Feds Probe Union Leader and Former Girlfriend of Gov. Corzine

July 16, 2008— -- Federal authorities have launched an investigation into New Jersey's largest state worker union, and of Gov. John Corzine's ex-girlfriend, Carla Katz, who until recently was its head, ABC News has learned.

As first reported by the Star-Ledger, investigators served document and record subpoenas yesterday on the Communications Workers of America in Washington, D.C.

The investigators are looking into allegations that Katz misappropriated union funds, sources confirmed for ABC News. These allegations were first raised in the union's own probe into Katz' management of Local 1034, sources confirmed to ABC News.

They were made public last week when the organization's governing body voted to oust Katz and take over the operations of the New Jersey local. At the time, Katz denied those charges and called her ouster a travesty.

Sources said that the investigation is being spearheaded by a task force that rousts the mob, and probes corrupt unions, and not by the U.S. Attorney's political corruption unit which has convicted more than 140 politicians in the state, including Newark's former mayor, Sharpe James.

When Katz and Corzine broke up in 2004 - just before he announced his gubernatorial bid - he had given her gifts worth more than six million dollars, including trust funds for her two children. This in turn raised questions during the race for office about Corzine's ability to properly run a state government that employed thousands of members of Katz local.

An ethics panel later found that the gifts caused no conflict for Corzine and did not taint state worker contract talks. US Attorney Christopher Christie is considered a potential Republican rival to Corzine in the 2009 election.

A spokesman for US Attorney Christopher Christie would neither confirm nor deny whether subpoenas were issued or whether an investigation was underway. CWA spokeswoman Candice Johnson, was not immediately available. Katz attorney, former federal prosecutor Paul Fishman, was not immediately available for comment.