Readers may recall a previous article in the EPTW earlier this year talking about the incredible amount of money (billions) the government has provided to union pension funds in the way of special financial assistance provided through the Pension Benefit Guaranty Corporation (PBGC) as provided by the American Rescue Plan Act passed under the current administration in 2021.
Aficionados of Mafia cinema will recognize the below as a sub-plot in the Scorsese film Casino. To build what became the Las Vegas of the 80’s the Teamsters lent mob frontmen such as Alan Dorfman and others millions from their pension funds back in the day.
The ASE article reported on recent payments to different labor pension funds to maintain and ensure their solvency. Some of these underfunded pensions were the same Teamsters funds that made loans to organized crime back in the 1970’s.
Though today’s pension fund deficiencies are not all related to these questionable union loans, other major factors creating the pension shortfalls are declining union membership that can no longer pay into these funds and a lower than projected investment return to the pension funds. The PBGC; however, is not supposed to fund weak pension funds with taxpayer money. They are supposed to fund weak pensions with premiums paid by defined benefit plan sponsors, assets of pension that are taken over, and recoveries of unfunded pension liabilities from the sponsor’s bankruptcy estates and investment income – not taxpayer dollars as is now the case.
After all that and 40 years later, after these pension funds are made whole with billions in taxpayer money, an Illinois judge (RIP Al Capone and Sam Giancana) dissolved the consent decrees put in place back in the 1970’s. In the 1980’s (1982 & 1985) these decrees forced the offending union pension funds into federal oversight to clean them up and make sure those “old tyme” mafia connections were thoroughly purged. The decrees were over the Teamsters Central, Southeast, and Southwest Areas Pension funds.
The Department of Labor opposed the motion to end the decrees. In their June 2nd brief they argued the consent decrees should stay in place to “avoid and deter further instances of egregious fiduciary misconduct.” The point of the continuance of the decrees from their standpoint was to monitor the pension fund’s management of the influx of special financial assistance funds. Will Martin Scorsese now be given new material for a sequel to Casino - Casino II: The Next Generation?
In fact, the DOL opined. “The secretary respectfully suggests that the time to test whether the consent decrees can be safely dissolved is not when the pension fund has just received an unprecedented infusion of $35.8 billion in taxpayer funds.” The judge however wrote in his opinion that the “DOL and other government agencies have other avenues to supervise the funds outside the confines of the consent decrees.”
So here we are, after 40 years – some great mafia cinema. The flush again pension funds that once provided the mafia money to build Las Vegas, led to some exciting crime movies and even may have resulted in some recent macabre finds in dried out lakes in the greater Las Vegas area.
Source: Law 360 Employment Authority. Ill Judge Ends 40-Year Oversight of Teamsters Pension Funds (6/12/2023)