CONTENTS I. Introduction__ An agreement is reached Origin of investigation and subcommittee's jurisdiction... Page 1 1 III. Criminal backgrounds of Harry Davidoff and Louis Ostrer.. Harry Davidoff's police record... Harry Davidoff appears before the Select Committee_ The testimony of James A. Landry....... The criminal record of Louis C. Ostrer.. Ostrer's link with organized crime.. IV. Local 295 severance trust fund.. The air freight industry in New York. The Local 295 contract proposal. Louis Ostrer promotes severance pay plan. Details of the severance plan-insurance benefit V. Commissions on the insurance policies-- Without agent's license, Ostrer relied on others. Fringe Programs, Inc.... Executive Life Insurance pays advance commissions. The loans are guaranteed... Forst, Lochner sign checks.. Trans World takes over the 295 account_ Trans World pays commission advances 20 20 21 22 Henry Brown cashes checks for Ostrer.. The Kings Lafayette Bank check is explained. VI. Evaluations of the severance pay-insurance plan. A critique of the Ostrer concept. Letters are not answered.. The Belmont stock case.. VII. Corrective actions and related events.. Reforms are implemented in fund. James Hoffa's book____ Reader's Digest article.. April 18, 1974 citation.. VIII. Findings and conclusions___. 22 23 24 25 25 25 26 28 28 29 29 32 32 32 32 33 35 APPENDIXES I. New York Post article headlined, "The Life & Times of Harry II. New York Daily News article headlined, "Swindler Makes IV. Affidavit of Otto Forst, May 31, 1972. V. U.S. General Accounting Office study of Local 295 severance trust fund, dated May 21, 1973_ VI. Report on Local 295 severance trust fund, dated June 25, 1971, prepared for the Senate Permanent Subcommittee on Investigations by Lawrence M. Hyman, Supervising Examiner, New York State Insurance Department; George Perla, Senior Examiner, New York State Insurance Department; and Herbert L. Feay, Assistant Director and Actuary, U.S. General Accounting Office_-_ VII. Findings of Fact, Conclusions and Decision by the New York State Insurance Department, dated October 4, 1967, regarding Louis Ostrer, Samuel Schienhaus and Seymour Greenfield; press release, dated December 22, 1967, issued by New York State Insurance Department concerning Louis Östrer.___ VIII. New York Insurance Department Report of Examination of Local 295 Severance Trust Fund as of June 30, 1971, No. 0-232-0295_ IX. Subcommittee memorandum of November 23, 1971 entitled, X. Check No. 6592, dated December 17, 1970 drawn on the account XII. Norbert F. Lochner affidavit, June 12, 1972... Page 37 39 39 44 49 98 106 108 117 119 122 122 124 XIV. Check No. 443, dated February 22, 1971, drawn on the account of Executive Life Insurance Company of New York, payable to Dina Gelman, in the amount of $25,000; Check No. 1466, dated May 14, 1971, drawn on the account of Executive Life, payable to Dina Gelman, in the amount of $5,671.88; and cashier's Check No. 2610093, paybale to Dina Gelman pursuant to instructions of Executive Life, in the amount of $20,000. XV. Affidavit of Russell J. Lasher, August 30, 1972. XVI. Affidavit of Joseph J. Warren, June 19, 1972. XVII. Check No. 20522, dated September 22, 1971, drawn on the account of Trans World Life Insurance Company, payable to Viscount Agency, Inc., in the amount of $25,000; Check No. 20523, dated September 22, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $25,000; Check No. 20919, dated October 8, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $15,000, Check No. 20920, dated October 8, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $15,000; Check No. 21145 dated October 18, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $20,000; Check No. 22152, dated November 29, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $10,000; and Check No. 22169, dated November 30, 1971, drawn on the account of Trans World Life, payable to Viscount Agency, in the amount of $30,000- - - XVIII.Check No. 22191, dated December 1, 1971, drawn on the account of Trans World Life Insurance Company, payable to Dina Gelman Agency, in the amount of $100,000; Check No. 22253, dated December 3, 1971, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $60,000; Check No. 22709, dated December 17, 1971, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $40,000; Check No. 22969, dated January 4, 1972, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $30,000; Check No. 23072, dated January 6, 1972, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $70,000; and Check No. 23144, dated January 10, 1972, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $20,000.. Page 126 128 129 133 135 XIX. Separate affidavits of Henry Brown, dated December 9, 1971; June 16, 1972; July 28, 1972; and September 8, 1972. 138 146 XX. Affidavit of Michael McEnroe, July 14, 1972.. XXII. Statement of Kings Lafayette Bank in which Seymour Greenfield XXV. Separate Kings Lafayette Bank statements closing out the account of the Modern Agency, Inc., care of Seymour Greenfield; and the personal account of Seymour Greenfield, both closings dated February 22, 1971... 147 150 150 151 154 XXVI. Check No. 23345, dated January 14, 1972, drawn on the account of Trans World Life Insurance Company, payable to Dina Gelman Agency, in the amount of $50,000; and Check No. 23709, dated January 27, 1972, drawn on the account of Trans World Life, payable to Dina Gelman Agency, in the amount of $25,000XXVII. Letter of April 24, 1972 from Joseph J. Warren to Dina Gelman XXVIII. Check No. 124, dated April 26, 1972, drawn on the account of Dina Gelman Agency, payable to Trans World Life, in the amount of $25,000; and Check No. 125, dated April 26, 1972, drawn on the account of Dina Gelman, payable to Trans World Life, in the amount of $50,000- Page 156 157 158 XXIX. Separate letters each dated March 30, 1973, from Howard J. 159 159 XXX. Letter of January 16, 1973, from Michael Hunt to Fringe XXXI. Subcommittee memorandum of February 21, 1973, entitled, XXXII. Amendment to Local 295 Severance Trust Fund, effective XXXIII. "The Mafia Tightens Its Grip on the Teamsters" by Lester Velie, Reader's Digest, August 1974.. XXXIV. State of New York Insurance Department Citation regarding XXXV News release of the State of New York Insurance Department 160 160 161 165 173 I. INTRODUCTION AN AGREEMENT IS REACHED Harry Davidoff and Louis Cuple Ostrer were men with different backgrounds. Davidoff was a tough, plain spoken labor leader who had grown up on the streets of New York. Ostrer, who had come to the United States from his native Rumania, was an insurance executive with a penchant for abstract thought and for making complicated actuarial theories easy to understand. But in the fall of 1970 these two men who seemed to have so little in common came together and made an agreement. Their plan was simple enough. Davidoff would use his considerable influence as secretary-treasurer of Teamsters Local 295 to persuade his membership to adopt Ostrer's new concept of severance pay and life insurance for workers. The plan was accepted. In December of 1970, the union contract contained a severance fund provision and Louis Ostrer was put in charge of managing the fund as well as overseeing the insurance feature. However, the agreement between Davidoff and Ostrer-and the severance fund-life insurance program that resulted from it-set off controversy and raised serious questions. Soon the severance fund-life insurance plan became the subject of inquiry by the Senate Permanent Subcommittee on Investigations. In addition, Harry Davidoff and Louis Ostrer themselves became subjects of Subcommittee inquiry. For, in spite of their differing backgrounds, they did have some things in common. They were both felons. They both had ties with organized crime. And neither of them should ever have been entrusted with responsibility for millions of dollars in labor-management trust funds. Although no hearings were held, the staff completed its investigation and compiled its case. What follows is the study by the staff of the Senate Permanent Subcommittee on Investigations of the severance trust fund and its life insurance benefit of New York Local 295 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America. ORIGIN OF INVESTIGATION AND SUBCOMMITTEE'S JURISDICTION The Senate Permanent Subcommittee on Investigations of the Committee on Government Operations is, by present and past Senate resolutions, authorized to examine alleged criminal activity in labormanagement relations. In February of 1971, the Subcommittee began a preliminary inquiry into the severance fund of Teamsters Local 295. The Subcommittee's interest in Teamsters Local 295 was prompted by information which alleged that the local's severance trust fund was being managed with questionable procedures and policies. |