Lawsuit: Top Union Punished Official Who Exposed Corruption

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August 25, 2021

A powerful labor union forced a top official to retire after he pursued an investigation into stolen union funds, according to a lawsuit. 

The International Association of Machinists (IAM) faces a lawsuit from its own executive council member, who claims leadership retaliated against his efforts to uncover how a single local affiliate embezzled six figures in union dues. The lawsuit, filed in August, claims union leadership targeted the source of the investigation, who was demoted, ordered to work from home, and forced to retire from his executive position before the end of his term. The plaintiff's investigation found that three local union officials used the embezzled funds to boost their salaries. 

IAM, which represents 600,000 members, did not respond for comment. 

The plaintiff in the lawsuit, Sito Pantoja, authorized an audit into the embezzlement scandal in 2017 as general vice president of the union. The audit found more than $100,000 in stolen funds from 2015 to 2018 at a single union affiliate: Houston Local 2198. This union was headed by the sister of IAM's secretary treasurer, Dora Cervantes, who denied accusations that she attempted to cover up the scandal. Cervantes's sister was one of the three officials who used the funds to inflate their salaries. The Department of Labor, which later took over the investigation into the embezzled funds, said it is not targeting Cervantes.

Patrick Semmens, vice president of the National Right to Work Legal Defense Foundation, said the allegations in the lawsuit detail common tactics from union executives to suppress any attempts to hold leadership accountable for corruption. 

"Big Labor’s preferred business model is extorting rank-and-file workers to pay up or else be fired, so it isn’t a surprise when the union bosses who are comfortable with that begin misusing the money they’ve extorted from workers," Semmens told the Washington Free Beacon. "If the corruption detailed in this lawsuit resulted in this campaign of retaliation against one of the highest-ranking officials in the IAM, just imagine the uphill battle a rank-and-file worker faces when trying to blow the whistle on union boss corruption they witness."

Pantoja opposed Cervantes's 2021 reelection campaign while top executives, including the union's president, Bob Martinez, backed her. Martinez removed Pantoja’s chief of staff days after he endorsed her opponent. Cervantes, who was the only executive to face an opponent in the election, won the race. IAM then removed Pantoja from his leadership position with the transportation department, membership on the United Airlines board of directors, and vice presidency of the International Transportation Federation, according to the lawsuit. The executive council later adopted a rule requiring its members to retire after turning 65—a move the lawsuit claims was intended to oust Pantoja when he turns 65 in 2022 despite his reelection to a four-year term this year. Pantoja has been a member of AIM for more than 40 years. 

The lawsuit alleges these actions prove AIM violated the Labor-Management Reporting and Disclosure Act, which details standards that must be met before a union member can be disciplined.

Maxford Nelsen, director of labor policy for the Freedom Foundation, said unions are more likely to get away with corruption now that the Department of Labor is headed by President Joe Biden, who campaigned with the promise of being the most pro-union president. Biden has repeatedly pushed Congress to pass the PRO Act, which would put an end to the 27 right-to-work states that ban forced union dues as a term of employment. 

"Corrupt union executives didn’t disappear after Joe Biden was elected president," Nelsen told the Free Beacon. "If Mr. Pantoja’s claims are true, they illustrate the importance of holding unions to account and giving all workers the ability to withhold dues from crooked unions." 

Published under: Big Labor , Corruption , IAM