The Billion-Dollar Reason for Hoffa’s Disappearance
September 8, 1975
Shortly after Jimmy Hoffa vanished, a newspaper colleague for whose intelligence I have the utmost respect commented from across the lunch table, “I don’t know why I should care whether he’s dead or not. They’re all crooks anyway.”
What she was saying, in effect, was that the black headline across the front of the Daily News that morning (FBI SAYS HOFFA DREW $IM CASH) was just the News’s standard police trivia, appealing to the same readers for the same reasons as the front page headline the next day (GUNMAN, MOLL SLAIN BY COP).
But several important facts elevate the Hoffa case from that of the unfortunate but forgettable man and moll who were interrupted in mid bank robbery.
First, Mr. Hoffa’s pending return to Teamster politics threatened to obstruct the Mafia’s drain on the union’s multibillion-dollar financial holdings — or else, why would he have vanished? In all probability, either the hoods he was meeting for lunch the day he disappeared came to that conclusion and set him up, or Mr. Hoffa figured they were about to come to that conclusion and took it on the lam, or, if you like long shots, the Justice Department figured somebody was about to come to that conclusion and sequestered Mr. Hoffa.
Twice in the year before Mr. Hoffa disappeared, the Justice Department was told by an emissary that Mr. Hoffa was willing to supply information that would “get” his rival, Teamster boss Frank Fitzsimmons, according to a senior official of a large U.S. attorney’s office, who says the emissary approached him personally. The official, who had been involved in investigating the union and who says he thinks Mr. Hoffa is dead now, asks not to be identified. He will identify the emissary only as a “reputable, respected member of the media.” And he says the offer was turned down.
Second, merely the ability of the mob to remove from activity someone as important as Jimmy Hoffa and get away with it would signify that in 1975, nearly 20 years after Robert Kennedy’s Senate hearings exposed Teamster corruption, the mob retains undiminished access to the union vault and still feels free to defy society and its laws with impunity.
Third, the $100 million deals that Teamster leaders transact with all sorts of suspicious characters are of a size beyond the imagination of most bank chairmen, let alone most bank robbers.
Moreover, the Teamster money is not merely being stolen by one set of crooks from another. Nor, ultimately, is it even being stolen from union workers or their bosses. The majority, though by no means all, of the 2.2 million Teamsters have in one way or another acquiesced in these shenanigans, and could, with a real will, stop them. The same could be said of their employers.
When you get right down to it, the money is being stolen from every one of us who ever buys anything, any part of which was ever shipped by truck or loaded in a warehouse. And to ignore what happened to Jimmy Hoffa would be to join the Teamsters and their employers in institutionalizing this thievery. (Actually, the pool of victims is expanding, as the Teamsters’ latest image-building ad campaign points out; victims now include drinkers of Gallo wine, patrons of certain telephone systems, and even the taxpayers of Michigan, some of whose state police just voted to join up.)
What separates Jimmy Hoffa from his rivals for power in the union is that Mr. Hoffa long has had the personal loyalty of hundreds of thousands of rank and file teamsters. Most of these Teamsters know very well that Mr. Hoffa has helped defraud their pension fund of enormous sums. They know he went to prison for it.
But they also know that what they have left over after he and his colleagues have finished stealing is still more than they ever had before Jimmy Hoffa built their brotherhood into America’s most powerful union. They are grateful.
The employers of these men aren’t blind either. They have purchased union stability, labor peace, and even a share of the pension fund action, all at the price of simple integrity.
The money for this industrial coziness is coming from us.
Every week the employers of Teamster members pay a contribution in lieu of salary into one of 200 union-connected pension funds. The biggest group of these workers, truckers covered by the master freight agreement, are supposed beneficiaries of contributions of $22 a week for each employee. The largest of the funds — the Central States, Southeast, and Southwest Areas pension fund, headquartered in Chicago — takes in about $400 million a year. Its reported assets exceed $1.3 billion.
This is the fund that Mr. Hoffa was a trustee of when he was international president of the Teamsters. It is the fund that he went to prison for defrauding, and the fund that his successor and rival, Frank Fitzsimmons, is a trustee of now.
Such funds aren’t required to disclose much about themselves to the public or to their members (even under the so-called Pension Reform Act of 1974), and the Central States fund has always gone to great lengths to keep its records secret. Information about how it handles its money has leaked out much more slowly than the money itself.
Several years ago, however, the fund was required to turn over a list of its investments to a federal court in connection with a lawsuit fired by a Teamster dissident. Although this investment list was sealed by the court at the union’s request and thus kept from public inspection, copies of it were obtained by Overdrive, a West Coast trucking magazine, and by the Wall Street Journal, both of which have recently published series of articles based in large part on its contents.
The records showed that some 89 per cent of the fund’s money was invested in real estate loans to businesses — against less than 5 per cent for the average similar fund; that many of these businesses seemed to have little other source of financing; and that a shocking 36.5 per cent of the money thus invested was in loans that already had gone delinquent or had been foreclosed, with indications that a lot more could wind up the same way.
Many loans have been made to companies owned by mobsters and their cronies; to companies at least partly owned by lawyers, consultants, or other insiders who help run the fund itself; and to companies employing Teamster workers. The union has on occasion refused to support its members in labor disputes with employers who have outstanding loans from the fund.
Mr. Hoffa was deeply involved in the channeling of union money to crime figures beginning with his rise to power in the Chicago-based Central Conference of Teamsters 25 years ago. The head of a Detroit local, he needed a power source in Chicago and found one in Paul “Red” Dorfman. Mr. Dorfman was a leader of the Chicago Waste Handlers Union (until later expelled by the AFL-CIO for misuse of funds) and a close ally of racketeers since the Capone era.
When Mr. Hoffa took power in the Central Conference of Teamsters, he immediately switched its group insurance business, which exceeded $10 million a year even in those days, away from a large, reputable company and over to a small one, whose general agent, just appointed, was Red Dorfman’s son Allen. Allen Dorfman and his friends prospered accordingly.
Young Dorfman became Mr. Hoffa’s right arm in pension-fund matters when the fund was established in 1955. He not only held its insurance business and was assigned to monitor the insurance needs of borrowers, he also was the man to see if you wanted a loan, and he stayed on as such after Mr. Hoffa began his prison term.
Mr. Dorfman sometimes acquired land in development projects that the fund was financing, or stock in a company that borrowed millions of dollars from the fund. He has sold such stock at a high personal profit before the borrowing company repaid much of its loan. He and other insiders have taken over a company in default to the fund, sold it at hundreds of thousands of dollars profit without repaying the fund, and arranged for the fund to transfer the unpaid mortgage debt to the new buyers.
Sometimes through arrangements made by Mr. Dorfman and sometimes not, the fund loaned millions of dollars to companies that were associated then or soon afterward with mobsters. Among the men involved in fund-financed projects who have been identified as prominent racketeers by government agencies and the press are Anthony “Tough Tony” Spilotro, Joseph “The Clown” Lombardo, Andrew Lococo, Michael “Big Mike” Polizzi, Louis “Lou the Tailor” Rosanova, and even the notorious, confessed torture-murderer Felix “Milwaukee Phil” Alderisio.
Millions of dollars from such loans weren’t repaid on time if at all.
The fund also has created controversy with its bizarre concentrations of loans. Las Vegas, for, example, is largely built with Teamster money, hundreds of millions of dollars of it. Much of the original investment was channeled through Morris “Moe” Dalitz, identified in congressional testimony as a bootlegging and gambling figure from Cleveland from decades ago. Mr. Dalitz bowed out of the Nevada business, though he stayed a part of the fund’s $57 million investment in the lavish La Costa resort and land development near San Diego, which is patronized in large part by union insiders and their cronies.
Nevada gaming authorities have been requiring clean records for casino operators there, so lately the Teamster investments have been channeled through men like Morris Shenker, long Mr. Hoffa’s lawyer, and Allen R. Glick, who, barely 30, rose meteorically from being an employee of a San Diego real estate firm to authority over more than $100 million in pension-fund investments.
Mr. Shenker also was a central figure in the biggest fund loan of all, some $116 million–$140 million to the Penasquitos land development project, in Southern California. The loan was foreclosed with barely $5 million repaid. The pension fund now owns the 16,000 mostly undeveloped acres in the project, and as in so many other cases nobody has accounted publicly for the money.
With all this cash going out, one might wonder how the fund pays its pensions. The answer is, it often doesn’t.
The fund won’t disclose how many men apply for pensions and how many are turned down, but it’s not hard to sit at a phone and locate dozens of Teamsters and former Teamsters who say they have been gypped out of pensions they believe they are entitled to. Mostly, their cases involve loopholes that are written into the fund rules. Most Teamsters apparently aren’t aware of these loopholes until it’s too late.
After a four-to-six month wait for the fund to process their applications, pension seekers often are told that they must prove they have 20 years of industry credit. In an industry like trucking, made up of many small companies that go in and out of business fast, satisfactory records often are unavailable. The fund itself would be best able to keep them, but it says it doesn’t.
For example, one Florida retiree wasn’t approved for a pension, apparently on the grounds that his work time in the 1950s with an Ohio firm, long out of business, wasn’t adequately verified. He submitted an employee identification card and a photograph of him driving a company truck, but his application was returned with only the cryptic explanation, “The attached papers are being returned to you.”
When he persisted, the fund wrote back many months later, “Kindly be advised that affidavits must be submitted from fellow workers, owners, or supervisors. These affidavits must include the type of work you did, the number of years you worked, and the number of hours worked per year. You may also submit your check stubs.” None of this documentation can be obtained now, the retiree says.
Other pension applicants are stunned to learn of the so-called break-in-service provision, under which, if a Teamster spends three years in other work, all prior pension credits are eliminated. Many truckers seek factory work during hard times in the hauling business, and then go back to trucking, now knowing that they are starting over on their 20-year pension service.
Many others spend a few years driving rigs that they are trying to buy under installment contracts such “owner-operators” still must maintain union membership, but the fund counts this time as a break in employee service. Often the installment contracts don’t work out and the driver goes back to salaried work, only to discover years later that he has lost his pension rights.
Moreover, many of the 200 pension plans don’t have reciprocal credit agreements with each other or with the big Central States fund. Truckers, in the course of their jobs, often must transfer from a local covered by one plan to a local covered by another, and thus, without realizing it at the time, lose their pension rights.
Occasionally an individual Teamster has gone to court and won the right to his pension, but dissident groups have never been successful in overthrowing the way the fund is run. The union always goes first-class on legal protection, and lawyers for dissident members, usually operating without fee or on contingency, run out of patience fast when faced by mountains of technical motions and other delaying tactics filed by the union’s high-powered law firms.
All of this, of course, works to the pleasure of the union leaders and the mob. When Mr. Hoffa, who did much to organize the system, went to jail, apprehension must have rippled through the Mafia beneficiaries of the union’s largess. But under Mr. Fitzsimmons, apparently nothing has gone awry.
Most impressive, when Allen Dorfman was forced to resign as “special consultant” to the fund in 1972 because he was on his way to jail for taking a $55,000 bribe in the award of a loan (he served less than a year), affairs continued to flow smoothly. (Interestingly, Mr. Dorfman went out of sight last month about the same time Mr. Hoffa did. His family and office say he’s traveling in Europe and can’t be reached.)
Like Theodore Roosevelt retiring from the White House in 1908, Mr. Hoffa on his way to jail had picked as his successor a weak man, a flunky, who could be expected to yield power on request. But as with Mr. Roosevelt, Mr. Hoffa decided later that he had chosen wrong, and felt constrained to launch what was in effect a third- (in this case, second-) party movement.
The mob may well have decided that a campaign between Messrs. Hoffa and Fitzsimmons could only cause trouble. Harmful charges might inevitable have leaked out even if both candidates tried to remain loyal to the system. But there was also the possibility that Mr. Hoffa would have stopped at nothing to regain power, and the possibility is based on more than mere speculation.
Friends of Mr. Hoffa have been arguing that the last thing in the world they would expect him to do would be to turn to the government with evidence about Teamster corruption. But the Justice Department official who told of being approached by an intermediary says otherwise.
The official says he declined to pursue the offer of information from Mr. Hoffa for two reasons. In general, he says, the Justice Department doesn’t want to be used as an instrument to help individuals “get” their enemies. And in particular, the offers came when the department was near trial in a major criminal case over an alleged plot to defraud the Central States pension fund of $1.4 million. Among the seven defendants in the case were two trustees of the fund and Messrs. Dorfman, Spilotro, and Lombardo. Prosecutors feared that the offer from Mr. Hoffa, if accepted, might somehow, compromise the prosecution of that case, the winning of which was considered crucial to forcing changes in the fund administration.
The case was tried this spring for 10 weeks. One of the government’s two star witnesses, a businessman who had helped the alleged plotters and then had agreed to cooperate with the prosecution, was shotgunned to death shortly before the trial. The judge ruled out any evidence about the shooting, or about the defendants’ backgrounds, and the jury never learned the checkered history of the pension fund.
The defendants were supported not only by some of the best legal counsel in the country, but also by Arthur Young & Co., the large accounting firm, which apparently was paid $150,000 in pension-fund money (channeled indirectly through the defense law firms) to prepare, belatedly, well-balanced books for the mobster-run company that defaulted on its $1.4 million loan.
All seven defendants were acquitted.