U.S. agents plan to arrest fashion chiefs

THE BALTIMORE SUN

NEW YORK -- As Seventh Avenue's leading designers prepare for the glitz of spring Fashion Week, undercover federal agents are ready to blitz the industry's underbelly.

Probing a side of the fashion world far from the paparazzi's flashes, agents are preparing bribery charges against union officials and fashion executives for allegedly circumventing contributions to union workers' health care.

The arrests will mark the latest attack in a two-year investigation into corruption in New York City's Garment District. So far, the probe has snared manufacturers, including an Anne Klein executive, and contractors who spent thousands to pay off union officials.

A top production executive at Donna Karan, the popular fashion company with estimated annual sales of more than $300 million, is among those under investigation, sources said.

"We cannot comment at this time on whether an individual employee of the company is the subject of an investigation," said a spokesman for Donna Karan. "However, the company does not condone such activities."

Federal officials would not say who could be arrested.

"I can say that with each new phase of this investigation, we are working our way up the ladder in the industry," said Norman Transeth, the U.S. Labor Department agent in charge of the probe.

In December, 19 contractors, workers, fashion executives and two officials of the International Ladies' Garment Workers Union were arrested as part of the investigation by the Department of Labor, the Postal Inspection Service and the New York Police Department.

The defendants were charged in an alleged bribery scheme and accused of ignoring collective bargaining agreements and allowing manufacturers and contractors to hide millions of dollars in work performed by nonunion labor. They allegedly avoided paying more than $300,000 into the union's health and welfare fund.

Fashion analysts were reluctant to say whether the practice affects the price of clothing for the average shopper. They did say that bribery hurts workers who rely on the ILGWU health and welfare fund, which has lost more than $60 million in the past two years.

Offshore contracting has depleted garment workers' union membership in New York City from a high of about 200,000 workers in the early 1970s to about 60,000 today. The ILGWU announced last week that it will merge with a former rival, the Amalgamated Clothing and Textile Workers Union.

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