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Investigation of improper activities in the labor or management field. Hearings before the Select Committee on Improper Activities in the Labor or Management Field (Volume pt. 53) online

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INVESTIGATION OF IMPROPER ACTIVITIES IN THE
LABOR OR MANAGEMENT FIELD



HEARINGS

BEFORE THE

SELECT COMMITTEE

ON IMPROPER ACTIVITIES IN THE

LABOR OR MANAGEMENT EIELD

EIGHTY-SIXTH CONGRESS

FIRST SESSION
PURSUANT TO SENATE RESOLUTION 44, 86TH CONGRESS



JUNE 2, 3, 4, 8, 9, 10, AND 11,



PART 53



Printed for the use of the Select Committee on Improper Activities in the
Labor or Management Field




INVESTIGATION OF IMPROPER ACTIVITIES IN THE
LABOR OR MANAGEMENT FIELD



HEARINGS

BEFORE THE

SELECT COMMITTEE

ON IMPROPER ACTIVITIES IN THE

LABOR OR MANAGEMENT FIELD

EIGHTY-SIXTH CONGRESS

FIRST SESSION
PURSUANT TO SENATE RESOLUTION 44, 86TH CONGRESS



JUNE 2, 3, 4, 8, 9, 10, AND 11, 1959



PART 53



Printed for the use of the Select Committee on Improper Activities in the
Labor or Management Field




UNITED STATES

6:)l

Peters, Ted 13659, 18i60

Pinelli, Anthony 18691, 18701, 18702, 18704, 18707, LS724

Plunkett, William 18511

Pohl, Matt lo535

Powers, John 18653, 18655

Ravder, Harold E 18498

Rizzo, Frank 18657

Rvder, Edward S 18485, 18556, 18557, 18692

Salinger, Pierre E. G.. 18673, 18692, 18697, 18701, 18702, 18726, 1872J, 18731

Schaefer, Rowland 18646

SchiraUi, Peter M 18753

Schultz, Carl M 18774

Sinclair, Richard G 18492, 18505, 18513, 18525, 18543, 18611, 18615,

18660, 18666, 18683

Smaluk, Nicholas 18527

Smith, Donald 18704, 18707, 18708

Smith, Frank J 18633

Sohacki, Steven D 18539, 18542, 18545

Steele, Albert 18478

Testo, John 18428

Thiede, John T 18461, 18662

Unetich, Frank 18704, 18707, 18708

Verplank, Cornehus, Jr 18560

Welbourn, George W 18539, 18542, 18545

Williams, John D 18637

Witecki, Frank 18453

Zeis, Harold S 18759

Zizzo, F'rank 18686



rV CONTENTS

EXHIBITS

Introduced Appear
on page on page

1. Resolution submitted to Gov. George N. Graig, of In-

diana, signed by five Lake County jukebox operators. 18458 (*)

2. Schedule showing total value of buildings and land of

St. George Realty Co. leased to the U.S. Government. 18466 (*)

3. Identification of people and of places named in telephone

conversations, tape recordings of which were played

at the hearing 18492 (*)

4. Invoice made out to Pete Chronowski by Ferree Storage

& Van Co. showing $47.29 paid for picking up pinball

machines at five locations 18527 (*)

5. Affidavit of Jack Ferree, of the Ferree Moving & Storage

Co 18527 (*)

6. Pamphlet "The Microphone Speaks," a report submitted

to the voters of Lake County, Ind., by the Gary Crime

Commission in 1949 18542 (*)

7A. Bankbook of Walter D. and Cora B. Conroy, East Chi-
cago Federal Savings & Loan Association, East Chi-
cago, Ind 18601 (*)

7B. Savings account book of Walter and Cora Conroy, First

Federal Savings & Loan Association of East Chicago. 18601 (*)

8. Summary of cash transactions of Metro M. Holovachka

for the years 1951-58 18615 (*)

9. Compilation of purchases from H. Horwitz Co. by Lake-

side Sales, charged to "Sales promotion" 18643 (*)

10. Application for charter, dated June 22, 1953, bearing

the signature of Rowland Schaefer, general secretary-
treasurer, National Union of Automatic Equipment
& Coin Machine Operators Service & Repairmen 18647 (*)

11. Official quarterly report and order blank. National Union

of Automatic Equipment & Coin Machine Operators
Service & Repairmen, dated July 1, 1952, signed by
Rowland Schaefer 18648 (*)

11 A, Application for membership in the National Union of
Automatic Equipment & Coin Machine Operators
Service & Repairmen, dated April 1952 in the name
of Robert Schaefer inscribed "Local Union No. 1"... 18649 18781

IIB. Application for charter dated June 26, 1953, bearing the
signature of Rowland Schaefer, local union secretary,
National Union of Automatic Equipment & Coin
Operators Service & Repairmen 18649 (*)

12A, Application for membership in the National Union of
Automatic Equipment & Coin Machine Operators
Service & Repairmen, dated June 7, 1955, in the name
of Frank Rizzo, inscribed "Local Union No. 3, trans-
ferred Local No. 1" 18658 18782

12B. AppHcation for membership in the National Union of
Automatic Equipment & Coin Machine Operators
Service & Repairmen, dated November 1952 in the
name of Frank Rizzo, inscribed "Local Union No. 1" 18658 18783

13. Subpena No. L-7333, dated May 18, 1959, served on

Frank J. Smith 18662 (*)

14. List of toll calls to Walter D. Conroy from John For-

musa 18690 (*)

15. Photograph of the business district of Sierra Madre

showing buildings acquired by Anthony Pinelli 18694 (*)

16A. Check No. 3214, dated June 9, 1954, payable to Joe
Dote, in the amount of $5,000, drawn by Movie Town

Motel and signed by Salvatore J. Pinelh 18695 18784

16B. Check No. 3216, dated June 9, 1954, payable to James
Markese, in the amount of $12,500, drawn by Movie

Town Motel and signed by Salvatore J. Pinelli 18695 18785

16C. Check No. 3217, dated June 9, 1954, payable to Sam
Siano, in the amount of $5,000, drawn bv Movie

Town Motel and signed by Salvatore J. Pinelli 18695 18786

♦May be found in the files of the select committee.



CONTENTS



Introduced
on page

17. Affidavit of S. W. Ferry, Gary, Ind 18698

18. Records of toll calls from Melrose Linen Co. to Red

Eagle Club, and from Melrose Linen Co. to Archie
Automatic Car Wash 18738

19. Affidavit of George Cvitkovich, East Chicago, Ind 18751

20. Memorandum of telephone message to "Gerhard,"

dated January 9, 1959: "While you were out Mr.
Pinelli called" 18766

21. Schedule of handbook disallowances for the years 1948-

52 18769

22A. Schedule "A. Pinelli, additional tax due on adding

$20,000 to income" 18771

22B. Schedule "Anthony Pinelli, additional tax deficiency
due to disallowance for rents and wages on handbook
operations, correction of partnership income, and

correction of oil inventory error" 18771

Proceedings of —

June 2, 1959 18427

Junes, 1959 18485

June 4, 1959 18539

June 8, 1959 18585

June 9, 1959 18637

June 10, 1959 18691

June 11, 1959 18727

•May be found in the flies of the select committee.



Appear
on page

(*)



(*)



18787



(*)

(*)



(*)



INVESTIGATION OF IMPROPER ACTIVITIES IN THE
LABOR OR MANAGEMENT FIELD



TUESDAY, JUNE 2, 1959

U.S. Senate,
Select Committee on Improper Activities

IN THE Labor or Management Field,

Washington^ D.C.

The select committee met at 2 p.m., pursuant to Senate Resolution
44, agreed to February 2, 1959, in the caucus room, Senate Office
Building, Senator John L. McClellan (chairman of the select com-
mittee) presiding.

Present : Senator John L. McClellan, Democrat, Arkansas ; Senator
Frank Church, Democrat, Idaho; Senator Homer E. Capehart, Re-
publican, Indiana.

Also present : Robert F. Kennedy, chief counsel ; LaVern J, Duffy,
investigator ; Richard G. Sinclair, investigator ; James F. Mundie, in-
vestigator; John T. Thiede, investigator; Robert E. Manuel, assist-
ant counsel ; Ruth Y. Watt, chief clerk.

The Chairman. The committee will be in order.

(Members of the select committee present at the convening of the
session : Senators McClellan and Capehart.)

The Chairman. The com,mittee today begins an inquiry into cer-
tain activities in Lake County, Ind. During the more than 2 years of
the committee's existence, it has on occasion embarked on investiga-
tions of improper activities in labor and management only to fmd
itself squarely faced with the problem of public corruption. This was
the case in Tennessee, when the committee found evidence that a bribe
had been paid to a judge to fix the case of certain officials of the Team-
sters Union accused of dynamitings, violence, and other crimes. In
Louisiana, the committee found a sheriff working hand-in-glove with
a top underworld figure in the jukebox business. In Portland, Oreg,,
the committee found the district attorney engaged in a conspiracy
with certain Teamster officials and underworld figures to control vice
and gambling in that city.

Such has again proved to be the case in our investigation into labor
union and management activities in the jukebox and pinball opera-
tions in Lake County, Ind. I shall not undertake at the outset to char-
acterize in advance the testimony we shall hear, but indications are
that the situation in this Indiana county is as critical as any that the
committee has heretofore exposed.

The illicit operations which appear to have flourished in Lake
County since 1950 would have been impossible without the knowledge,
acquiescence, and cooperation of some public officials. Certain seg-
ments of the citizenry in this area have attempted to do something

18427



18428 IMPROPER ACTIVITIES IN THE LABOR FIELD

about this situation, but without success. The reason is that when
local officials enter into an alliance with the corrupt elements of the
community, there is really no one for the citizen to turn to. He simply
becomes the victim of such corruption.

Any local area in which there is a breakdown of law enforcemjent
inevitably attracts outside hoodlum figures. This appears to have
been the case m Lake County, where in 1954 certain top figures in the
Chicago syndicate moved into both the coin-operated machine and
restaurant business. The extent to which these Chicago hoodlums
had the cooperation and the assistance of a top official of the Interna-
tional Brotherhood of Teamsters to prevent the unionization of their
companies will be one of the subjects of this hearing.

The committee must report that the cooperation received from cer-
tain public officials in Lake County during this investigation has been
less than satisfactory. It is to be hoped that these officials can and
will come before the committee and give to it the cooperation that is to
be expected of any public official who is charged with law enforce-
ment duties or any other responsibilities of public trust. We shall
withhold further comment on this until the hearings have proceeded
or been concluded.

Previous hearings of the committee have shown the growing power
ot the American underworld. These hearings will underline this grow-
ing power 111 conjunction with the corollary fact of public corruption.

I he Lake County case will show the effect that hoodlum domination
o± an industry has on a labor union operating in that industry. It will
also show the problems faced by legitimate businessmen when they
must compete with hoodlum-dominated companies who have the active
backing of public officials.

Senator Capehart, do you have any statement ?

Senator Capehart. No, thank you.

The Chairman. Call the first witness, Mr. Kennedy.

Mr. Kennedy. Mr.Testo.

The Chairman. Mr. Testo, will you come around, please? Will
you be sworn ?

You do solemnly swear that the evidence you shall give before this
Senate select committee shall be the truth, the whole truth, and noth-
ing but the truth, so help you God ?

Mr. Testo. I do.

TESTIMONY OF JOHN TESTO

The Chairman. Mr. Testo, will you state your name, your place
of residence, and your business or occupation, please.

Mr. Testo. My name is John Testo, and I live at 608 Van Buren
Street, Gary, Ind. As to my occupation, I have been in the American
Federation of Labor all of my life.

The Chairman. That is, you have been a member since you started
working, I guess.

Mr. Testo. Yes, sir.

The Chairman. That is what you mean ?

Mr. Testo. Yes. I have been working in the trade all of my life.
I am a marble and tilesetter and terrazzo operator.
^ Mr. Kennedy. You are a member of the Terrazzo Union and prac-
tice that trade at the present time ?



IMPROPER ACTIVITIES IN THE LABOR FIELD 18429

Mf.Testo. Yes, sir.

Mr. Kennedy. And you have been in a labor union all of your life
either as an officer or as a member ?

Mr. Testo. Well, I was working and I was officer and I have been
a member of the organization.

The Chairman. Proceed.

Mr. I'^NNEDY. Now, Mr. Testo, you headed the Coin Operators
Service and Repairmen's Union in Gary, Ind., from 1947 until you
resigned in 1957 ?

Mr. Testo. Yes, sir.

The Chairman. That was a period of about 10 years ?

Mr. Testo. Well, it was before that. It was pretty close to 14 years.

The Chairman. You must have started before 1947.

Mr. Testo. That is right. . .

Mr. Kennedy. The particular union that we are interested m is
the Coin Operators Service and Repairmen's Union in Gary, Ind.
You started heading that in 1947 ?

Mr. Testo. Yes, but I worked before, and that was the time when
we were granted a charter for that type of work.

Mr. Kennedy. Now, going through your background, in February
of 1951, you started your own national independent union, the Auto-
matic Equipment and Coin Machine Operators Service and Repair-
men ; is that right ?

Mr. Testo. That is correct.

Mr. Kennedy. That was a national union ?

Mr. Testo. That is correct.

Mr. Kennedy. And in February of 1952, you became affiliated with
the national union, and at that time you received the name of Local
No. 1 of the Automatic Equipment and Coin Machine Operators
Service and Repairmen's Union ; is that right?

Mr. Testo. That is right.

Mr. Kennedy. They were issued a charter, or local No. 1 was issued
a charter in February of 1952 ?

Mr. Testo. That is right.

Mr. Kennedy. Now, during the period of 1952 to July of 1957,
nine additional charters were issued by you throughout the country ;
is that right ?

Mr. Testo. That is right.

Mr. Kennedy. Local No. 2 was a charter that operated in Chicago
and Cook County and vicinity ?

M?,. Testo. That is right.

Mr. Kennedy. And that was ultimately taken over by certain of
the underworld element in Chicago, and you withdrew that charter;
is that right ?

Mr. Testo. I withdrew the charter.

Mr. Kennedy. There were some bad people who came in and took
it over ?

Mr. Testo. That is right.

Mr. Kennedy. Ultimately that local No. 2 charter was given out in
Los Angeles ?

Mr. Testo. That is correct.

Mr. I^nnedy. You formed a union out in Los Angeles?

Mr. Testo. That is correct.



18430 IMPROPER ACTIVITIES IN THE LABOR FIELD

Mr. Kennedy. And then local No. 3 was another charter that lasted
]iist a very short period of time in Chicago and Cook Countv «
Mr. Testo. That is correct.

Mr Kennedy. And then local No. 4 in Eugene, Oreg. ; local No 5
in Lake Geneva, Wis.; local No. 6 in Buchanan, Mich.; local No
im Boston, Mass.; local No. 8 in Manchester, N.H.; local No 9 in
Fort Wayne, Ind.; and local No. 10 in Knoxville, Tenn.; is that
correct ?

Mr. Testo. That is right.

Mr. Kennedy. And for the most part this was a question of the
local union distributmg labels : is that correct ?

Mr. Testo. Well, they supplied the organization, to keep the or-
ganization up.

Mr. Kennedy. What you would do as international officer is sup-
ply tJiem with labels ? ^

Mr. Testo. I never supplied them myself. The secretary of the in-
ternational supplied them.

. Mi-. Kennedy. The international would supply these locals with
labels ?
Mr. Testo. Yes, sir.

Mr. Kennedy. And a number of them had only maybe 5 or 10
members, but they would have thousands of labels that they would
have for distribution purposes ?

Mr. Testo. I suppose that they bought the label accordino- to the
machine that they got. ^

Mr. IvENNEDY. But they would have the labels that they could dis-
^ r^^^r^™^^^^ ^^^^ machines in their particular area ; is that correct «
Mr. Testo. Yes.

Mr. Kennedy. Now, there is just one other matter that I wanted
to clear up w^ith you.

In February of 1956, you had a conversation with a man by the
name of Matt Mendyke ; is that right «
Mr. Testo. That is right.

Mr. Kennedy. And at that time you wanted to raise some monev,
and so you spoke to Mr. Mendyke who had been a friend of youre
that you could get him made general secretary-treasurer of the na-
tional union if he would make an investment in the union ; is that
right ? '

Mr. Testo. We were broke, and we couldn't operate and so he
promised to come in.

Mr. Kennedy. So he was going to come in. He was going to make

l?.n!7^^^'?^''^ •^'^^^ ^'^ idtimately did make an investment of some
$8,600, IS that right, some $8,625 ?

Mr. Testo. Something like that.

Mr. Kennedy. He made that investment in the union and in turn
^Tr^®^ ^^"^^ ^^ ™^^® ^"^^ secretary-treasurer of the national union «
^ Mr. Testo. Not me. It was the executive board of the interna-
tional.

Mr. Kennedy. The executive board would make it?

Mr. Testo. Yes, sir.

Mr. Kennedy. Did the executive board ultimately make him sec-
retary-treasurer ?

Mr. Testo. That is right.



IMPROPER ACTIVITIES IN THE LABOR FIELD 18431

The Chairman. Did that money go in to the union treasurer, the
money that he invited?

Mr. Testo. Eveiy nickel of it has been used, Senator.

Mr. Kennedy. It was all turned over in the form of cash ; is that

rio-ht^
Mr.' Testo. Yes; I think so, because I never handled the money

myself.

Mr. Kennedy. Who handled the money ?

Mr. Testo. He came over to the house and gave it to Mrs. Testo.
Mr. Kennedy. Your wife ; is that right ?
Mr. Testo. Yes, sir.

Mr. Kennedy. The money was turned over to your wife i
Mr. Testo. Yes, sir. , . i • x

Mr. Kennedy. But all of this money ended up m the union treas-
ury?

Mr. Testo. What is that?

Mr. Kennedy. Did all of this money go to the union ?
Mr. Testo. That is right. You have it in your file, and you have an
accounting of all of that money. , o rr. i

Mr. Kennedy. Now, to whom was the money given i i o whom was
this $8,000 dollars given? -, . j

Mr. Testo. It was supposed to be given to the general secretary, and
I don't know.

Mr. Kennedy. Who was supposed to get it ?

Mr. Testo. Mrs. Testo gave a receipt, and the man did. After they
o-ave iiim the monev he got a note, and I thinly you have it in your file.
'^ Mr. Kennedy. Is the money— it was then, you say, turned over to
Legetto? ^ ^^ ,

Mr. Testo. It was supposed to be turned over to Legetto, aaicl so
I saw him one time when they gave him the money.
Mr. Kennedy. Mrs. Testo gave the money to Legetto ?
Mr. Testo. Yes, sir.

The Chairman. Gave all of it to him, the $8,500 ?
Mr. Testo. I think. Senator, it was given a couple of times, and I
think that he paid it a couple of times, and we were in debt and that
money went to organize outside.

The Chairman. For outside organization ?
Mr. Testo. That is right.
The Chairman. That is why it was borrowed ?
Mr. Testo. Yes ; we got the money because we were broke.
The Chairman. To try to get your organization rolling, and get
new members and expand it ?

Mr. Testo. Well, we have the organization. Senator, and we have
the organization outside, but we had no money to operate the organi-
zation. We loaned him the money, and I think you have a file on that.
Mr. Kennedy. And Mendyke was then placed on the payroll at
some $400 per quarter ?

Mr. Testo. They paid him $400 back, every quarter.
Mr. Kennedy. But he still is owed over $5,000 ; is he not?
Mr. Testo. I never know, Mr. Kennedy.

Mr. Kennedy. Do you understand he is still owed some money ?
Mr. Testo. I don't know anything about it, because I never h.ul
anything to do with it for 3 years, since I got the stroke, and I was sick.



18432 IMPROPER ACTIVITIES IN THE LABOR FIELD

Mr. Kennedy. Now, in going on, in 1953, you were organizing
chiefly the jukebox operators and their employees ; is that right ?

Mr. Testo. Well, we organized all of the servicemen. I was backed
by William Green.

Mr. Kennedy, I don't want to go into all of that.

The main area that you had the jurisdiction over was the jukebox
operators and their employees, the repairmen ?

Mr. Testo. We organized repairmen and some of those people
joined in the union because they did repairmen work themselves and
they worked on the machine, and they joined the union.

Mr. Kennedy. That would be the category of the operators who
repaired their machines ?

Mr. Testo. That is what they called them.

Mr. Kennedy. Now, in 1953, and thereafter, and 1954, and 1955,
the gambling type of pinball machines began to be introduced into
the area ; is that right ?

Mr. Testo. That is right.

Mr. Kennedy. And the jukebox operators who were members of
your union could not compete against these machines ?

Mr. Testo. That is right.

Mr. Kennedy. They were losing revenue to these gambling-type
machines ?

Mr. Testo. That is right.

Mr. Kennedy. Because if someone came into a tavern or a loca-
tion they would rather play the gambling-type machine rather than
the jukebox ?

Mr. Testo. I suppose so.

Mr. Kennedy. But anyway, they were in very difficult straits;
is that right?

Mr. Testo. Yes.

(At this point Senator Church entered the hearing room.)

The Chairman. Is that when you began losing money, when the
gambling-tjrpe machines came in ?

Mr. Testo. That is right.

The Chairman. Had you been making money on them before?

Mr. Testo. No, We just was organized ourselves.

The Chairman. You had just gotten organized ?

Mr. Testo. That is right.

The ChairmanI You hadn't tested out to find out how much money
you could make ?

Mr. Testo. I never did make money myself.

The Chairman. You haven't made any yet ?

Mr. Testo. I never made nothing. I spent my own.

The Chairman. Proceed.

Mr. Kennedy. In order to compete with this, did the local people
who had the jukeboxes then decide that they had better go into the
gambling type of equipment themselves ?

Mr. Testo. Yes, sir. Some of them operators

Mr. Kennedy. In order to compete ?

Mr. Testo. In order to compete.

Mr. Kennedy. This was an outside group that was bringing in the
gambling equipment ; is that correct ?

Mr. Testo. Correct.



IMPROPER ACTIVITIES IN THE LABOR FIELD 18433

Mr. Kennedy. If it was gambling equipment and gambling is
illegal, why didn't the Lake County authorities do something about it?

Mr. Testo. I don't know anything about that.

Mr, Kennedy. They didn't do anything about it?

Mr. Testo. So far as I know, I didn't hear of anybody that did
anything.

Mr. Kennedy. But in order to compete with this outside group
that was bringing in this gambling equipment, the local operators
started trying to place their own gambling equipment on the various
locations; is that right?

Mr. Testo. That is right.

Mr. Kennedy. Did they find that they had even greater difficulty
when they tried to do that ?

Mr. Testo. Well, our members of the union they have pretty hard
time.

Mr. Kennedy. What happened ?

Mr. Testo. Well, a lot of locations some of those people that have
the pinball, they went in and took the machine away from our oper-
ator.

Mr. Kennedy. How did they do that ? Who did that?

Mr. Testo. Well, some of those operators who operated the coin
machine around Gary and around Lake County, except the East
Chicago. East Chicago was the only one. They just had pinball but
they never did bother anybody.

Mr. Kennedy. In East Chicago, they joined up with the union?

Mr. Testo. They joined up the first day they started.

Mr. Kennedy. That was one group and they joined the union,



Online LibraryUnited States. Congress. Senate. Select CommitteeInvestigation of improper activities in the labor or management field. Hearings before the Select Committee on Improper Activities in the Labor or Management Field (Volume pt. 53) → online text (page 1 of 40)