Labor Department reportedly joins investigation of SEIU payments
A growing financial scandal in the 2-million-member Service Employees International Union has prompted a federal criminal investigation into the labor organization’s largest California local, sources familiar with the probe say.
U.S. Labor Department authorities are examining payments of hundreds of thousands of dollars by the union and a related charity to firms owned by relatives of the Los Angeles local’s president and expenditures of similar sums on a golf tournament, restaurants, a cigar lounge and entertainment companies, according to people with knowledge of the investigation.
The investigators are also looking into allegations that some union staff members faced retaliation last week after they refused to sign a petition supporting its president, Tyrone Freeman, the sources said.
The Times disclosed the spending practices of the United Long-Term Care Workers this month. The union’s 160,000 dues-payers earn $9 an hour or slightly more tending to the elderly and infirm in their residences or nursing homes.
Two agencies of the Labor Department are conducting the inquiry -- the Office of Labor-Management Standards and the Inspector General’s Office. They are responsible for investigating allegations of criminal embezzlement and racketeering in unions and work with U.S. attorney’s offices in pursuing prosecutions.
A spokeswoman for SEIU President Andy Stern said late Wednesday that the Labor Department had notified the union that an investigation had been launched.
“We are deeply concerned about these allegations,” said spokeswoman Michelle Ringuette. “We are cooperating fully. We will not tolerate in any leader actions that threaten the best interests of our members.”
Labor Department officials declined to confirm whether an investigation was underway. In response to the allegations of retaliations, however, the head of the Office of Labor-Management Standards, Don Todd, said in a statement: “We take seriously any allegations of intimidation, violence or retaliation. Intimidation of union members is unacceptable and is prohibited by law.”
Investigators from Todd’s agency and the Inspector General’s Office are interviewing potential witnesses about the local’s financial transactions and the role that Freeman played in the expenditures, the sources said. The sources asked to remain anonymous because they feared reprisals.
Freeman, a longtime Stern protege who has taken a leave of absence, could not be reached for comment Wednesday, and his representatives did not return phone calls and e-mail messages. He previously denied any wrongdoing.
The union’s national office has placed Freeman’s local in trusteeship, removing its elected officials, including 55 board members. The local is the second largest in the Service Employees International Union, the fastest-growing labor organization in the country.
A second union official, Rickman Jackson, Freeman’s former chief of staff, has stepped aside from his post as president of SEIU’s biggest Michigan chapter.
A housing corporation that Freeman helped found used the address of a home that property records show is owned by Jackson, The Times has reported.
Union and housing corporation officials have declined to say whether Jackson was paid for any use of his residence. Jackson said in an e-mail that he had no comment.
It was not clear Wednesday whether the federal inquiry extended to Michigan. Stern’s representatives have saidhis administration is examining the Detroit local’s financial records.
Freeman’s local has paid nearly $178,000 to a video firm operated by his wife at the couple’s home, The Times has reported.
A day-care service run by his mother-in-law at her house has received $96,000 annually for several years from a union-affiliated charity, the Homecare Workers Training Center.
In addition, the local has paid $16,000 to a now-defunct minor league basketball team coached by Freeman’s brother-in-law and $219,000 to another small video firm run by a former staffer, Brian Cheatham. Three other former staffers said that Cheatham is a close friend of Freeman and his wife, Pilar Planells, and that he had been pictured as a member of their wedding party on the website of a Hawaiian nuptials service.
The photo recently was removed from the website.
Altogether, payments to Freeman and the firms operated by his relatives and Cheatham totaled more than $1 million in 2006 and 2007. That includes Freeman’s compensation from the union, which was about $213,000 last year.
The local also spent nearly $300,000 in 2007 on the Four Seasons Resorts golf tournament, restaurants such as Morton’s steakhouse, the Grand Havana Room cigar club in Beverly Hills, and the William Morris Agency, the Hollywood talent firm, The Times has reported.
The union spent at least $123,000 more on the Carlsbad tournament than it received in reimbursements, although the event was billed as a fundraiser, records show.
After The Times raised questions about the nearly $10,000 paid to the Grand Havana Room, Freeman said he refunded the money.
He said all the other expenditures were in the interest of the union’s members.
Freeman and union representatives have declined to discuss an $82,000 payment to a Florida video firm that has said it never received such a payment.
The payout was reported in the union’s Labor Department filings.
Meanwhile, several union staff members told last week of being pressured by Freeman’s lieutenants to sign the petition supporting him.
Some of those who initially refused were transferred to positions far from their homes, according to three staffers who asked not to be identified because they feared retribution.
About 10 workers who balked at signing the petition had their union-provided cellphone service discontinued, the staffers said.
Ringuette said the union was investigating those complaints “very aggressively.”
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