SEIU Pledges Reform as Investigation into California Local Union Continues

Published December 1, 2008

The head of California’s largest labor union local has been placed on leave following a Los Angeles Times investigation revealing financial improprieties at the union.

Tyrone Freeman, considered a rising star in organized labor and a protégé of Service Employees International Union President Andy Stern, disputed the findings by the Los Angeles Times and a subsequent SEIU probe. The newspaper’s reports appeared in a series of more than a dozen articles beginning in August and running into mid-September.

The local, the United Long-Term Care Workers, represents 160,000 home care and nursing home workers. It has been placed under the trusteeship of the union’s parent affiliate, SEIU. SEIU took the action shortly after the initial newspaper article appeared August 9.

Union Leaders Disciplined

Two other local leaders have been placed on paid leave, and several staffers, including Freeman’s top aide, have been fired.

“Whether we’re talking about a union of private or public workers, the principle is the same. Union financial dealings must be transparent,” said Sonya Jones, director of labor policy at the Evergreen Freedom Foundation, a nonpartisan public policy organization in Washington state.

“States should examine existing federal standards and consider extending similar disclosure requirements to cover public-sector unions. Union members and the general public deserve to know that union leaders are not mismanaging funds,” Jones said.

More Corruption Found

Immediately after the initial Los Angeles Times story, SEIU asked a former California attorney general to review the local’s finances. Following that review, two SEIU trustees issued their own nine-page report detailing seven corruption charges against Freeman.

According to the report, $650,000 from the local went to a video production business owned by Freeman’s wife. Also, Freeman allegedly directed $100,000 annually from a related charity to his mother-in-law’s day-care business. The investigation found the sum of money was unwarranted based on the number of children cared for.

In addition, Freeman allegedly directed a different union local and a local housing corporation, from which he improperly drew $5,000 for himself each month. Freeman billed the union for $8,100 in expenses during his own wedding in Hawaii, and he spent about $13,000 at a Beverly Hills cigar lounge. Freeman reimbursed the union $9,800 after the Los Angeles Times reported those expenditures.

Other charges include improper documentation of expenses, concealment of facts from the local’s executive board, and a health insurance scam.

Freeman allegedly directed the local union to pay for his wife’s medical insurance while he kept his ex-wife on his policy. Instead of paying for coverage for his ex-wife with his personal funds, he wanted the union to pay for his insurance, his wife’s, and his ex-wife’s. Freeman also did not file required disclosure forms until the Los Angeles Times revealed his failure to do so.

Calls Self Scapegoat

Freeman responded by saying the union is scapegoating him to protect its image. He defended the payments to his wife’s video firm as expense reimbursements and claims she did not profit from them.

SEIU has turned over its internal audit findings to federal authorities, including a congressional committee and the U.S. Department of Labor, which are investigating the situation for possible criminal violations.

In response to this and other scandals, SEIU is setting up an ethics commission to establish tougher rules for all its union officials. Stern is asking all local unions and state councils “to immediately adopt as their minimum standards the international union’s code of ethics, which deals with conflicts of interest, self-dealing, and gifts.”

According to The New York Times, Stern wants new standards in place by January that “articulate bright lines of right and wrong, and we want to enforce them.”

String of Scandals Hits Locals

The incident involving Freeman is the latest in a string of financial missteps by union locals.

The president of a local representing 77,000 county employees in Los Angeles stepped aside after allegations her local paid her boyfriend thousands of dollars. SEIU has threatened trusteeship on a 130,000-member local in Northern California, and the president of a 55,000-member local in Michigan was forced to step aside due to allegations of financial mismanagement.

The Los Angeles Times investigation of Freeman relied in part on union financial disclosure forms required by federal law. SEIU must file those forms because it represents some workers in the private sector. The federal requirements are intended to enable union members to know about union expenditures and for the public to provide appropriate oversight.


Scott Dilley ([email protected]) is labor policy analyst at the Evergreen Freedom Foundation in Olympia, Washington.