By controlling Council 16, then, Hoffa could have exercised significant influence over the course of organized labor in the New York area. Hoffa would also have become pre-eminent in the ability of New York, America's biggest city, to survive.9

FORMATION OF THE "PAPER" LOCALS

Hoffa, who was a vice president of the Teamsters International wished to take over Joint Council 16 at the same time labor racketeers and organized crime figures had designs on the Council.10

The two groups-the Hoffa loyalists and mobsters-entered into an alliance. Together they formed seven locals. With these new locals, Hoffa and his allies hoped to outnumber-and out vote-existing locals in Joint Council 16."

The new locals-Nos. 295, 275, 651, 258, 269, 284 and 362-were "paper" organizations at the start since they lacked members.12

THE UNION PHILOSOPHY OF THE RACKETEERS

The racketeers whom James Hoffa allied with in the mid-1950's were not newcomers to the labor movement. Two of them, in factAnthony (Tony Ducks) Corallo and John (Johnny Dio) Dioguardi— were well established labor racketeers.

Corallo had long been considered by law enforcement authorities to be one of the most powerful underworld figures in New York. His principal pursuits were in illicit narcotics and labor rackets.

Corallo acquired the nickname of "Tony Ducks" because of his ability to escape convictions when arrested. His police file showed 12 arrests but only one conviction, a six months sentence in 1941 for unlawful possession of drugs.13

Dioguardi, or Johnny Dio, had 12 arrests and three convictions--for extortion, for extortion and conspiracy, and for tax evasion-and, like Corallo, was also active in the labor movement. He was a regional director of the United Auto Workers-American Federation of Labor (UAW-AFL) locals in New York.14

14

Corallo and Dioguardi and their associates eagerly betrayed the interests of union members in return for money and power for themselves.15

The Select Committee exposed many instances when Corallo and Dioguardi unions entered into collusive contracts which called for wage rates lower than the national minimum wage enacted by Congress. In other instances, workers were forced to join unions not of their own choosing or made to work in sweatshop conditions in bitter cold. or extreme heat. They were often passed around from one union to another.

Witnesses from both labor and management testified about illegal and strongarm tactics used by unions controlled by Corallo, Johnny Dio and their criminal associates. Workers told Senators how they were ordered to join corrupt locals or face the threat of being fired.

• Ibid.

10 Ibid.

11 Ibid., p. 163.

12 Ibid., p. 199. 13 Ibid., p. 173.

14 Ibid., pp. 167, 170.

15 Ibid., pp. 162-221.

They told of union contracts negotiated in secret, contracts that gave them miniscule raises and no vacations, no seniority rights, no welfare benefits and only two, three or four holidays a year.

Workers found themselves afraid of their own union. They were not given copies of the contracts they worked under. Their business agents were not known to them. Union meetings were rarely held. Elections were unheard of.16

THE SEVEN "PAPER" LOCALS AND THEIR LEADERS

The plan to take over Council 16 was implemented. The five UAWAFL locals controlled by Johnny Dio were transferred into the Teamsters November 8, 1955. The same day two existing Teamsters locals were split up and two new locals were created." The seven new locals had seven votes each for a total of 49, margin enough, Hoffa hoped, to elect a Council president of his choosing.

Although the subsequent election was later voided in court, 42 of 49 new votes were cast for Hoffa's candidate.18

The Select Committee on labor-management rackets found that the Corallo-Dio labor mob the Teamsters now housed included 40 men in positions of trust who, among them, had been arrested a total of 178 times and convicted 77 times for crimes such as theft, violations of narcotics laws, extortion, conspiracy, bookmaking, use of stench bombs, felonious assault, robbery, possession of unregistered stills, burglary, violation of gun laws, being an accessory to murder, forgery, possession of stolen mail and disorderly conduct.19

One of these men was Harry Davidoff, a convicted felon with a record of 12 arrests going back to 1936.20 Davidoff had been an officer in the UAW-AFL Local 649, an organization Johnny Dio used as his headquarters. With the changeover to the Teamsters, Dio named Harry Davidoff head of Teamsters Local 258.21 Davidoff later was reassigned to run the affairs of the newly created Teamsters Local 295. It was as secretary-treasurer and principal leader of Local 295 that Davidoff, in 1970, got into the severance fund business with Louis Cuple Ostrer.

16 Ibid.

17 Ibid.

18 Ibid., pp. 210, 211.

19 Ibid., p. 167.

20 Ibid., p. 170.

21 Ibid., p. 199; exhibit facing p. 202.

III. CRIMINAL BACKGROUNDS OF HARRY DAVIDOFF AND

LOUIS OSTRER

HARRY DAVIDOFF'S POLICE RECORD

A New York newspaper once described Harry Davidoff as a "tough looking, tough talking man with a sixth grade education" who had been "shot, arrested, questioned by Congressional panels and investigated by the FBI." 22

Similarly, the Subcommittee found Davidoff to be a ruthless New York thug, a gangster who gravitated to the labor movement for no other reason than to steal from it.

Harry Davidoff's crime career began in 1933 when, at the age of 15, he was arrested for burglary. He was sentenced to three years probation.23

From 1934 to 1939, Davidoff was arrested-but not convicted-for felonious assault with a knife, possession of a gun, grand larceny and robbery.

In 1940, Davidoff received a suspended sentence for attempted extortion. He was convicted and fined $25 for bookmaking in 1943.

It was also in the 1940's that Davidoff moved into the leadership of organized labor as he went from positions of responsibility in one local to another in the New York area.

In one of his jobs-as president of the AFL Local 130, Toy and Doll Workers-Davidoff became a trustee of the welfare fund. The New York Insurance Department found that Davidoff had siphoned off $4,000 from the fund for a new car for himself and was paying himself $225 a week from the fund as well as taking $75 a week from it for

expenses.

When his payments from the welfare fund came to light, Davidoff left the Toy and Doll union and went to other unions and other positions of trust, eventually finding his way into Johnny Dio's UÂWAFL Local 649 and then into the Teamsters' "paper" locals November 8, 1955.

HARRY DAVIDOFF APPEARS BEFORE THE SELECT COMMITTEE

On August 14, 1957, Harry Davidoff, under subpoena, appeared before the Select Committee on labor-management rackets.

The Chairman, Senator John L. McClellan of Arkansas, and his Chief Counsel, Robert F. Kennedy, questioned Davidoff extensively about his activities in the labor movement.

To each question, Davidoff refused to respond, invoking 45 times his 5th Amendment right not to testify because his answers might have incriminated him.2 24

New York Post article headlined, "The Life & Times of Harry Davidoff," December 15, 1972, p. 2. (See Appendix I.)

Interim Report of the Select Committee, March 17, 1958, p. 170.

24 Hearings before the Senate Select Committee, part 12, August 14, 1957, pp. 4523-4532.

71-542-76

THE TESTIMONY OF JAMES A. LANDRY

James A. Landry, the general counsel of the Air Transport Association of America, testified before the Senate Permanent Subcommittee on Investigations June 24, 1971 on the subject of airport security.25

The hearings at which Landry testified were in connection with the Subcommittee's investigation of the role of organized crime in the worldwide traffic in stolen securities. Many of these securities are stolen from mail bags at major airports.

Landry said the airlines, deeply troubled by airport thievery, had formed an Airport Security Council in 1968 and that, due to the Council's efforts, some progress had been made in controlling the number of thefts.

Landry said thievery at the John F. Kennedy International Airport was still very high but that statistics showed the crime rate to be declining. Thefts and losses in 1969 at JFK were $3.4 million, Landry said, but in 1970 they dropped to $1.4 million.

In addition, Landry said an Airport Security Council study found that the major gangsters involved in thievery from New York airports were out of circulation now, having been convicted of federal crimes. All the "principal hoodlums" in airport thievery had been caught, Landry said-except one, Harry Davidoff. Landry's Airport Security Council concluded that "Harry Davidoff is the only remaining key organized crime figure associated with JFK Airport who has not been arrested as a result of investigations conducted by federal and local law enforcement authorities with the cooperation of the air cargo industry." 26

THE CRIMINAL RECORD OF LOUIS C. OSTRER

Louis Cuple Ostrer had come to Harry Davidoff with the idea for the severance pay-life insurance plan in 1970. In the 1960's, Ostrer was alleged to have stolen several hundred thousand dollars from the Canada Life Assurance Company. He was caught, charged with grand larceny, found guilty and given a five-year suspended sentence. His license to sell insurance would have been revoked but the State of New York had already done that.

As an agent for the Canada Life Assurance Company, Louis Ostrer sold to the Allmetal Screw Products, Inc., Garden City, New York, insurance policies on the lives of several of the firm's executives.

In 1964, Ostrer convinced the corporation's officials that it would be to their advantage to prepay for several years the future premiums. on 12 policies. As a result, Allmetal drew 12 checks on March 10, 1964, all to the order of Canada Life Assurance Company. Two of these checks were for $60,810.28 and the other 10 were for $25,772.13 each.

The 12 checks, which totalled $379,341.86, were delivered to Ostrer.

It was alleged that Ostrer altered the checks by adding the phrase "Louis C. Ostrer Associates Agents for" just before the words "Canada Life Assurance Co."

25 Hearings before the Senate Permanent Subcommittee on Investigations entitled "Organized CrimeStolen Securities," part 2, June 24, 1971, pp. 376–420.

20 Ibid., pp. 378, 379.

Ostrer took six of the checks which were for $25,772.13 each to Henry Brown, a broker who operated the midtown Commercial Corporation at 301 West 39th Street in New York. Brown cashed the checks for Ostrer.

Some three years later-in February and March of 1967-Ostrer advised Canada Life that Allmetal wanted to take out loans on the policies it held on its executives. Canada Life recieved formal requests from Ostrer which bore the forged corporate seal of Allmetal and the forged signature of Allmetal officers.

The Canada Life Assurance Company forwarded to Ostrer checks totalling $396,000. Ostrer was found out but not before he had cashed eight checks worth $338,000.27

Charged with grand larceny of some $300,000, Ostrer pled guilty and received a suspended sentence.28

Canada Life Assurance conducted an investigation into Ostrer's activities while he represented the insurance company. The investigation showed that Ostrer's larcenies from Canada Life were not limited to the approximately $700,000 from the 1964 and 1967 thefts. It was asserted that Ostrer's larcenies from the Canadian firm actually were more than $1.2 million.2

29

As for the $300,000 which Ostrer pled guilty to having stolen, the sentencing judge-Manhattan Supreme Court Justice Xavier C. Riccobono-gave Ostrer five years' probation and ordered him to make restitution. Then the judge explained why he was not sending Louis Ostrer to jail.

Justice Riccobono said to Ostrer:

It would appear that almost any venture you undertake, obviously because of those talents and gifts that have been given to you by the Almighty Himself, seems to enable you to convert almost anything into a very successful enterprise. It is inadvisable, under these circumstances, for the court to take these Godgiven talents and incarcerate them by incarcerating you.30

In addition to the Allmetal case, Ostrer was arrested July 6, 1967 by New York police for possession of $20,000 in stolen municipal bonds. No conviction resulted from this arrest.31

On January 4, 1973, trial was held in federal court in the Southern District of New York in which Ostrer and John Dioguardi were charged with conspiracy and stock fraud in connection with the manipulation of stock of the Belmont Franchising Corp. The case was prosecuted by Assistant U.S. Attorney Harold McGuire, Jr. Ostrer and Johnny Dio were convicted. More details of this case are presented later in this staff study, beginning on page 29.

OSTRER'S LINK WITH ORGANIZED CRIME

Harry Davidoff's association with organized crime was a long established fact. He was Johnny Dio's man in labor rackets and law enforcement agents had so identified him for many years.

27 Investigation Report concerning Louis Ostrer prepared by the Probation Department, New York County, Case No. 5333/68.

28 Ibid.

29 Ibid.

20 New York Daily News article headlined, "Swindler Makes 250G Bail But Still Winds Up in Jail," February 25, 1973. (See Appendix II.)

31 Investigation Report, New York County.