Wednesday, August 29, 2012

Top SEIU Officials Linked to Tyrone Freeman Scandal

SEIU's Stern, Medina and Woodruff
In an earlier post, Tasty referred to evidence that links SEIU’s top officials to Tyrone Freeman’s corruption scandal. Freeman -- who served as the President of SEIU Local 6434 and a Vice President of SEIU’s International Executive Board -- was recently indicted on 15 criminal counts that could land him in jail for up to 200 years.

The evidence -- which Tasty is providing below -- may explain why federal prosecutors are conducting "a continuing investigation" into SEIU officials connected to the scandal, according to the Wall Street Journal.  

So what’s the evidence? It’s sworn testimony from Jim Philliou, a top SEIU staffer who delivered the testimony during a separate, unrelated court case. Philliou’s testimony -- called a “deposition” -- was made under penalty of perjury and was recorded by a court reporter in the presence of SEIU’s own attorney, Leon Dayan of the law firm Bredhoff and Kaiser.

Philliou testifies that SEIU’s top officials knew of Freeman’s corruption as early as 2001 -- or seven full years before Freeman was finally busted by the Los Angeles Times in 2008! Furthermore, even though SEIU officials were alerted about the corruption, they failed to take any steps to stop Freeman... and instead gave Freeman more freedom to steal from SEIU's low-wage homecare workers. Basically, SEIU's top officials decided to 'looked the other way' while Freeman and his business buddies stole an estimated $15 million from SEIU members earning just $9 an hour.

So who’s Philliou? He’s a longtime SEIU staffer who most recently served in the Purple Palace as the Director of SEIU’s Long-term Care Division.  

What did Philliou say during his deposition? Below, Tasty has pasted 14 pages from the deposition. They're Philliou's own words about what happened.

Here’s some background and a quick summary:

From 1997 to 2004, Jim Philliou served as the Organizing Director for SEIU’s Western Region and  reported to Eliseo Medina and Tom Woodruff. (Medina currently serves as SEIU’s Secretary-Treasurer and Woodruff is Executive Vice President.)

During this period, Philliou was assigned to monitor the finances of SEIU Local 434B, whose name was subsequently changed to "SEIU Local 6434." In the late 1990s, Andy Stern had created SEIU Local 434B as a brand new union to represent newly organized homecare workers in Southern California. He appointed his close ally and confidant, Tyrone Freeman, to serve as the union’s president.

Under SEIU’s constitution, Local 434B was considered a start-up or “provisional” local union and received lots of financial subsidies from the Purple Palace. For these reasons, SEIU’s higher-ups assigned Philliou to monitor the union’s finances and to co-sign each and every check -- along with Tyrone Freeman -- that was issued by Local 434B. 

This, my friends, is how Philliou discovered that Freeman was stealing buckets of money from SEIU’s members.

Here’s how he discovered the corruption:  Back in 2001, when Philliou was co-signing checks at Local 434B’s offices, he discovered lots of “unduly large” checks that Tyrone had prepared for him to sign. What were these checks for? Among others things, they included payments to a childcare vendor! Of course, this is one of infamous scams that Freeman used to funnel large volumes of cash to a childcare business run by his mother-in-law and wife.

Here’s an excerpt from Philliou’s testimony. The “Q” indicates a question posed by an attorney. The “A” contains Philliou’s response. The transcript may seem a bit jumpy. That's because the court reporter takes down every word that's uttered by Philliou and the attorneys.
Q.  You said also that there was something about the amounts of the checks that you regarded as – that caused you to question the legitimacy of the charges that were being made by vendors; is that right?
A.  The size of the -- some of the expenditures seemed unduly large to me and I could not justify putting my name on those checks as being in the members' best interest.
Q.  Were you aware of what the checks were charging the local for what kind of services that were being paid for?
A.  I saw Excel spreadsheets with description of the payments, then that's when I asked.
Philliou then discusses his particular concerns about the checks issued to Freeman’s childcare vendor.

So what did Philliou do about his concerns? He told his superiors at SEIU, including Sheila Velasco, who was Eliseo Medina’s Chief of Staff. Here's more of Philliou's testimony:

Q.  Did you have concerns that the amounts of money charged by the vendors were perhaps a little out of proportion with what they should have been, a little excessive?
A.  My concern was some of those expenditures were questionably high.
Q.  And you told Ms. Sheila Velasco about your concerns?
A.  Correct.
Q.  What was her position within the International?
A.  She was the chief of staff for the western region.
Q.  So when in 2001 did you report your concerns to Ms. Velasco?  Do you have a recollection?
A.  It was April or May.
Q.  How do you know that?  How do you recall the month?
A.  Because it was around the time of a jurisdictional hearing in Los Angeles where the healthcare locals gave testimony about future organizing, and I recall it around that time, which is the end of April…
Q.  Ms. Velasco was working under the direction of Eliseo Medina at the time; is that correct?
A.  That's right…
Q.  Did you have conversations with anybody else who was working with SEIU International staff about those concerns?
A.  David Kieffer, K-i-e-f-f-e-r.
SEIU's Dave Kieffer
Who's Dave Kieffer? He's another of SEIU's top officials. He currently serves as the Executive Director of the SEIU California State Council, which is SEIU’s lobbying arm in California.

So what happened next? Philliou testifies that he was so troubled by Freeman’s “unduly large” payments that he refused to continue co-signing the checks on behalf of SEIU! Quite a red flag, right?

So what did SEIU’s top officials do?  Nada! In fact, they did even worse than “nada.” SEIU officials released Philliou from his role as the watch-dog over Freeman's finances. And then, rather than crack down on Freeman, SEIU simply withdrew its financial oversight, allowing Freeman to funnel even more money to his wife, mother-in-law, business buddies, cigar bars, Hawaiian adventures, etc.

Here's how Philliou describes it (A reminder: "Mr. Dayan" is SEIU's attorney.)

Q.  When you asked to have your assignment changed so you would no longer have to cosign checks with Mr. Freeman -- I forget.  Where was it that you were assigned after that?
MR. DAYAN:  You can answer.
THE WITNESS:  My assignment didn't change. That particular assignment was at my request removed from me, but I was still the western regional organizing director.
Q.  But that job duty was removed from you?
A.  Correct.
Q.  Why did you ask that it be removed from your responsibilities?
A.  Because I felt like I was representing the International union and if I signed my name to something, I had to believe it was a justifiable expense of the members' money.  And if I didn't believe that, I could not sign my name.
Q.  Do you know who it was who took over the responsibility after you no longer performed it of cosigning checks with Mr. Freeman?
A.  No one.
Q.  So the SEIU no longer had somebody representing it cosign those checks?
A.  At that point the local became more self-sufficient economically and it was agreed they would simply have to function like any other local.
WTF!! Let's see if this makes sense. A top SEIU staffer is so shaken by signs of corruption that he refuses to continue co-signing checks written by Tyrone Freeman. So what does SEIU do? They remove their financial oversight over Freeman. Are you kidding?

So... did SEIU ever conduct an audit of Freeman? Here’s Philliou’s testimony:
Q.  Do you know whether that audit took place?
A.  I don't know firsthand.
Q.  You don't know?
A.  I don't have any firsthand knowledge.
Q.  Did anybody tell you the audit had been conducted?
A.  David Kieffer.
Q.  And what, if anything, did Dave Kieffer say to you in response to your concerns when you first approached him about what was going on at 6434?
A.  He told me later that there had been some type of audit and the expenditures were, quote, "questionable but legal," end quote.
Hold on a minute! If SEIU had actually audited Freeman's expenditures, don't you think the investigators would have contacted Philliou to get details about the questionable checks that he'd discovered? Funny that Philliou had no"firsthand knowledge" of an audit by SEIU. Tasty would bet his paycheck that SEIU never did lifted a finger... except to run a cover-up operation.

Philliou continues his testimony:
Q.  When we talked earlier about your having given information to Sheila Velasco in 2001 -- April, May of 2001 concerning your discomfort about continuing to sign or cosign checks on the 6434 account, you also said that you spoke with Dave Kieffer.  In what month did you speak with Dave Kieffer?
A.  I recall to be in the summer.
Q.  Summer 2001?
A.  Correct.

And there's more in this 14-page excerpt from Philliou's deposition. Tasty has placed several red arrows in the margins to indicate where Philliou begins his testimony on these issues.
Jim Philliou's Deposition discussing SEIU Officials' Knowledge of Tyrone Freeman's Corruption in 2001
P.S. What is Philliou doing now? He left SEIU and helped found a for-profit company called TruCorps that supplies "temporary staff" to unions. In 2010, SEIU paid approximately $1.5 million to TruCorps to supply staffers for SEIU's fraudulent campaign against the 43,000 workers at Kaiser Permanente who voted in an NLRB decertifiction election. Philliou also works as a "consultant" for Dave Regan's SEIU-UHW. During the past two years, Regan has paid Philliou more than $200,000, according to annual financial reports filed by SEIU-UHW with the US Department of Labor.