The Service Employees International Union sweetened Stephens' exit with severance payments and other compensation that totaled nearly $180,000, said union spokeswoman Michelle Ringuette. A condition was that Stephens give up the salary he was receiving from Los Angeles County, Ringuette said. Under an agreement between the union and the county, taxpayers covered the salary of the head of the union local.
The SEIU inquiry remains unresolved. Now, however, records and interviews show that Grajeda arranged to keep Stephens on the county payroll for the first eight months of this year. The arrangement she worked out called for the union to reimburse the county for Stephens' pay.
The work status Grajeda secured for Stephens was a leave designed for employees who are needed for union business that also benefits the county, such as training sessions for shop stewards, county administrators say. Stephens, however, used the time to work for a union-affiliated nonprofit that he heads. The group stages an annual 5- and 10-kilometer race that is supposed to raise money for an emergency relief fund for union members, and for cancer patients, premature babies and other charitable purposes.
For the last several years, the nonprofit's tax returns indicate that it has done poorly at that task. In 2007, for example, the nonprofit spent $22,782 on its charitable programs, just 11% of its outlays. Seventy-eight percent of its expenditures went to fundraising costs, and it ended the year with a deficit of $34,429, Internal Revenue Service records state.
The charity netted $6,882 in fundraising returns, spending more than 90 cents for each dollar it brought in. It reported $227,742 in long-term assets and fund balances. Elizabeth Brennan, a spokeswoman for the local, said that money is available for emergency relief and "benefits our members."
Charity Navigator, an online monitoring service, and other watchdogs say well-performing nonprofits devote a minimum of 70% of their total expenditures to charitable programs and have fundraising costs of 10 to 20 cents per dollar.
"It's really quite bad -- very poor," Charity Navigator President Ken Berger said of the spending record of Stephens' nonprofit. "They're an outlier."
The union chapter involved, SEIU Local 721, represents about 80,000 social workers, nurses, sanitation drivers and other public sector employees across Southern California. It was formed last year from the merger that swallowed up the chapter that Stephens had headed, Local 660. Grajeda had been the general manager of Local 660 under Stephens, then became the president of Local 721after the merger. She also serves as an SEIU executive vice president and president of its state council.
Jim Adams, who approves union leaves as the county's labor relations chief, said his office had no idea that Stephens was being paid to work for the nonprofit. "That was never part of any request," he said. If his office had been aware, "I'm not sure what I would have thought about that."
Adams said that a negotiated agreement allows the union to arrange for a limited number of employees to go on county-paid leave for union duties, provided the money for salaries and benefits is reimbursed. He said the county relies on the union to ensure that the leave is properly used. "What we're interested in is whether they'll pay us back," he said.
In hindsight, Adams said his office should have been more vigilant about Stephens. "We certainly have to build in some due diligence," he added.
Attempts to reach Stephens and Grajeda for comment were unsuccessful.
After Stephens lost his presidency last year, he continued to collect his roughly $47,500 in county salary, plus benefits, officials say.
The county tried unsuccessfully to get him to return to work in the Department of Health Services, where he was employed as a marketing representative, Adams said. He later went on vacation until January 2008, when the leave and union reimbursements arranged by Grajeda started, Adams said.
The SEIU has demanded that Stephens return most of the money it paid him in 2007, saying he violated the terms of his separation agreement by not forgoing the county salary. And the county is billing the local for Stephens' government payments last year, citing the requirement that the union refund the salary and benefits of non-officers on leave.
Grajeda made the leave request in a Nov. 27, 2007, letter to the county's chief executive office. The letter does not mention the nonprofit. In a brief interview shortly after she stepped aside from her union jobs, Grajeda said her lengthy personal relationship with Stephens ended in July 2007.
SEIU spokeswoman Ringuette said the union did not know about the letter. Ringuette declined to comment further, saying, "We are in the middle of an intensive investigation."
Brennan, the Local 721 spokeswoman, said Stephens' placement on county leave last year had been proper because the merger of the union locals involved an extended transition. "He continued to serve in a leadership role," she said. "This is a unique situation."
She said that Stephens worked full time for the nonprofit from January through August of this year. In previous years, he reported working part time for the charity as a board member, sometimes for as little as an hour or less per week, although the number jumped to more than 25 hours in 2007, according to IRS filings.
Three SEIU locals are involved in scandals, and nonprofit groups have played a role more than once. Last week, the union imposed a lifetime ban on the former president of its largest California local, Tyrone Freeman, and demanded that he return more than $1 million it says he misappropriated from the union and at least one affiliated nonprofit.
The Times had reported that Freeman's local and a second nonprofit paid hundreds of thousands of dollars to small companies owned by his relatives and friends and spent a similar sum on golf tournaments, expensive restaurants, a Beverly Hills cigar lounge and a Hollywood talent agency.
The SEIU had removed Freeman's former chief of staff from the presidency of the union's biggest Michigan local, after determining he received $33,500 in improper payments from a housing nonprofit. Freeman and others with ties to the SEIU are the subjects of a federal criminal investigation.
Pringle is a Times staff writer