John Samuelsen and Insurance Peddling in TWU Local 100

Samuelsen Scam

It smells to high heavens at TWU Local 100 under John Samuelsen. The local is being overrun by vultures, vendors and parasites who have returned to the good ole days, days that made unions become known as thriving centers of corruption and rip-offs.

I recently attended a “Track Safety (Re)Certification” course at the NYCT Learning Center located in the old P.S. 248 building in the Coney Island section of Brooklyn. While there I observed a typical induction for new transit employees. A large class of conductors was being trained in the P.S. 248 auditorium. Local 100 reps were present and in fact presiding over the session. Placed prominently for all the new students to file past by was a table manned by employees of an insurance company called M3 Technology selling: “$450-$1,500, MONTHLY, TAX FREE DISABILITY INCOME BENEFIT! NO MEDICAL QUESTIONS, PHYSICAL EXAM OR BLOOD TESTS!”

The package handed out by this insurance peddler referred to this as “YOUR TWU LOCAL 100 SUPPLEMENTAL BENEFIT PROGRAMS.” They are careful and specific to emphasize that this is Local 100. And a Local 100 union logo under that heading directs all new employees to “Get Involved” with the union by signing up with M3. To further reinforce this deception, at the bottom of the package, M3 describes itself as the “Administrator” of this program, not owner in full but “administrator” on behalf of Local 100!!!

Now naturally, all incoming transit workers would be justified in believing, with the union present and all, that this is part of their induction routine and they are expected to sign up. I am told that the sign-up is 100 percent, which means that M3 is getting more in premiums than the $23-$24 million that Local 100 gets in dues annually, or eventually would!!! In fact, M3 gets a front-row seat in the crew rooms and employee reporting locations on all Local 100 properties, at all section and division meetings as well as all events, even the occasional Local 100 staff meetings have been turned over to them, to train the staff to steer members to M3.

What is going on!?! And who is M3?

Back in 2003, after incessant and universal complaints from members and officers, Local 100’s executive board had a review of M3’s predecessor performed. Back then M3’s owners operated under the name “TransAmerica.” They had been plying Local 100 properties for years, changing their names every so often, and withheld all information from the executive board. Getting information and numbers from the TA was also like pulling teeth, but eventually we did. Back then, M3’s predecessor was pulling in $5-$7 million a year in premiums from our members, who were all angry as hell.

The executive board banned M3’s predecessor from all Local 100 properties and notified the TA. All officers were directed to evict them on sight. All officers, including virtually all of the current top officers, were also notified of our findings and decision, which was voted on unanimously at the board. In fact some of them were on the same executive board that adopted that ruling. Samuelsen, Downs and Utano, among others, were personally aware of all this. “TransAmerica,” now called M3, went into hiding. Not as much as a whimper was heard from them, that is until… John Samuelsen appeared on the scene.

Now, I don’t know what role if any they may have played in helping his campaign but it was shocking and strange to discover that just 5 months into office, in May 2010, Mr Samuelsen had violated the Local 100 executive board decision and ruling and secretly signed permission giving M3 exclusive rights and access to Local 100 members and properties, without telling a soul!!! Now who would do that?!?

Unions are not in the insurance-peddling business. This is an area that belongs with used-car salesmen and ambulance-chasers. And to begin to fill the gap in our members’ disability insurance coverage, we had negotiated for all members to be enrolled in State Disability Insurance back in the 2005 contract for the first time. There are clean ways to do this, but peddling the wares of insurance companies is NOT one, and “exclusive” access to boot—no competitive bidding, no independent oversight, no due diligence?

But it gets worse. At the time that Samuelsen secretly signed this exclusive arrangement, M3 was being sued by another insurance company. That other insurance-company lawsuit claimed that it had paid the owner of M3 $30-million for its exclusive rights to Local 100 members and that the owner of M3 had cashed the $30-million check and then turned around and opened back up shop on Local 100 properties for itself. The company wrote to Samuelsen and to the International Union complaining that he wasn’t returning their calls and threatening to sue Local 100 as well. In fact, in the summer of 2010, they sent both Samuelsen and the International union a draft copy of the multi-million-dollar lawsuit they were about to file against Local 100 for assigning to M3 the rights they had purchased for $30 million. The lawsuit sought to get their money back, damages and costs.

The TWU International began asking questions of Samuelsen. His own hand-picked secretary-treasurer had filed charges against him alleging misconduct with regards to his union issued credit cards. An auditor assigned by the International to look into Local 100 finances became aware of the TransAmerica/M3 history including the 2003 executive board unanimous ruling and of the way Samuelsen had done his secret agreement with M3 behind the backs of his own executive board, and also began making inquiries of Mr. Samuelsen.

Other officers at Local 100 began asking questions about the M3 deal. Meanwhile other insurance companies also began making inquiries challenging why they were not even allowed a shot at selling insurance at Local 100.

So what does Samuelsen do?

Two things: First, he directed his subordinates to grant interviews to other insurance companies, after the fact. Mind you, this was several months after he had already personally signed an exclusive with M3! Second: Samuelsen apparently went back to M3 and asked them to juice up the incentives they were offering Local 100. So, more scholarships and sponsorships started appearing all of a sudden.

The idea was to lay the basis to claim some due diligence in terms of competitive bidding and to making the claim that the product provided by M3 was competitive or superior from a market standpoint. But all it proves is the willfulness of Samuelsen’s conduct and conspiracy to cover his trail, after the fact.

On M3’s part, juicing up the package was easy considering the millions they stood to rake in from Local 100 members. The real measure of fairness in this area is the ratio and proportion of money received in premiums, to money paid in actual benefits to members, sometimes called the “returns rate,” not a few scholarships. And that is key to truly determining the magnitude and full dimensions of how Local 100 members are being preyed upon.

Sometime after that other company’s lawsuit(s) surfaced, it disappeared, suggesting that the plaintiffs were either somehow satisfied by a settlement and/or were cut into the deal to quiet the whole sordid affair.

Remember, the setting here was 2010; Samuelsen was only months in office. It seems that while he was accusing his own secretary-treasurer of shady dealings with a certain shady company, Samuelsen was courting big-money insurance peddlers.

This is absolutely dirty and deserves the intervention of the authorities. Tens of millions from the pockets of Local 100 members is involved. It’s shameful that this is what has become of Local 100, again!

– Roger Toussaint


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