Union Labor Life Insurance Company (ULLICO)

Union bosses are fond of complaining about corrupt business executives accused of embezzling millions of dollars. But the case of self-dealing by executives and union officials who made up the board members of ULLICO is a prime example of how corrupt union officials cost members millions of dollars. In all, a ULLICO-sponsored investigator said nearly $6 million in profits should be returned by leaders of the AFL-CIO, United Auto Workers, United Food and Commercial Workers, Ironworkers, International Brotherhood of Electrical Workers, Carpenters, and other unions.


Big labor unions are facing their own executive-greed scandal after a scathing report was leaked on how labor bosses voted themselves big bucks on inside deals -- a report one top union official tried to hush up. — The New York Post, November 29, 2002


“a budding labor scandal threatens the movement's credibility on corporate accountability. It appears that a few labor leaders, sitting on the board of ULLICO, parent of Union Labor Life Insurance Company, personally profited from privileged deals in the Enronlike boom and bust of telecommunications upstart Global Crossing, while their unions' pension funds were denied the same opportunity “ Many union officials say they were shocked and disgusted by the news, a reminder that 'no more business as usual' is a widely applicable slogan, even within union ranks. —The Nation, April 18, 2002


The ULLICO scandal, now known as Big Labor's Enron, has been the subject of an ongoing federal grand jury probe, as well as investigations by the Department of Labor, the National Labor Relations Board and the Securities and Exchange Commission “ the scandal also involves stiffing the union pension funds, and, indirectly, all the workers whose futures depend upon those investments. Union pension funds, which comprise the bulk of ULLICO's shareholders, were shut out of a sure-fire, get-rich-quick scheme, which was secretly made available only to the two dozen union officials who serve as officers and directors of ULLICO. —The Washington Times, November 17, 2002


The Facts
In November 2005, ULLICO chairman Terence O'Sullivan informed investors that as one condition of a settlement, former CEO and president Robert Georgine -- who also headed the AFL-CIO's Building Trades division until 2000 -- would return millions of dollars in compensation and profits from shady stock deals. O'Sullivan noted that "the total economic value of the settlement is in excess of $17 million." Under the agreement, Georgine would return $2.6 million in profits from the sale of stock; forfeit $10 million in compensation held in trust; repay $500,000 in a loan ULLICO made to a Georgine-controlled company; and face cancellation of $4 million in obligations of compensation, among other items.

But Georgine wasn't alone in this scandal -- there were plenty of other labor leaders who enriched themselves, while putting the assets of union members and their pension funds at risk.

A Senate report outlined the complicated scheme: Georgine -- along with other ULLICO managers and directors (including numerous union officials) -- bought ULLICO stock from the company itself at a bargain price when the company was doing well, and then forced the company to buy that same stock back at a high price when ULLICO became less valuable. As a result of policies they helped set, ULLICO's insiders were able to sell back all or nearly all of their remaining stock and lock in their profits, even though they knew the stock price on the open market had dropped significantly. For example, an investigator reported that of the stock ULLICO bought back in 2000, 31 percent came from ULLICO insiders, even though these insiders owned less than 2 percent of the company. Meanwhile, ULLICO created rules that prevented larger shareholders, including most of the unions and pension funds that had invested in the company, from selling more than a small portion -- 2.2 percent -- of the shares that they offered back to the company.

Georgine and ULLICO responded to allegations of their wrongdoing by hiring former Illinois governor James Thompson to perform his own investigation and report back his findings and recommendations. Thompson's report called for ULLICO insiders to return nearly $6 million in profits from their stock transfers.


Who Benefited?
The following is a partial list of ULLICO executives and directors who took part in questionable stock deals at ULLICO. The amounts given are profits from the sale of ULLICO stock that former Illinois Governor James Thompson advised should be returned to the company:

Robert Georgine, President and CEO: over $2.1 million Joseph A. Carabillo, Vice President and Chief Legal Officer: $720,420 James W. Luce, Executive Vice President: at least $789,299 William G. Bernard, ULLICO Director and President Emeritus, International Association of Heat and Frost Insulators & Asbestos Workers: $1,329,619 Bill J. Casstevens, ULLICO Director and Former Secretary Treasurer of the United Automobile Workers of America: $809,627 John F. Gentleman, ULLICO Director and Former President of ULLICO: at least $162,115 Jacob F. West, ULLICO Director and President of the Ironworkers Union: at least $989,060 James F. M. McNulty, ULLICO Director and General Counsel of The Union Labor Life Insurance Company (a ULLICO subsidiary): at least $284,985

John J. Barry, ULLICO Director and International President Emeritus of the International Brotherhood of Electrical Workers: $280,730 Marvin J. Boede, ULLICO Director and Former President of the Plumbers and Pipefitters Union: $234,680 John Cullerton, ULLICO Director and Consultant for the Hotel Employees and Restaurant Employees Union: $176,010 Martin J. Madaloni, ULLICO Director and General President of the Plumbers and Pipefitters Union: $234,680 Joseph F. Maloney, ULLICO Director and Secretary Treasurer Emeritus for Building & Construction Trades -- AFL CIO: $418,880 William H. Wynn, ULLICO Director and President Emeritus of the United Food and Commercial Workers International Union: $234,680

Overall, Thompson recommended that ULLICO insiders return nearly $5.6 million in profits from questionable stock sales.

For more detail, see the Thompson Report, Gov. Thompson's presentation to the Senate, and the final Senate committee report