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Ron Carey is accused of lying to investigators about illegal fund raising.

By Phil Hirschkorn
CNN New York Bureau

NEW YORK (CNN) -- A jury was selected Monday in the federal trial of former Teamsters Union President Ron Carey, accused of lying to investigators about an illegal fund-raising scheme during his 1996 re-election campaign.

Carey, 65, is being prosecuted in the U.S. district court in Manhattan on a seven-count indictment alleging he committed perjury before a grand jury and lied to government investigators who were reviewing the flawed election.

A panel of nine women and three men was selected to decide the case. Judge Robert Carter scheduled opening statements for 11 a.m. Tuesday.

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Carey pleaded innocent to the charges in February and has steadfastly maintained his innocence since details of the scheme surfaced four years ago.

Carey is not charged with embezzling union funds or laundering the money generated by the play executed by his campaign manager, a political consultant and a direct mail provider.

Under the plan, funds from the Teamsters treasury were diverted to liberal political groups in exchange for donations, via third parties, to Carey's campaign.

The scheme resulted in $885,000 in contributions that went to Citizen Action, the consumer and environmental advocacy group, Project Vote, a group that mobilizes low-income and minority voters, the National Council of Senior Citizens, and the American Federation of Labor, according to the government.

In return, Carey's campaign received $360,000, according to the indictment. Any political contribution by the Teamsters required Carey's approval.

In 1997 testimony before a grand jury, Carey said he did not recall the largest of the contributions in question -- $475,0000 to Citizen Action -- or that he discussed it with his secretary or campaign manager, who said they sought Carey's approval.

Carey told the grand jury that because Citizen Action shared the Teamsters' agenda on such issues as Medicare and NAFTA the donation "would not have raised any flags for me."

Carey denied under oath that he knew union expenditures were being used to induce contributions to his campaign.

"And if I did, it would have been stopped dead in its tracks," Carey testified. "If I had, I would have got to the bottom of that and heads would have rolled."

Carey had won the first direct election of a Teamsters president by the union's rank and file in 1991 and was seeking a second five-year term. His opponent was James P. Hoffa, son of the legendary union leader who spent years in prison and disappeared after his release.

As polling in fall 1996 showed Carey's lead over Hoffa diminishing, Jere Nash, campaign manager, and Martin Davis, a Washington-based political consultant, decided to undertake a direct mail campaign to the union's 1.4 million members. The estimated cost was $700,000, prompting the need for more fundraising.

Carey narrowly defeated Hoffa by 16,000 votes out of 458,000 ballots cast during the mail-in election that December.

After government election monitors discovered the illegal campaign fund raising, they voided Carey's victory, and after deciding Carey had prior knowledge of it, they barred him from the rerun election, won by Hoffa, the current union president.

In 1998, the Teamsters expelled Carey, ending a four decade association that began when Carey became a UPS truck driver in 1955. Carey went on to lead the Teamsters Local 804 in Queens, New York and rose to prominence for fighting corruption.

The Teamsters, the nation's largest private sector union, and for decades under the influence of organized crime, has been operating under government supervision pursuant to its 1989 settlement of a racketeering case with the Justice Department.

Four of Carey's predecessors, including Jimmy Hoffa, were convicted on various corruption charges, and a fifth president died before trial.

Nash, Davis and a Boston-based direct mail provider, Michael Ansara, have pleaded guilty to developing and executing the illegal Carey fund-raising scheme. They are cooperating with the government and are yet to be sentenced.

William Hamilton, the union's political director under Carey who was convicted in a jury trial, is serving a three-year sentence for his role in the scheme.