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Invisible Enterprise, Part 4 - The Most Abused, Misused Pension Fund in America

NCJ Number
FORBES Dated: (November 10, 1980) Pages: 69-72,77,80,82
J Cook
Date Published
7 pages
As part of a series on organized crime's infiltration of business, this article traces the involvement of the mob in the Teamsters Union's Central States Pension Fund (CSPF) from abuses by Jimmy Hoffa to current efforts by independent managers to restructure the fund's assets.
The $2.2 billion-dollar CSPF was founded in 1955 by Teamsters President Jimmy Hoffa who viewed it, not as a fiduciary responsibility, but as a means of winning friends and influencing people. Hoffa moved funds into banks whose backing could be useful to the Teamsters, invested in Florida real estate instead of stocks and bonds, and made substantial loans to mobsters who were partners in Las Vegas casinos and Southern California real estate developments. When Hoffa was jailed in March 1967 for defrauding the pension fund, he turned the CSPF over to Allen Dorfman who had longstanding connections with the Chicago mob and had profited enormously from business deals with Hoffa and from acting as the exclusive for the CSPF's insurance. Dorfman increased the fund's assets from $400 million to nearly $1.5 billion in the early 1970's. When he was jailed in 1972 for accepting kickbacks, Alvin Baron took over the CSPF but landed in jail for the same reasons. During all these regimes, at least two of the Teamsters' highest officers who were also trustees of the pension fund were closely associated with the mob -- Roy Williams of Kansas City and William Presser of Cleveland. The Labor Department cited 15 examples of gross fund mismanagement when it launched its 1978 suit against the CSPF trustees, but these charges barely suggested the complexities of the fund's loan arrangements. In the 40 months since the trustees lost control, the asset managers, Equitable Life and Victor Palmieri & Co., have restructured the assets along more conventional lines, realized some profits from the CSPF'S massive real estate investments, and improved terms on the remaining loans. The new trustees, however, were probably handpicked by the old guard, have failed to meet conditions imposed by the Internal Revenue Service, and have harassed the independent managers. Dorfman still processes claims for the health and welfare funds and was given a 50 percent fee increase by the trustees. When the asset managers' contracts expire in 1982, organized crime is likely to reactivate its direct involvement with the CSPF. For previous articles, see NCJ 74174, 76111, 77403.