Fraud Suit Filed Against Garden State Union

January 14, 2005 ( - A lawsuit filed in US District Court in New Jersey is alleging that several employees of Local 734 of the Laborers' International Union of North America defrauded the pension and welfare funds of over $1 million.

>The lawsuit, filed by Patrick Byrne and Paul Drazen – trustees of the local’s funds – alleges that the employees swindled its members by providing jobs and overpaid positions to relatives and close associates, according to New Jersey’s Bergen Record. The lawsuit also contends that no-bid contracts were given, and often included excessive payment. The lawsuit contends that some of the employees named in the suit have ties to the Genovese crime family.

“These grossly excessive salaries caused the Pension fund to pay approximately 40% of its total contributions towards administrative costs with the Welfare Funds paying approximately 20% in that connection – far exceeding permissible administrative costs under the ERISA [Employment Retirement Income Security Act],” the lawsuit states, according to the Bergen Record.

>Lawyers have asked the court for a preliminary injunction that would bar the employees named in the suit from operating the funds. In the suit, they are also seeking compensatory and consequential damages.

>The suit comes out of an investigation that found “massive fraud” had been perpetrated against the fund, according to the Record. The investigation concluded that August “Auggie” Vergalito and a group of individuals related or closely associated with him devised the scheme to defraud the funds. Named in the suit were Vergalito, his wife, Rhoda; his daughter, Jamie Dolan; and his sons-in-law, John Fritzsch and Edward Dolan. Also named were Peter Rizzo, the fund’s administrator, and Isaac Barocus, an associate of Vergalito, according to the Record.

>The Laborers union represents 800,000 employees nationally. Most workers are in construction, health care, food services, and custodial work.