EX-MEBA OFFICIAL TO TESTIFY AGAINST FORMER COLLEAGUES DEAL A BREAK FOR PROSECUTION IN LABOR PROBE

EX-MEBA OFFICIAL TO TESTIFY AGAINST FORMER COLLEAGUES DEAL A BREAK FOR PROSECUTION IN LABOR PROBE

In a major break for federal prosecutors, a former maritime union official convicted of racketeering has pleaded guilty to a separate charge of tax fraud and will testify against his former colleagues, U.S. officials said Monday.

The guilty plea of Reinhold "Fred" Schamann, a former vice president of District 1/Marine Engineers Beneficial Association-National Maritime Union, was made Friday in a federal courtroom in Washington, D.C.He pleaded guilty to a charge, filed by federal attorneys in Norfolk, Va., of defrauding the United States by approving fraudulent expense reports filed by MEBA officials in Norfolk and elsewhere that were not reported to the Internal Revenue Service as income.

In addition, Mr. Schamann agreed to cooperate with the Justice Department's Organized Crime and Racketeering Section and waived his right to appeal previous charges for which he and four other former officials were convicted July 5.

"There will be no limits on his cooperation," said Ted Planzos, the lead prosecutor in that case. "He has agreed to help us on anything we ask him about."

Mr. Schamann, former District 1/MEBA-NMU President C.E. "Gene" DeFries and three other union officials were convicted for racketeering, conspiracy, mail fraud, embezzlement and extortion.

Testimony to Aid Prosecution

Mr. Schamann's decision to cooperate is a major break for the federal task force that has been investigating maritime union corruption. It includes the FBI, the Office of Labor Racketeering of the Department of Labor's Inspector General and the Internal Revenue Service.

According to government officials, Mr. Schamann's testimony could be helpful in several areas, including plans by the other convicted MEBA officials to merge the MEBA and NMU pension plans, past union elections, contracts with shipping companies and the role played in the union by one of its lawyers.

The merger between District 1/MEBA and the NMU was terminated in 1993 after a two-year battle between the union's shipboard engineers and the leadership of District 1/MEBA-NMU. The pension plans were never merged.

Mr. Schamann's plea agreement will not affect the appeals to be filed by the other defendants, said R. Stan Mortenson, Mr. DeFries' attorney.

Appeal to Protest Instructions

Among other things, Mr. Mortenson said he will argue in his appeal that U.S. District Judge Thomas Penfield Jackson failed to provide to the jury ''advice of counsel" instructions. If he had done so, the jury would have understood that taking certain actions on the advice of a lawyer "can constitute an absence of doing anything wrong," Mr. Mortenson said.

District 1/MEBA-NMU's chief counsel was Angelo Arcidipane. During the trial, he testified under immunity for the defense and was named an unindicted co-conspirator. His attorney, Barry Levine, said the co-conspirator designation is unfair, meaningless and damaging because prosecutors don't have to provide any evidence to back up the designation.

The DeFries appeals will be filed after Judge Jackson sentences the four remaining defendants. That is expected to be in November or December, Mr. Mortenson said.

The Norfolk case against Mr. Schamann was brought by Helen Fahey, U.S. attorney for the Eastern District of Virginia.

Reimbursement Fraud Alleged

Between 1983 and 1991, it charged, Mr. Schamann "approved or

assisted other conspirators in the approval and payment of over $270,000 on fraudulent 'expense reimbursements' filed by John C. DeLullo, a MEBA representative in the Port of Norfolk, and other MEBA representatives in the Ports of Charleston, (S.C.), Boston and Jacksonville."