KVIG Informative

The Teamsters’ Central States Pension Fund spent decades financing and getting burned by Las Vegas, from casino construction loans that went bad to a bribery scheme aimed at Nevada’s own U.S. senator. A federal court finally lifted four decades of supervision over the fund’s trustees in 2023 — six months after the same fund needed one of the largest pension bailouts in U.S. history just to keep paying retirees.

By 1979, the Teamsters’ Central States, Southeast and Southwest Areas Pension Fund owned a 5.8-acre Las Vegas parcel known as Wonderworld, managed on the fund’s behalf by the Victor Palmieri Company, according to the U.S. Court of Appeals for the Seventh Circuit’s 1984 opinion in United States v. Williams. Roy L. Williams, by then the Teamsters’ international vice president, and Allen Dorfman, a consultant who reviewed loan proposals for the fund, worked to steer the property’s sale to a homeowners’ group fronted by then-Sen. Howard Cannon of Nevada at a discount, the court’s opinion states — conditioned on Cannon opposing a bill in Congress to deregulate the trucking industry, which the Teamsters opposed.

On Jan. 10, 1979, Williams and Dorfman met with Cannon and offered him exclusive rights to buy Wonderworld for $1.4 million, according to the Seventh Circuit’s opinion. Through February 1979 the pair worked to eliminate competing bidders, including Las Vegas investors Allen Glick and Fred Glusman, the opinion states. Recorded conversations from May 21, 1979, showed the men still trying to make good on the arrangement; the property was ultimately sold to a different buyer, American National Development Corporation, for $1.6 million on May 25, 1979, according to the court.

A federal jury convicted Williams, Dorfman, Joseph Lombardo, fund trustee Thomas F. O’Malley and former fund trustee Andrew G. Massa on all 11 counts, including conspiracy to bribe a U.S. senator and wire fraud, and the Seventh Circuit affirmed the convictions on June 8, 1984. Williams was sentenced to 55 years, later reduced, and Lombardo to 15 years, according to the court’s opinion. Dorfman never reached sentencing: he was murdered outside a Lincolnwood, Illinois, hotel in January 1983, a killing that remains unsolved.

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The Wonderworld scheme wasn’t the only Las Vegas money trouble hanging over the fund. The U.S. Government Accountability Office examined the fund’s Las Vegas hotel-casino lending in a 1985 report, finding that a $98 million line of loans to Argent Corporation for the Fremont and Stardust — issued in 1974 and 1975 — carried a $73.9 million balance by November 1984, when the properties sold to Golden Nugget for $58.58 million, a loss of roughly $15.32 million. A separate $43 million loan to the Aladdin Hotel Corporation had gone delinquent since September 1982 and carried an anticipated loss of about $6 million, the GAO found. The fund’s own manager changed hands over this period, from Victor Palmieri and Company to Morgan Stanley in 1984.

Trustee corruption tied to loans and investments with organized-crime figures led the U.S. Department of Labor to place the fund under a federal consent decree in 1982, mandating that an independent special counsel attend every trustee meeting and file quarterly compliance reports, according to Central States’ own account of the decree’s history. That arrangement lasted four decades. On June 9, 2023, Judge Thomas M. Durkin of the U.S. District Court for the Northern District of Illinois dissolved the consent decree at the request of the independent special counsel. Durkin found the fund had shown sustained compliance and that the decree’s original purpose had long since been fulfilled, according to Central States’ own published account of the ruling.

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The oversight ended just six months after the fund needed rescuing on a scale the 1980s trustees never faced. The federal Pension Benefit Guaranty Corporation approved $35.8 billion in Special Financial Assistance for the Central States plan on Dec. 8, 2022, after finding the plan was projected to run out of money by 2025 and would otherwise have had to cut benefits to roughly 60 percent of what retirees were promised, according to the PBGC. The assistance covers 357,056 participants, the agency reports.

The fund that once loaned Las Vegas casino developers tens of millions of dollars, and whose own officials tried to trade a Las Vegas lot for a senator’s vote, spent four decades under a federal magnifying glass for exactly that kind of self-dealing — only to need one of the largest single pension rescues in American history the moment nobody outside the fund was required to keep checking.