Opinion ID: 772930
Heading Depth: 2
Heading Rank: 1

Heading: The First IRB Proceeding.

Text: 10 In addition to its provisions pertaining to the conduct of free and fair elections, the Consent Decree between the government and the IBT also established the IRB to oversee the eradication of corruption in the IBT. Detailed rules approved by the district court and this court govern operation of the IRB. See United States v. IBT (IRB Rules), 803 F. Supp. 761 (S.D.N.Y. 1992) aff'd in part, rev'd in part, 998 F.2d 1101 (2d Cir. 1993). The three-member IRB is vested with broad investigative and disciplinary powers, including the power to investigate allegations of corruption. 2 See IRB Rules, 803 F. Supp. at 784-85. 11 On October 22, 1997, the IRB issued an Investigative Report to the IBT's General Executive Board (GEB) recommending that Hamilton be charged with bringing 12 reproach upon the IBT by embezzl[ing] IBT funds by arranging for IBT donations to certain advocacy groups as part of a scheme in which, in return for the IBT's donations, individuals, directly or indirectly, would donate money to benefit the [] Carey [] campaign thereby violating the IBT Constitution. 13 In addition, on November 25, 1997, the IRB issued an Investigative Report recommending that Carey be charged as follows: 14 In breach of your fiduciary obligations, you authorized IBT contributions in October, 1996 to Citizen Action, Project Vote and the National Council of Senior Citizens, totaling $735,000, knowing the contributions would result in a personal benefit to you in money to pay expenses for your re election campaign. You failed both to disclose that benefit and to give it to the IBT, as your fiduciary duties required. You also failed to exercise your fiduciary obligation to inquire into the circumstances surrounding your co fiduciary's recommendations of those transactions. 15 The GEB filed the recommended charges against Hamilton and Carey and returned the matter to the IRB for a joint hearing. 16 The charges against Carey and Hamilton were based on a scheme by which IBT funds were manipulated in order to generate contributions to the Carey campaign. Specifically, as the IRB noted, in October 1996 the IBT gave $735,000 in political contributions from the IBT treasury to three political advocacy organizations: (1) $475,000 to Citizen Action, (2) $175,000 to Project Vote, and (3) $85,000 to the National Council for Senior Citizens (NCSC). These contributions were part of a leveraged scheme whereby individuals would contribute to the Carey campaign in return for IBT contributions to these political organizations. The IRB found that Hamilton, as the Director of the Government Affairs Department, helped Nash and Davis implement the scheme by suggesting to Carey and others which donations should be made, while Carey approved the payments to these groups. As a result of this scheme, these political advocacy organizations generated in the range of $200,000 for the Carey campaign. These monies were used to fund a large, last minute mailing to IBT members designed to turn out the pro Carey vote in the IBT election. That mailing and the source of the funds were the basis for the Election Officer Quindel's refusal to certify the results of the 1996 election and her call for a rerun election. 17 On December 5, 1997, Hamilton's counsel wrote the IRB, requesting an adjournment of the IRB hearing until the completion of any investigation by the United States Attorney's Office for the Southern District of New York regarding any conduct relating to these proposed charges. The letter did not mention the IBT Constitution. The IRB granted Hamilton a brief stay, and, on December 17, 1997, scheduled a consolidated hearing for Carey and Hamilton on January 20 and 21, 1998. Less than one week before the hearing, Carey applied to the district court for authority to issue subpoenas to several potential witnesses. Hamilton joined Carey's application with regard to one witness. The district court denied the requests for subpoenas. 18 On January 20 22 and March 11, 1998, the IRB held a consolidated hearing concerning the charges against Hamilton and Carey in Washington, D.C. While Carey testified at the hearing, Hamilton did not. On April 27, 1998, after the IRB hearing was concluded, a grand jury in the Southern District of New York returned an indictment, charging Hamilton with felonies arising out of his role in the campaign fundraising scheme and its cover-up. 3 That day, Hamilton's counsel sent a letter to the IRB stating that counsel did not consider it advisable for Hamilton to file a post-hearing memorandum, and again requested a stay of the proceedings. The IRB did not grant the stay. 19 After conducting the four-day hearing which included testimony, more than 100 exhibits, and numerous written submissions, the IRB issued its decision on July 27, 1998. The IRB found that Hamilton had brought reproach upon the IBT and embezzled IBT funds when he knowingly participated in the illegal fundraising scheme benefitting the Carey Campaign, and that Carey breached his fiduciary duty and brought reproach upon the IBT by failing to inquire before approving the four large political contributions which resulted in monetary benefit to his campaign. The IRB expressly found that Carey both knew of and approved the contributions at issue. (We can only conclude that at the times in question Carey knew of the proposed contributions and approved them, and we so find.). 20 Accordingly, the IRB imposed the following penalties: 21 Hamilton [and Carey are] permanently barred from membership, permanently barred from holding any office or employment relationship with the IBT or its affiliates or otherwise drawing any salary or compensation from any IBT affiliated source. 22