stees meeting tend to confirm this latter statement. See ibit No. 40, pp. 733–745.

50 and October 1953 the social security department of the out $3,268,563.09 in premiums for group insurance to workers with the Security Mutual Life Insurance Co. mount was transmitted to the insurance company through he broker. This was done pursuant to a resolution of by the board of trustees (the trustees at that time were 7, Charles Goldstein, Los Angeles, Calif., a vice president tional union; and John J. Toomey, Chicago, Ill., secreicago Laundry Owners Association).

1 premiums which were transmitted through the broker, e diverted or perhaps more accurately embezzled approxi00. Saperstein was able to accomplish this plunder of falsely reporting to the Security Mutual Life Insurance umber of employees than was actually paid for by the y department, and also by post-dating the coverage of and finally by a combination of the two methods.

, under the terms by which Saperstein placed this insurSecurity Mutual Life Insurance Co., he received annummission of 10.5 percent, which commissions over the › October 1953 aggregated $262,507.59. Under a typical commission scale normal commissions would have apaly $10,000 a year on premiums averaging approximately year. In other words, except for some claims Sapercoverage he did not report to the insurance company, excess of 36 percent of the premiums which were paid

has been alleged that Saperstein's records pertaining to ons have been stolen, Saperstein's bookkeeper, Mrs. Consco, testified that, acting on Saperstein's instructions, s on group policies of locals, the coverage of which Sapt reported to the insurance company, and that she also ubstantial part of the nine-hundred-thousand-odd dolby Saperstein to Eugene C. James, Chicago, Ill., secreof the LWIU, by checks drawn on Saperstein's Harlew cies to the order of the LWIU. She further testified given to understand by Saperstein that the money was 1 to the LWIU to take care of unemployment. he records of the LWIU failed to reflect any accounting or of an unemployment fund. Investigation by the subI did reveal an account in the Merchants National Bank he name of the LWIU into which was traced $573,269.47 Saperstein's Harlew insurance agencies. James had o draw upon this account.

posits in this account from September 14, 1951 to May 6, was closed, amounted to $776,917.37. There were only vn against the account, ranging from $500 to $37,500. king, withdrawals from the account kept pace with the rgest balance on hand at any one time being $70,093.72. ger sheets of this account, appendix, pp. 54-59 infra.) ible from the records of the bank to trace the disburseis account nor was the subcommittee able to determine besides James and Saperstein may have received a por

testimony and evidence adduced at the subcommittee ppears that following this notification Wickes, Saperboley, together with certain officials of the LWIU, set ntrolling interest in California Life Insurance Co., ÓakOn August 6, 1953, 16,045 shares of the common stock Life were purchased for $132,000 ($8.25 per share) by To effect this purchase Saperstein furnished $117,000, 000 allegedly was in cash and represented contributions s, Eugene C. James, Charles Naddeo of Philadelphia, esident of the international, Jacob Friedlander, attorney y City, N. J., local, and Charles Goldstein. Dooley furand Wickes $9,000. Later, Orville Faris and William s of the California Life Insurance Co., who between 7,768 shares of California Life common stock, joined up. On August 14, 1953, Dooley, acting on behalf of corporated the Founders Syndicate of America at Reno, stock authorization of 100,000 shares of preferred ($10 00 shares of common (no par). Wickes resigned from ual as of September 1, 1953, and became associated as California Life Insurance Co. On October 6, 1953, at ustees meeting of the LWIU Social Security Departgo, Wickes was also appointed consulting actuary to ent at Saperstein's suggestion and at the same meeting ggestion) the LWIU welfare insurance was transferred rity Mutual Life Insurance Co. to the California Life, October 1, 1953.

of the same meeting of the trustees reflect that Dooley nvestment by the LWIU social security department in stock of California Life through Founders Syndicate d a resolution was passed that $450,000 of welfare fund invested. Pursuant to this the social security depart5,000 shares of Founders Syndicate preferred stock for ovember 25, 1953. On the same date Founders Syndise proceeds, bought 39,213 shares of class A stock (90) lifornia Life Insurance for $392,134; also on the same a Life common stock in the amount of 23,813 shares, ted 91 percent of the voting stock, was transferred to licate from Louis B. Saperstein and those LWIU offiented, Dooley, Wickes, and Orville Faris and William ia Life officials. In payment of the California Life Founders Syndicate issued 46,536 shares of its comhose individuals. In other words, through this series sand by using $450,000 of the LWIU welfare funds, -Wickes-Dooley-LWIU group bought overwhelming California Life Insurance Co.

1954, subsequent to the time Saperstein was publicly ng involved in irregular insurance practices by a New estigation, the social security department gave Dooley e in turn paid back the original investors in the Calimmon stock. At the same time Founders Syndicate he social security department 32,090 shares of Founders non. So as of that date for the first time the social ment had control of California Life. Since then

Founders Syndicate has been dissolved and the social security depe ment now owns the controlling California Life stock outright.

The only explanation offered for this series of transactions by a this group at the subcommittee hearings was that the purchase of C fornia Life was accomplished in this manner for the purpose of s cealing the fact that a labor union was purchasing the company. After the insurance of the LWIU welfare fund was transferred the California Life Insurance Co. Saperstein by agreement was tinued as the broker. For the period October 1, 1953 to April 2, 194 the social security department remitted premiums to California L through Saperstein in the amount of $680,237.16; after this date miums were remitted directly to the company. California Life p Saperstein commissions for the period October 1, 1953 through J 4, 1954, at which time he was canceled as the broker for this accor Saperstein's commissions on this business were supposed to be at the rate of 612 percent plus a 2 percent override. According to the t timony of Orville Faris, Saperstein's total commissions amounted "about $159,000."

Background of LWIU

DETAILED FINDINGS

The Laundry Workers' International Union, A. F. of L.. has it principal offices at 30 West Washington Street, Indianapolis, I It was originally chartered in November 1900 as the Shirtwaist & Laundry Workers International Union and developed through grow and reorganization until it was chartered as the Laundry Workers International Union and became affiliated with the A. F. of L. August 28, 1939. Since 1949, its membership has approximated 65, members, located in the United States and Canada. The member ship was divided into 55 locals as of March 1955. Sam J. Bvers of Indianapolis, Ind., has been general president of the internations union for many years. E. C. James has been secretary-treasurer of the union since 1950.

At its 1949 national convention, looking toward collectively ba gained welfare benefits, the LWIU accepted a recommendation of Ge eral President Sam J. Byers for an international welfare plan to administered through a social-security department and passed a res tion empowering the general president to appoint a committee of the to further investigate the practicability and workability of such plan. If it was found practical and workable, the general executi board was authorized to formulate a proper program and make th final decision as to when such welfare plan should become operative and effective within the international union. Byers appointed Inter national Vice Presidents Lawrence Palacios, Charles Goldstein, Eugene C. James to the aforesaid committee. Each LWIU local w urged to include provisions for this plan at the earliest opporturity in subsequent collective bargaining and, if successful in obtaining er ployer contributions, to then join the national plan.

LWIU Local 26, San Francisco, was the first to negotiate a welfare plan when, in October 1949, the San Francisco Laundry Owners As sociation agreed to make contributions. Under the agreement between the parties, contributions were deposited in a San Francisco bark and Sam J. Byers, general president of LWIU, and Matthew J. D ley, attorney and president of the aforesaid association, were named

of the fund by the respective groups. Subsequently, numr LWIU locals negotiated contributions from employers participants in this national plan until, as of early 1955, ely 55 locals were included therein.

hment of LWIU social-security department

950 Byers and Dooley set about establishing a social-securent at Indianapolis in the national headquarters of the central headquarters for a national welfare plan. That actually began full-time operation in August of 1950. reement was made and entered into August 9, 1950. That rovided that the LWIU had established the social-security (SSD)

velop, and administer in general, a program for the improvement of elfare, health, and security of its members, and, in particular, to d accord to its members a program of life, accident, medical, hosd other benefits.

ted that the social-security department would be adminboard of trustees consisting initially of two persons, one e international and the other by the employers. A proviluded for additional trustees, up to six, to be appointed, equal proportions and on a geographical basis. Minutes ngs were to be kept, and the trustees were charged with ally a complete and consolidated financial report, audited I public accountant, covering all financial transactions of statement of which was to be available for inspection by 1 persons at the principal office of the SSD, the principal mployer, and in the offices of the local unions. All checks, era, were to be signed jointly by the chairman and the the board of trustees. The trustees were to secure for the bers certain specific benefits, described in the agreement, roup or blanket policy of insurance from an insurance y licensed and authorized to do business in the State of he SSD was also called upon to set aside and maintain a funds contributed by employers, for the payment of

3.

ng on August 14, 1950, Sam J. Byers was designated by s their trustee, and Matthew J. Dooley was named by the to Laundry Owners' Association as their trustee. On , 1950, two additional trustees, John T. Toomey, secreo Laundry Owners' Association, and Charles R. Goldgeles, Calif., vice president, LWIU, were named. Then ield Chasmar, Jersey City, N. J., vice president, LWIU, s a union trustee, and Chantry Davis, secretary of the ard of Trade of Philadelphia, was added as an employer aforenamed six individuals continued to act as trustees s of the time of these hearings.

arrier and placement of insurance

mmittee experienced considerable difficulty in determinthe original insurance carrier, Security Mutual Life ., Binghamton, N. Y., was selected in this case. Security he carrier during the period April 1950 through SeptemCalifornia Life Insurance Co., Oakland, Calif., became