Presser, Aides Enter Pleas of Not Guilty

CLEVELAND —  Teamsters President Jackie Presser and two longtime union associates pleaded not guilty Friday to charges of siphoning off more than $700,000 in Teamster funds to pay “ghost employees” who did no work, in a 10-year embezzlement scheme.

At their arraignment before U.S. Magistrate David S. Perelman, Presser and his co-defendants, Harold Friedman and Anthony Hughes, all entered pleas of innocence through their attorneys.

Released on Bonds

Perelman, after a five-minute proceeding, ordered the defendants released on $50,000 personal signature bonds, for which they are not required to post any money.

Meanwhile, The Times learned that the FBI stopped using Presser as an informant after a decade when he took command of the nation’s largest union in 1983. FBI Director William H. Webster decided then that it was improper for the head of a major American institution to provide information secretly on organized crime.

Officials who declined to be identified made the disclosure that Presser had been removed from the informant rolls. It was not previously known that Presser had stopped serving as a “top echelon” FBI source--a ranking for those believed to have access to the highest levels of organized crime. Webster’s decision, which he made known to then-Atty. Gen. William French Smith in a May, 1983, meeting--a month after Presser was named to head the 1.7-million-member Teamsters--also signals the sensitivity the FBI attached to his service.

Presser’s informant role and alleged assertions by FBI supervisors that they had authorized him to make “ghost” payments from union funds resulted in the Justice Department’s decision last July not to seek his indictment. The case was resurrected and Presser and his co-defendants were indicted May 16 after FBI and Justice Department investigators determined that there had been no such authorization.

Smith, who has returned to his private law practice in Los Angeles, was out of the country and could not be reached Friday. The FBI, which has never publicly acknowledged Presser’s informant status, declined comment.

Presser Refuses Comment

Presser, accompanied by his lawyer, John R. Climaco, refused to comment Friday when asked about the informant matter in the corridor of the federal courthouse here.

One co-defendant, Friedman, is vice president of the international union and president of Teamsters Local 507--Presser’s hometown local here. He also is president of Bakery Workers Local 19, also based here. Hughes, the other co-defendant, is recording secretary of Local 507 and a business agent for Bakery Workers Local 19.

At a pretrial hearing, which also ran five minutes, U.S. District Judge Ann Aldrich said that Presser and Hughes, who are being represented by brothers who are partners in a law firm, might want to consider whether this might result in a conflict of interest. Neither defendant responded.

Climaco had written Aldrich May 21 suggesting that she might want to disqualify herself from the trial because of “past differences” between her and the Climaco law firm.

Aldrich, in referring the challenge to U.S. District Judge George White, cited a 1985 decision by the U.S. 6th Circuit Court of Appeals that ordered her to step down from a civil case involving the law firm.

Earlier Dispute Cited

Climaco had asked for Aldrich’s removal in that case because of an earlier dispute in which Aldrich accused U.S. District Judge Frank Battisti of steering bankruptcy litigation to Climaco’s firm, which had employed the judge’s nephew. Climaco contended that Aldrich had improperly obtained confidential information about a client of his firm through the judge’s close friendship with a member of the law firm.

Officials familiar with Presser’s removal as an FBI informant said they did not expect disclosure of the action to affect his trial or the related trial of Robert S. Friedrick, an FBI supervisor charged with making false statements about efforts to prevent Presser’s indictment.

These sources predicted that Presser’s relationship with the FBI will not figure in his trial because the Teamsters president and his two co-defendants are expected to base their defense on the contention that the alleged “ghost employees” actually did perform work for the money they received.

Ronald J. Ostrow reported from Washington and Robert L. Jackson from Cleveland.