# The Teamsters Union and the Mafia: Did The Teamsters Lose? **URL:** \ **Category:** Factual Questions\ **Created:** [August 4, 2015, 11:16am UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957 "2015-08-04T11:16:39Z")\ **Posts on this page:** 18\ **Page:** 1
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [August 4, 2015, 11:16am UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/1 "2015-08-04T11:16:39Z")
In my readings about the Jimmy Hoffa era of the Teamsters, it seems that the Mafia likes a cosy relationship with the union-the union “invested” large amounts of the pension funds in Mafia run hotels and casinos in Las Vegas. This was one of the main reasons why Hoffa was killed-he threatened this arrangement. What has never been clear to me, was the results of this: did the union lose money on this? Under the Mob, Las Vegas casinos were highly profitable; did the investments return a profit to the union? The relationship benefitted the union to management; but were the rank and file ripped off? When the Nevada authorities cracked down on the corrupt casinos, the Mafia was barred from ownership-did the union get their money back then? ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 4, 2015, 12:44pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/2 "2015-08-04T12:44:27Z")
I once read an article about this in - IIRC - the NY Times. They said that the Teamsters did very well under Hoffa and his mob investments, and that when they subsequently went legit and switched to investment/money management professionals they did not do nearly as well. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 4, 2015, 1:18pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/3 "2015-08-04T13:18:37Z")
I believe [this](http://www.nytimes.com/2004/11/15/business/15teamster.html?ref=topics&_r=0) may be the article I’m remembering. > [@](#): > > In the 1960’s and 1970’s, the Teamsters’ huge Central States pension fund was a wellspring of union corruption. Tens of millions of dollars were loaned to racketeers who used the money to gain control of Las Vegas casinos. Administrative jobs were awarded to favored insiders who paid themselves big fees. A former Teamster president and pension trustee was convicted of trying to bribe a United States senator. > > Yet for nearly half a million union members who are expecting the fund to pay for their retirement, those may have been the good old days. > > Since 1982, under a consent decree with the federal government, the fund has been run by prominent Wall Street firms and monitored by a federal court and the Labor Department. There have been no more shadowy investments, no more loans to crime bosses. Yet in these expert hands, the aging fund has fallen into greater financial peril than when James R. Hoffa, who built the Teamsters into a national power, used it as a slush fund. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 4, 2015, 1:41pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/4 "2015-08-04T13:41:29Z")
Unsurprisingly, investments in criminal enterprises are often quite profitable. Turns out that’s one of the prime motivations for people who commit crimes. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 4, 2015, 1:58pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/5 "2015-08-04T13:58:41Z")
Well yeah, but the tricky part is to make sure some of the profits accrue to you instead of just to the criminals themselves. Or, looked at another way, to make sure you’re really an investor and not a victim. ---
**Author:** ![dolphinboy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dolphinboy/32/330_2.png) [@dolphinboy](https://boards.straightdope.com/u/dolphinboy)\ **Post date:** [August 4, 2015, 2:23pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/6 "2015-08-04T14:23:14Z")
If you’re knowingly investing in illegal activities it’s hard to report ‘criminal activity’ if your mafioso partner rips you off. Nobody would be surprised to hear that the mob ripped off the Union along the way. However overall it sounds like the Union’s coffers, and its officials, benefited from its relationship with the Mafia during its heyday. The rank and file, perhaps not as much. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [August 4, 2015, 5:02pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/7 "2015-08-04T17:02:24Z")
Thanks-it sounds like the Mob made a lot of money in Las Vegas-probably because they were able to “skim” a lot of money off the top-not paying taxes increases your profits greatly! ---
**Author:** ![madsircool](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/madsircool/32/3432_2.png) [@madsircool](https://boards.straightdope.com/u/madsircool)\ **Post date:** [August 4, 2015, 5:12pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/8 "2015-08-04T17:12:09Z")
This is a plot point in James Ellroys American Tabloid…a great read. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [August 5, 2015, 4:57am UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/9 "2015-08-05T04:57:04Z")
Another way to look at it would be to say that those “prominent Wall Street firms” skimmed off more money in fees and charges than the corrupt mafia did. After all, I remember reading as a youngster that those terrible loan sharks charged victims up to 25% on their loans – now my credit card companies would charge 29.5% if I didn’t pay it off every month. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [August 5, 2015, 10:28am UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/10 "2015-08-05T10:28:22Z")
> [@t-bonham@scc.net](#): > > Another way to look at it would be to say that those “prominent Wall Street firms” skimmed off more money in fees and charges than the corrupt mafia did. > > After all, I remember reading as a youngster that those terrible loan sharks charged victims up to 25% on their loans – now my credit card companies would charge 29.5% if I didn’t pay it off every month. The loan sharks charge 25% a MONTH, not 25% annual rate. ---
**Author:** ![Fotheringay-Phipps](https://avatars.discourse-cdn.com/v4/letter/f/d9b06d/32.png) [@Fotheringay-Phipps](https://boards.straightdope.com/u/Fotheringay-Phipps)\ **Post date:** [August 5, 2015, 1:10pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/11 "2015-08-05T13:10:12Z")
> [@dolphinboy](#): > > However overall it sounds like the Union’s coffers, and its officials, benefited from its relationship with the Mafia during its heyday. The rank and file, perhaps not as much. Actually that’s not what it sounds like. Read the article I linked above. ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [August 5, 2015, 2:02pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/12 "2015-08-05T14:02:42Z")
So Wall street was like the Mafia (but with lower returns?) ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [August 5, 2015, 3:58pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/13 "2015-08-05T15:58:35Z")
What happened was Hoffa created the pension fund and his mafia friends got him to lend it to other mafia members who built the casinos. At one point the Teamster’s pension fund had over 90% of its pension invested in Las Vegas casinos. This is kind of crazy for a pension fund since the failure of a couple of businesses could have wiped out the entire fund and left thousands of teamsters with no retirement. However, the casinos prospered and the Pension funds got repayed. The seventies were a down decade in the stock market so having the funds in Las Vegas real estate instead of stocks probably was a much better investment in hindsight though the risk made it unwise. Having the mafia involved meant millions of dollars in kickbacks but apparently the casinos were so profitable they were able to repay anyway. After the Department of Justice went after the teamster mafia connection, the pension fund was switched to regular wall street investments. This is a much safer strategy and is more appropriate for a pension fund. At the same time this happened there was trucking deregulation, which devastated the teamsters union and the pension fund has been in trouble ever since. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [May 20, 2016, 10:54pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/14 "2016-05-20T22:54:23Z")
An update on the Central States Pension Fund: > [@](#): > > The Central States Pension Fund has no new plan to avoid insolvency, fund director Thomas Nyhan said this week. Without government funding, the fund will run out of money in 10 years, he said. At that time, pension benefits for about 407,000 people could be reduced to “virtually nothing,” he told workers and retirees in a letter sent Friday. > > In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency. > > The fund could submit a new plan, but decided this week that there’s no other way to successfully save the fund and comply with the law. The cuts needed would be too severe. > **[Pensions may be cut to 'virtually nothing' for 407,000 people](https://money.cnn.com/2016/05/20/retirement/central-states-pension-fund/)** > > The Central States Pension Fund -- one of the biggest in the country -- will run out of money in 10 years, and without government funding there's no way to avoid insolvency. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [May 21, 2016, 8:00pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/15 "2016-05-21T20:00:26Z")
heh people in las wages say the same thing ie"we were better when the mafia ran the joint" ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [May 21, 2016, 8:25pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/16 "2016-05-21T20:25:55Z")
of course it probably helped too that the mafia controlled a lot of the trucking companies that the teamsters worked on ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [May 21, 2016, 9:40pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/17 "2016-05-21T21:40:02Z")
So what happens now? Does the pension fund continue it’s current pension benefits until the money runs out–and then the government pays out reduced (government maximum) benefits after that? Or will the government take over in a few months? Why didn’t the government require action many years ago? ---
**Author:** ![TommySeven](https://avatars.discourse-cdn.com/v4/letter/t/8edcca/32.png) [@TommySeven](https://boards.straightdope.com/u/TommySeven)\ **Post date:** [May 22, 2016, 7:34pm UTC](https://boards.straightdope.com/t/the-teamsters-union-and-the-mafia-did-the-teamsters-lose/726957/18 "2016-05-22T19:34:12Z")
The rules for when the government steps in to take over a failed multi-employer plan are complicated, and I don’t think anyone but a specialist lawyer, accountant, or actuary will be able to explain in detail. I certainly can’t. It sure seems to happen pretty late, though, long after the outcome was all but certain. Note that any payment to the participants in a failed plan is supposed to come from premiums paid to the PBGC by healthy plans; it’s supposed to be an insurance company organized by the government, not directly a government guarantee. The PBGC is itself running out of money, and I think its limits for multi-employer plans are much lower than for single-employer plans, and much lower than typical benefits paid by Central States. From the perspective of the failing plan, there’s no incentive to get taken over sooner than absolutely necessary. Things might always turn around due to an unexpected marketed upturn, etc., and it’s easier to argue that the government should pay to stop retirees from getting nothing than it would have been to argue that the government should step in to stop retirees from getting a 20% (fake number; I don’t know what would have saved the plan here) cut in benefits twenty years ago. The whole problem arises because pensions promise a risk-free payout, and fund it with risky investments. Everyone has an incentive to use an optimistic rate of return, to maximize the promised benefit for a given contribution. If that’s actually achieved, then great. If it’s not, then at least you get your “insurance” payout, and maybe the government will give you money too. I think other countries have pensions where the benefit is continuously adjusted according to actual historical performance, which avoids this problem/opportunity.