance benefit.-
Without agent's license, Ostrer relied on others.
Third-year advances are returned..
Subcommittee asks actuaries to examine fund.
The Belmont stock case..
Reforms are implemented in fund.
April 18, 1974 citation...
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APPENDIXES I. New York Post article headlined, "The Life & Times of Harry Page Davidoff,” December 15, 1972-
37 II. New York Daily News article headlined, "Swindler Makes
250 G Bail But Still Winds Up in Jail,” February 25, 1973... 39 III. U.S. General Accounting Office document of April 13, 1973
entitled, “Review of Plans, Programs and Financial Transac-
39 IV. Affidavit of Otto Forst, May 31, 1972.
44 V. U.S. General Accounting Office study of Local 295 severance trust fund, dated May 21, 1973..
49 VI. Report on Local 295 severance trust fund, dated June 25, 1971,
prepared for the Senate Permanent Subcommittee on Investi-
98 VII. Findings of Fact, Conclusions and Decision by the New York
State Insurance Department, dated October 4, 1967, regard-
State Insurance Department concerning Louis Ostrer... 106 VIII. New York Insurance Department Report of Examination of
Local 295 Severance Trust Fund as of June 30, 1971, No.
108 IX. Subcommittee memorandum of November 23, 1971 entitled,
"Interview of Cy Reeves Snyder re Louis Ostrer and Sever-
117 X. Check No. 6592, dated December 17, 1970 drawn on the account
of the Executive Life Insurance Company of New York,
119 XI. Memorandum, dated December 10, 1970, from Harry O. Miller to Otto Forst.
122 XII. Norbert F. Lochner affidavit, June 12, 1972.
122 XIII. Check No. 610, dated March 1971, drawn on the account of
Executive Life Insurance Company of New York, payable