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1 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 DC4LCARC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------x UNITED STATES OF AMERICA, Petitioner, v.

DISTRICT COUNCIL, et al., Respondents. ------------------------------x New York, N.Y. December 4, 2013 9:37 a.m. Before: HON. RICHARD M. BERMAN, District Judge APPEARANCES UNITED STATES ATTORNEY'S OFFICE SOUTHERN DISTRICT OF NEW YORK BY: BENJAMIN H. TORRANCE Assistant United States Attorney DENNIS M. WALSH, Esq. Review Officer MINTZ LEVIN BY: BRIDGET M. ROHDE ZUCKERMAN SPAEDER LLP Attorneys for Respondent District Council BY: BARBARA S. JONES -andSPIVAK LIPTON LLP BY: JAMES M. MURPHY ADRIAN HEALY KAUFF MCGUIRE & MARGOLIS LLP Attorneys for Respondent District Council Benefit Funds BY: ELIZABETH O'LEARY HOLLAND & KNIGHT LLP Attorneys for Intervenor Building Contractors Assoc. BY: LOREN L. FORREST, JR. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 90 CV 5722 (RMB)

2 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (In open court) THE COURT: So following our last session I was quite concerned about some of the issues that we discussed and that appear to be going on here, and for that reason I issued the November 25, 2013 order and have received some helpful submissions from all of you, including the Mr. Walsh's latest report, the seventh interim report of the review officer, which I think is very helpful. It also raises some issues or perhaps they've been bubbling under the surface which I'm quite concerned about in addition to the issue of the technology and the technology fixes which I want to discuss today. So I'd like to get right to it. In a subsequent memo endorsement of mine dated November 27, I indicated an order in which I would like to proceed today and I indicated that I'd like to hear from the government first and then the district council and then Mr. Walsh. And let me just tell you why I think that's the appropriate order and mechanism. So first, obviously, this is the government's case historically and currently. It's U.S. v. District Council, et al., and the origin of the case has to do with, among other things, what were undeniably a history of bad practices and corruption in the union. So I thought that given that context and given that one of the central problems I'm concerned about now is the implementation, the very belated in my opinion implementation SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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3 DC4LCARC of these electronic reporting systems which were, as I indicated in my order, part and parcel of approval of the collective bargaining agreements going back over the last month, given the fact that those very reporting requirements were presented to me and described by you all -- and by "you all" I mean, for example, Mr. Murphy and others -- as anticorruption measures, I wanted to start and get the government's take on this particular issue about how these collective bargaining agreement aspects are being implemented from the bigger perspective of what this case has been all about. And I don't have to remind you as I indicated in the order dated November 25 that there was on my part, and others, as well, there was an enormous change in these collective bargaining agreements which was the implementation of what is described as full mobility. And that was done with considerable thought, but it did represent a sea change in how hiring took place with these contractors. These contractors got a huge benefit in that regard in my opinion. And the quid pro quo for that full mobility was the implementation of -- one of the quid pro quos was implementation of these anticorruption measures. And so clearly the full mobility was implemented but the measures were not. And as I read these materials -- by the way, I haven't read all of them in detail, but I've read most of them in the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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4 DC4LCARC main including the seventh interim report, including Judge Jones' letter dated December 3, and including the additional supplemental letter dated December 3, 2013 from Kauff McGuire & Margolis that has to do with pension issues. So before I just turn to all of you because I don't want to monopolize the conversation, but there was one other point that I would like to make. And I don't know if it's become obvious, but from my point of view when we have these proceedings and hearings, one of the most beneficial aspects from my point of view is to hear actually from the people who implement whatever it is we're talking about. So, for example, when we're talking about the benefit funds, you know, we have the most talented lawyers in the world sitting right here in front of us, but sometimes it's preferable to get beyond the lawyers and to hear from the people who are actually doing the work and I would like to continue to do that going forward. We had that experience particularly with the benefit funds, and I think that has worked quite well actually hearing from those people who are in charge of investments and the benefit funds as employees, not just as lawyers. And I would like -- there's a lot of mention in both Judge Jones' letter and in the seventh interim report of the people who were actually implementing these technology changes. It would be useful and beneficial for me to hear directly from SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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5 DC4LCARC them. And I'm always happy to hear from lawyers as well, but those are the people who really are doing the job and so I would like to hear from them as well. But anyway, enough said by me. I would start with Mr. Torrance. MR. TORRANCE: Thank you, your Honor. Good morning. Benjamin Torrance for the United States. Your Honor has it precisely right. This action was brought by the government as an anticorruption lawsuit, obviously brought under the Racketeer Influenced and Corrupt Organizations Act in order to eliminate racketeering and corruption. We were motivated by a long history of Cosa Nostra control, organized crime influence in this union. We've made great progress since that time. The suit obviously dates to 1990, and in the interim we've had three court-appointed officers: Judge Conboy, Mr. Mack, and Mr. Walsh. And, as I said, they've made great strides to eliminate that. But it's not enough in the government's view to push out individual racketeers. It's not enough to eliminate specific practices of racketeering. The point in a sense of a civil RICO action is to create structures that will prevent corruption going forward, that will prevent this problem from returning to the union. We can prosecute individuals and, in fact, have prosecuted individuals for criminal actions. But if the system of the union and if the culture and the structure of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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6 DC4LCARC the union remain open to corruption, then corruption will return. In recent years the form of corruption that we've seen has been what Mr. Mack and Judge Haight referred to as job site corruption. This is the practice of manipulating the presence and the hours and the reporting of carpenters, paying them off the books in order to commit fraud. THE COURT: And underreport benefits and underpay benefits that might otherwise. MR. TORRANCE: Yes, that practice being concealed by the off-books payments that we saw so much of particularly as detailed in Mr. Mack's reports. For years we fought for the 50/50 rule. We viewed that as an anticorruption measure. We viewed it as positive for the union to have people on the jobs who were not beholden to contractors, potentially corrupt contractors, who would then not have the incentive to conceal that kind of job site corruption. But under Mr. Walsh's tenure we have agreed, as the Court knows, to essentially make a trade. We agreed to forgo that 50/50 mechanism in order to achieve what we hoped would be a more effective way of monitoring who is on the job, who is being paid, what benefits were being paid; and that, of course, was the electronic reporting that Mr. Walsh has recommended and worked to implement. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

7 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But it should of course go without saying that that has to be an effective system. We would not have made that trade had we thought that this system would not work; and it will require efforts by, of course, Mr. Walsh and the union to make sure that it does work. We need the data to be current and accurate in order for it to be tracked and monitored to prevent that kind of job site corruption and that is our motivating principle here. It seems from the recent record that the information technology failures and the failures of accurate reporting by shop stewards are a threat to the effectiveness of that system and that is of great concern for us. THE COURT: That is of great concern to me as well, just so you know. MR. TORRANCE: Right. THE COURT: Because it's not clear to me from these submissions that this is a technological problem exclusively which can be resolved by an RFP and bringing in some consultant. It appears, reading not only between the lines but the lines themselves, that there's more to it than that and I'd like your opinion on that as well. MR. TORRANCE: Well, the shop steward reporting, we understand that there is going to be some inertia and that people need to relearn practices that perhaps they've been following for years. I have not had a chance to talk with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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8 DC4LCARC Mr. Walsh about Judge Jones's latest letter, but we do note that there are promises of essentially putting more pressure on shop stewards to change more quickly. And I'd very much like to hear Mr. Walsh's view on whether he thinks that will be enough or whether more is required. Obviously, the record will be what the record is. Say a month from now we'll know more about exactly how effective it is. But it's heartening to hear that they are addressing that problem, but we do need to have, we do need to have the people out in the field, the shop stewards, make sure that that data is accurately entered and accurately reported and done so quickly so that the opportunities for job site corruption are eliminated. So whether on that problem or on the IT problem, we do see the need to fix it as pressing. As I said, we view the latest letter from Judge Jones as hopeful. We hope that it will serve as a promise to quickly address these problems. Hopefully, we'll be fleshing that out somewhat more this morning. But our bottom line is that we need these problems to be solved and we need them to be solved quickly and effectively in order to achieve the project of eliminating corruption in general and eliminating job site corruption in particular. THE COURT: Okay. Thank you. I'm going to turn to district council. But before I turn to Judge Jones, I would also like to hear from Mr. Murphy. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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9 DC4LCARC He was the primary legal representative, as it were, counsel when all this took place, when the collective bargaining agreements were negotiated and agreed to. And I'm not quite understanding, which I indicated in my November 25 order and I think may have included some give and take between Mr. Murphy and the Court and others, why we are where we are right now and, you know, why things are taking so long and why we need -well, just that. I'd like Mr. Murphy's take on the situation. Mr. Murphy, you made some considerable sort of assurances to me months and months ago that seem, you know, I don't have that assurance today, I'll promise you that. And I don't understand -- I just don't understand. MR. MURPHY: I certainly understand your concerns. I share those concerns. It appears as this process has unfolded, as we've implemented one contract after another and where district council has instituted anticorruption measures, for instance, the job site integrity inspectors on the one- and two-person jobs, that we find or we discover different glitches in the system. One of the most notable ones as far as the statistics are concerned is the inability electronically to account for jobs being closed and then being reopened and then being closed and so that when you look at the statistics, there appear to be a number of jobs in which there is no reporting and that we've SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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10 DC4LCARC then had to manually with people drill down and follow up on that. As Judge Jones explains in her letter, there's now a permanent team made up of six people at the district council who are charged with at least in the interim figuring out what jobs are actually closed and then being able to clear those statistically. THE COURT: I get all that. I read Judge Jones' letter. I think it's a very good letter. I don't understand how it squares with what you said to me months ago in this courtroom that we tested the system, it looks like it works, and you strongly urged me to prove full mobility on the understanding that these anticorruption measures were up and ready to go. And, frankly, that is the basis or substantial basis for which I did approve full mobility, notwithstanding some of the members of the union said, you know, Judge, don't, don't approve full mobility. So I did, but in large measure based on assurances from you in particular as the counsel for the district council that this other piece of the pie was, you know, in place and now all of a sudden it's dramatically different. And, by the way, Mr. Walsh has been ringing this bell, so to speak, right from the get-go. He on each occasion that we've had a conference over the last I can't remember how many months, each time he said that he had a concern that things SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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11 DC4LCARC were not happening as they were promised. And, honestly, that's what I don't understand. And I don't think, as I said to Mr. Torrance, that these are only, although I do respect that there are some technological problems, I don't think that's the whole story. MR. MURPHY: Again, your Honor, I share your concern. The representations that have been made to the Court were based upon the information that we had at the time, going back I believe my first letter to the Court as sort of a preview was filed back in February of this year based upon information received from the IG's office, received from the representation center, from the union itself. And as this has unfolded, I believe the first contract was implemented in, was actually starting to go online in May and June of this year. THE COURT: But this process went way before that. MR. MURPHY: I understand that. THE COURT: There was a whole series of negotiations where, by the way, the rank and file rejected the collective bargaining agreements, so, and that discussion was happening months and months before. MR. MURPHY: Rank and file voted in February/March of 2012 to reject all but one of the collective bargaining agreements that had been negotiated by the international union during the trusteeship that provided for full mobility. So the union went back into negotiations and concluded at least SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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12 DC4LCARC tentatively the first agreement on August 22, 2012. That agreement frankly had, as far as I can tell, really nothing about the anticorruption compliance. And literally on August 22, 2012, I met with the review officer. We discussed what would be necessary and I typed that up, reviewed it with him, he agreed, the union leadership agreed. They sent it to the first association with whom we had the deal which was the largest one, the wall ceiling association, and they were on board. And then from that time we went through in the fall and winter 2012/2013 to testing -- initially I guess alpha testing and beta testing in the field -- the reporting system. THE COURT: That's my recollection too that it goes back to 2012, August, September of 2012 for sure. So anyway. MR. MURPHY: Anyway, if I may, I think that the review officer, and also in Judge Jones's letter, the review officer in his previous interim report and this interim report more than touch upon an issue and it's an issue that I've had since arriving on the scene in late January 2012, and based upon being in the trade union movements for literally slightly more than 40 years, since I was an undergraduate student in college, that I think that the district council really needs to upgrade the number of personnel and the training of personnel. I think the district council is woefully understaffed at the clerical level, the administrative level, and at the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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13 DC4LCARC business rep level. They're making efforts now to upgrade that and change that, but it's a very slow process to add additional business representatives, to add additional clerical people, to add additional administrative staff in order just to function. It's a 20,000 member district council, $60 million in net assets, and it needs to function like an organization of that size. THE COURT: And so why doesn't it? MR. MURPHY: Why doesn't it? THE COURT: Yeah. It's got a billion six or more in one benefit fund. This is not a mom-and-pop operation. So why doesn't it? And why doesn't, for example, one issue that has concerned me since these discussion began, why doesn't it have an in-house person that has IT capability and who can supervise even the contractors who are working on this project? Why in your opinion is that not already in place? We've got -- and I don't mean to be critical -- we've got enough lawyers here, you know, to fill the hiring hall at the district council. So why don't you have the staff to be able to administer these programs? MR. MURPHY: My personal opinion, based upon 40 plus years? THE COURT: Yeah, you're the counsel, your opinion. MR. MURPHY: I think there's an inertia that's hard to overcome. I think that one of the issues is because of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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14 DC4LCARC staffing levels that the officers and the staff, who do I think really tremendous yeoman's work, are at most times completely overwhelmed by just doing administrative functions. The RO has mentioned it in detail in his interim reports where you have business reps rather than out doing jobs are waylaid to do clerical administrative filing types of functions. So the lack of staffing is sort of like a feedback group onto itself and once an organization sort of stumbles by on that kind of staffing and getting along, it's hard to break out of that mold. THE COURT: Do we have present today anybody from the district council, the EST, for example, the interim EST or somebody else who could address that? MS. JONES: Yes, your Honor. MR. MURPHY: Yes, your Honor. THE COURT: Could he address this issue? Nice to meet you. Wherever you're comfortable. At the podium if you like or there. MS. JONES: Your Honor, I should also tell you that vice president Mike Cavanaugh is here and a number of other representatives from the district council. THE COURT: Thank you. If you could state your name for the record. MR. McINNIS: Steven McInnis. How you doing, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

15 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Currently we have a process for hiring that's required by the bylaws. We have six names that have been sent to the review officer for review to put six more representatives in the field. When it comes to administrative staff, we've actually added four additional admin staffs temporarily to deal with this issue. THE COURT: Do you have an IT person? MR. McINNIS: We use Red Eye to handle the basic IT stuff. THE COURT: That's a contractor? MR. McINNIS: Correct. THE COURT: I'm talking about in-house. MR. McINNIS: Red Eye is in-house four days a week. THE COURT: You don't have anybody on your staff? MR. McINNIS: Right. We began the process and I think that the delegate body wanted to take on the process to bring in a consultant in IT and we want to do it ourselves. If we're going to be a democratic organization and stand on our own two feet, we need to take on the responsibility of doing it right the way. So we actually have interviews with five different firms this week, and we hope to have a recommendation to the delegate body next Wednesday. It's a process. The review officer mentioned what the funds have done. That's been a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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16 DC4LCARC two-year process. I don't think it's going to take us two years to get where we need to go. I think we have a very expedited process and we're addressing it and we're addressing a lot of different issues. THE COURT: What's your take about why it hasn't happened since August of 2012? That's when the issue was first put on the table or maybe even before that. MR. McINNIS: Which particular issue? THE COURT: Technology. MR. McINNIS: Technology? THE COURT: Yeah. MR. McINNIS: You know, we've used contractors. Down the road, I don't know if we're going to use contractors. We're going to see what the consultant has to say. It's very difficult to move things at the district council. We deal with a lot of different issues. This is, as Jim Murphy would state, this is a large organization. I think when it comes down to it, and Judge Jones will go into it, when it comes to the rolling out of the compliance piece regarding full mobility, our intention was to incrementally roll it out. In discussions with the bureau office, we didn't wanted to jump in the pool the same day. I think our numbers are above 95 percent of our people are doing this the right way. You know, it's something that our goal and the vision here is to get it to a hundred percent. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

17 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: You think you're at 95 percent compliance, as it were, with the electronic anticorruption measures at this point? MS. JONES: Judge, in terms of actually reporting hours worked, we think we are somewhere between 90 and 95 percent. In terms of the accuracy of the underreported jobs because shop stewards -- that's only one reason -- are not calling in a job when it's closed, we carry all of these open jobs where there really is no reporting that could be done. There are no hours being worked. I know you understand that -THE COURT: I do. MS. JONES: -- from my letter. THE COURT: I do. MR. McINNIS: So we've taken the measures to drill down and identify these false negatives and to implement different pieces. Whenever you're going to roll out something -- and this is a fundamental change institutionally and organizationally and culturally about how we report hours -and it's something that takes a little bit of time. We've seen a lot of technological rollouts with their issues out there, and I don't think we're anywhere near some of the CityTime for New York City or the Affordable Care Act website. I think we're doing a good job. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

18 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: I don't think these things are comparable to that. I don't think this is in any way comparable to Affordable Care Act issues and problems. I don't think it's anywhere comparable to the CityTime, which is the subject of a criminal court proceeding as we sit here right now. I think this is far more finite. And it didn't take any, it didn't take any time to implement full mobility, right? That was a fundamental change that a lot of the people who are in your union were not happy about. That you did overnight. That was also a big change. So this, you know, I'm just. MR. McINNIS: Your Honor, I can tell you that there is on the union side, you know, we are in unchartered territory, this new technology. We do believe we need assistance. THE COURT: I don't get it. You're either at 95 percent compliance or you're in unchartered territory. You can't be in both places at the same time. MR. McINNIS: I do believe you can be in both places at the same time. This is a new system and a new system that is working at 95 percent, with the goal to get it to a hundred; and we're committed to put the additional resources to get it to a hundred percent, to be at full compliance. THE COURT: And what's your view about having a technology person on staff? MR. McINNIS: I believe that, you know, it's something SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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19 DC4LCARC that's not my expertise and that's why we're going to bring somebody in. We feel the consultant is an architect and if we're going to build something, we need an architect who's going to come in. And if they say we need two in-house people and that's the recommendation, I think that's the direction we should head into. THE COURT: You don't have an opinion as to whether you need anybody in-house? MR. McINNIS: I'd like to have an educated opinion. We had the first interview. I think it was very informative. I'd like to make educated opinions in regard to that, and it's not something that's common nature and knowledge to me. But I'm looking to educate myself and the executive committee and the delegate body so that when these decisions are represented, it's transparent, people understand what we're spending money on, and it's something that the members can buy into. And that's the process we've signed on for and that's the process we hope to follow. MS. JONES: Your Honor, if I could just add one thing. THE COURT: Sure. MS. JONES: So you do know what's going on in the background, the district council is not interviewing these candidates without anyone there who has expertise in technology. We have an arrangement which we're very appreciative of with the funds, and we have two members of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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20 DC4LCARC IT department, the head of it, and another. THE COURT: From the funds? MS. JONES: From the funds who are attending all of these interviews, or at least so far, and we have their guidance and we've used it on other occasions as well. THE COURT: Do you, in particular, would you think that just as they have IT people on their staff that it would be a useful thing for the district council to have? Most organizations, that's like the No. 1 person these days. MS. JONES: My own opinion, and I'm not an IT person, it would seem to me that going forward it would make perfect sense to have an IT director. But, again, we don't have it now. We're using a great deal of help from the funds, and we're going to take the advice of the technology consultant that we get. THE COURT: Great. Thanks. Judge Jones, did you want to comment? I have your letter and I think it's well done. MS. JONES: I guess, Judge, I do want to say that it is a promise. We understand. And you're right, some of the problem is technology but some of it is human. The fact that there is a failure to report the closing of jobs is a huge problem and we know that. But there are five or six other reasons why those jobs don't get closed and for all of them we think technology may be helpful. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

21 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I know you read the letter so you know that we have a job closing button on the electronic shop steward's report that will be coming, and I know you've seen my other comments. We're not sure, in fact, we don't believe telephone reporting, nonelectronic reporting has actually gone up. We are enhancing steward, shop steward discipline, and Mr. McInnis himself -because we want shop stewards to know that this is coming from the leadership -- has sent out personal emails to each shop steward and done a number of other things. And I guess the most important thing at least to me in the letter, because we do understand that these numbers have to be accurate if the electronic reporting system is going to mean anything, but the most important thing that I learned after I spoke with actually three of our business reps, all of whom have been working on this project for the last two weeks and one of whom who's been working on it since July full-time, is that there are not work hours that are not being put into or not a great many work hours that are not being put into Watchdog. We have a lot of hours we're looking for that were never worked because the jobs aren't getting closed. I know you've heard about our inability to close jobs. I'm hopeful that the closure box will help. But I think it may be equally helpful, maybe more helpful to get the attention of the stewards and that's what we're about. THE COURT: That struck me from your letter, from all SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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22 DC4LCARC the letters, to be a really crucial and open issue. MS. JONES: And that's what we're about now. We're making sure -- and this began before the November 18 conference -- that we keep records of stewards who are not reporting, and after two failures to report and a warning, they'll be brought up for shop steward review. THE COURT: Do we have, Judge Jones -MS. JONES: Vendors? I'm sorry, Judge. THE COURT: I was going to ask, some of the people mentioned in your letter, Mr. DiNapoli, for example, we've heard from Mr. McInnis, Mr. Danielson, Mr. Caperso, are they here? MS. JONES: Judge, I think it would be, and let me tell you, Stephen McCann, Jeremy Millen, and Andrew Macaria are the three gentlemen seated in the first row to the left. I think Mr. McCann has the most knowledge about what they're doing now, and I think it would be very helpful if he could explain to you how he's going about his job. THE COURT: Yeah, I'd like that. If you could state and spell your name for the court reporter and indicate what your title is. MR. McCANN: Good morning. Stephen McCann. I'm a business representative for the New York City District Council of Carpenters. For the last few months I've been working on the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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23 DC4LCARC electronic reporting, going through the reports, sorting them out, trying to identify problems. Some problems we resolve right away, some occur as we resolve other problems with the computer, we change one thing and another door opens type of situation. But overall most people are reporting, 90, 95 percent of the people out of the gate are reporting the jobs. They work the hours they work. We run into technical difficulties with new members on the job who are unable to be logged into the system until a different division of the union sends up paperwork and it gets processed through. So you run into problems on that front. As far as the other problems, the closeouts, the job lingers on where it shows up on the report. The job is over. All the hours from the job have been captured. There's no outstanding hours, but the computer still looks for it until we manually go in and tell it not to look for it. THE COURT: And what's your technology background? MR. McCANN: As far as I'm just -- I don't really have any formal education. From growing up being around computers and the age group I'm in, I'm pretty well knowledgeable of a computer. THE COURT: Okay. That's helpful. Thank you. MS. JONES: Your Honor, I would only add to what Mr. McCann said which is that he as well as the other two reps SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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24 DC4LCARC who are here have indicated to me that when they get their list of jobs that appear to be open but are actually closed, they call almost every steward and they have each told me -- and we're going to track this going forward so we have precise statistics for the Court, we'll use a form -- they have discovered at least six different reasons why the jobs weren't closed. THE COURT: Were not. MS. JONES: Were not, and why hours that we're looking for for entry into Watchdog were never put in. I guess my only point is this. This will help us. It's something that we should have investigated before, but at least we now know why we have these crazy numbers in the unreported job category. But what each one of them said was virtually the number of times that they had a steward that needed to report hours was under -THE COURT: Minuscule. MS. JONES: Minuscule, absolutely minuscule, Judge. So for what it's worth, we do believe that all along Watchdog has had the data in it for carpenters, working carpenters, to check hours and crew sizes. THE COURT: Anybody -- I don't know who everybody is back there. MS. JONES: Your Honor, we did ask representatives from Standard Data, Red Eye, and AT&T. And we had thought we SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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25 DC4LCARC had a representative from Motorola, but at the last minute last night we were not able to get that person. THE COURT: Somebody from Standard Data might be helpful. They were originally online, as it were, for implementing this system. In fact, I think at one of the early conferences we had here in court somebody from Standard Data spoke. MS. JONES: Mr. Andretta, Tony Andretta is here. THE COURT: So maybe he could shed some light on what problems exist. MS. JONES: Sure. THE COURT: And actually why they exist and where we're headed. MR. ANDRETTA: My name is Anthony Andretta, President of Standard Data Corporation. THE COURT: So you've been on board with this project as a contractor, consultant, right, for some considerable amount of time? MR. ANDRETTA: Yes. I've actually been working with the district council for over ten years. And this particular process that they're going through actually began like maybe five years ago with a different type of technology and so forth, which you're probably aware. THE COURT: I am. And, in fact, I remember, I think you were on that side of the courtroom and spoke at one of our SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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26 DC4LCARC fairly recent, in the last six months or so, about what was going on. So what is going on? MR. ANDRETTA: I was about to say, frankly, we're a bit surprised to hear this being described as a technology problem when in reality it's more of a procedure problem for which the technology has to be maintained, enhanced, and modified to meet the changes that we're learning about what's happening in the field. THE COURT: When you say procedure problem, you mean a human problem? MR. ANDRETTA: The procedures that exist out in the field for the carpenters and how they enter the hours, how they open and close jobs, and utilizing the existing technology that was already at the district council to be able to be integrated with this new technology. So we've been doing that, and we really don't understand that there's any problem that exists. A problem does come up though when a procedure has to change. We have to modify or enhance that program, all the integration part of the program, we have to train the people that are going to use the updated system. And one of the biggest problems we have in this regard is we can't test it, so we have to roll it out in a production environment. So I will say that when we roll out a change in production, it's not always working properly, but that could be for a day or two. So, again, going back to what I said earlier, I don't SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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27 DC4LCARC see this as a technology problem. THE COURT: Well, it's kind of mystifying to me because I think there are at least one or two RFPs that are available in which people are being interviewed and potentially hired to solve technology problems. So am I wrong about that? MR. ANDRETTA: No. Again, I don't know much about that other than what I read or what I'm being told. I know they're outside looking for a consultant to come in and analyze the existing technology. Understand that some of the technology in place was put in ten years ago, okay, and trying to integrate a ten-year old technology with a new technology such as this is difficult to do. But I feel that we've done that, okay. Should the old technology be replaced? I can give you an example. There's a product in place called Liberty. It is an imaging document management system that's been in place for close to ten years. Liberty is no longer supported in the industry. Liberty was bought by a company called Onbase. They continued to support it for a number of years. We are now supporting that product on our own. Does it work? Yes, it works. Can we enhance it? No, we can't. There are certain limitations to it. So as a result of that limitation, we have to make changes to the electronic reporting to make up for the deficiencies within that system. So should that system be replaced? Yes. Is it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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28 DC4LCARC expensive? Extremely, and it's not something that I believe the district council wanted to get into at this point based on the issues they're dealing with today with the full mobility. THE COURT: Okay. Thank you. MS. JONES: Your Honor, the district council is getting into these issues with the IT consultant that we intend to hire and that person will lead us into the next stage because we'll then have an IT vendor. He will come in and put our systems in place. So that's exactly where we're going. THE COURT: Is that intended to supersede Standard Data? Is this a new era of vendor/contractor/consultant? MS. JONES: We're not at the stage where we're putting out the RFP for the Standard Data type vendor or the Red Eye type vendor for that matter. That will come out in March. THE COURT: So what RFP are we at? MS. JONES: The RFP that we're doing now is to get us an IT consultant who can examine business practices and work flow, look at what we have now, our hardware and our software, and actually with us design a system that will serve our purposes and also be integrated not just internally within the district council, but also with the funds. That's what the purpose of this person is. They're going to remain on when we go through the phrase of trying to bring in the actual people who are going to produce our hardware and design the software and they will help us select those vendors. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

29 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: So these are the entities being interviewed currently? MS. JONES: No, neither are. THE COURT: I thought they were. I thought the first RFP was to select. MS. JONES: I'm sorry, neither who is being interviewed? THE COURT: I'm trying to figure out who you are interviewing in this first round, RFP round. MS. JONES: Okay. We have five firms who are IT consultants. THE COURT: Correct. MS. JONES: None of them -- I thought you were asking me if they included either Red Eye or Standard. THE COURT: No, no. I'm wondering who they are. MS. JONES: They're a variety of firms. One is Segal that has done prior work of this nature with unions. Another is called MeetUs. Another is Aquist. There's been one interview. The other four are going to be accomplished by the end of the week. There's a range of costs, as you might expect, with them. And as I think Mr. McInnis said, they were very happy with the first interview because they felt that the person they interviewed there could be quite helpful. It's only the first interview. We have four to go. THE COURT: When you say range of cost, what are we SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DC4LCARC talking? MS. JONES: I think one was as low as a hundred thousand dollars and one that was over $300,000. THE COURT: This is just for a consultant to advise you about what the problem is. MS. JONES: Right. But we think this is a very important phase because this consultant is going to hope us figure out our work flow and business practices and then figure out what the technology is that goes with them -- and, again, that couldn't be more important -- and then ultimately selecting the vendors who can provide us with the hardware and software. They'll stay on to help us do that. THE COURT: Yeah. And that now is anticipated, that second RFP, in March or something? MS. JONES: Yes. THE COURT: It can't be any sooner than that? MS. JONES: You know, Judge, it could turn out to be not as big a question or difficult as we think. I've heard opinions saying that this might take us as long as it took the funds. I've heard other people say these are really not that difficult. We should be able to do it in six months. I don't know, but that's why we're getting these consultants in. THE COURT: To tell you. MS. JONES: To tell us. THE COURT: Maybe we should turn to Mr. Walsh. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

31 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WALSH: Thank you, your Honor. Dennis Walsh, the review officer. The frustrating thing about the District Council of Carpenters is that it only responds to negative inducement. One would have thought that after all these years of oversight, the pendency of a consent decree since 1994, and the stipulation and order since June of 2010 that the leadership at the union would have decided, finally, we must engage in rigorous self-analysis. We must figure out how to improve this institution so that it is perfected, so that not only is corruption eradicated, but that it functions as the modern, efficient, compliant business that it must be to benefit its 20,000 members and their families. We had here this morning because the Sword of Damocles is palpable on the head of this union. Nothing has changed in terms of the quintessential horse who not only will not be led to sweet water, but falls down and says drag me to that sweet water, to valleys of green grass that will make him strong, like a child who won't eat his spinach, and that's all crazy. When is it going to end? When is the district council going to step up and say we understand these problems and, with alacrity, we are going to solve them? I think that among the options that the Court has is to set a rigorous deadline for perfection of this system, no matter how many human beings they have to throw at it, so that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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32 DC4LCARC they can come back to this Court and say we have 100 percent of the information in this system that the members will need to use Operation Watchdog. And if that is not achieved quickly, I think it's fair to abolish the contracts, to set the parties back to the table, but to hold on to the imperative of -THE COURT: So abolish -MR. WALSH: -- electronic reporting. THE COURT: -- which contracts? MR. WALSH: All of the contracts previously approved by the Court on the promise that this compliance program would work. THE COURT: You mean the collective bargaining agreements. MR. WALSH: Yes, the collective bargaining agreements is what I mean by the contracts. I think that it would be entirely fair for the Court to request that the district council affirm within 30 days that they are at least at 90 percent accuracy and without too much advocacy, relying exclusively on facts, be able to demonstrate to the Court, to the government, and to my office that this is a reliable representation. THE COURT: So there is one other issue that's troubling me that's not so subtle, actually, in the seventh interim report that you mentioned, and that is whether and why, if the answer is no, the district council is not responding to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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33 DC4LCARC your suggestions, in particular with respect to these issues, and I think we need to air that too. I don't quite get it. The report even suggests, or doesn't suggest, it states that Judge Jones was hired to speak to you as if Mr. Murphy couldn't or didn't or wouldn't. I don't quite get that whole dynamic here. But it is, it is contained in this report, and I'm not sure I'm understanding that element. MR. WALSH: Judge, what was clear a few months ago was I thought that I had reached agreement with this union to give them an opportunity to take on the challenge of upgrading their IT platform and their business systems. I addressed, as you know, the delegate body on two occasions. I addressed the executive committee. And I thought that all their concerns had been addressed, yet the executive committee voted against the recommendation to upgrade. The delegate body confirmed that they didn't want to upgrade. There was then a movement to hire counsel to fight me, in plain English. I observed delegate meetings and listened to recordings of others where the sentiment of the delegates was very clearly expressed that they'd had enough of Dennis Walsh, that they had enough of the review officer suggesting or even demanding that certain change be effected, that they wanted to hire a lawyer to fight me on that. Now, thankfully, Judge Jones has been selected and she has been immensely helpful in I think cutting to the chase with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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34 DC4LCARC her clients and discussing reality and various imperatives on an objective basis. She has never intimated that it is ever her intention to be adversarial, and I am grateful for and respect her efforts every day at the district council. The sentiments though that led to this chain of event is still there, and I expressly remark that there are people who absolutely chafe at the notion that they have to deal with the review officer and the oversight of this Court and that's going to be an ongoing problem and I don't know how it's going to play out. MS. JONES: Your Honor, there is a lot of sentiment at the district council with respect to the relationship with Mr. Walsh and I think that that's a fuller conversation that can be had on another occasion and I think it's something that is profitably discussed with the government, Mr. Walsh, and myself before we air it before the Court. THE COURT: And what about Mr. Murphy? Where is Mr. Murphy in this? MS. JONES: Well, you know, Mr. Murphy is general counsel, and I don't know anything about labor law. Thankfully, he's handling all those issues. I was hired to come in to counsel the district council with respect to their obligations under the consent decree and particularly with respect to dealing with the RO. And I appreciate Mr. Walsh's statement. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

35 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: You know, we don't have to go into all the details now, but that's precisely what I don't get. I mean it's clear that's what it was, but. MS. JONES: The ability for -- I'm sorry, Judge, I didn't hear you. THE COURT: I just mean why does the general counsel have to hire a general counsel to talk to Mr. Walsh? It makes no sense to me. I mean you're a wonderful person to have in that role and I have great respect for you, but I don't understand. It sounds so dysfunctional, frankly. MS. JONES: Communications are not good, period. Mr. Murphy has plenty to do without also having to discuss initiatives with Mr. Walsh and make efforts to counsel the district council as we go along in terms of this compliance. I would like to add, just make this one comment because I read, obviously, I read Mr. Walsh's seventh interim report and, you know, I agree with him that if a union is going to succeed on its own and be free of corruption and democratic, that impetus has to come from within. And I guess what I didn't understand after he talked about democracy was his criticism of the council's IT program, which I know your Honor is totally familiar with. I was hired. I assessed the situation. I counseled my clients, and an IT program was voted and approved by the delegate body. THE COURT: But it was first rejected when he proposed SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DC4LCARC it. MS. JONES: Well, there are two things. THE COURT: It's the way it seems. MS. JONES: Right. There are two things. First of all, it wasn't precisely the same program. Regardless of who's right or wrong, the district council wanted to get consultants first and decide about an IT director and a project director second. That was the only difference between the two proposals, I grant you. What I don't understand is why Mr. Walsh would say the starkest transgression against common sense was the rejection of my recommendations regarding information technology and business practices and the subsequent vote to pursue everything I recommended regarding IT in the first place. THE COURT: You mean it's hyperbolic? MS. JONES: I mean it's hyperbolic. I guess my question -THE COURT: It sounds true. MS. JONES: Well, my question is what's wrong with the union wanting to own its own technology program? And especially one that Mr. Walsh doesn't even criticize and, in fact, he did not object to the distinction of hiring a consultant first; I don't understand why that's a cause of concern. If this union is going to stand on its own two feet and reject one plan by Mr. Walsh but comes back with one that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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37 DC4LCARC he now claims is totally satisfactory, albeit a little different -THE COURT: Not much. MS. JONES: No, I'm saying -THE COURT: No, it's not much different. MS. JONES: You know, Judge, I think they wanted to vote their own IT program. THE COURT: Well, yeah, I sort of understand that. But it strikes me that or what perplexes me is why everybody isn't on the same page here. Sure, everybody's got different personalities and some people are easier to talk to than others. But nobody -- he, for example, his suggestion which are in the main, not even in the main, but you're talking about 95 percent before, I would say his proposal is 95 percent of the same proposal that when he proposed it was rejected and it's now implemented. So there is that problem that, frankly, I think needs to be resolved as much as the IT program as to how people are communicating and why they're fighting with each other over the 4 percent, so to speak. I just don't get it. I was so surprised, to be perfectly honest with you, and I'm surprised that this issue, there it is. It couldn't be clearer. So Mr. Walsh I might characterize as a tough taskmaster or whatever the expression is, but there's a history to this union which would lead one to believe that that's appropriate. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

38 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. JONES: Let me just say this because the government talked about corruption earlier. I think we all know what happened in 2009 with Forde and the corruption that existed. We are four years later. Mr. Walsh has eradicated any organized crime members or connections, at least to the extent that he's able to investigate and we know. There are no more drugs. There are no more bribes. People are not blowing out expense accounts. They're not driving around in fancy cars. Those abuses and that corruption -- and I think Mr. Walsh has said this himself and fairly recently -- no longer exist. I know we need a structure going forward to assure everything, but I think this monitorship has to go into a new phase because the people in the district council are people who are hardworking, they would like to achieve the goals of the union, but -THE COURT: I think you all need to go into a new phase. I don't think just the trusteeship or the monitorship; I think everybody has to go into a new phase. MS. JONES: That's right. We need to have a district council that does feel that it can speak its mind, disagree with proposals without fear of veto, where we can find another enforcement mechanism that would keep this in order. We need this monitorship to transition into a structure where people who are not criminals and are working carpenters and business SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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39 DC4LCARC reps are treated differently than the union was treated four or five years ago. There is a very big problem with communication because of the atmosphere that exists at the district council. THE COURT: Well, I get it. I get that there is, but I don't quite get why. And I do think we should have or you should have -MS. JONES: I think, as I said, your Honor, I think it would be very profitable for the government, Mr. Walsh, and myself to continue these conversations. I've discussed that with Mr. Torrance, and I believe Mr. Walsh and I discussed it sometime ago that we should get together. THE COURT: Yeah, I think it is a good idea because I think it's getting in the way of business. MS. JONES: It most definitely is. MR. FORREST: Your Honor, if I may be heard, Loren Forrest from Holland Knight for the Building Contractors Association. I've just heard some discussion today and your Honor has also intimated discussion, the negotiations between the parties whereby full mobility was gained by the contractors in exchange for anticorruption measures. I would just want to state and I think I'm not going too far afield here to say that for the Building Contractors Association and as far as the other contractors association, I don't think abolishing the CBAs or unwinding them would help all the parties. I think all SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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40 DC4LCARC possible other options should be explored. As your Honor probably knows, that previously happened in 2007 and 2008 and that resulted in two years of litigation including a Second Circuit appeal, motion practice. THE COURT: I frankly don't care about that. What do you think is needed to get these anticorruption technology measures implemented ASAP, and do you think the contractors have a role in doing that? The contractors got full mobility. And so what's your specific position about implementing these technology changes, why hasn't it happened? MR. FORREST: Your Honor, I read the seventh interim report by Mr. Walsh, I read the letters by Judge Jones and the parties here. I believe that most of this from everything that I've read and I've seen are internal workings with the union. There's obviously updates and things that need to be implemented better. The parties I think have obviously all got to speak and communicate better. But I think the contractors really don't have a say in a lot of the internal workings of the union and that would be unfair to unwind the agreements that were negotiated, as you know, and it took a long time, over two years. So I think most of it is internal. The contractors are willing, if there's anything we need to come to the table and talk to the parties about, if it affects the CBA in any SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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41 DC4LCARC way, I think all the contractors associations would be willing to discuss that with Judge Jones, U.S. Attorney's Office, the Review Officer Walsh, and obviously Mr. Murphy. So I think right now the contractors are on the outside, I think as you can see from Mr. Walsh's report, on the outside of all this. They're not being implicated that they've done anything wrong. So we stand ready to do whatever is necessary to help the process along. I just wanted to state for the record that I don't think unwinding the CBA would help the process because, as you've probably already heard, it would actually hurt the contractors in terms of time and expense. THE COURT: I get it. MR. FORREST: Thank you. THE COURT: Anything else? There was a hand before. MR. KELTY: Greg Kelty, Local 157. Your Honor, in regards to the compliance issues with this machine and what we're having here with the council is I think one of the biggest issues here is there's really no set in stone requirements that have been going out to the shop stewards, to the contractors, or anyone else. I constantly get phone calls from people asking me what's going on with this, what's going on with that, how come we have to do this and now they're telling us we have to do that. And if you don't have that built into your software, how can you possibly have it SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DC4LCARC work? I mean, as you said, this has been going on from about March 2012. And when that memorandum for the contract went to the delegate body, we had about a paragraph and a half of what the compliance issues were going to cover and we have yet to see anything since then exactly what the rules and requirements of the compliance were going to be still to this day. I had somebody call me last night and say, you know, they just told us if we have a two-man job and one of the guys leaves, we have to call the job back in as a one-man job and otherwise they're going to bring us up on charges. It's almost like they're putting the onus on the contractor and on the shop stewards to get this thing right when it should be on the council to get this thing right. THE COURT: That's the last thing we need is to have lawyers out in the field. MR. KELTY: What I'm saying is they put the cart before the horse. They put this system in place without really having -- nobody knows what the parameters are. THE COURT: I thought there were trainings. MR. KELTY: They train you how to use the device essentially. THE COURT: Okay. MR. KELTY: As far as the transparency goes, counsel Murphy referred to the transparency. As a delegate, and I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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43 DC4LCARC think I missed maybe half a meeting in the last two and a half years, there has been really no transparency between the council and the delegates as to what's going on with this system. We asked many times what's going on and they just allude to we got it going, it's good, it's this, it's that; and it's been an absolute disaster. We've had many delegates get up and make suggestions; they've just fallen on deaf ears from day one. THE COURT: Suggestions about the technology? MR. KELTY: You have the tablets. Say you have the tablets. We're spending $1,200 on the tablets. I myself and some of the others said why don't we just order smartphones? You can get an iPhone 4 for $200. You know, for whatever reason and what I've been told that more people are using their phones and going home and using their computers to put the hours in than are actually using the tablets. The tablets have been a total disaster right from the start. One of our former delegates, Bill Walsh, took a picture. He was down at the rep center. They had a whole cart full of broken tablets in there that didn't work. I know guys that, you know, they're like I can't get through with this thing. You know what they do? They leave it at home or they just leave it in their tool bag and they go home and do it on the computer. It's just been an absolute disaster. There's been no leadership from the council on taking SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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44 DC4LCARC the bull by the horns and straightening out this whole technology thing. Like Dennis said, he's been mentioning it from his first interim report we need to upgrade the technology. You have the benefit fund upgraded their whole system. Last we heard from Rick was they were testing the system. And yet here we are, until Barbara Jones came in -and I commend her because nothing was done until Barbara Jones came in and got the ball rolling on this whole thing. It's just the whole thing is an absolute disgrace. THE COURT: Thank you. Anybody else? MR. CLARKE: Good morning, your Honor. THE COURT: Good morning. MR. CLARKE: I don't have to tell you my name, Gene Clarke. I'd like to say, first of all, everything that's said is wonderful. Only one thing. The membership has no dental and it has no eyeglass prescription. They're paying all these bills. These people get salaries that are outrageous. They just keep on dumping on the membership. The membership is getting nothing. They're getting not a dime out of this. They just keep on losing benefits. All right. Kind of dirty. I'd like to talk to you about the trusteeship of the New York City district council, how it was about. Fred Devine and myself had breakfast one morning and we talked about how McCarron called him up and asked him to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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45 DC4LCARC give six cents an hour to him from the labor management fund. Fred Devine said to him 6 cents today, 25 cents tomorrow. So he got a stonewall, McCarron was out. He knew he couldn't get into New York to get out our money and he figured another way. So he went and got ahold of his old friend Paschal McGuinness, who is an associate of the Gambino crime family, and he got Doug McCarron the deal he wanted. They sat down and they brokered a deal, okay. That deal was a nightmare. The school funds were taken for about six to $12 million. If McCarron got the 6 cents, I don't know. I brought it to the attention of Dennis Walsh and also I brought it to the attention of our U.S. attorney, but that's another story in itself. Also, McCarron took $2 million from 608 treasury. That's why it doesn't shock me to see the treasury of 608 and all the books gone, the charter thrown away. I wonder why. Is it because of all the money that went south? I'd like to know myself. Now, the statute of limitations limits us in the discovery of what went on with all this money, but we'll never find out unless we get into a RICO criminal again. That's the only way we're going to find out how this money disappeared. All right. Now, Hunter College, who was in charge of giving money to the school, they turned down the school for funding because SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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46 DC4LCARC of the money that left the school and went out to Washington, D.C. to Bob Georgine. What happened? Who knows. Now, we have other problems. Now they get Harvey Torrack in the late nineties. He comes in to clean up the mess. He's doing a great job. Harvey is doing good. He's out of the labor department. He's doing the job. You know what happened to Harvey? They got rid of him. They gave him a pension, a car, and some money and sent him on his way. Then in 2005 we have Mike Forde in the hotel out in the international convention. He's walking around. He has -who goes down and gets him out of it? Our friend Brian O'Dwyer. Brian O'Dwyer with his associate, they tell the international he's coming back to New York with us. We take care of New York. You have nothing to say. He's not going in rehab. He's got his problems, but he's got other problems. And this goes on and on and on. THE COURT: I get it. MR. CLARKE: We are owned and still are part of organized crime. And we're never going to get rid of it unless we get rid of the international and keep them out of all of the affairs of this union. Then maybe we'll have a shot at cleaning the mess up. Until then, nothing. THE COURT: I got it. Thanks, Mr. Clarke. We have one more speaker. MR. MAKOWSKI: Robert Makowski, Local 157. Thank you, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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47 DC4LCARC your Honor, good morning. Three things. In short, one, if you think this is dysfunction, imagine what the membership thinks of this. No. 2, Dennis Walsh mentioned the Sword of Damocles. Well, it's already slicing the members because of this. It might not have affected the council in such regard as it has the membership, but we are suffering because of it. THE COURT: How? MR. MAKOWSKI: That was my third explanation. Just recently, and this is personal experience from being dispatched to job sites within the last couple months, is that we have repeated manning violations taking place on job sites and we were assured that if it was repeated, this mobility factor would be revoked or whatever we collectively bargained for would be negated if there was a second infraction. Well, I don't see the enforcement because if there was enforcement after the first one, there wouldn't be a second infraction. I personally have been dispatched to job sites and not working in one year working a total of 40 hours, I have 12 to 14 skill sets on my hour list, my work list dispatch. When I'm sent out to a job in 12 months, I get one week because I complain about collective bargaining things and I go to the IG's office and grievances are filed, but that's on a repeated basis, not just the first instance of a report. So I wonder again if there is enforcement why are we having repeated SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

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48 DC4LCARC violations. Now, someone like me that doesn't work that often because of the mobility and the new contracts, when you get to a job site and you see four- to five-month work ahead of you, you're thrilled. Right before the holidays, it gives you an uplift. It helps you. It makes you give some faith to the system. But when they send you home without even opening up your tool bag because of a repeated violation, you've just been disenfranchised again. Like I said, the Sword of Damocles might be hanging over the head of the district council, but it is now at present slicing up the membership. Thank you very much. THE COURT: Anybody else? So what I would like, I think it would be useful if you had that meeting or conversation, that is to say, Judge Jones and Mr. Walsh and Mr. Torrance, sooner rather than later so maybe there could be better communications. And then I would like to know though in the relatively near future, I guess when you finish your interviews, if there isn't or can't be some more expedited time table. MS. JONES: Very well, your Honor. THE COURT: So perhaps, it could even be a joint letter from Mr. Walsh and Judge Jones and Mr. Torrance. However, and that interview process seems to me -- it is going to be concluded did you say this week? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

49 DC4LCARC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. JONES: The last two interviews are Friday. THE COURT: So presumably next week or sometime thereafter you're going to make a determination. MS. JONES: Right. We have to present our candidate to Mr. Walsh for his approval. And then assuming that we have it or that he selects someone else, we'll go forward among our candidates. THE COURT: Okay. Anybody else want to be heard? I think that's good progress for today as far as I'm concerned. Anybody else? No. Nice to see you all. o0o

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