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APPENDIX II

[From the Sunday News, Feb. 25, 1973)
SWINDLER MAKES 250G BAIL BUT STILL WINDS UP IN JAIL

(By Paul Meskil) For financial finagler Louis C. Ostrer, it was a case of out of the frying pan, into the fire. Or, more specifically, out of Civil Jail and into the Tombs.

Ostrer, a convicted swindler whose pals include underworld bosses, wanted his freedom so much he put up $250,000 bail to get it. But it lasted only a few minutes. Rearrested for alleged violation of probation, he spent the weekend behind bars in the Tombs, Manhattan's House of Detention for Men.

His latest bout with the law began Thursday when he appeared in Manhattan Supreme Court as a material witness in a grand jury probe of organized crime. Assistant District Attorney John Fine asked Justice Jacob Grumet to hold Ostrer in $10 million bail because "his life is in danger."

“If this man is at large,” Fine added, “I have no doubt that he will be killed.” He said the roly-poly Ostrer "has important information' about a mob plot "to assault and murder a certain person.” Ostrer denied this.

"To say I have any knowledge of any wrongdoing is absurd,” he insisted. “To say that my life is in danger is absurd.'

Grumet set bail at $250,000 and sent Ostrer to Civil Jail until he could post the bond, which he did Friday. As he left the jail on W. 37th St., preparing to go home to 181 Kings Point Road in Great Neck, L.I., he was rearrested by officers bearing a warrant charging him with violating the terms of a 1969 probation agreement.

WAS “THE GREATEST" In June 1969, Ostrer pleaded guilty of stealing, forging and cashing $338,370 worth of checks belonging to his employer, Canada Life Assurance Association of Toronto, which had once called him "the greatest insurance salesman on the continent."

Placing Ostrer on five years' probation, Manhattan Supreme Court Justice Xavier Riccobono had said: "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 talents, these God-given talents, and incarcerate them by incarcerating you.”

Last month, Ostrer and Mafia Mobster John (Johnny Dio) Dioguardi were convicted in Federal Court of conspiring

to manipulate stocks. They were accused of plotting a $1 million stock swindle. They are to be sentenced March 13 and could get up to five years in prison.

At Thursday's court hearing, prosecutor Fine said Ostrer had information on big-time loan-sharking and was "indebted to known criminals” who run loanshark operations and have more than $75 million "out on the street" on any given day.

APPENDIX III

U.S. GENERAL ACCOUNTING OFFICE, APRIL 13, 1973
OFFICE OF LEGISLATIVE LIAISON-Roger SPERRY

REGIONAL MANAGER, NEW YORK-ALFONSO J. STRAZZULLO (Review of Plans, Programs and Financial Transactions Relating to the Severance

Benefit Trust Fund of Local 295 (Code 97518) We have completed the additional work requested by the Permanent Senate Subcommittee on Investigations and the results are included in the attached workpaper summary:

To recap, our review was primarily concerned with determining whether the plan is adequately funded to protect the rank and file of the Local's membership. We have satisfied ourselves that the severance benefits paid were in accordance with the rules and regulations of the fund. In addition, we have also reviewed the life insurance benefits paid for deceased employees and again are satisfied that the rules and regulations of the fund were compiled with.

Other matters that came to our attention concerning the administration of the fund have been enumerated in the attached workpaper summary.

If we can be of any further assistance to the Subcommittee on this matter, please let us know. The workpapers on this assignment are being retained in this office.

Attachment.

SUMMARY ON THE REVIEW OF THE SEVERANCE Trust Fund of Local 295 INTER

NATIONAL BROTHERHOOD OF TEAMSTERS

BACKGROUND

At the request of the Senate Permanent Subcommittee on Investigations, the GAO reviewed the Severance Trust Fund of Local 295, International Brotherhood of Teamsters. The review which was performed at the local's office near John F. Kennedy Airport consisted of an analysis of receipts and disbursements for the trust fund during the period December 1, 1970 through November 30,1972.

Local 295 has a membership of 1300-1400 individuals who are engaged in the trucking of air freight at John F. Kennedy Airport, New York, N.Y. The current union agreement which was negotiated for the three year period effective December 1, 1970 provides for the establishment of a Severance Trust Fund for the employees.

The agreement called for a contribution by the employees of $15 per employee per week during the first year of the contract with successive increases during the second and third year to $30 and $40, respectively. Upon severance, regardless of the reason, the employee shall receive what has been contributed in his behalf plus any increments that may have accrued on his behalf less his applicable portion of fund expenses and insurance premiums. However, the member is guaranteed that as a minimum he will receive what his employer contributed for him. For those employees who entered the program after December, 1970 and who subsequently terminated, the amount received would only represent a percentage of the amount contributed.

An insurance provision was added to the Severance Trust Fund which provided death benefits to the survivors of employees vested in the program. The program provides the beneficiary with the option of receiving the proceeds of the program over a stipulated period or taking the proceeds in a lump sum. The latter method considers certain downward adjustments to the face value of the policy.

Fringe Programs, Inc. was selected to be the administrator of the Local 295 STF. In addition to its function as administrator, it was authorized to negotiate the proposed life insurance with a duly licensed agent and to obtain the best terms and conditions available for the STF. Fringe Programs selected Cy Reeves Snyder to be the agent; subsequently, he was replaced by Dina Gelman.

Local 295 STF purchased insurance for its members from the first year contributions from Executive Life Insurance Co. of New York. This insurance was increased with the increase in contributions during the second year (beginning 12/1/71) by purchasing additional insurance from Transworld Life Insurance Co. These insurance policies were individual whole-life policies with the fund as beneficiary.

RESULTS OF REVIEW

Cash Receipts and Disbursements

Local 295 STF had receipts totalling $3,304,336 for the two-year period December 1, 1970—November 30, 1972. During the same period $2,156,171 was disbursed (not including interbank disbursements), resulting in a net cash balance of $1,148,165 at November 30, 1972.

Local 295 STF has had four checking accounts during the two-year period:

Bank

Account No. Period

Kings Lafayette.
Central State (regular account)
Central State (disbursement account).
Chemical Bank.

010031839 January to April 1971.
1-22953-6 April 1971 to September 1972,
1-22967-7 Do.
125007205 June 1972 to present.

When there were two Central State accounts, one was used for normal receipts and disbursements and another (“disbursement account”) was used to disburse payments to severed and deceased union members.

Sources and Applications of Cash

The major source of cash for the STF was employer contributions. These totalled $2,966,220 for the two year period December 1, 1970-November 30, 1972. The largest use of this cash was for insurance premium payments which totalled $1,531,234.

The following schedule shows the major sources and applications of cash:

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Significant receipts

(A) Employer contributions.-Employer contributions totalled $2,966,220 for the two-year period. Local 295 contributed $11,940 itself; local 295 STF as an employer contributed $1,815; and local 295 group welfare and pension fund contributed $12,950.

(B) Life insurance proceeds. For the period December 1, 1970-November 30, 1972, the STF received life insurance proceeds totalling $312,500 representing the collection of the face amount of policies on fifteen employees who died. As of November 30, 1972 benefits on twelve of these cases had been settled. These settled cases had face amounts totalling $250,750 and benefits of $192,244 were paid on them to beneficiaries. The difference of $58,505.55 was incorporated into the fund as income due to beneficiaries electing to take the life insurance in a lump sum (and, hence, receiving only a commuted or discounted value) instead of taking the full amount over a ten year period.

(C) Interest income.--Interest income totalled $11,876 for the two year period, This consisted of interest received on cash deposited in savings accounts and invested in certificates of deposit. Cash disbursements

(a) Premiums-Executive Life of N.Y. and Transworld Life Insurance Co. The local 295 STF disbursed a total of $1,531,234 for premiums on insurance policies to Executive Life of N. Y. and Transworld Life Insurance Co. Premiums were paid to these insurance carriers on a monthly basis,

A total of 27 checks were written to Executive Life of N. Y. totalling $1,014,571. A total of 13 checks were written to Transworld Life totalling $516,663.

(6) Life insurance benefits paid The local 295 STF paid $192,244 in life insurance benefits to beneficiaries of twelve union members who died. All of these payments were taken in a lump sum known as commuted value with the exception of one death claim.

(c) Severance benefits paid During the two year period ending November 30, 1972, the STF disbursed $175,764 in severance benefits to a total of 242 employees of Local 295 who terminated their employment. These members received as their severance benefit the amount of money contributed for them into the severance fund by their employers.

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(d) Administrative fees Fringe Programs, Inc. was paid a total of $148,198 for administration of the Local 295 STF through November 30, 1972. A total of six checks were paid to Fringe as follows:

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In addition, Fringe was paid a subsequent amount of $10,718.92 on January 16, 1973 for services rendered December, 1972-January 1973. This is probably the last payment to Fringe as it was terminated as administrator of the fund by the Trustees as of January 31, 1973.

(e) Rent The Local 295 STF paid a total of $6,196.00 for rent to the landlord of the building at 179-30 149th Avenue, the 146th Drive Property Corporation which in turn is owned by the Local 295 Employees Group Welfare Fund. A total of 15 checks were paid, the monthly rent being $359.80. The rent for the building is allocated among the five tenants of the building on a square footage basis. These five tenants are Local 295, Local 295 Group Welfare, Local 295 Pension Fund, Local 295 Severance Trust Fund, and Local 851. The Severance Trust Fund actually began paying rent in April, 1971, as it was only then that the above allocation was made.

(f) Legal The Severance Trust Fund has hired two attorneys, one representing the union trustees, Herbert Simon, and one representing the management trustees, Haskell Wolf. It pays each of them $750 a month. Through November 30, 1972 it has disbursed $18.017.50 to Herbert Simon (20 checks) and $18,000 to Haskell Wolf (20 checks). The extra $17.50 paid to Simon was for expenses incurred in serving a subpoena.

(g) Audit fees The STF's accountants, Finklestein, Goldstein and Rick were paid a total of $12,900 through November 30, 1972 (16 checks). They were paid $450 a month through April, 1972, at which time their retainer was increased to $750 a month.

(h) Wages A total of $15,990 was paid in_gross wages to the one bookkeeper the fund employs. Until July 1, 1972 Pat Barnett was the bookkeeper and she received $12,075 in wages ($9,540.30 in net salary paid in 69 weekly checks). She was succeeded by Marilyn Franchi whose gross salary totaled $1,575 paid over a nine week period through September 1, 1972 ($1,198.80 in net salary paid in nine weekly checks). From September 4, 1972 until October 4, 1972, the STF did not employ a bookkeeper. However, an employee of the Local 295 Group Welfare and Pension Fund, Diane Norton, worked her lunch hours and evenings to keep the STF records in order. She was subsequently reimbursed for these services by being paid a gross salary of $1,050 (net salary $725.40) on October 26, 1972.

On October 4, 1972, Roslyn Henry was hired as bookkeeper for the STF. She remains at present in this position. Through November 30, 1972 her gross salary was $1,290 ($1,045.42 in net salary paid in nine checks for nine weeks employment).

(2) Trustees' meetings stenographer Arnold Levy, stenographer for the Local 295 STF Board of Trustees Meetings, was paid $4,780.25 for recording and transcribing the minutes of 16 Trustees meetings. This amount was paid in sixteen checks, one after each meeting.

The union trustees' attorney for the STF informed us that there was no contract with Arnold Levy. Rather, the Fund pays Levy for his services provided his bills are considered normal and reasonable in his profession. Yet this criteria has resulted in the fund paying Levy $140 for 10 copies of 56 pages of minutes, while for the next meeting the fund paid $325 for 10 copies of 65 pages of minutes.

Cash balance

The Local 295 STF had cash totalling $1,148,165 at November 30, 1972. The following is a schedule of the cash items as of this date: Checking account (Chemical Bank).

$148, 165

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Grand total...

1, 148, 165 The $150,000 certificate of deposit (CD) issued by Banco Popular on April 28, 1972 was sent by the bank to the STF on May 1, 1972. Shortly thereafter, the custodian claims to have misplaced the CD. At this time the STF notified Banco Popular who assured them that they would honor the CD on its maturity date (April 23, 1973) by paying the proceeds only to STF. We have not been able to obtain any written confirmation of this statement.

A Banco Popular official told us that the CD is negotiable and that, should someone acquire it with the rights of a holder in due course, the bank might be forced to pay that person. The possibility that such a situation may occur casts considerable doubt on the value of the verbal assurance given to the STF.

The board of Trustees of the STF has not been informed of the loss of the CD.

All the remaining certificates of deposit and savings account books are merely kept in a draw of a file cabinet which is locked at night. Severance Benefits Paid

During the two year period ending 11/30/72, the STF disbursed $175,767 in severance benefits to 272 members.

According to the STF accountant and in accordance with the fund's existing rules and regulations, an employee upon severance receives as his benefit, the amount actually contributed by his employer. Should the employer be deficit in his contribution the benefits realized by the employee are adjusted accordingly.

In order to determine whether the severence benefits paid were computed in accordance with the rules and regulations of the fund, we reviewed severance benefits paid to a random number of separated employees. In addition, we reviewed the severance benefits paid to certain deceased employees. The discrepancy noted consisted of overpayments in some of the cases examined. In total the overpayments did not exceed $750. Life Insurance Benefits Paid

As at March 1, 1973 one death claim remained unsettled as a result of a dispute concerning the legal beneficiary.

As regards those claims that had been paid our tests revealed that the fund was paying the proper amounts to beneficiaries, using correct commutation rates, and maintaining adequate documentation concerning these claims. The only

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