WASHINGTON -- The mob has infiltrated the union dental plans of hotel and restaurant workers in Las Vegas and Atlantic City and is skimming hundreds of thousands, perhaps millions, of dollars a year from them, Senate investigators said Tuesday.
A former trustee of the Las Vegas local's dental plan fund, however, denied under oath that he worked for any organized crime members or knew of any fraud or mismanagement concerning dental plan funds.
The probe by the Senate Permanent Subcommittee on Investigations was concentrated on the Hotel Employees and Restaurant Employees International Union Local 54 in Atlantic City and Local 226 of the Culinary Workers Union in Las Vegas.
Howard Shapiro, a subcommittee investigator, said his staff found that the Atlantic City union local's dental plan was controlled on behalf of the organized crime family in Philadelphia formerly headed by Angelo Bruno.
The Las Vegas local's dental plan is controlled by the Chicago mob, whose family representative in Las Vegas for the past 12 years has been Anthony Spilotro, said subcommittee investigator Barbara Cart.
Ben Schmoutey, the former secretary-treasurer of the Las Vegas local and a former trustee of the dental plan, said he knew of no mismanagement or fraud.
'Hundreds of thousands of dollars were being skimmed for services that were not being performed. You didn't know that?' asked Sen. Warren Rudman, R-N.H.
'No sir,' Schmoutey replied. 'I relied on a professional administrator, attorneys and consultants.'
Schmoutey, who testified after receiving a grant of immunity, said he had met Spilotro only once and had not known that one of his closest associates was a good friend of Spilotro's.
'When I was treasurer, I ran the union,' Schmoutey said. 'Nobody gave me an order whatsoever.'
Mobsters gain control of the administration of the dental plans, then charge the union trust fund for services that either are not provided or greatly exaggerated, said investigators. The charges increase monthly premiums paid by covered employees.
In the case of the Atlantic City local's dental plan, Shapiro said only 55 percent of the total $1.15 million price tag for the plan went to dental care providers and the rest was charged to administrative costs.
'The subcommittee's extensive review of the Atlantic City Local 54 dental plans has established that Lawrence 'Larry' Smith, who is neither a plan administrator, attorney, trustee, nor dentist, has controlled this plan almost since its inception and has done so on behalf of the Philadelphia organized crime interests,' Shapiro said.
Smith -- now on trial in Camden, N.J., for his role in a kickback scheme involving five union severance pay plans -- received $210,000 a year for being a consultant to the Atlantic City dental plan administrator, Shapiro said.
Although he is no longer a consultant, Shapiro said, Smith still receives a monthly $15,000 check from the fund for the 'services' of Tex-Com, a computer firm Smith set up.
'Part or all of it then goes into the pockets of organized crime,' Shapiro said.
Ms. Cart said the staff's investigation of Local 226 in Las Vegas 'led us to virtually the same conclusions, namely that the plan is controlled by organized crime.'
She said Spilotro, facing charges of racketeering and murder in Las Vegas, virtually controlled the union local, which has 26,000 members.
Only 57 percent of the funds in the Las Vegas dental plan designated for dental services was actually paid to dental care providers, she said. The rest went to consultants and administrators, two of them linked with organized crime figures in Chicago and on the West Coast.
The Las Vegas dental plan contract was worth $8 billion over three years.
At least $426,000 a year is paid to a firm called Stratum Five International, which provides no defined services to the union local, she said.
Tuesday was the first of three days of hearings on the mob's infiltration of the union health and dental plans. The panel recessed until next Wednesday.