In the seedy world of the Chicago unions and the political pawns they control, there is a family dynasty whose name is at the top of heap in terms of power and political muscle. That is the Coli family. Without the blessings of the Coli family and the union they control, Teamsters Local 727 and Joint Council 25 (the governing body of 20 Teamster locals in Illinois and Indiana), Chicago might not have Rahm Emanuel as its mayor and America might not have Barack Obama as its president. Now, however, the Coli union dynasty may be in jeopardy due to a RICO suit filed against several members of the Coli family, including John Coli, Sr., and Teamsters Local 727.
SCI Illinois Services, Inc. is a company that provides funeral services in Chicago and vicinity. Being in the Chicago area, the company’s employees (which consist of funeral directors, embalmers, embalmer trainees, and auto livery drivers) are represented by Teamsters Local 727.
According to the RICO suit, SCI is required under its union contract with the Coli-controlled Teamsters, to pay money into the union’s health, pension, and education funds for its Teamster-represented employees. The health, pension and educations funds are where out of the four fund trustees, according to the suit, the Coli family has installed three of its family members.
The funds are also where the Coli dynasty has, according to the RICO suit, allegedly created a “scheme to defraud and extort” money from SCI by inflating audit findings. Over many years, the union would claim that the company owed more money than it believed it owed to the Coli-controlled funds.
Defendants have conspired to and have falsely and intentionally inflated audits relating to how much was owed to the Local 727 Funds, continually abusing the legitimate audit process year after year to extort as much money as possible from Plaintiff for the Funds.
Finally, after years of Plaintiff submitting to extortion and incurring enormous legal expenses, Plaintiff decided to fight instead. In litigation brought by the Funds at the control and direction of the Defendants, Plaintiff sought the deposition of key individuals, including Defendant John Coli, Sr. Coli Sr. resisted his deposition vigorously. When the court finally ordered him to attend he did appear, but was belligerent and uncooperative, stating, “For the record, go f**k yourself.”
By engaging in the scheme to extort contributions from Plaintiff into the Funds, the Coli Defendants are seeking to increase the viability and perceived financial soundness of the Funds by any, including illegal, means.
By engaging in the scheme to extort contributions from Plaintiff into the Funds, the Coli Defendants and the Union are seeking to serve and protect their own direct and indirect financial interests. The Union’s pension fund is seriously underfunded and a source of potential embarrassment and criticism for the Union and its leadership. The underfunded status of the Funds impacts the Union’s ability to recruit and retain members, which has the effect of diminishing membership dues − the primary revenue source for the Union. The Coli Defendants and the Union are therefore seeking to augment the pension fund by engaging in this fraudulent and extortionate scheme to reduce the level of underfunding. The seriously underfunded status of the pension fund is also a potential source of embarrassment for and criticism of the Coli Defendants, causing their job performance to be called into question, and raising questions about their competence and issues of nepotism, cronyism, qualifications, experience and general fitness to carry out their responsibilities, placing at risk their job security and generous compensation packages. Similar motives exist with regard to the other union benefit plans. The Coli Defendants are engaging in this scheme to wrongfully extort money that the Funds are not entitled to for the purpose of improving their image, consolidating their control and thereby protecting their own financial interests and maintaining control of the Funds and the Union.
The gravamen of the complaint is that Defendants have manipulated a series of audits to fraudulently inflate the amounts for which the Funds billed Plaintiff. Specifically, the complaint alleges that beginning in August 2002 and continuing to the present, Defendants have deliberately withheld records from auditors, signed off on final auditing reports that they know to be materially flawed, imposed unreasonably burdensome procedures on Plaintiff to challenge the audits, and sued Plaintiff to collect payments to which they were not entitled. For years, Plaintiff capitulated to the fraud by settling rather than incurring the costs of litigating each individual audit. The complaint states that, between April 2004 and April 2008, Plaintiff settled seven lawsuits with Defendants for amounts far exceeding what Plaintiff actually owed the Funds.
The most recent scheme allegedly involved an employer-wide audit covering all of Plaintiff’s funeral homes in the State of Illinois. Plaintiff alleges that Defendant deliberately withheld information from the auditing firm which “caused the draft audit report to have intentional misrepresentations,” such as the inclusion of non-Local 727 employees, as well as employees and funeral homes covered by previous settlement agreements.
The complaint contains enough facts to infer the existence of an agreement between Defendants to violate § 1962(c). The conspiracy claim stands. Causation and injury have been sufficiently pled–there is no question that Plaintiff has payed out hundreds of thousands of dollars to the Funds in order to settle ERISA actions based on disputed audits.
While the Coli case is about one individual union and the family that controls it, the case may have much farther reaching impact as there are thousands of companies across the United States that contribute to underfunded union pension plans.
If the allegations against the Coli-controlled funds prove to be true, not only might the Coli dynasty come to a well-deserved ignominious end, but there may be other companies that are overpaying moneys into ‘schemes’ such as the one the Coli’s are accused of masterminding.