Hotel and Restaurant Employees and Bartenders Intern. Union Local 54, Matter of

• Decision Date: 11 July 1985
• Citation: 496 A.2d 1111,203 N.J.Super. 297
• Parties: , 110 Lab.Cas. P 56,022 In the Matter of the HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54.
• Court: New Jersey Superior Court — Appellate Division

Page 297

203 N.J.Super. 297

496 A.2d 1111, 110 Lab.Cas. P 56,022

In the Matter of the HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION LOCAL 54.

Superior Court of New Jersey Appellate Division.

Argued Feb. 21, 1985.

Decided July 11, 1985.

Michael N. Katz, Philadelphia, Pa., for Hotel and Restaurant Employees and Bartenders Intern. Union Local 54 (Meranze & Katz, Philadelphia, Pa., attorneys; Bernard N. Katz, Philadelphia, Pa., of counsel).

Ronald F. Kidd, Philadelphia, Pa., admitted pro hac vice, for appellants Gerace, Materio and LaSane (Duane, Morris & Heckscher, Philadelphia, Pa., attorneys; Steven M. Janove, and Harry Horwitz of Davis, Reberkenny & Abramowitz, Cherry Hill, of counsel).

John R. Zimmerman, Senior Asst. Counsel, Trenton, for respondent N.J. Casino Control Com'n (Thomas N. Auriemma, Deputy Director/Legal Div., and Leonard J. DiGiacomo Asst. Counsel, Trenton, on the brief).

Eugene M. Schwartz, Deputy Atty. Gen., for respondent State of N.J., Div. of Gaming Enforcement (Anthony J. Parrillo, Asst. Atty. Gen., of counsel; Gary A. Ehrlich, Deputy Atty. Gen., of counsel and on the brief with Eugene M. Schwartz, Deputy Atty. Gen.).

Before Judges MATTHEWS, FURMAN and HAVEY.

The opinion of the court was delivered by

MATTHEWS, P.J.A.D.

From June to September 1982, the Casino Control Commission conducted hearings to determine whether certain officials of the Hotel and Restaurant Employees and Bartenders International Union Local 54 were disqualified under Section 86 of the Casino Control Act, N.J.S.A. 5:12-1 to N.J.S.A. 5:12-152 (the act). Pursuant to Section 93(a) of that act, Local 54 had filed an annual registration statement with the Commission. N.J.S.A. 5:12-93(a). The Division of Gaming Enforcement was then requested to review the credentials of the Union and its personnel as mandated by N.J.S.A. 5:12-94(a).

On May 11, 1982, the Division submitted a letter report to the Commission in which it urged that Section 93 sanctions be imposed against several union members. Among the individuals said to be disqualified by the act were the President, Frank Gerace, and Business Manager, Frank Materio. On April 30, 1982, the Division filed another report in which it cited two additional union employees, Eli Kirkland ¹ and Karlos LaSane, as disqualified under the act.

On September 28, 1982, the Commission issued a determination in which it found Gerace and Materio disqualified under Section 86(f), and LaSane disqualified under Section 86(c). The Commission applied Section 93(b) which prohibits the Union from receiving dues from its employees or from administering pension or welfare funds if any of its officers, agents or principal employees is disqualified by Section 86 of the act. N.J.S.A. 5:12-93(b). ² Frank Gerace, Frank Materio, Karlos LaSane and the union have appealed the adverse decision.

Local 54 represents approximately 14,000 hotel workers, 10,000 of whom are employed in casino hotels in Atlantic City. The Local's members are employed in non-gaming positions including waiters, kitchen workers, bartenders, and porters.

In 1979 Frank Gerace was elected as President of Local 54, and was re-elected to that position in June 1982. As chief executive officer, Gerace was authorized to hire and discharge business agents, oversee daily union activities, and engage in collective bargaining on behalf of the Local's members. Frank Materio became an employee of Local 54 in mid-1978. On June 30, 1978, pursuant to a motion made by Gerace, Materio was accepted by Local 54's Executive Board as a union organizer. Materio was appointed to the Executive Board as trustee on January 16, 1979. Karlos LaSane was employed by Local 54 on May 4, 1981 to represent union members at grievance hearings. LaSane also was designated by Gerace as Local 54's affirmative action officer.

Section 86, of the act, N.J.S.A. 5:12-86, sets out the criteria under which an applicant will be denied a license. Among those criteria pertinent here are subsections c and f. N.J.S.A. 5:12-86(c) mandates the disqualification of any applicant who has been convicted of certain enumerated crimes under New Jersey law. N.J.S.A. 5:12-86(f) disqualifies any applicant identified as a "career offender or a member of a career offender cartel" or one who is "an associate of a career offender or a career offender cartel in such a manner which creates reasonable belief that the association is of such a nature as to be inimical to the policy of this act...." (emphasis provided.) N.J.S.A. 5:12-86(f). However Section 93(b) also permits the Commission, at its discretion, to waive the disqualifying criteria. N.J.S.A. 5:12-93(b).

In its letter of May 11, 1982, the Division alleged that Gerace and Materio were disqualified under Section 86(f) by reason of their association with certain career offenders or career offender cartel members. LaSane was claimed to be disqualified under Section 86(c) by reason of a prior criminal conviction. Two issues were directed to the Commission with respect to Gerace and Materio: first, whether Gerace and Materio were associated with members of a career offender cartel, and second, whether that association was of such a nature so as to create a reasonable belief that it was inimical to the policy of the act and to gaming operations. The issues directed to the Commission with respect to LaSane were whether he was an officer, agent or principal employee of Local 54 within the meaning of the act, and whether the Commission should waive his disqualification as permitted by N.J.S.A. 5:12-93(b).

The Division presented extensive evidence to suggest a relationship between Gerace and Materio and career offenders, especially one Nicodemo Scarfo. Testimony at the 1982 hearings concerned Scarfo, the Bruno crime family, and all possible implications between Scarfo and Local 54 members. At the conclusion of the testimony, the Commission made detailed findings of fact regarding the possibility of a relationship between the Union officials and Scarfo, and its extent.

The Commission found that Nicodemo Scarfo has led the Bruno organized crime family since March 1981. The "Bruno family," which operates in the Philadelphia metropolitan area and southern New Jersey, including Atlantic City, was named after its former head, Angelo Bruno. Bruno was murdered in March 1980. Philip Testa assumed control of the "family" following Bruno's death, until he was murdered in March 1981.

The Commission also found that Scarfo had a lengthy history of criminal involvement, beginning in March 1950 when he was convicted of setting up an illegal lottery. He entered a plea of guilty to involuntary manslaughter in 1964, and most recently, was convicted of possession of a firearm by a convicted felon in 1981. The Commission concluded that Scarfo is a career offender and an active member of a career offender cartel. ³

The Commission evaluated the evidence concerning the relationship between Gerace and Materio and Scarfo. It found six areas in which an association between Scarfo and Local 54's officers is evidenced.

The Division first submitted a telephone list as indicative of Scarfo's association with Gerace and Materio. The telephone list was seized from Scarfo in December 1979 following his arrest for the murder of Vincent Falcone. Some of the names on the list were aliases and many of the numbers were encoded. After deciphering the code, the law enforcement officers determined that several encoded names and numbers related to associates of Scarfo who have been linked to organized criminal activity. Other names and numbers listed in the book were not encoded, such as dentists and attorneys.

The Commission determined that five employees of Local 54 were listed in Scarfo's phone book under aliases. Frank Gerace was listed under the name "Percy," and his number was in code. Gerace's mother was listed as "Percy Mom," and Susan Holland, Branch Manager of William L. Meyers, Inc., Administrator of Local 54's Health and Welfare Fund, was listed as "Percy Girl." Both women were listed with coded numbers. Materio's number was also on Scarfo's phone list. However, Materio was listed by his proper name and his numbers were uncoded. In addition, Robert Lumio, Secretary-Treasurer of Local 54 from September 1979 to June 1981, and Frank Lentino, Business Agent for Local 54 since 1981, were listed under aliases.

In December 1979, the police found another piece of evidence indicative of Scarfo's interest in Local 54. During their investigation of the Falcone murder, the police seized a piece of paper from Scarfo's dresser drawer containing the words:

KIS-POTS-GON ALL OUT BACK TO 54 ST. BEFORE FEB.

The Commission found that the note referred to Thomas Kissick, Ernest Potts, and Thomas "Goony" Walsh, and their removal as union officials when Local 491 merged with Local 54 in September 1980. The Commission held that the paper evidenced both Scarfo's interest in the unions, and his advance notice of the unions' activities.

The third basis on which the Commission disqualified Gerace and Materio involved the events leading to Scarfo's arrest for the Falcone murder. Shortly after their arrest, Scarfo and his two associates, Leonetti and Merlino, were released on $92,000 cash bail. Twenty thousand dollars of that amount was provided by Gerace's mother. At the hearing, the Division presented documentary evidence that half of Lillian Gerace's contribution was supplied by appellant Frank Gerace.

In addition, after their release, Materio put up his house as property bail for Leonetti and Merlino, so that part of the cash bail could be released. Despite this, Materio testified that he did not know Leonetti and Merlino personally and that he agreed to use his home for bail as a favor to Scarfo's mother, a personal friend. Materio further testified that he had known Scarfo for 25 years, although he had only seen him 6 to 7 times in the prior 5 years.

The...