Fraud case against union leader outlined
By David Waite
Advertiser Courts Writer
United Public Workers union leader Gary Rodrigues systematically overcharged union members for health and dental insurance so he could steer lucrative consulting contracts to his daughter and share in the money, an assistant U. S. attorney told a federal court jury yesterday.
"This case is about greed and about a powerful person," federal prosecutor Florence Nakakuni said in her opening statement in the trial of Rodrigues and daughter Robin Sabatini on charges of mail fraud, money laundering and conspiracy to defraud a health-care benefit program.
RODRIGUES
Rodrigues' lawyer, Doron Weinberg, told the jury his client had done nothing wrong, and that the contracts Rodrigues negotiated with medical and dental insurance providers cost UPW members no more in premiums than comparable, and in some cases inferior, health plans the workers could purchase from the state.
"It is simply not true that Gary Rodrigues negotiated higher premiums; he negotiated lower premiums," Weinberg said.
Although he hired his daughter as a consultant and paid her a "significant amount," it was "appropriate to do so," Weinberg said. "Making money in this country is not a crime," he told the jury.
Rodrigues, once considered among Hawai'i's most powerful labor leaders and dubbed the "26th senator" because of his influence at the state Legislature, also served on the nine-member Judicial Selection Commission that screens judges for the state bench. He stepped down from the panel in March 2001 after he was indicted.
SABATINI
If convicted, Rodrigues almost certainly faces prison time and removal as head of the 13,000-member union representing blue-collar state and local government workers. The charges carry prison terms ranging from five to 20 years.
Weinberg said it had not been decided whether Rodrigues would take the stand.
Rodrigues appeared at the trial in a tan jacket, dark brown dress Levis, a yellow reverse-print aloha shirt and his trademark cowboy boots and string tie.
He watched intently, without smiling, during Nakakuni's 40-minute opening statement describing what the government believes is evidence that Rodrigues took steps to hide Sabatini's consulting pay from union members and its executive board. She said Rodrigues had shown "consciousness of guilt" by ordering documents to be shredded after learning of a federal investigation of him.
Defendants: Gary Rodrigues, 60, state director of the United Public Workers union, and his daughter, Robin Haunani Rodrigues Sabatini, 38, a Kaua'i accountant. Charges: Rodrigues and Sabatini face 100 counts of mail fraud, conspiracy to defraud a health-care benefit program and money laundering. Rodrigues also is charged with embezzling labor organization assets and accepting kickbacks in connection with an employee welfare benefit plan. Prosecution: Rodrigues negotiated dental and health care contracts with insurers on behalf of UPW members, but never told members part of their monthly premiums was used to pay Sabatini as a consultant. Defense: UPW members were not forced to subscribe to dental or medical insurance plans Negotiated by Rodrigues, and UPW members paid less for the insurance plans in question than alternative coverage available from the state. Judge: David Ezra, U.S. District Court. Schedule: The trial is expected to last four weeks, although it will be in recess in mid-October, when Ezra travels to the Mainland to preside over a previously scheduled case.
Rodrigues' demeanor did not change as Nakakuni told the jury there was a paper trail of consultant checks made out by the companies that provided medical or dental insurance to UPW, and that insurance agent Herbert Nishida, who earned more than $100,000 in commissions by selling union-endorsed life insurance policies to union members, would testify that he made cash payments to Rodrigues in return.
Trial at a glance
Rodrigues' mood lightened as his attorney told the jury the government's evidence would fail to show that Rodrigues "embezzled, stole or misappropriated the UPW's money in any way."
The union leader is charged alone with accepting a kickback in connection with life insurance purchased by the union for its members.
In her opening, Nakakuni said Rodrigues' power over the union and its executive board allowed him to conceal the fact that his daughter was being paid with union money until the two were indicted by a federal grand jury in March 2001.
"Mr. Rodrigues is the UPW," Nakakuni said in outlining her case for the jury. "This is how he was able to do all of these things."
Nakakuni said the illegal consulting fees that went to people as directed by Rodrigues came to nearly $200,000.
But Weinberg said the "enemies and opponents" Rodrigues had made as head of the UPW for 20 years might be the real reason that he and Sabatini face federal charges.
He described Rodrigues as "first and foremost" a father, one who is "fiercely loyal to, and fiercely protective" of, Sabatini and another daughter he raised by himself.
"He is also very much a union leader, one who is as fierce and as loyal in protecting his union's membership as in protecting his family," Weinberg said. That has made him a target for people "motivated by many things," he said.
The government's case against Rodrigues will be based in part on testimony by Georgietta Carroll, Rodrigues' secretary until 1993, when he broke off a long-term relationship with her, Weinberg said.
"She was unhappy that Gary left her, and it is clear that she did everything she could to hurt Gary Rodrigues. You will see her hand at work," Weinberg said.
Richard Hoke, Sabatini's lawyer, said he would wait to decide whether to make an opening statement until the defense finished presenting its case against her.
Although the trial puts one of Hawai'i's most recognized labor leaders in the spotlight, other union officials cautioned that it should not be used to taint other unions.
J.N. Musto, executive director of the University of Hawai'i Professional Assembly, said he did not believe the trial would have such an impact on other unions, except among people who already were prejudiced against them.
"Everybody that has a prejudice against unions will use this as an example of how they're right, that they can't be trusted — and that's just flat out not the truth," he said.
Musto emphasized that Rodrigues was on trial, not the UPW or unions in general.
Eric Gill, financial secretary-treasurer of the Local 5 Hotel Employees and Restaurant Employees Union, said he was unfamiliar with the charges against Rodrigues, but suggested he would not have been indicted if he were head of a corporation rather than a union.
"He's under charges because the scrutiny is very high," Gill said.
Rather than looking at Rodrigues' indictment as a black mark against unions, Gill said, "I think it's pretty indicative to think that there are hundreds of union leaders out there, and we only have one that's been indicted.
"I think it speaks well for unions that they have such a small percentage of people having this problem," Gill said.
Advertiser staff writer Treena Shapiro contributed to this report.
