Ex-la­bor leader is in­ves­ti­gated

Ques­tions fo­cus on fees paid by one ex-SEIU of­fi­cial to an­other, sources say.

Los Angeles Times - - Latextra - Paul Pringle and Pa­trick J. McDonnell paul.pringle@latimes.com pa­trick.mcdonnell @latimes.com

A fed­eral probe fo­cuses on $150,000 in con­sult­ing fees paid by one ex-SEIU of­fi­cial to an­other, Ale­jan­dro Stephens.

As part of a lengthy cor­rup­tion in­ves­ti­ga­tion, fed­eral au­thor­i­ties have been ex­am­in­ing $150,000 in con­sult­ing fees paid to a dis­graced for­mer Los An­ge­les la­bor leader un­der a con­fi­den­tial agree­ment signed by Andy Stern, then pres­i­dent of the pow­er­ful Ser­vice Em­ploy­ees In­ter­na­tional Union, ac­cord­ing to doc­u­ments and in­ter­views.

The U.S. at­tor­ney’s of­fice in Los An­ge­les had con­sid­ered fil­ing em­bez­zle­ment charges against Ale­jan­dro Stephens, who headed the SEIU lo­cal for county govern­ment work­ers, in con­nec­tion with the pay­ments, records ob­tained by The Times show.

Pros­e­cu­tors de­cided last year not to in­clude the em­bez­zle­ment counts in a crim­i­nal com­plaint against Stephens, who is go­ing to prison on other charges, but in­ves­ti­ga­tors were still ques­tion­ing la­bor of­fi­cers about the pay­ments at least nine months later, say three peo­ple fa­mil­iar with the probe. They spoke on con­di­tion of anonymity be­cause of the se­cre­tive na­ture of the fed­eral in­quiry.

They say the FBI and U.S. La­bor Depart­ment in­ves­ti­ga­tors are fo­cus­ing on whether Stern or other SEIU lead­ers ex­pected Stephens to per­form any work for the money, or if they ap­proved what amounted to a no-show job for him.

SEIU spokes­woman Michelle Ringuette de­clined to an­swer ques­tions about the agree­ment. In an e-mail she said, “Ale­jan­dro Stephens has had no role or in­volve­ment with the union for sev­eral years. Stephens vi­o­lated the terms of his … agree­ment with the union, and we are ag­gres­sively seek­ing the re­turn of all pay­ments made to him un­der that agree­ment.”

Stephens, 67, said that he did the work re­quired by the 2007 agree­ment and that the union still owes him $75,000.

At­tempts to reach Stern, who re­tired last spring and now sits on Pres­i­dent Obama’s bi­par­ti­san deficit-re­duc­tion com­mis­sion, were un­suc­cess­ful. Fed­eral of­fi­cials would not com­ment.

The 2-mil­lion-mem­ber SEIU, the nation’s sec­ond­largest union, has been wracked with al­le­ga­tions of cor­rup­tion, es­pe­cially in Cal­i­for­nia. The Times re­ported in 2008 that an­other SEIU lo­cal in Los An­ge­les had di­rected hun­dreds of thou­sands of dol­lars to busi­nesses owned by relatives and as­so­ci­ates of its pres­i­dent, Tyrone Free­man, who was sub­se­quently fired.

Fed­eral au­thor­i­ties have since been in­ves­ti­gat­ing Free­man and other SEIU of­fi­cials, ac­cord­ing to court records and peo­ple close to the in­quiry.

While look­ing into the Stephens agree­ment, in­ves­ti­ga­tors have also sought in­for­ma­tion about SEIU out­lays to other con­sul­tants and firms with per­sonal ties to union of­fi­cers and about a book deal that paid Stern a six-fig­ure ad­vance, say the peo­ple with knowl­edge of the probe.

SEIU helped fact-check and pro­mote Stern’s 2006 book, “ A Coun­try That Works,” and bought it in bulk, union of­fi­cials have ac­knowl­edged. Stern has said that his book con­tract was en­tirely proper and that he did not ac­cept roy­al­ties from sales to the union.

Le­gal is­sues aside, la­bor ex­perts said such agree­ments as Stephens’ can be trou­bling, es­pe­cially when they are con­fi­den­tial.

“It’s not trans­par­ent, so the union mem­bers could not see what’s go­ing on with their money,” said David Witwer, a pro­fes­sor at Penn­syl­va­nia State Uni­ver­sity, Harrisburg, who has writ­ten books on la­bor cor­rup­tion.

In a sep­a­rate case, Stephens pleaded guilty to mail fraud and tax evasion in­volv­ing a la­bor non­profit and was sen­tenced to four months in fed­eral prison.

He faced up to 43 years be­hind bars on those of­fenses but told The Times that he did not co­op­er­ate with the govern­ment in ex­change for a lighter sen­tence.

“I’m no fink,” Stephens said.

As the Stephens agree­ment notes, he lost his lo­cal pres­i­dency af­ter his SEIU chap­ter was merged into a new one. The deal re­quires him not to dis­close its terms or to say any­thing dis­parag­ing about SEIU.

When The Times learned the first de­tails of the agree­ment in Au­gust 2008, 20 months af­ter Stern signed it, SEIU of­fi­cials said Stephens had vi­o­lated its terms by stay­ing on the county pay­roll. But the four-page agree­ment does not in­clude a re­quire­ment that he give up his county job.

SEIU of­fi­cials later said that Stephens had not done the work he promised to do.

The agree­ment calls for Stephens to re­ceive a severance pay­ment of about $77,000 and three an­nual grants of $75,000 each for the con­sult­ing du­ties, which were de­fined as “re­tiree re­la­tions and other com­mu­nity pro­grams that sup­port the union’s work in South­ern Cal­i­for­nia.”

Stephens said, “There was no money that was stolen, no money that was em­bez­zled from SEIU. I’m get­ting screwed while ev­ery­one else is out there en­joy­ing them­selves. I’m the fall guy.”

The Stephens ar­range­ment led to the down­fall of an­other SEIU leader, An­nelle Gra­jeda, his for­mer girl­friend.

Amid ques­tions of whether she used her in­flu­ence to keep him on the county pay­roll, Gra­jeda lost her po­si­tions as pres­i­dent of the merged lo­cal, head of SEIU’s Cal­i­for­nia coun­cil and one of the union’s six ex­ec­u­tive vice pres­i­dents.

More re­cently, Gra­jeda, who has de­nied any wrong­do­ing, re­tired as an SEIU staff mem­ber, Ringuette said.

Gary Fried­man

PROBE: In­ves­ti­ga­tors are said to be ques­tion­ing la­bor of­fi­cers about pay­ments to Ale­jan­dro Stephens.

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