A TEAMSTER TEMPEST

By RICHARD BEHAR

SEVENTY-FOUR-YEAR-OLD FREDERICK B. Lacey is America's leading justice-for-rent. The retired federal judge has been hired to lead investigations of sensitive cases ranging from the Iraq-gate scandal to Michael Jordan's gambling activities. But Lacey 's handling of his most challenging role, federal supervision of the 1.4 million-member International Brotherhood of Teamsters, has provoked debate about whether Lacey and his justice Department employers have gone soft in their handling of America's most corrupt union.

Criticism of Lacey's judgment has been building since last July, when he issued a 79-page report exonerating Teamsters boss Ron Carey, a self-styled reformer, from allegations that he is linked to organized crime. Lacey conducted his probe as the leader of the Independent Review Board, the three-member federally created agency that polices the union. While the board's report criticized Carey for some dishonesty in matters relating to his real estate dealings, it accepted his denials regarding the Mob. Critics in the union described Lacey 's report as a whitewash, while Carey claimed he was the victim of a smear campaign.

Now TIME has obtained a private letter written by Lacey in April 1994, amid his investigation of Carey, that raises questions about his impartiality. The letter was a warning to Thomas Puccio, one of two court-appointed trustees of a Teamsters local (the other: Michael Moroney, a labor-racketeering investigator) who were threatening to go public with materials allegedly linking Carey to a former Mafia boss. During a conversation in March 1994, Lacey reminded Puccio in the letter, "I told you that I thought you and Mr. Moroney ought to have in mind what would happen if you brought Carey down in that there were `old guard' Teamsters throughout the country that were hoping that Carey would be eliminated as a candidate in 1996 so that the clock could be turned back to what it was when I first came on the scene as Independent Administrator. You indicated that you had not given any thought to that but you would keep it in mind."

Puccio declines to discuss the letter, which he considers "confidential," but he, appears satisfied with Lacey 's report. Says he: "I don't have any doubt that the investigation was sufficient enough to satisfy the standards they were trying to satisfy."

Justice Department officials privately applauded Carey's climb to the Teamsters helm, viewing him as the union's best chance for reform and publicly promoting him as almost squeaky clean. Four of the union's past eight presidents had been indicted on criminal charges; three of them went to prison. In 1989 the union finally settled an epic racketeering suit in which the feds accused its leadership of forging a "devil's pact" with the Mafia. Under the settlement, the Teamsters agreed to allow the members to elect their president freely. Since then, Lacey and his team have booted out more than 200 union members on a wide range of corruption charges.

For Carey to be tied to the Mob would be a huge defeat for the government's program to rehabilitate the union. The man who has made that allegation to the FBI is Alfonso D'Arco, a former acting boss of the Lucchese crime family who is today the government's best and most protected Mafia witness. Many leading mobsters have gone to prison on his word. As for D'Arco's general credibility, Donald North, one of the FBI's chief organized-crime investigators, told New York magazine in january that "in thousands of hours of conversation, we have never caught him in a contradiction." Lacey concluded that D'Arco, who never met Carey, relied on false statements of two fellow mobsters who said Carey was part of the gang.

Moroney, the frustrated union trustee, resigned his investigative post last October; one month later, he wrote a six-page letter accusing Charles Carberry , Lacey 's chief investigator, of reaching a "preordained" conclusion regarding Carey's alleged Mobties. "We both know that the FBI is absolutely convinced that D'Arco has told the truth," wrote Moroney. "As I told you some time ago, I spent two days alone interviewing Darco in April 1993 and there is no doubt in my mind that he was telling the truth about Carey." Last week Moroney told TIME, "An appropriate investigation would bear [D'Arco] out." Carberry refuses to discuss the report, and Lacey did not return telephone calls.

This is not the first time critics have accused Lacey of a whitewash. Appointed as the Bush Administration's investigator into the Iraqgate scandal, Lacey declared that the government's handling of the case was "virtually perfect." That brought charges of "patsy" and worse, since many critics felt Lacey should have called for an independent prosecutor. Lacey and his staff have labeled their Teamsters report "extensive," but there were numerous leads unpursued and witnesses not interviewed. For example, Ron Carey's brother Carlisle was not questioned; in 1972 he married the widow of an alleged associate of the Colombo family.

Several members of Congress have taken notice. In late April Senator Jesse Helms wrote to Attorney General Janet Reno asking for an investigation into whether Lacey 's team is keeping the Mob out of the Teamsters. Aides from Senator Orrin Hatch's Judiciary Committee are gathering documents and considering hearings. if such an examination indicates Carey is clean, it would finally put to rest the speculation that he is a federal informant along the lines of the late Teamsters leader Jackie Presser.