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United States v. Budzanoski

decided: June 12, 1972.


Rosenn and Rosen, Circuit Judges, and VanArtsdalen, District Judge.

Author: Rosenn

I. The Facts

Max ROSENN, Circuit Judge:

Appellants Michael Budzanoski and John Seddon are President and Secretary-Treasurer, respectively, of District 5 of the United Mine Workers of America, located in Pittsburgh, Pennsylvania. They were convicted in a jury trial as indicted on four counts. Three of the counts charged them with violations of Section 209 of the Labor- Management Reporting and Disclosure Act of 1959 (also known as the Landrum-Griffin Act, and known hereinafter as the "LMRDA"), 29 U.S.C. § 439 (1970), by falsifying financial records their labor organization is required to keep under Sections 201 and 206 of the LMRDA, 29 U.S.C. §§ 431, 436 (1970). The fourth count charged them with conspiring between themselves and with others to cause false entries to be made on vouchers and monthly reports submitted to District 5 in violation of 18 U.S.C. § 371 (1970).*fn1

At trial, the Government relied principally on the testimony of two unindicted co-conspirators, Pellegrini and Halvonik. Their combined testimony established that on February 21, 1969, immediately following a regular monthly meeting of the executive board and staff, another session was held attended only by the defendants and other members of the board. At this meeting, the defendant Budzanoski informed his colleagues that he had been to Washington, D.C., and had obtained $10,000 from the International Union to be used in the re-election campaign of United Mine Workers President, W. A. "Tony" Boyle. Budzanoski then outlined the manner in which the money would be directed and funneled, without being traced, from the District's bank account and converted into cash for use in the forthcoming election campaign.

According to the Government's witnesses, the four board members were instructed by Budzanoski to prepare false vouchers indicating that they had spent a sum of money approximately $2000 each to avert the spread of wildcat "black lung" strikes from West Virginia to District #5.*fn2 Under this plan, each of them would receive checks drawn on the District from Seddon in payment of the vouchers for their "expenses." They were to cash the checks and turn over the proceeds to Seddon for use during the fall presidential campaign for Boyle.

After some prodding from Seddon, Pellegrini and Halvonik each submitted vouchers to him. They received checks from Seddon in the sums of $1870 and $2370 respectively, drawn on the District's bank account in payment of the false vouchers for "expenses" in the black lung campaign. Pellegrini immediately cashed his check and turned over the proceeds promptly to Seddon on or about March 26th. Halvonik carried his check around for several months and, after several reminders from Seddon, cashed it and turned over the proceeds to him on May 29th. Later, the other two executive board members of District #5, Francis A. McCallister and Roland Nuccetelli, submitted their vouchers to Seddon and received $2450 and $1870 respectively. The expenses listed on their vouchers are different from Pellegrini's and Halvonik's and are not part of the indictment. They also received checks in payment therefor, and after cashing them, delivered the proceeds to Seddon. None of the payees knew what happened to the money after that point.

Seddon, with Budzanoski's knowledge, placed all of this cash in his personal safe deposit box in a Pittsburgh bank. On July 14, 1969, when the defendants concededly became aware that the Federal Bureau of Investigation was investigating the use of union funds to promote the candidacy of the incumbent president, Boyle, in his re -election campaign against Joseph "Jock" Yablonski, they withdrew all of the money ($8560) from the safe deposit box. They flew to Washington, D.C., and deposited the money in the District's general checking account.

The evidence established that the District's monthly financial reports were regularly prepared by or under the direction of its Secretary-Treasurer, Seddon. The March financial report for District #5 lists the checks to Pellegrini and Halvonik as disbursements for "organizing expenses." It does not list Pellegrini's return of the money. The April report purports to reflect the payment to McCallister and the return to the union of the proceeds of the checks cashed by Pellegrini and McCallister. The executive board approved the March and April financial reports at its meeting on May 21, 1969.

In September, the entire executive board approved the financial statement for May, June and July, which together showed the payment to Nuccetelli and the return of all the remaining money from Halvonik and Nuccetelli.

The defendants contended that the Government's story was implausible. Budzanoski, Seddon, Nuccetelli and McCallister all testified that they knew of no opposition to Boyle's re-election until May 1969. They denied Pellegrini's and Halvonik's contentions that by February rumors had circulated that two other men were going to run against Boyle, and in any case, they believed that neither man presented serious opposition. Budzanoski also claimed that the only $10,000 loan from the International to the District during the relevant months occurred in May 1969, not February.

The Government's witnesses, Pellegrini and Halvonik, supported "Jock" Yablonski in the election; defense witnesses McCallister and Nuccetelli supported the incumbent Boyle.

The defense presented its own version of the facts which was at odds with that of the Government. According to that version, the District in January 1968 had attempted to organize many of the non-union mines north and west of Pittsburgh, and it had always been short of cash in the field during the campaign. In the early months of 1969, the defendants testified that they were contemplating launching another campaign in the spring that would culminate in the fall with a major effort by International Union organizers and local union presidents. They alleged that they were urged by President Boyle to take some of the District's funds and convert them into cash so that they would not be short of funds this time.

Budzanoski testified that the only meeting he attended in Washington during the first two months of 1969 was the International Union's executive board meeting on February 24-26. A major subject of conversation was the wildcat strikes over black lung disease, and President Boyle demanded that the districts make every possible effort to prevent the walkouts. Boyle feared that the union would be sued for damages by the coal companies, and he wanted his organization on record as firmly opposed to unauthorized stoppages. To bolster his position, he asked district presidents to send in any vouchers for expenses incurred by their staffs in attempting to stop the wildcats. The vouchers would be evidence of the union's good faith attempt to uphold contracts.

Budzanoski testified at trial that in the early part of March he casually asked Marion Pellegrini if he had expended any money attempting to curb the wildcats. Pellegrini said that he had not, but Budzanoski told him that if such expenses were required, Pellegrini should spend the money because it would be proof of the union's opposition to the strikes. Budzanoski testified that Pellegrini offered to go out and spend the money, but that he, Budzanoski, cautioned against unnecessary expense. Then Pellegrini supposedly came up with the idea of submitting vouchers for expenditures he never had incurred and returning the money to the union.

Budzanoski did not like the idea at first, but, as he thought about the fall organizing campaign's need for cash, he became convinced that Pellegrini's suggestion would solve two problems at once. He told Pellegrini to estimate how much his subdistrict would need for the organizing campaign and submit the voucher in that amount. Pellegrini supposedly thought it was a good idea and promised to go ahead and do it.

Shortly after the meeting with Pellegrini, Budzanoski stated that he broached the plan to Halvonik, who immediately agreed to do the same thing. In the middle of March he talked to McCallister and Nuccetelli, and they also agreed to submit vouchers and turn the money back to the union for the fall campaign.

Budzanoski claimed that was the last he heard about the plan until March 21, when John Seddon asked him about the vouchers. Budzanoski and Seddon both testified that when Seddon gave Pellegrini and Halvonik their checks on March 20 and 21, Seddon was under the impression that they had actually incurred the expenses in attempting to curb the wildcat strikes. However, Seddon claimed that he was disturbed about the large amount of money being spent, and went to see Budzanoski to confer with him about the outlays.

Both defendants testified that Budzanoski then explained the voucher program to Seddon. Seddon was concerned, and Budzanoski conceded that Seddon warned him the vouchers were probably illegal. Budzanoski went on to explain that he did not see anything improper because the money was eventually to be used for a legitimate union purpose, but agreed that Seddon should talk to McCallister and Nuccetelli so that they would state different reasons on their vouchers. Notwithstanding the conversation, Seddon did not ask Pellegrini or Halvonik for new vouchers or additional information for the ones they ...

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