Daily Labor Report

NUMBER 148 A-11 AUGUST 1, 2012

Unions

Federal Grand Jury Issues Indictment Against Former SEIU Ofcial Tyrone Freeman

federal grand jury has indicted a former official of the Service Employees International Union on charges of embezzling tens of thousands of dollars from his local union, the office of the U.S. Attorney for the Central District of California announced July 31 (United States v. Freeman, C.D. Cal., No. CR 12734,indictment 7/31/12). The 15-count indictment charged Tyrone Ricky Freeman, the former president of SEIU United Long Term Care Workers Local 6434 and a former member of the SEIU international executive board, with four counts of mail fraud, seven counts of embezzlement and/or theft of labor union assets, one count of making false statements to a federally insured financial institution, and three counts of subscription to a false tax return. The charges carry combined maximum prison sentences of more than 200 years. Freeman has agreed to appear Sept. 24 for an arraignment in the U.S. District Court for the Central District of California, the U.S. attorneys announcement said. The indictment comes more than three years after SEIU permanently banned Freeman, who headed the unions largest local in California, from holding union office or membership in light of evidence that he had misused union funds (230 DLR A-5, 12/1/08). After a report by an outside hearing officer found Freeman had engaged in a pattern of financial malpractice and selfdealing, SEIU ordered him to make restitution of more than $1.1 million to return all misappropriated local funds. A lawsuit filed by Local 6434 in 2009 seeking to compel Freeman to pay the fine (64 DLR A-1, 4/7/09) has been on hold in the Los Angeles County Superior Court of California at the request of the federal government while it conducts its investigation. The case against Freeman was investigated by several departments of the U.S. Labor Department, and by the Federal Bureau of Investigation and the Internal Revenue Service.

Freeman Innocent, Lawyer Says. A statement provided to BNA Aug. 1 by Freemans attorney Michael Zweiback of Arent Fox said his client is innocent of

the charges, and he looks forward to the opportunity to present his side of the story. When the truth comes out at trial, it will be abundantly clear that he acted appropriately at all times, Zweiback said. According to the announcement and the indictment, Freeman allegedly pilfered money from Local 6434 by diverting to himself reimbursement payments from California United Homecare Workers that were meant for his local. CUHW was established in 2005 jointly by SEIU and the American Federation of State, County, and Municipal Workers to represent public sector homecare workers throughout California. Until at least April 2007, CUHW had no revenue from member dues so Local 6434 lent CUHW staff, office space, and office supplies. Freeman served as president of both organizations, according to the indictment. In January 2007, Freeman introduced a resolution before the CUHW board calling for CUHW to reimburse Local 6434 $2,500 per month for each month he worked 60 hours or more on CUHWs affairs. The resolution stated that the payments would reimburse Local 6434 for the payment towards the salary of Freeman for the time he spent away from his duties at Local 6434. According to the indictment, Freeman falsely told a Local 6434 employee that the CUHW executive board had approved paying the stipend to Freeman, but because CUHW did not have the funds to pay him, Local 6434 should begin paying the $2,500 a month to Freeman. Between Jan. 16, 2007, and April 2, 2007, Freeman requested and approved three separate payments to himself from the local, the indictment said. Then in April 2007, Freeman directed the employee who processed check requests from the CUHW account to begin paying him the monthly stipend from CUHW funds. Between May 1, 2007, and Aug. 4, 2008, Freeman approved the payment of $2,500 per month to himself from CUHW funds, the indictment alleged. For all the payments that Freeman received from May 2007 through March 2008, he directed CUHW to mail the checks from California to Nevada via Federal Express so the checks could be signed by a CUHW executive board member. The payment checks would then be mailed back from Nevada to Freeman in California, the indictment said. The indictment alleged that in June 2008, Freeman falsely told the CUHW executive board that Local 6434 was reducing his salary by $2,500 for each monthly pay-

COPYRIGHT

2012 BY THE BUREAU OF NATIONAL AFFAIRS, INC.

ISSN 0418-2693

2 ment he received. It further alleged that from January 2007 to August 2008, Freeman concealed from both executive boards that he was receiving $2,500 a month in addition to the regular salary Local 6434 was paying him. ties of Rickman Jackson, president of Healthcare Michigan, SEIUs statewide local for health care workers, during the time when Jackson was employed as Freemans chief of staff. Following the investigation, Jackson was removed from his positions as president of the local and a member of the internationals executive board, was barred from holding union office for three years, and agreed to make complete financial restitution under a settlement agreement reached with the international (199 DLR A-8, 10/15/08). Annelle Grajeda, who was appointed president of Local 721 in Los Angeles by Stern, and was later elected international executive vice president of the union, stepped down from both those positions following internal allegations that the local paid money to Alejandro Stephens, a former boyfriend of Grajeda, in violation of a severance agreement he signed in 2007 (47 DLR A-7, 3/13/09). Stephens, the former president of SEIU Local 660, later was sentenced to four months in prison and an additional three months of home confinement for his role in a scheme to defraud a nonprofit organization called the Voter Improvement Project (171 DLR A-14, 9/3/10). Stephens pleaded guilty in August 2009 to mail fraud and tax evasion charges (166 DLR A-13, 8/31/09). Also, a huge internal battle in California resulted from Sterns attempt in 2008 to move some 65,000 home care workers out of United Healthcare Workers West to Freemans Local 6434, prior to his being ousted from the union. The conflict led to the trusteeship of UHW and the formation of a new unionthe National Union of Healthcare Workersby former officers of the SEIU local. Following Freemans ouster, the SEIU executive board voted to create a new local of 240,000 long-term home care workers through the merger of the nursing home and home care members from UHW, Freemans Local 6424, and Local 521 (06 DLR A-15, 1/12/09). When UHW protested, Stern placed the local under trusteeship for refusing to fully cooperate with the implementation of the decision (16 DLR A-20, 1/28/09). More than three years later, no new local has been created, and the 65,000 home care workers that were to be moved out of UHW remain part of that local.

Union Paid for Wedding Expenses. The indictment also alleges that Freeman charged more than $8,000 on a Local 6434 credit card for personal travel to Hawaii, including expenses related to his wedding, all of which was reimbursed by the local. According to the announcement and the indictment, Freeman allegedly embezzled money from Local 6434 by diverting funds to himself from the Long Term Care Housing Corporation, a not-for-profit corporation organized in 2004 for the purposes of developing affordable housing for members of the local union. Freeman allegedly took almost $17,000 in June 2008 by requesting the Local 6434s executive board to make payments to LTCHC, which he then diverted to himself. The indictment further alleged that in July 2008, Freeman lied to Countrywide Bank, when applying for a home loan of nearly $700,000. He falsely told the bank that Local 6434 paid his personal American Express credit card bills and his monthly lease payments on a Land Rover, when in fact the local did not make these payments, the indictment alleged. Three tax charges alleged that Freeman underreported the amount of income he earned on his taxes for 2006, 2007, and 2008, failing to report about $100,000 in income he received during those three years. Todays indictment demonstrates the [DOLs] Office of Inspector Generals commitment to investigating allegations of labor racketeering in our nations unions, Abel Salinas, special agent in charge of the Los Angeles regional office of the Labor Department, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, said in the announcement. While serving as president of his local union, Freeman allegedly used his position to enrich himself at the expense of union members, Salinas said. We will continue to work with our law enforcement partners to investigate these types of alleged corruption. Other Scandals Over Past Five Years. The Freeman scandal is just one of several that have tarnished the international union over the past five years, some involving leaders, including Freeman, appointed by former SEIU President Andy Stern. During its investigation of Freeman, the union opened a separate investigation into the financial activi-

BY MICHELLE AMBER
Text of the indictment is available at http:// op.bna.com/dlrcases.nsf/r?Open=mamr-8wrsdu.

To request permission to reuse or share this document, please contact permissions@bna.com. In your request, be sure to include the following information: (1) your name, company, mailing address, email and telephone number; (2) name of the document and/or a link to the document PDF; (3) reason for request (what you want to do with the document); and (4) the approximate number of copies to be made or URL address (if posting to a website).

8-1-12

COPYRIGHT

2012 BY THE BUREAU OF NATIONAL AFFAIRS, INC.

DLR

ISSN 0418-2693