Starting in the early 1960's, the fund loaned tens of millions of dollars for investments in Las Vegas casinos, including the Desert Inn, Caesars Palace, Stardust, Circus Circus, the Landmark Hotel and the Aladdin Hotel, according to a history by Edwin H. Stier, a former federal prosecutor hired by the union as part of its efforts to clean house.
The loans in those days typically involved a front man who signed the papers and a crime family raking off cash behind the scenes. The loan approval process involved kickbacks, threats and, in at least one case, a kidnapping. By the time Hoffa disappeared in 1975, the Central States pension fund had loaned an estimated $600 million to people connected with organized crime, according to Mr. Stier, who resigned his union appointment in April after questioning the union's ongoing commitment to rooting out corruption.
But many of the loans did serve their intended purpose, making money to pay for Teamsters' retirement benefits. The hotels, casinos and other real estate projects, not all of which were connected to organized crime, were generally profitable, according to Mr. Stier, and before his disappearance Hoffa saw to it that his loans were repaid.
By 1977, after years of indictments, prosecutions, Congressional hearings and murders, federal regulators pressured the Central States trustees to resign and turn over the fund's assets to an independent money manager. The 1982 consent decree reduced the trustees' powers permanently, requiring the pension fund to choose an outside fiduciary from America's largest 20 banks, insurance companies and investment advisory firms.
