Agencies Reviewing UFW and Charities

Two government agencies, one state and one federal, are reviewing operations of the United Farm Workers and the union’s related charities to determine whether the tax-exempt organizations’ transactions warrant investigation.

Officials with the U.S. Department of Labor, which charters and regulates labor unions, and the California attorney general’s office, which regulates charities, said their agencies initiated reviews after a four-part series published in The Times last month detailed the charities’ interlocking finances and certain transactions that benefited people connected to the organizations.

The charities, along with the UFW, make up what their leaders call the Farm Worker Movement, a network of tax-exempt groups. The Times reported about various transactions in which the charities did business with one another, as well as engaged in deals that benefited friends, relatives and board members.

The articles also raised questions about the accuracy of information reported on state forms and federal tax returns. The misstatements included routinely providing incorrect answers to questions such as the number of employees -- the charities answered none -- to reporting that they received no government funding.

“There were issues raised in the series that merit attention, and we are reviewing them,” said Teresa Schilling, a spokeswoman for state Atty. Gen. Bill Lockyer.

Schilling said the review would determine whether the office launches a formal investigation, in which case it would inform the charities but would not comment publicly, even to confirm the existence of the inquiry.

Problems uncovered by The Times’ investigation included the charities’ failure to report transactions with one another on sworn federal and state forms and transactions that might not be getting the best value for the charities -- including deals that benefited insiders.

In one case, according to state and county records, Emilio Huerta, legal counsel for the National Farm Workers Service Center, was a partner in a firm that purchased a piece of land in Fresno from the center and then quickly resold it at a $1.1-million profit.

In another example, a related charity, La Union del Pueblo Entero, rented space in a building owned by a member of its board of directors and referred clients to the tax service operated in the same office by the board member’s wife, according to the charity’s executive director.

Leaders of the Farm Worker Movement have said since the series ran that they complied with laws and regulations, and they have defended their reporting.

UFW spokesman Marc Grossman said in a statement Thursday that union officials declined to be interviewed because of their unhappiness with The Times’ series.

Charities are tax-exempt because they serve a public good; legally they are thus required to obtain the best value possible. If a charity does business with someone serving in certain key positions with the group, the charity must be able to demonstrate, if asked by authorities, that it considered alternatives and can justify that it got the best deal.

The Farm Worker Movement includes tax-exempt groups that build and manage affordable-housing projects, operate a network of radio stations, run the National Chavez Center, maintain buildings and operate food services for Farm Worker Movement employees, operate training programs and conduct community organizing.

The Times’ articles also detailed various financial connections between some of the charities and the UFW, which buy services from one another. As a labor union, the UFW is regulated by the U.S. Department of Labor, and the union’s health and pension plans also fall under that department’s jurisdiction.

Deanne Amaden, a spokeswoman for the department’s Bureau of Labor Management Standards, which oversees union elections and financial reporting, said the federal agency is also conducting a review to determine whether to launch a confidential investigation that would probe the union’s compliance with federal regulations.

Amaden said issues related to possible taxable income or other tax questions would be handled by the Internal Revenue Service. The IRS does not confirm or deny inquiries it conducts.

The charities in the Farm Worker Movement are so-called 501(c)(3) corporations, which are regulated by the IRS as well as the state attorney general.