Monday, July 30, 2012

Newspaper: SEIU’s Tyrone Freeman to Face Indictment by Federal Grand Jury

Tyrone Freeman and Monica Russo

It appears that the purple-hued crime spree that's been splashed across San Francisco's newspapers is now shifting south to Los Angeles. According to an article in the Los Angeles Daily News, a federal grand jury will soon hand down a criminal indictment against Tyrone Freeman. Here’s an excerpt from the article:
For Freeman, who has been living with family members as he has sought various jobs over the last four years, the day of reckoning is expected to come this week when a federal grand jury returns an indictment against him...

His wife, Pilar Planells, pleaded guilty earlier this year to a misdemeanor federal charge regarding her tax reports. She was fined $130,000.
The article includes a statement from Freeman about the pending indictment:
"I'm back voluntarily -- and confidently -- to face these false allegations, which appear to be leading to an unjust indictment," Freeman said in a statement released by his attorneys. "Just like what brought me to L.A, in 1999, I am back to fight the good fight."
Freeman was appointed by Andy Stern to serve as the president of SEIU Local 6434, which represents 170,000 homecare and nursing home workers across California. He also served as a Vice President on SEIU’s International Executive Board and is a close ally of Mary Kay Henry.

Tasty believes the federal indictment will be handed down tomorrow, July 31. Earlier this month, the United States Attorney’s Office filed this document in a related civil suit. It indicates that the current “statute of limitations” on Freeman’s alleged criminal violations will expire on July 31.

Tasty believes the indictment will cover both familiar and unfamiliar territory for readers. Many readers are well aware of the corruption documented by the Los Angeles Times, including Freeman's schemes to divert more than a million dollars of union members’ money to his relatives and himself for cigar bars, expensive restaurants and Freeman's lavish wedding in Hawai’i.

Less well-known, however, is an even larger scheme that drained at least $12.5 million from the union. And the details are literally jaw-dropping.  

The scheme, which has not been reported in the press, is described in a civil lawsuit filed in federal court in June of 2009. It alleges that Freeman plundered millions from “a union-sponsored health and welfare plan that provides benefits to tens of thousands of workers providing in-home care to California’s aged and disabled.”

Basically, Freeman set up an SEIU insurance fund that was supposed to provide health, dental and other benefits to tens of thousands of SEIU's members across California. In order to fund these benefits, Freeman collected millions of dollars of benefits payments from county governments… and then systematically plundered the funds via a series of insider deals, kickbacks and backroom schemes with crooked consulting firms and fat-cat businessmen.

Companies involved in the multiple schemes include TelaDoc, Dickerson Employee Benefits and Physicians Care Insurance Services. Here's an excerpt from the lawsuit (see a full copy at bottom). Tasty describes some of the stunning details below.
Due to the acts and omissions of the Defendant Dickerson Employee Benefits and Freeman, the Plan purchased over-priced, inappropriate and/or illegal benefits, was charged excessive and improper commissions, paid money on claims not owed under the Plan terms, and failed to collect sufficient revenue to finance Plan benefits. Defendant TelaDoc aided in the fiduciary breaches of Dickerson Employee Benefits and Freeman, improperly received Plan assets, and engaged in material misrepresentations to induce the Plan to purchase an over-priced, inappropriate and/or illegal benefit service. As a consequence of Defendants’ acts and omissions, millions of dollars of Plan assets were wasted, and the Plan was very nearly rendered insolvent.
Here are some examples from court records, which describe a corruption that's so appalling it would make an Enron executive blush.

In one case that's described in court documents, Freeman funneled money to a corrupt contractor who then allegedly kicked back a portion of the funds to a special fund that Freeman used to finance his re-election to the presidency of SEIU Local 6434.

In another case, a corrupt contractor delivered kick-backs to Freeman by "donating" money to Freeman’s lavish golf tournaments, “the proceeds of which were whittled away on Freeman and his guests,” including “greens fees and spa treatments provided to Freeman and his friends…”

In yet another case, Freeman channeled workers’ health premiums to a corrupt contractor who allegedly rewarded Freeman with stock options in a private, for-profit corporation called “IGP Technologies.” When confronted with the details of this scheme, Freeman’s attorneys said the stock options were awarded to Freeman in exchange for his “advice on executive strategy execution." (Hmm... WTF is "executive strategy execution"?)

In still another case, Freeman diverted rivers of money to his principal partner-in-crime, Dickerson Employee Benefits, which then paid Freeman $45,000 in return for Freeman’s supposed advice and business plan for a for-profit company that was never launched. The phantom company that benefited from Freeman's astute business advice was called Insurance Clerk, Inc.  

Freeman -- who was the full-time president of two SEIU local unions as well as a Vice President of SEIU International -- apparently had plenty of time for consulting on the side, not to mention lavish golf tournaments and for-profit business schemes.

Amazingly, there are even more digusting dimensions to SEIU's corruption scandal. In 2007, Freeman signed a contract with a company called “TelaDoc” to provide over-the-phone medical consultations to workers when they're sick or injured.

Freeman signed the contract even though he allegedly knew that many workers could not legally receive the services. Why? In order to legally receive the over-the-phone services, each worker is required to have a primary-care physician who actually has conducted an in-person medical examination of each worker.

Most of the low-income workers in Freeman’s union did not have physicians! Nonetheless, under the deal, Freeman regularly deducted money from each worker’s paycheck in order to pay TelaDoc, which then pocketed giant profits because workers couldn't use the services! Next, Freeman negotiated a “refund” from TelaDoc, which Freeman allegedly funneled into so-called special projects.

And there’s more… but the details are far too lengthy to include in this post.

Needless to say, the allegations -- delivered to a judge in June of 2009 -- represent another giant vindication of Sal Rosselli and his team of rank-and-file leaders. In 2008, they rightfully resisted Andy Stern’s order to forcibly transfer 65,000 workers into Tyrone Freeman’s corrupt union. And they rightfully insisted on workers’ right to a transparent and democratic vote. For this, their union was placed under trusteeship by a corrupt and undemocratic SEIU. 

For those of us on the outside, we can now see more clearly why Rosselli's team resisted the forced transfer of 65,000 workers. Aside from the principles of worker democracy, it's clear that Freeman’s union was nothing less than a giant crime scene… and that Freeman’s corruption was thoroughly hard-wired into the union’s business relationships, insurance funds, consulting arrangements and finances.

Let's hope that Freeman -- and all of the Purple Palace officials who aided and abetted his crimes -- get their due!