Earlier this year, President Reagan pointed with pride to major gangland trials held in Boston, New York and Kansas City spotlighting the Justice Department’s spirited drive on organized crime. The president did not mention that he had cut the budgets of crime-fighting agencies as soon as he took office, or that the cases against the mob were conceived during the Carter administration.
In fact, several figures close to and within the Reagan administration have been scandalized by past relationships with racketeers. Sen. Paul Laxalt (R-Nevada), Reagan’s close friend, adviser and the manager of his presidential campaigns, has been defending himself lately against allegations of a dubious relationship with the Las Vegas underworld. The president’s best friend in organized labor, Teamsters Union president Jackie Presser, was recently indicted for embezzling $700,000 in union funds to pay no-show workers. And on Tuesday, former Labor Secretary Raymond Donovan will go on trial in New York on larceny and fraud charges.
The Bronx district attorney will charge that Schiavone Construction Co. – of which Donovan was vice president, in collusion with a mob-connected trucking firm, defrauded New York City of $7.4 million in a subway tunnel construction project. Witnesses, including a confessed murderer, will testify on the Mafia’s grip on the construction industry, a 1979 Super Bowl junket to Miami during which Donovan allegedly met with organized crime figures, and the role of a black New York state senator in qualifying the trucking firm for federal funds earmarked for minority-run businesses.
Witnesses also testify to the FBI’s suppression of incriminating evidence during Donovan’s 1981 Senate confirmation hearings.
GOP ties to Teamsters
Last January, the Presidential Commission on Organized Crime deemed the Reagan administration “either unwilling or unable” to combat labor racketeering that has gained the mob “monopoly power” in several industries, construction among them. The union blemished most by “control or influence by organized crime” was the only major union to endorse Reagan in 1980 and 1984, the International Brotherhood of Teamsters.
While corruption of Teamster officials is legendary, far less appreciated is the relationship between the Teamsters and the Republican Party. In 1971, Richard Nixon pardoned Jimmy Hoffa, the former Teamster president convicted of mail fraud and jury tampering. Four years later, Hoffa disappeared without a trace. Gerald Ford, who was appointed vice president by Nixon and replaced him when he resigned, not only absolved Nixon of Watergate-related guilt, but pardoned Dave Beck, a Teamster president convicted of income-tax evasion. Ford’s labor secretary went before the Teamster convention one year later in 1976 to declare an alliance between the union and the Republican Party.
The alliance flourished as Ronald Reagan campaigned and later received a remarkable 40 percent of the labor vote in each of his presidential elections. As chronicled by Dan Moldea, author of “The Hoffa Wars”:
· On the campaign trail in 1980, candidate Reagan met with both Roy Williams and Jackie Presser, then Teamster vice presidents, the day after Williams took the Fifth Amendment 23 times before a Senate probe of his underworld ties.
· Following the election, the president appointed Presser “senior economic adviser” to his transition team. New Jersey police had already identified Presser as the mob’s contact for loans from Teamster pension funds.
· That spring of 1981, a Senate sub-committee described Williams as “as an organized crime mole operating at senior levels of the Teamsters Union.” The next day, he was indicted for the attempted bribery of Nevada Sen. Howard Cannon. Three weeks later, Reagan invited Williams to a White House conference on the economy. Williams is currently serving a 10-year sentence for bribery and conspiracy.
Reagan’s first labor secretary, Raymond Donovan, kept the administration on good terms with the Teamsters. According to the Presidential Crime Commission, Labor Department officials accused Donovan of blocking their investigations. Chairman Orrin Hatch of the Senate Labor Committee subpoenaed Donovan to procure Teamster pension fund documents. Later, citing a sharp decline in the prosecution of union officials after Donovan took office, Hatch charged the Labor Department with following “a policy of inaction and ineptitude that increases the vulnerability of the labor rank and file to abuses by unscrupulous officials.”
The president’s choice as secretary of labor had been his top campaign fundraiser in the state of New Jersey. At a single dinner at which insurance man William McCann was co-host, Donovan raised $175,000. McCann was later named ambassador to Ireland, but was replaced when it was revealed that his firm swindled the union of its pension funds.
Donovan joined the Schiavone Construction Co. in 1959. He would become a multimillionaire – in the words of veteran labor reporter A. H. Raskin – “in a see-no-evil, hear-no-evil, speak-no-evil industry … in which the partnership of unions and bosses has often led into the sewers of collusion and graft.”
Wiretaps lead to indictment
Donovan’s conduct in that environment caught up with him when federal prosecutors, frustrated with Justice Department roadblocks, turned over to a Democratic district attorney wiretaps that had remained sealed during Donovan’s confirmation hearings. In October 1984, Donovan was indicted on charges that the Schiavone Construction Co., of which he was vice president, and a sub-contractor, the Jo-Pel Contracting & Trucking Co., defrauded the New York City Transit Authority of $7.4 million in federally subsidized subway tunnel projects in 1977-79.
Federal regulations required that 10 percent of such business be contracted to minority-run enterprises. To circumvent this rule, according to the district attorney, the Schiavone company conspired in 1977 with William Masselli, owner of a Bronx meat-supply company, convicted robber and member of the Genovese crime family.
With the aid of a $200,000 advance check co-signed by Donovan, Masselli had formed the Jo-Pel Co. Masselli’s partner, New York state Sen. Joseph Galiber, was black. Since Galiber reportedly owned a 51 percent interest, Jo-Pel qualified as a minority-run enterprise. However, Masselli can be heard on an FBI wire-tap claiming Galiber “didn’t put a penny into it.”
Further evidence is to be presented at the New York trial that, through phony accounting, Jo-Pel kicked back to Schiavon some two-thirds of the $12 million it received for the subway project.
In summer 1982, Leon Silverman, a special prosecutor appointed by President Reagan, was reexamining Donovan’s alleged organized crime connections. Evidence of fraud uncovered in the Masselli tapes was kept from Silverman, who for a second time chose not to prosecute Donovan.
It was not the first time the Justice Department withheld evidence bearing on Donovan’s case. During Donovan’s 1981 Senate confirmation hearings, FBI assistant director Francis Mullen testified there were no references to Donovan on organized crime wiretaps in New Jersey. Later, after he was promoted to director of the Drug Enforcement Administration, Mullen admitted withholding information. There were several references to Donovan on wiretaps in New York.
During pretrial hearings last summer, a 20-year FBI veteran testified he had been ordered to destroy notes of an interview in which an informer told him he could connect Donovan to racketeers. The same agent charged in a 1981 report to FBI director William Webster, that “after three years of dedicated effort by innumerable street agents … high-impact political corruption cases” were dropped in favor of relatively minor cases.
In 1982, the FBI finally sent the Senate Labor Committee the results of an exhaustive search of its files for material on the labor secretary. According to a Fortune magazine investigation by Roy Rowan, the findings included a reliable informant’s allegation that Donovan had a longstanding relationship with one Salvatore “Sally Bugs” Briguglio.
Briguglio was the business agent of Teamster Local 560. He reportedly had access to inside information on construction company bids on New Jersey projects. He allegedly sold the data to Ray Donovan, whose firm then underbid. As payment, Schiavone provided material worth $50,000 to renovate the home of Local 560’s president, Anthony “Tony Pro” Provenzano.
Provenzano had earlier been convicted of extortion. He is currently serving a 20-year sentence for ordering the murder of the previous president of Local 560. Briguglio, a co-defendant in the same case and prime suspect in the disappearance of former Teamster president Jimmy Hoffa, was shot to death while awaiting trial.
Donovan has denied under oath that he knew Briguglio. He was backed up by Briguglio’s associate, Fred Furino, under questioning by the special prosecutor. However, when Silverman subjected Furino to a lie detector test in April 1982, he failed. Two months later, his body was found stuffed in a car.
Shortly after the Furino murder, the special prosecutor reopened his investigation into Donovan’s alleged payoffs and criminal ties. William Masselli was flown to New York from a Florida prison cell. Before he could be interrogated, his son, Nat, was shot to death in the Bronx.
Nat Masselli had assumed control of the Jo-Pel Contracting & Trucking Co. following his father’s hijacking and narcotics conviction. At the time of his death, he was reportedly an undercover informant for the special prosecutor.
Donovan has scoffed at any connection between his case and the homicides. He calls one informant a “damnable liar,” another, “murdering slime.”