Mayor Walsh is drawn into federal labor probe
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This story was reported by Andrew Ryan, Mark Arsenault, Milton J. Valencia, Adrian Walker, and Shelley Murphy of the Globe staff. It was written by Arsenault.
A sweeping federal investigation into allegations of strong-arm tactics by unions has triggered a wave of subpoenas to union leaders, developers, and Boston City Hall staff, bringing scrutiny to Mayor Martin J. Walsh's administration and his work as a labor leader before taking office in 2014, according to people familiar with the inquiry.
At issue in the investigation is whether labor officials threatened developers and business people who hired nonunion workers on their projects. Walsh, though apparently not an early focus of the probe, became drawn into it through wiretaps on which he was recorded in 2012, saying he had told a development company it would face permitting problems on a planned Boston high-rise unless it used union labor at another project in Somerville, according to people familiar with the tapes.
The investigation renews a long debate about where the line falls between forceful advocacy on behalf of working people and unlawful coercion.
In an interview Saturday in his office, Walsh declined to address many specifics, but he said no government official had contacted him about any investigation related to his time as head of the Boston Building Trades, an umbrella group representing laborers, electricians, Teamsters, and others.
"No one has approached me on this at all," Walsh said. "The only information I have on this is what the Globe is asking me."
The mayor insisted that as a union leader he was not one for hardball tactics, such as erecting inflatable rats outside nonunion construction sites. "That's in the past," he said. "It's a business now. I don't agree with those tactics."
In a follow-up statement, he said, broadly, "When I was head of the Building Trades, my role was to advocate for more jobs for working men and women in the Greater Boston region. Since becoming mayor of Boston, I have changed the development process to be more open and inclusive. Bottom line, no one gets any special treatment under my administration — developers, contractors, or unions."
Walsh, in the interview, was also clearly concerned that a probe into events before his City Hall years could taint his image and legacy as mayor.
"Don't paint an unfair picture of me, of what I've been doing in this building for the people of Boston," Walsh told the Globe.
The federal investigation, which extends to communities beyond Boston, is proceeding at a time when the regional real estate market is beset by some of the nation's highest development costs, due to the steep price of land, permitting, and labor — a cost generally higher for union-built projects. Development costs are considered a major driver of rising housing and rental prices.
Investigators have also issued subpoenas to City Hall staffers as part of an ongoing case of alleged union extortion and harassment of a TV production crew in 2014, which has already led to the indictment of five Teamsters members. Those cases are pending.
Prosecutors are using at least one grand jury in their probe. Grand juries are panels of citizens who meet in secret, hear evidence presented by the government, and can be asked by prosecutors to sign off on indictments.
The review of Walsh's work as a labor leader is part of a broader investigation into the tactics of local union leaders, according to one person with knowledge of the probe.
Many of the people interviewed for this story would speak only under the condition of anonymity because the investigation is ongoing and they are not authorized to discuss it.
While investigators' level of interest in Walsh could not be determined, he was, according to two people familiar with the investigation, recorded discussing union strategy in 2012, while he was a state representative and head of the Building Trades. Walsh led the trades from 2011 to 2013, when he resigned to run for mayor. As head of the Building Trades, he was an advocate on behalf of construction unions in Greater Boston, from Walpole to Reading.
In a conversation recorded in October 2012 between Walsh and Anthony Perrone, a leader of the Laborers Local 22 in Malden, Walsh said he had told a housing developer, AvalonBay Communities, that its then-pending project on Stuart Street would be held up at the Boston Zoning Board of Appeal unless the company used union workers at its housing project at Assembly Row in Somerville, according to the people familiar with the investigation.
The Globe reported in November that federal prosecutors — using years of wiretap evidence — have been investigating whether Perrone pressured developers into using union labor.
Membership on the ZBA is designed to represent different points of view on development, and the board includes labor representatives. The board approved the Stuart Street building but only after a union rep on the panel, Michael Monahan, asked AvalonBay whether it was using union labor in Somerville, according to a recording of the ZBA meeting acquired by the Globe through a public records request. An AvalonBay representative told the ZBA that the Somerville project would be built with a mix of union and nonunion workers; it's unclear whether the mix had changed after the Walsh-Perrone phone call. Both AvalonBay projects have since been built.
AvalonBay declined to discuss the issue with the Globe: "Given the ongoing investigations related to this matter, the company has no comment at this time," a company spokesman said by e-mail.
Walsh, in the interview, said he never threatened AvalonBay in any way.
AvalonBay executives have donated $3,850 to Walsh's campaign fund since 2013, according to campaign finance records. The mayor's staff noted that Walsh, as a union leader, testified in favor of the Stuart Street project in November 2011 when it was approved by the Boston Redevelopment Authority. As mayor, Walsh attended the ribbon cutting for the building, and an AvalonBay executive serves on the administration's housing task force.
Monahan's attorney, George C. McMahon, said that his client was subpoenaed as a witness, in part because of the zoning board meeting. McMahon did not elaborate and said he did not know the scope of the investigation.
Perrone's lawyer, Robert Sinsheimer, said the purpose of unions is to advocate for their members, and that his client had done nothing wrong.
Investigators have also been questioning other developers about their interactions with unions.
One developer, Michael Rauseo, who confirmed he has received a subpoena in the investigation, told the Globe he had a run-in with Walsh in late 2012.
At the time, Rauseo's company was working to convert an old Charlestown warehouse into 121 loft-style apartments. Rauseo said part of the project workforce at that point was union, but that organized labor and some members of the Charlestown Neighborhood Council were unhappy. He met with Walsh — then the head of the Boston Building Trades, and still a year away from being elected mayor — on Dec. 11, 2012, at Rauseo's office, according to e-mails and other documents.
Rauseo said he was surprised when Walsh arrived with union leader and Boston Zoning Board of Appeal member Mark Fortune, who had not been invited to the meeting. Walsh said Saturday that Fortune, who was the Building Trades president (the No. 2 position), often accompanied him to meetings.
"First thing Walsh did was that he introduced Fortune as a member of the Zoning Board of Appeal — and he introduced Fortune as someone that we'll have to deal with in the future," Rauseo said.
Rauseo said Walsh and Fortune demanded to know why an "open-shop" general contractor had been hired for the apartment project. Rauseo said he told them several union shops had declined to bid, partly due to an uptick in the construction business.
Walsh "demanded that we rescind the awards to nonunion contractors, and I said that we would not do so," Rauseo said.
The meeting was also attended by Mark Rosenshein in his role as a member of the Charlestown Neighborhood Council. Rosenshein said he arrived 15 minutes after the meeting began and was the first one to leave.
"During the time I was in the room, nothing inappropriate or threatening was said in my opinion," Rosenshein told the Globe.
At the time, Rauseo was working on a separate project in Charlestown. The building, after its renovation, was also to become the home of a community health center with a pharmacy. The project was also to incorporate a neighborhood food pantry that was already operating but without proper zoning compliance.
Despite the written support of Congressman Michael Capuano, then-Mayor Thomas M. Menino, and the testimony of dozens of local residents — many of whom also packed the ZBA's meeting room in City Hall — the board voted down its zoning variance, Rauseo said.
Rauseo filed suit — and also complained to the Globe at the time that the ZBA had inexplicably voted against a food pantry and a pharmacy — and the ZBA ultimately yielded.
Rauseo said he is convinced the project's initial rejection was due to his refusal to satisfy Walsh and Fortune on the unrelated apartment project. "It was clear to me that this was orchestrated by Walsh, who brought Fortune to the [initial] meeting without telling us in advance," he said.
Fortune has not responded to messages from the Globe. His lawyer, Tracy Miner, said Fortune "absolutely denies ever using his position on the Zoning Board of Appeal inappropriately. He always voted in the best interest of the community."
Miner was also critical of the federal investigation.
"This is unfair union bashing to some extent," she said. "Unions are allowed to voice opposition to a project for any number of reasons, including use of nonunion labor."
Miner said Rauseo raised the same allegations about Fortune and Walsh in 2013, in a complaint to the state Ethics Commission. The commission, she said, investigated and decided not to take any action.
"They found the allegations were insufficient to go forward," Miner said.
Through his attorney, Rauseo disputes Miner's account, maintaining that he withdrew the complaint after the ZBA approved the variances he had been seeking.
Walsh's extensive background as a labor leader helped drive his election as Boston's first new mayor in a generation. Unions from across the country spent millions on his campaign. His family has deep ties to Laborers Local 223. While serving as state representative, Walsh ascended to his post as leader of the Building Trades.
The Globe first contacted Walsh directly about aspects of the investigation on March 30, and he declined an interview request through his spokeswoman, Laura Oggeri. At that time, and in subsequent e-mails in April, Oggeri said that Walsh had not appeared or testified before a grand jury and had had no contact with federal investigators.
In Saturday's interview, Walsh declined to answer a question about whether he had been before a grand jury.
To help deal with Globe questions about the investigation in recent days, Walsh brought in Boston public relations giant Rasky Baerlein.
Labor tactics have come under increasing scrutiny by federal investigators in Boston.
Last year, federal prosecutors cited an unnamed member of Walsh's administration in the indictment of five Teamsters members accused of extortion for allegedly harassing a television production crew that was using nonunion workers during the filming of a "Top Chef" episode. The indictment said that a city official, later identified as Kenneth Brissette, the director of tourism, sports, and entertainment, warned two businesses that the union was planning to picket those businesses for allowing the television crew to film at their locations. An investigator hired by the city, Brian T. Kelly, said in December that he found no criminal wrongdoing by any city employees but did find a concerted effort to preserve the administration's relationship with the Teamsters union.
Kelly said that Brissette did not collude with the Teamsters, and Brissette was not disciplined.
The Walsh administration has refused to release text messages and phone records Kelly cited in his report. In rejecting a Globe request for the information under the state public records law, the administration wrote that a report detailing a search of city employees' text messages was secret because of an "ongoing internal review." Phone records used in the investigation also are secret, the administration claims, because, even though Kelly was paid from public funds, he was not a city employee.
The Walsh administration also denied a Globe records request for any public documents provided to federal investigators. "If the city were to receive a subpoena from law enforcement and provide information . . . we would be requested by law enforcement to keep it confidential to preserve the integrity of their investigation," Oggeri, the mayor's spokeswoman, wrote on April 11. The Globe has appealed the denial to the secretary of state.
Lawyers for the five Teamsters members charged in the "Top Chef" incident have filed a motion to dismiss the case, and the AFL-CIO has intervened and filed its own separate motion to dismiss, saying it has broader implications on protected union activity and would discourage members who want to lawfully protest.
"The government in this case has taken misbehavior on a recognitional picket line and sought to make it a federal felony," the union argued, in its filing. "If the government succeeds, it will change the structural foundation on which federal labor law rests and it will chill organizational activity and recognition efforts through the United States."
In recent years, three members of a local Teamsters chapter were convicted in federal court of extortion, for threatening to disrupt businesses if they did not provide union work.
Two of those members were also convicted of racketeering: John Perry, 63, former secretary treasurer of Local 82, and Joseph "Jo Jo" Burhoe, 47, of Braintree, received prison terms of 30 months and 70 months, respectively.
The third Teamsters member who was recently convicted, James E. Deamicis, 52, of Quincy, said in an impassioned statement during his sentencing hearing that he is innocent and would be cleared on appeal.
A fourth person was acquitted of similar charges.