Excerpted from Culture of Corruption, “Chapter 7: SEIU – Look for the union label”
Andy Stern rallied the Illinois delegation to the 2008 Democratic National Convention in August 2008 with an impassioned salute to the working man Flanking Stern on stage at the Denver celebration: Chicago political machine kingpins Rahm Emanuel and Richard Daley. Stern roared about “rebalancing power between wealth and work” to “make sure everyone shares in the wealth of a growing economy.” Echoing Obama’s 2007 speech to the SEIU political action conference, union boss Stern condemned the old way of doing business and called on American to “turn the page” on behalf of hard-working Americans and their families.
But just two weeks before Stern and company gathered in the Mile High City to celebrate Obaman’s coronation,, the Los Angeles Times published an explosive investigative series about the SEIU, Although the series got surprisingly little attention from national news organizations, L.A. Times reporters exposed how one of Stern’s top protégés “shared in the wealth” –— by siphoning off hundreds of thousands of dollars in dues money for his personal enrichment and pleasure. Moreover, the paper alleged, Stern helped cover up the scandal. No wonder they keep urging us to “turn the page.”
The L.A. Times investigation zeroed in on Tyrone Freeman who, like Barack Obama, began his career as an urban community organizer. In Atlanta, Freeman quickly ascended the SEIU ladder. In 1994, Stern found him at a small Georgia chapter of the union, Local 1985, and brought him westward. Stern set his loyalist Freeman up as head of Local 6434, the sprawling home care workers’ chapter in southern California that represents an estimated 160,000 workers who make about $9 an hour caring for the elderly and disabled. Stern chose Freeman as part of his administration slate at the SEIU convention in 2008 and named him a national vice president in addition to the L.A. appointment. The move wasn’t an altruistic act of affirmative action. It was part of Stern’s grander plan to consolidate power by merging locals into statewide chapters.
With bigger membership rolls came bigger coffers, and with bigger coffers came irresistible temptations.
Freeman, the L.A. Times discovered, had piped $600,000 in union contracts to his wife’s video production and entertainment ventures. The local also paid his mother-in-law $8,000 a month to babysit his daughter and other union employees’ children; footed a $13,000 bill for membership at a Beverly Hills cigar club; covered $12,500 in tabs at upscale Morton’s restaurant in Burbank; and forked over $8,000 in union dues to cover expenses for Freeman’s Hawaiian wedding. Freeman’s spending orgy didn’t end there.
Stern’s protégé created a non-profit training shop called the “Homecare Workers Training Center” –— ostensibly to provide educational opportunities for nurses. In practice, the non-profit served as a conduit to subsidize a childcare business operated by Freeman’s mother-in-law. “Her business had been receiving more than $90,000 annually for the past several years from the training center that Freeman founded as a separate nonprofit and chairs, according to IRS filings and interviews” by the L.A. Times. The funding from her son-in-law constituted more than 10 percent of the nonprofit’s total yearly expenditures. Freeman’s wife, Pilar, and brother-in-law, Hernando Planells Jr., are listed in state documents as officers in the mother-in-law’s business.” Freeman’s ransacking of Local 6434’s treasury didn’t end with nepotistic favoritism. The Times also reported:
* A housing corporation that Freeman helped found as a nonprofit has not been granted the IRS tax-exempt status it sought and was suspended from doing business in California. It also has claimed on its website to have a “strong relationship” with the prominent California Community Foundation, which says it has no such relationship.
* The union spent at least $123,000 more on the fund-raising tournament at the Four Seasons Resort in Carlsbad than it received in reimbursements, according to Labor Department filings and interviews. Freeman said the event made money for the charity. The union’s expenditures included $100,000 in payments to entities associated with former professional football star Eric Dickerson, which have been suspended from doing business in California. The payments were listed as donations to nonprofits, not as fund-raising expenses.
* And a now-defunct minor league basketball team coached by Freemant’s brother-in-law received $16,000 for what the union described as public relations.
Freeman’s local also paid nearly $106,000 to a company called “The Filming Inc.” –— for which the Times could find no state incorporation record or IRS nonprofit listing, no business license, and no legitimate address –— and another $106,000 to Hollywood talent agency William Morris for “advice and counsel” in such areas as media and “membership awareness.”
Even more troubling, Freeman allegedly rigged his own election. In August 2008, the Labor Department began investigating charges from rank-and-file members that Freeman’s union local “made it nearly impossible for candidates not on his slate to qualify for the ballot, according to people familiar with the probe. The FBI and the U.S. attorney’s office also opened investigations. Former employees of Freeman’s nonprofit charity also alleged that the Stern protégé forced them to work on campaigns of political candidates in violation of federal law.
Even more damning, a key union source told the Times that, contrary to the denials of union brass, SEIU’s top officials were warned of Freeman’s plundering six years before the paper blew the whistle:
In response to the July  inquiries, [union spokesman Steve] Trossman had issued a statement on behalf of Stern that said the union had received no allegations about Freeman’s local. Freeman denied any wrongdoing.
The source, who said he was party to internal conversations about Freeman in 2002, told The Times last week: “The international knew that there were allegations of impropriety many years ago. This is not news to them.”
On Aug. 20, 2008, just days before Stern would join Democrats in toasting Barack Obama at the party convention in Denver, Stern’s protégé Tyrone Freeman stepped aside as head of Local 6434 and the chapter was placed in a temporary trusteeship. Stern’s office in Washington, D.C. released the announcement. “These allegations are of serious concern to all of us and we support Mr. Freeman’s decision to put the best interests of the members first,” Stern spokeswoman Michelle Ringuette wrote in an e-mail to the Times. But even as he relinquished his position, Freeman was apparently engaging in the strong-arm tactics he learned from Stern. Ten employees told the Times that they suffered retaliation after refusing to sign a petition supporting him as the scandal exploded. “Freeman’s lieutenants” at Local 6434 essentially pressured other members to sign a “loyalty oath,” one union member disclosed.
After dragging its feet and being forced to act to quell public embarrassment over the Times investigations, SEIU finally announced formal charges against Freeman “for engaging in self-dealing and financial malpractice in violation of SEIU’s Constitution and Local bylaws.” In November, Stern threw his underling under the bus. Freeman, whom Stern had groomed in his own image, was banned for life from the SEIU and ordered to provide $1.1 million in restitution to the union. A sanctimonious Stern issued a statement lamenting Freeman’s downfall: “Today’s decision sends a clear message across our Union…We are all accountable. Our members do some of the toughest jobs anywhere, and we will not tolerate any actions violating their trust or putting their interests at risk.”
But rank-and-file members weren’t fooled or mollified. An insurgent group called S.M.A.R.T. –— SEIU Member Activists For Reform Today –— blasted the union leadership:
Freeman didn’t come from nowhere. He was appointed by Andy Stern – for the third time…And there are many other locals where Stern has installed unaccountable appointees and, sometimes ignoring reports that they were out for personal gain…So Stern’s message to us is clear – he cares more about expanding control for himself and an ever shrinking inner circle than he does about building real power for working people, creating solid organizations, coming through on SEIU’s political pledges for the fall, or even the perception of our union and our movement as real, democratic, valuable and clean. He will only act when there is no other option, and he will never apologize.
As for Freeman, he glided into a new life as a Los Angeles sports agent –— where he uses his criminal involvement in defrauding low-wage workers as a selling point. His shameless biography on the website of the SMWW Sports Agency touts his “tireless commitment to lead the struggle for livable wages, decent housing and health care for all.” Burnishing his scandal credentials, Freeman adds: “I believe my recent personal experience evolving from turmoil, can be a testimony shared in preparing any athlete for the trials and tribulations of being a star.
Ruthless Andy Stern taught Tyrone Freeman and his southern California peers all too well. Rickman Jackson, another Stern administration protégé and former chief of staff to Tyrone Freeman, headed Michigan’s largest SEIU chapter before being “reassigned” for three years to a staff organizing job after the revelation of financial shenanigans tied back to L.A.’s Local 6434. While collecting a six-figure annual salary in Michigan, Jackson was drawing a second salary in California and accepted $33,500 in housing payments on a residence listed as the business address of Freeman’s bogus housing non-profit corporation.
Another Stern administration protégé, Annelle Grajeda, rose to power after the SEIU president installed her as president of the 80,000-member Local 721 in Los Angeles. She ascended to positions on the union’s state council and international executive board. Like Freeman and Jackson, Grajeda had been voted onto Stern’s official administration slate at the SEIU convention in 2008. The Times published damning details of how Grajeda’s ex-boyfriend, SEIU official Alejandro Stephens, collected multiple salaries and consultant fees from the union while also pocketing a salary as a Los Angeles County health services employee. Grajeda had arranged for her ex-lover to get an eight-month leave of absence from the job. He was fired after he refused to return to work. Grajeda quit her California posts after catching public flak and found a new job –— as special assistant to SEIU secretary-treasurer Anna Burger in Washington, D.C.! Her former chapter heralded the move up. Grajeda will now oversee efforts to “partner with the Obama administration” to secure more public funds for SEIU projects. What could go wrong?
Former SEIU 721 President Annelle Grajeda assumed her new role as special assistant to the International Secretary-Treasurer Anna Burger for the Public Sector Mar. 9.
According to a staff announcement from the International Union in Washington, D.C.: “With more than two decades of service, Annelle has played a critical role in winning strong contracts for tens of thousands of union members, preserving trauma centers in Los Angeles County, fighting for health care reform, defeating ballot initiatives in 2005 that challenged working families’ livelihoods and uniting more than 80,000 workers into SEIU 721 for greater strength and a stronger voice for public service providers. She brings this wealth of experience and talent to the national level in her new role.”
…The International’s announcement went on to state “While there has been no finding of wrongdoing on Annelle’s part, she has decided to change the capacity in which she serves the Union in order to take on the challenge of developing quality public services at a time when funding is threatened like never before.”
In her new role, Annelle will expand SEIU’s work in the public sector partnering with the Obama Administration to secure more funds for key infrastructure projects and core public services including care for the elderly, health care, education and social services.
Tyrone Freeman, Rickman Jackson, and Annelle Grajeda were all groomed by Stern and personally appointed by him to the posts they exploited. But there’s no “three-strikes” policy in labor management. Like Obama, Stern has managed to pass the buck while pretending it stopped at his desk. Birds of a feather evade accountability together.
The L.A. SEIU debacles were just one stinking layer of Stern’s rotten onion. Corruption isn’t an anomaly at the SEIU. It’s a contagion. Cronyism isn’t the exception. It’s the rule…