A little known and privately-held firm that handles investment portfolios for union pensions is at the center of a federal investigation that even labor unions concede could generate some of the most scandalous charges to hit the labor movement in years.

A federal grand jury and the Labor Department is investigating whether the labor bosses who make up the board of directors of the Union Labor Life Insurance Company, known as Ullico, made big bucks from insider trading while the rank and file pension earners were stuck with hefty losses.

"The directors of Ullico wrote special rules to benefit themselves to allow themselves to buy and sell stock, to buy it at a low price and sell it at a high price, whereas other investors, such as union pension plans, were locked out completely from selling their holdings of stocks," said Stefan Gleason, vice president of the National Right to Work Legal Defense Foundation.

Some of the most powerful union bosses in America sit on Ullico's board of directors. Only directors or union pensions can buy its stock.

But in 1999 the directors, not the pensions, were offered a very sweet deal.

Each director could buy 4,000 shares of stock at $54 dollars per share. The offer came just before Ullico, which adjusts its stock value once a year, was about to boost its stock value to $146 per share.

Why the stratospheric rise in stock value? Ullico had bet heavily on now-bankrupt telecommunications company Global Crossing, which in 1999 was still a Wall Street favorite.

One year later, the same Ullico directors would be allowed to dump as many as $10,000 in shares at $146 dollars per share just before Ullico dropped its stock value to $76 per share. Again, pension funds had no access to either transaction.

Virtually all the money invested in Ullico is from union pension funds and it's that money that is put at risk by self-dealing by the top members of the board.

Pro-union activists have lampooned Ullico's behavior in a political cartoon that compares the board's actions to Enron, the now-defunct energy giant.

Ullico refused to comment on the allegations or the board's conduct, but AFL-CIO President John Sweeney, a board member, did not trade any Ullico stock. He has ordered an independent investigation of the matter that a top AFL-CIO lawyer told Fox News is proof that Sweeney takes the insider trading charge "very seriously."

"The AFL-CIO takes the allegations regarding Ullico very seriously and President John Sweeney has made clear that one standard must apply to all companies worker money is invested in," said Damon Silvers, Associate General Counsel of the AFL-CIO.

Analysts say the developing scandal could undercut union attacks on big business.

"The union leadership that's involved in this is in a very similar circumstance in those respects as some of the business leaders that are being called on the carpet," said Marvin Kosters, director of economic policy studies at the American Enterprise Institute.

And while the union's sharpest critics say the brouhaha isn't nearly as big as Enron -- especially since Ullico is still operating, no one got laid off and Ullico stock isn't in the tank -- that doesn't mean laws weren't broken or labor bosses may soon be tarred with accusations of greed and hypocrisy leveled against big business.

Fox News' Major Garrett contributed to this report.