Thursday, June 9, 2016

SEIU-UHW Gave $25,000 to Group Linked to Alleged Influence-Buying Scheme and Scandal-Plagued Puerto Rican Governor

Banco Popular in San Juan
California-based SEIU-UHW contributed $25,000 to a group at the center of an alleged influence-buying scheme linked to Puerto Rican governor Alejandro García Padilla, according to records obtained from two federal agencies.

Why did SEIU-UHW President Dave Regan give $25,000 of his members’ money to a Puerto Rican organization that’s co-financed by a massive hedge fund and the island’s largest bank… and which allegedly funneled money to the Governor’s brother for a no-show job?

The answer apparently lies with Dennis Hickey Rivera.

Rivera -- who was the president of SEIU 1199NY and is now a “Senior Advisor” to SEIU President Mary Kay Henry -- is closely associated with the Puerto Rican governor and his political party, the Popular Democratic Party.

Rivera reportedly set up the organization that’s at the center of the alleged influence-buying scandal -- the “Sociedad Económica de Amigos del País” (SEAP) -- by using the shell of a nonprofit corporation he previously established in New York.
SEIU's Dennis Rivera
What does SEAP do? And who funds it?

Here’s where the story gets interesting.

According to its website, SEAP seeks “to support economic development in the Commonwealth” by “bringing investment and creating jobs in Puerto Rico.”

However, critics allege that the organization is a tool for corporations to buy influence with the governor. They point to the organization’s funding sources and its payouts to the governor’s brother to back their claims.

In 2014, a majority of SEAP’s funding -- $200,000 of its total $275,000 -- came from just three corporations: Banco Popular (Puerto Rico’s largest bank), St. James Security, Inc. (a security firm that holds contracts with the Puerto Rican government), and Putnam Bridge Funding (a hedge fund operated by its billionaire CEO, Nicholas Prouty, which has made huge bets on Puerto Rican real estate).

Excerpt from SEAP's federal tax return for 2014 indicating some of its sources of funds.
Banco Popular’s CEO Richard Carrion serves as the Chairman of the SEAP’s Board of Directors while SEIU’s Dennis Hickey Rivera is the Vice Chairman, according to the organization’s website and federal tax returns.

Another member of the organization’s board is Miguel Ferrer, former Chairman of UBS Financial Services Inc., which in 2012 paid a $26.6 million penalty to the U.S. Securities and Exchange Commission (SEC) to settle allegations that it misled customers and engaged in fraud, according to Reuters.

What about the governor’s brother?
The Puerto Rican governor and his brother, right.
Curiously, SEAP has only one staff member -- the governor’s brother, Antonio García Padilla. 

He’s a full-time professor at the University of Puerto Rico… but he nonetheless was paid $70,000 over 11 months by Rivera’s nonprofit organization to serve as the organization's full-time Executive Director, according to SEAP’s 2014 tax returns. 

What role has SEIU-UHW President Dave Regan played in the scandal?

In 2014, SEIU-UHW was SEAP’s fourth-largest contributor, according to SEAP’s federal tax returns. 

SEIU-UHW’s annual filing with the US Department of Labor confirms the union’s $25,000 contribution to the group (see excerpt immediately below).

Excerpt from SEIU-UHW's US DOL Form LM-2 for 2014
Now… it doesn’t take a rocket scientist to understand why corporations would want to buy influence with the governor. But why did SEIU-UHW contribute to SEAP, which is located some 4,000 miles away?

Tasty’s sources say it was part of an effort by SEIU-UHW’s Regan to buy influence inside SEIU’s DC headquarters during his battle against SEIU President Mary Kay Henry.

Regan delivered the $25,000 to Rivera in July of 2014 as Regan was sharpening his attack against Henry. Only five months later, Henry and SEIU’s International Executive Board approved a resolution ordering the transfer of 65,000 members of SEIU-UHW’s members to a separate SEIU local union controlled by one of Henry’s allies, Laphonza Butler.

According to Tasty’s sources, Regan’s donation of $25K to Rivera’s organization was intended to curry favor with Rivera, who works inside SEIU's headquarters and also has great influence with leaders of 1199NY, the largest and most powerful local union inside SEIU.

Interestingly, the scandal surrounding SEAP comes just months after another influence-buying scandal involving another brother of the Governor. 

In December, the FBI arrested 10 businessmen and Puerto Rico officials in the first scandal.
Press coverage of scandal with Gov's first brother

Anaudi Hernández Pérez -- a businessman, political fund-raiser, and the head of campaign finances for the governor’s party -- allegedly used his relationship with the governor’s second brother (Luis Gerardo García Padilla) to steer government contracts to corporations that, in turn, lined Hernández Pérez’s pockets. 

The government then paid the corporations for contract work they never actually performed, thereby lining the businessmen’s pockets with cash, according to a 25-count indictment handed down by the US Attorney’s Office.

On June 24, Hernández Pérez faces sentencing of up to six years after pleading guilty to 14 corruption charges. He also agreed to forfeit his $4 million home in Puerto Rico. Meanwhile, the governor has announced he will not run for another term of office.

Smart move.

SEIU and Dennis Hickey Rivera have a long and dirty relationship with the governor’s party, the Partido Popular Democratico or "Popular Democratic Party."

In 2008, SEIU used its cozy relationship with the party and then-Governor Anibal Acevedo Vila to try to eliminate one of Puerto Rico’s largest and most militant unions, the Federacion de Maestros de Puerto Rico (FMPR), and replace it with SEIU as a “company union” that would do the governor’s bidding, according to reporting by Juan Gonzalez at the New York Daily News.
Puerto Rican teachers confronting SEIU's 2008 convention
The current SEAP scandal underscores SEIU will officials' cozy relationships with the captains of big business, including the hedge funds, banks, and real estate corporations that have played an outsize role in the economic crisis affecting Puerto Rico and the United States.

More news to follow in the days ahead. 

Here's a full copy of SEAP's federal tax return for 2014, which includes disclosure of Regan's $25,000 contribution to SEAP on page 22.