Profiles in Corruption

by Peter Schweizer

  A major problem for organized labor and millions of Americans is the failure of union pension funds over the years. The pension funds have been poorly funded, leaving workers holding the bag. Brown places the pensions’ failing on Wall Street. “Wall Street turned around and stole the pensions Ohioans worked for,” he said.101

  But the causes are not so simple. Some of the blame lies with union leaders themselves.

  One of Brown’s closest alliances is with the Teamsters, which is headed by Jimmy Hoffa Jr., son of the mob-tied former Teamsters’ leader. His father mysteriously disappeared under suspicious circumstances in 1975.102 The Teamsters’ pension fund, the Central States Pension Plan, is in deep financial trouble today thanks in part to poor management and corruption involving union leaders. The Central States fund was only 38 percent funded as of December 2018. The fund started in 1955 and has been linked to the mob over several decades. In 1963, the elder Hoffa and six other union officials were indicted in federal court for diverting $25 million in pension fund loans and then siphoning off $1.7 million of that for their personal use. They were convicted and went to jail. But the travails continued. In 1967, Hoffa and others were implicated in a real estate scandal whereby they received 10 percent kickbacks on “highly questionable” loans. In 1972, the stepson of Teamster local boss Paul “Red” Dorfman was convicted “for illegally obtaining a $55,000 kickback from a recipient of a Central States loan.” In 1974, “He was indicted for fleecing the fund out of $1.4 million.” An audit of the pension fund by Price Waterhouse in the 1970s found that 90 percent of the pension funds were invested in real estate. Many of these were related to organized crime investments. As a Justice Department official put it: “The thing that’s absolutely frightening is that through the Central States Pension Fund, the mob, quite literally, has complete access to nearly a billion dollars in union funds.”103

  The Teamsters are not alone in having these problems with their pensions. Other pension funds in Ohio that are in trouble include the United Mine Workers of America Pension Plan, the Ironworkers Local 17 Pension Plan, the Ohio Southwest Carpenters Pension Plan, and the Bakers and Confectioners Pension Plan. All, Brown said in early 2018, “are currently on the brink of failure.”104

  In general, while nonunion private pension plans must use a government-prescribed and realistic interest rate, unions have enjoyed regulatory favoritism that allows them to use—in effect—whatever interest rate assumptions they want when running their pension plans.105 The problem, in short, has less to do with Wall Street than it does the union leaders who manage and run the plans.

  The question is, what to do about these pension problems? How best to ensure that union members who paid into these pensions have retirement funds?

  Some have called for the federal government-supported Pension Benefit Guaranty Corporation (PBGC) to take over some of these pension funds. This would ensure payment to workers, essentially backed by the federal government.106

  Senator Sherrod Brown, however, is opposed to that. He is the co-chairman of the federal bipartisan committee to “solve the pension crisis.” Brown does not want union workers to have their pensions handled by the federal government; instead, he wants the federal government to loan the money to union leaders and let them manage it.107

  He introduced a bill called the Butch Lewis Act, which would have taxpayers lend money to the union-run pension funds to cover the shortfall.108 But those same union pension funds were poorly run in the first place, creating the crisis that exists today. Brown does not propose any additional accountability for union leaders to run the pension with a taxpayer bailout. Instead, he proposes that taxpayers provide thirty-year loans to the unions with interest-only payments for twenty-nine years. In year thirty the union would be expected to pay off the principal. Observers expect that would never happen.109

  The distinction between Brown’s alliances with union bosses as opposed to rank-and-file members is further demonstrated by his apparent lack of interest in highlighting and dealing with financial malfeasance by union officials. Although he has spoken about the importance of labor unions in American society, he has demonstrated a remarkable lack of interest when congressional hearings focus on the actions of corrupt officials who created financial hardships for his own constituents. In October 2005, Sherrod Brown was in Congress and a member of the Committee on Energy and Commerce in the House of Representatives. Labor organization members, including at least one Ohio resident, testified on how they had paid dues only to see organization officials use those dollars for exorbitant “office expenses.” (They discovered the financial misconduct by using those disclosures required by the federal government that Sherrod Brown opposes.) When one disabled member needed his permanent disability payments, they found that the account had been raided to make temporary disability payments. Brown, a member of the Subcommittee on Oversight and Investigations, never asked a single question or made a single statement at the hearing. Indeed, there is no evidence that he even attended the hearing.110

  Senator Brown has pushed other legislation favored by union bosses but opposed by rank-and-file members. Brown has vigorously advocated for “card check” unionizing. The current system allows that if 30 percent of workers sign cards saying they want a union, a secret ballot is held. If 50 percent of employees vote yes on a secret ballot, a union is formed. But card check dramatically changes those rules. Under card check, if 50 percent of employees turn in cards saying they want a union, it will automatically be organized. But here’s the rub: surveys consistently show that more than 70 percent of union members want a secret ballot. Only 13 percent want a change to the law. The main reason: union intimidation. There are numerous examples of those who do not support the formation of a union being threatened with physical violence. In one instance from 2008, for example, the National Labor Relations Board (NLRB) heard testimony from an employee who received an anonymous phone call in which the caller threatened to “get even” with him if he “backstab[bed] us.” Another group of employees experienced threats that corroborated that story.111

  Sherrod Brown has, over the course of his political career, denounced the terrible influence of lobbyists on policy making in Washington, D.C. He even proposed renaming the Washington Nationals baseball team the “Washington Lobbyists.”112 But when Brown ran for reelection to the U.S. Senate in 2018, he received more campaign contributions from lobbyists than any other senator: more than $430,000.113

  7

  Bernie Sanders

  The Last Chance Saloon was a gathering place in mid-1980s Burlington, Vermont, and then-mayor Bernie Sanders would visit while making his rounds. One night he showed up while an Irish band belted out “green alligators and long-necked geese”—lyrics from “The Unicorn Song.”1 Sanders ordered the bar’s special, “Fat Man Bud.” Bob Conlon recalls that night he was tending bar. Bernie dropped a dollar on the bar to pay for his ninety-five-cent drink. Conlon remembered that the mayor stood there “waiting four [people] deep to get his nickel change back.”

  The incident made an impression on Conlon, who made part of his money on tips. “I’d vote for O. J. Simpson before I’d vote for Bernie,” he later said.2

  Bernie Sanders is one of the most polarizing figures in modern American politics. Sanders fans are likely to view this event as evidence of his frugality. Critics will no doubt label his demands for a nickel (with no apparent effort to tip) as “cheap.” And so it goes with so much about Bernie Sanders. People are divided about his message: fans consider him a truth-teller about capitalism and income inequality; critics see him as a grandstander and a hypocrite. His brusque and blunt style means he is being candid and honest in the eyes of his supporters; detractors see his holier-than-thou attitude as a turnoff. Even some friends and acquaintances joke that his hectoring and sermonizing can be a bit much. Professor Garrison Nelson, who taught for decades at the University of Vermont and has known of Sanders almost as long, warns that “Bernie’s the last person you’d want t
o be stuck on a desert island with. Two weeks of lectures about health care, and you’d look for a shark and dive in.”3

  Beyond his difficult and gruff style, there is little doubt that Sanders has become a major force in American politics. He has well-honed progressive credentials. As Professor Michael Kazin describes him, “Sanders resembles his hero, Eugene V. Debs—the Socialist who ran five quixotic races for president, the last time, in 1920, from a prison cell—far more than he does a standard-issue career politician. Other pols identify with ‘revolution’ and claim their campaign is a ‘movement.’ But Bernie really means it.” Sanders deeply identifies with Debs and even has a plaque of him on his Senate office wall.4

  Many of the policy prescriptions that Sanders has called for over the past several decades have become main planks of the Democratic Party. Although he steadfastly insists that he is an independent, there is little doubt that they have moved closer to him than he has to the main tenets of the party. The dominance of progressives within the ranks of the Democratic Party is a testament to the power of Bernie Sanders and his brand. His approach to politics has been remarkably consistent in one respect: the need for an enemy. According to Dennis Morrisseau, a “lifelong Vermonter” who has followed Sanders’s career for decades, he “always had a common enemy in each of his more than twenty political campaigns—namely, the wealthy.” In the 1970s, he railed against the Rockefeller family; today it is the billionaire class. Morrisseau adds, “If Bernie didn’t have an enemy or scapegoat, he created one.”5 In 2017, researchers at the University of Vermont named a new spider species after Sanders: “Spintharus berniesandersi.”6 The naming is apt because Sanders has become adept at spinning a web of financial ties and relationships that remain largely hidden from the public.

  There are serious financial mysteries swirling around Sanders, concerning both his own wealth and the funds that have been pouring into his political movement. They raise fundamental questions that have yet to be aired, questions that Sanders and his wife, Jane, have worked to avoid addressing. Beyond the mysterious flow of funds, there is also the reality of his close, mutually beneficial financial ties to powerful financial figures—those that belie his image as David taking on Goliath. As we will see, Sanders has worked hard to obscure his financial arrangements.

  Sanders is a son of Brooklyn, New York, born to Jewish parents. His father, Eli, was from Poland and immigrated to the United States in 1921. Mother Dorothy Glassberg was a native New Yorker, whose parents arrived off the boat earlier from Poland and Russia.7 Among the extended Sanders family, he had relatives killed in the Holocaust. Sanders spent his early childhood in a three-and-a-half-room apartment. He was a “pretty good student” and attended the University of Chicago, where he became politically active. He was involved in the civil rights movement of the 1960s and more left-wing politics like the Young People’s Socialist League.8

  After college, Sanders drifted around before heading to Israel to work on a kibbutz in 1963. The kibbutz movement was wide and varied, and for years, Sanders refused to reveal the exact kibbutz to which he was connected. During the 2016 presidential campaign, intrepid journalists discovered that he spent his time at a settlement connected to an Israeli political party called Mapam. This was a particularly political settlement, Kibbutz Sha’ar Ha’amakim, connected to a “Soviet-affiliated political faction.” Kibbutz members admired Joseph Stalin until his death, calling him “Sun of the Nations.” They would celebrate May Day with red flags.9

  Sanders spent several months there in 1963, where he wore a uniform of khaki slacks with a matching button-down shirt. He would wake up every morning at 4:10 a.m. to pick fruit. The kibbutz had strict rules: members were not allowed to wear skirts or neckties, and social activities like playing cards and ballroom dancing were forbidden.10

  The kid from Brooklyn, via Chicago and the Israeli desert, eventually found his way to rural Vermont. By his own account, how he ended up in the Green Mountain State was surprisingly happenstance.

  As a teenager, he was walking through midtown Manhattan when he had an encounter that would change his life. “We stopped near the Radio City Music Hall and at that point the state of Vermont had a storefront there, advertising Vermont land,” he recalled. “We picked up the brochures. We read them and we saw farms were for sale.” More than ten years later, he pooled together some inheritance money with his brother and his first wife to buy eighty-five acres in the north woods of Vermont for $2,500.11

  “I had always been captivated by rural life,” he would later say.12

  Sanders settled in the small town of Stannard, a hippie enclave with a population hovering around 150 people just forty-five minutes from the Canadian border.13

  Sanders and his wife moved to Vermont, but he spent very little of his time in the decade and a half following college with gainful employment. He worked briefly as a researcher with the Vermont Tax Department, before trying his hand as a carpenter. (One acquaintance admitted, “He was a shitty carpenter.”) Mostly he was a political activist and agitator, who occasionally wrote essays, one displaying his “affinity for Sigmund Freud.”14

  Throughout the 1970s, Sanders continued to avoid consistent employment and was endlessly running for political office. (He derided basic working-class jobs as “moron work, monotonous work.”) He ran two campaigns for the U.S. Senate as part of a minor political party called Liberty Union. The campaigns were bare-bones and during his 1974 campaign for the U.S. Senate, he actually collected unemployment while a candidate. His campaign rhetoric could be downright apocalyptic and conspiratorial. “I have the very frightened feeling that if fundamental and radical change does not come about in the very near future that our nation, and, in fact, our entire civilization could soon be entering an economic dark age,” he thundered as he announced his 1974 Senate run. Later that same year, he sent a public letter to President Gerald Ford, declaring that America would face a “ ‘virtual Rockefeller family dictatorship over the nation’ if Nelson Rockefeller was named vice president.”15

  Rockefeller did become vice president. The dictatorship, of course, never emerged.

  During this period, while he was laying out his policies for reorganizing the entire American economy, Sanders quite literally had trouble keeping the lights on in his sparse apartment. “He was living in the back of an old brick building,” recalled Nancy Barnett, an artist who lived next door. “And when he couldn’t pay the [electric bill], he would take extension cords and run down to the basement and plug them into the landlord’s outlet.” Eventually, the landlord kicked him out of the apartment. He moved in with a friend.16

  In 1980, at age thirty-nine, Sanders made a decision to run yet again for political office. This time he set his sights lower than the U.S. Senate. He wanted to be mayor of Burlington, Vermont, a picturesque and bucolic town on the shores of beautiful Lake Champlain, and the largest town in the state. It was his newly adopted home and he entered the crowded field as a socialist, leveling many of his attacks at a local developer named Tony Pomerleau. On Election Day, Sanders upset the political establishment by winning the race by ten votes out of 8,650 votes cast.17

  “The whole Bernie Sanders phenomenon all comes down to ten votes,” says Sam Hemingway, a columnist for the Burlington Free Press who covered Sanders for decades. “If he had failed to win that race, he would have been history.”18

  The win rocked local politics. A self-professed socialist had beaten back both Republicans and Democrats. As one local politician described Sanders, “He’s the puppy that caught the car.”19

  But Sanders would prove to be no puppy.

  * * *

  Ten days after election night, Sanders held an official victory party at which he would forge perhaps his most important personal and political alliance. He was divorced from his first wife, and among the young activists who showed up at the party that night was a campaign worker and young mother named Jane Driscoll. They would soon start dating.

  Jane would go
on to be Sanders’s consigliere. They would eventually marry in 1988.20

  “She’s one of his most trusted advisers, if not the most trusted adviser,” says Sanders political consultant Tad Devine.21 “They are a team; they always were a team,” said Carina Driscoll, her daughter. “They have been a really amazing example of a partnership based on building something extraordinary together.”22

  From the outset, having finally achieved political office, Sanders established a pattern of benefiting himself and his allies. Shortly after taking office, he appointed his new girlfriend, Jane, to head up the Mayor’s Youth Office. (The office organized “youth dance troupes,” among other things.) It was initially a volunteer position that later became salaried. The job was never advertised so that others could apply. A local paper noted that Sanders never bothered to provide evidence as to her “qualifications” for the position. Conveniently, the Mayor’s Youth Office was under his chain of command. It was not under the jurisdiction of the Parks and Rec Department.23

  The appointment would remain a source of controversy for Sanders. After Bernie and Jane got married, his new wife received a big pay increase. As one local newspaper reported, “Political sparks flew at Burlington’s annual city meeting Monday night as Democratic aldermen raised a series of questions concerning a hefty pay raise for Mayor Bernie Sanders’ new wife and whether she should continue to hold her job as director of the Mayor’s Youth Office.”24