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Insurance Company of New York and the Trans World Life Insurance Company of New York.

The trustees and the insurance companies agreed, "without conceding liability,” to pay the $200,000 to the insurance department, Superintendent Hartnett said. The department was then to transmit the money to the local's severance fund.

According to Insurance Superintendent Hartnett, the recovery was in response to the department's charges that, first, the trustees had imprudently bought excessively costly whole life insurance policies for severance fund members; second, the trustees had made these purchases upon the advice of Louis C. Ostrer but they had not bothered to check out his felonious past; third, the insurance companies had violated the insurance law by issuing individual policies without obtaining the individual member's written consent to having his life insured; and fourth, the commissions paid on the policies were "grossly in excess” of those permitted under the Code of Ethical Practices of the National Association of Insurance Commissioners.

The March 4, 1976 action ended the insurance department's proceedings against the 10 severance fund trustees and the two life insurance companies, Executive and Trans World.

However, the department noted, its proceedings against Louis Ostrer, Dina Gelman, Cy Reeves Snyder, Seymour Greenfield, Viscount Agency, Inc., and Fringe Programs, Inc., would continue, resuming March 15, 1976 in the department's offices in the World Trade Center Building No. 2 in New York City. These hearings were still in progress at this writing. The department hoped to be awarded the remaining $900,000 of the original $1.1 million it charged had been depleted from the Local 295 severance fund.

VIII. FINDINGS AND CONCLUSIONS

Investigation by the Subcommittee staff into the severance trust fund of Teamsters Local 295 showed that the fund and its life insurance feature were established and operated more to benefit the creator of the system-Louis C. Ostrer-and his associates than the workers.

The workers could have had cheaper and more practical insurance coverage and their severance trust fund could have been built and operated on a much sounder footing.

The two major drains on the severance fund were the huge commissions on the individual policies and the exorbitant administrative fees. Both of these resulted in handsome profits for Ostrer and his associates such as Mrs. Dina Gelman, Cy Reeves Snyder and Seymour Greenfield. These profits were gained at the expense of workers.

One example of how workers ultimately suffered was the Ostrer system of paying insurance benefits to beneficiaries. A worker's widow was given the choice of receiving one lump sum payment with a significant discount; or she could take the entire endowment in 10 equal payments across 10 years. Either way, the widow lost and the severance fund gained. But the fund required profitable procedures like this to compensate for the depletions caused by the high insurance commissions and administrative fees.

Another example of how Ostrer designed the severance pay-life insurance plan to benefit himself was seen in his arranging whole life policies for each of the 1,400 workers, rather than negotiating a more conventional and much less expensive--group plan.

The General Accounting Office estimated that commission costs would have been approximately $10,000--not $800,000—if the coverage had been group rather than individual whole life. Thus, the use of individual policies rather than the less expensive group plan cost the fund approximately an additional $790,000 in commissions.

Ostrer's intention was clear. Individual policies also meant many individual commissions for the agents and the agents were Mrs. Gelman, Ostrer's sister, and his close associates, Snyder and Greenfield.

Similarly, Ostrer saw to it that the same Mrs. Gelman was also awarded the job of administering the severance fund. Again, the returns were lucrative. Ostrer benefited from administrative fee profits, just as he profited from the insurance commissions.

It is apparent, then, that instead of being primarily increased compensation for workers, the fund served as a means for improperly obtaining monies from the severance trust fund. The excessive agents commissions and the administrative costs-and the very concept of whole life policies--were the avenues through which Ostrer, with Davidoff's concurrence, was able to extract hundreds of thousands of dollars from management at the expense of the workers.

A severance pay-insurance plan provides a wide variety of probably legal but certainly questionable methods for mobsters to obtain huge amounts of funds. À mobster who can speak for organized labor in

pursuit of an apparent legitimate union demand-such as a severance fund-enjoys considerable protection against detection and prosecution. That is one reason why organized crime has been attracted to the union movement for many years.

Accordingly, the investigation by the Subcommittee staff into the severance trust fund and life insurance benefit of Local 295 showed that the local's leadership continued to be infiltrated by persons associated with organized crime.

In the late 1950's and in 1960, the Select Committee on Improper Activities in the Labor or Management Field cited Local 295 as being run by racketeers. The Select Committee was, in effect, an arm of the Senate Permanent Subcommittee on Investigations. Some 16 years have gone by since the Select Committee examined Local 295. There was more than enough time for the Teamsters International to demand that Local 295 be cleaned up.

The mere fact that Harry Davidoff was able to stay on for so long a time as secretary-treasurer and principal leader of the local is sufficient evidence on its face to demonstrate that the corruption that was rampant more than a decade ago was not eliminated.

The Teamsters Union has never lived down the bad reputation it received in the public mind as a result of the activities of Dave Beck, James Hoffa and their associates. The International should be determined that each of its local chapters is run for the benefit of its members and certainly not be led by persons who are associated with organized crime. Hundreds of thousands of men and women who are law abiding members of the Teamsters throughout the nation deserve no less.

With specific reference to the severance pay-life insurance program of Local 295, the Subcommittee staff finds that:

(1) Louis C. Ostrer designed and managed the severance payinsurance program to make a lot of money for himself at the expense of workers and management.

(2) Ostrer should never have been allowed to participate in Local 295 affairs. Conscientious labor leaders would have noted his ties with organized crime and the fact that he had lost his agent's license in a criminal matter.

(3) The Executive Life Insurance Company of New York and the Trans World Life Insurance Company of New York, which provided coverage for Local 295 under the severance pay-life insurance program, should have refused to have any dealings with Ostrer because his license had been revoked in a criminal matter. A review of the charges levelled against Ostrer would have revealed his criminal past. By doing business with Ostrer, the two insurance companies showed that selling 1,400 insurance policies was more important to them than the ethical considerations of how the policies were being sold and who, in reality, was selling them.

(4) Abuses of the severance fund were of such consequence that the Permanent Subcommittee on Investigations is referring this staff study to the Senate Committee on Labor and Public Welfare. The potential for other abuses of severance funds may be seen in the Local 295 experience and this staff study may be helpful in citing the need for new legislation. Copies of this study are also being referred to the Internal Revenue Service, the Department of Labor, the Department of Justice and the headquarters of the International Brotherhood of Teamsters, Chauffeurs, Wareliousemen and Helpers of America.

APPENDIX I
[From the New York Post, Dec. 15, 1972)
THE LIFE & TIMES OF HARRY DAVIDOFF

was

(By Robert Garrett) The court-ordered gags on Harry Davidoff's past have been lifted, following the latest of his many confrontations with law-enforcement agencies. The story of the secretary-treasurer of Teamsters Local 295 can now be told.

The labor boss of Kennedy Airport was convicted last night of 21 separate violations of the Taft-Hartley labor relations law involving the use of his union position to get free airplane tickets. Each count carries a maximum one-year sentence.

He was acquitted of two more counts and an extortion charge was thrown out before the case went to the jury.

Davidoff, 55, a tough-looking, tough-talking man with a sixth-grade education, has been shot, arrested, questioned by Congressional panels and investigated by the FBI. His convictions, dating from the 1930s, include burglary, extortion and gambling. Numerous arrests for felonious assault with a knife, possession of a gun, grand larceny and extortion are listed on his record.

Only last year, Davidoff is said to have threatened a magazine photographer-telling him: "I could have you killed.”

The photographer took his picture anyway, perhaps not realizing that the union boss-in charge of hundreds of men handling cargo at Kennedy Airportonce closely linked to Murder Incorporated, the syndicate's killer squad.

Harry (Duff) Davidoff's crime career began in 1933, when he was 15. By 1943, when he and a brother were shot in a Brooklyn bar and grill, he had gained a fearful reputation and been arrested nearly a dozen times.

The first arrest resulted in a three-year suspended sentence for burglary. In 1940, Davidoff received a suspended sentence for attempted extortion and in the summer of 1943 he was picked up for policy and bookmaking. The bar shooting, police said at the time, was the result of a gang war in the Brownsville-Canarsie area over control of rackets. Davidoff and his brother, William, were said to be targets of a hired gunman. But Davidoff-who got one slug in his belly-survived.

In the early 1940s, when Davidoff was awaiting trial on charges of conspiracy to violate state banking laws, a madam to whom he had loaned $100 charged him with threatening her with death. Davidoff was sent off to jail for the madam's protection. The next day he was convicted on the conspiracy charge.

The burly gangster eventually found his niche. He moved from one union to the next in a variety of positions: once as secretary, another time as treasurer, then for a short period as president of Toy and Doll International, AFL, Local 130.

As the Toy and Doll boss, Davidoff was named a “trustee" of the union's welfare fund-until the State Insurance Dept. got wind of some expensive hankypanky with the fund's $58,344. In 1953, Davidoff quietly siphoned off $4600 for a new car and $225-a-week "salary," plus a weekly expense account of $75.

The SID investigation, which stemmed from the murder a year earlier of Thomas Lewis, labor czar at Yonkers Raceway, resulted in rapid union statements denying anything was wrong;

They also resulted in Davidoff's quick switch to another union.

JOINED TEAMSTERS IN 1960

In 1960 Davidoff made it into Teamsters Local 295, a union representing cargo handlers, truck drivers and other ground workers at Kennedy, the world's largest Cargo terminal.

When he arrived, mob chieftains Vito Genovese and John (Johnny Dio) Dioguardi were said to be in direct charge of the lucrative air freight business at Kennedy.

Davidoff quickly gained control of the union and in 1966, when an investigation into cargo thefts forced president John McNamara to quit, Davidoff became its boss.

Davidoff once boasted he could close the airport down "with a word.”

But under oath he was always very sparing with words, taking the Fifth Amendment instead.

NO TESTIMONY During one such episode, late in 1967, Davidoff faced the State Investigation Commission-probing charges of sabotage, bribery levied against the unionwithout a lawyer. "I'm not ready to give no testimony,” he said. “Without an attorney, I will give no testimony."

When he did appear with an attorney a week later, he took the Fifth Amendment scores of times, as did other mob bigwigs.

Last year, Davidoff was termed a "key organized crime figure" in testimony before a Senate rackets panel. The testimony, given in June, 1971, by James Landry, general counsel of the Air Transport Assn. of America, said:

“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 ..."

But Davidoff's time had come: In November, a sealed indictment charged him with extorting nearly $10,000 worth of tickets from Trans-Caribbean Airways over a period of five years, beginning in 1966.

SAID HE MADE THREATS

The 25-count indictment said Davidoff had threatened the airline with a multitude of labor troubles—including strikes--if they didn't give him free tickets, some of which he could pass on to family members. All but one count named specific instances of ticket use, each representing one year and/or a $10,000 fine.

The main charge extortion-carried a penalty of 20 years and a $10,000 fine.

The week-long trial, began Dec. 5 with defense attorney Michael Gillen showing a clipping from that day's Daily News to Brooklyn Federal Court Judge John Bartels.

The News story said Davidoff had long been "a target of local and federal law enforcement authorities' and linked the union boss to “the incursions by organized crime at JFK."

The lawyer said the statements were "prejudicial” to his client.

Judge Bartels agreed. Calling the reporter, Robert Kappstatter, before the bench, the judge threatened him and the News' editors with contempt, and said he would oust him from the trial if such stories continued.

CAN'T BE TRUSTED

The next morning, after only one witness was heard, the judge again criticized the press. To Kappstatter he said: "I see you can't be trusted."

Other newspapers, including The Post, had noted Judge Bartels' earlier admonitions and had run articles mentioning Davidoff's tarnished background.

The Post, the News and the New York Times were asked to promise not to publish any more information not brought out during the trial itself.

The Post, while declining to submit to any pre-censorship, agreed to abide by the state's voluntary Fair Trial-Free Press code and limit its coverage of the trial to the testimony alone. The Times, through counsel, argued that Davidoff's background was essential to its coverage of the trial. The News, also represented by an attorney, assured the court that Davidoff would get a "fair shake" in its stories.

Judge Bartels, meanwhile, listened to motions for a mistrial, a change of venue and sequestering of the jury. All were denied.

The jurors, polled by the court, all said they had not read any account of the trial in the papers.

Last Monday, when the trial resumed after a three-day adjournment, Judge Bartels again criticized the media for its coverage. He said an article in Newsday, which included Davidoff's arrest record along with other background information, was “prejudicial” to the defendant, and could result in a mistrial.

A mistrial, said Judge Bartels, would be “directly attributable to the prejudicial statements which might be made in the media"-newspapers, radio or television" that would interfere with the administration of justice.”

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