Union and Port Employee Arrested in $1.2M Puerto Rico Extortion Scheme
U.S. authorities in Puerto Rico arrested the president of the longshore union local, a port employee, and five others on charges of organized crime and extorting more than $1.2 million from shipping companies in the San Jun as well as cheating the union benefits fund. With a list of charges reading like the famed 1950s waterfront cases, the U.S. attorney said the FBI-led investigation showed the scheme had been operating since at least 2005.
A federal grand jury in Puerto Rico returned the incidents on Monday for charges of RICO conspiracy, a Hobbs Act extortion conspiracy, violations of the Taft-Hartley labor law, money laundering, and mail and wire fraud. Among the individuals named in the seven-count indictment was the president of the International Longshoremen’s Association, AFL-CIO union local ILA-1740 Carlos Sánchez-Ortiz, an employee of the Puerto Rico Port Authority Jorge Batista-Maldonado, and Pedro Pastrana-González and his ex-wife, Iara Clemente-Rivera, owners and managers of JCPY, Inc. the local stevedores company. Three other members of the union were also named in the indictment.
“These arrests are the result of a comprehensive investigation that now will put a stop to the illegal fees that the defendants were charging the shipping companies at Piers 9, 10, and 11,” said W. Stephen Muldrow, U.S. Attorney for the District of Puerto Rico.
According to the indictment, they were running a criminal enterprise dedicated to extorting and misleading shipping companies into paying fees for the loading and unloading of cargo at the Port of San Juan. They were demanding “fees” from the shipping companies to be able to use “union-free labor” for the loading and unloading of cargo. The individuals were threatening the shipping companies with strikes and blockades by members of the ILA union’s local ILA-1740.
Monies received from the shipping companies they allege were divided by JCPY and payments to the ILA-1740’s employee benefit plan.
In addition to the extortion scheme, the indictment also charges a false work scheme in which the union card of Clemente-Rivera, a member of ILA-1740, was passed to other individuals who would show it on the docks to make it appear that Clemente-Rivera was working. The hours worked were fraudulently counted for Clemente-Rivera’s yearly-hour requirement to qualify for benefits from the union plan.
“Today’s indictment includes allegations of corruption against a union president as well as several union members,” said Megan Underwood, Northeastern Regional Director of the Office of Labor-Management Standards (OLMS). “We will continue to work with its law enforcement partners to hold accountable union officials, who hold positions of trust, as well as others who may seek personal gain through illegal activities, taking advantage of the union and the hardworking rank and file workers who the union represents.”
The charges include conspiracy under the RICO Act (Organized Crime law), extortion, money laundering, and mail and wire fraud, each of which carries a potential sentence of up to 20 years on each of the four counts in the indictment. Other elements in the indictment include health care fraud violations which are punishable by up to 10 years imprisonment, while the other counts of Taft-Hartley Act labor violations and charges of willfully converting funds and falsifying records are each subject to up to five years imprisonment.
“These fraudulent actions resulted in people improperly receiving benefits they were not eligible for, hurting thousands of Puerto Ricans who worked tirelessly to earn those benefits honestly and legally,” said Ali Khawar, Acting Assistant Secretary of Labor, Employee Benefits Security Administration (EBSA). “When anyone commits a crime involving an employee benefit plan, EBSA will make sure they are brought to justice.”
The indictment estimates the total value of the loss at approximately $1,184,524.26. It also includes a forfeiture allegation related to a residential property, a vehicle, and a boat.