Over the years, Democratic lawmakers created loopholes that made it possible for union leaders to work as little as one day in their civil-servant capacities, and then take extended leaves of absence in order to work for their unions — secure in the knowledge that their city pensions would be calculated on the basis of their far higher union salaries. As a state senator, Barack Obama voted in favor of these loopholes.
The first of these loopholes was created by Democratic state legislators in the mid-1990s, and word got around quickly and quietly. Almost immediately, the union leaders in Chicago began taking extended leaves of absence from their city jobs to work full-time for the unions.
Earlier, far more common sweetheart deals with union supporters involved taking a city job, working 20 years to qualify for a pension, then retiring and getting rehired for a different city job, collecting both a salary and a pension. After 40 years, two pensions plus Social Security, and whatever other nest eggs the loyal Democratic Party supporter could acquire, make a very comfortable retirement package.
But even that wasn’t good enough for the union bosses, and so these pension loopholes were created. The most extreme example of the union leaders’ sweetheart deals was given to Dennis Gannon, president of the Chicago Federation of Labor. Starting in 1973, he worked for 17 years as an equipment operator and manager, then took a leave of absence to serve as a union business agent.
When going on a leave of absence, of course there’s a form to fill out. Conveniently, the expiration date on Gannon’s form wasn’t filled in by anyone at Streets and Sanitation. He could have stayed on a leave of absence until retirement.
But Gannon and his cronies found an even more lucrative way to exploit the city pension fund. He resigned from the city job, received a refund of all contributions to the pension fund, was then rehired for a single day, then went on another leave of absence to work for the union again.
Since his formal retirement in 2004, Gannon has collected a city pension of $158,000 a year. It’s so high that it exceeds federal limits, and the city dutifully filed the necessary paperwork for an IRS exemption. So far, Gannon has collected over $1 million. Until 2010, this pension was in addition to his CFL president’s salary, which was over $240,000. Now with Grosvenor Capital Management, Gannon manages the Illinois teachers’ retirement fund and other public pensions funds.
It may not be a coincidence that the teachers’ retirement fund was the subject of several corruption trials, leading to the conviction of political fixer Tony Rezko, among others. (The federal trial of one of Rezko’s co-conspirators, Bill Cellini, started early this month.) Rezko’s bundling of contributions for the campaigns of Obama and Rod Blagojevich, and his arrangement of a sweet real estate deal for Barack and Michelle Obama, are also well known.
Rezko and Blagojevich picked board members for the retirement fund’s board of trustees and another Illinois state board, so that they could steer billions of taxpayer dollars to investments that benefited the friends and families of Illinois Democrats. Gannon, by collecting huge commissions on retirement fund investments, is only one of these beneficiaries.
Blago is one of the machine’s beneficiaries, having married the daughter of one of Daley’s ward bosses. Obama is another beneficiary, having married the daughter of another ward boss.
Another union “double dipper” in the pension funds is Liberato “Al” Naimoli. In 1985, working a city job that paid $15,000 a year, he took a leave of absence that lasted 25 years. Rising to the president’s office of Cement Workers Local 76, Naimoli finally retired from his city job in 2005 with a pension of $158,000 a year, based on his inflated union salary.
Like Gannon, Naimoli’s pension is so huge that it violated IRS regulations and required special permission, duly filed for by the city. Like Gannon, Naimoli is also eligible to receive a huge pension from the union, even though he signed a city pension application in 2009 stating that he wasn’t enrolled in a union plan.