Unanswered Questions in SEIU Corruption Scandal as Tyrone Freeman Ordered to Prison

Now that Tyrone Freeman is finally on this way to the Big House, there are still many unanswered questions about SEIU's corruption scandal. Here are a few:

1.  Will the feds pursue the SEIU officials who aided and abetted Freeman during his crime spree? 

Jim Philliou, a top SEIU staffer, has twice testified under oath that Purple Palace officials were fully aware of Freeman’s crimes as early as 2001, but failed to step in and instead reportedly launched a cover-up to hide the corruption from legal authorities and SEIU’s own members. 

The SEIU officials implicated in the scandal include Eliseo Medina, Andy Stern, Steve Trossman, Sheila Velasco, Dave Kieffer, Tom Woodruff, Gerry Hudson, Mary Kay Henry and Dave Regan.

In late September, the former president of an SEIU local union sent this five-page memo imploring federal prosecutors to go after the top SEIU officials involved in Freeman's crimes.

2.  Who paid Freeman’s legal bills? 

Rumors are that SEIU secretly paid the bills in exchange for Freeman’s promise to not bring down other Purple Palace officials with him. Sources tell Tasty that Freeman’s legal bills from the firm Mayer Brown -- an elite global law firm that specializes in White Collar Defense cases and has represented White House staffers and congresspeople -- easily totals many millions of dollars.  

3.  Will SEIU now pursue its civil lawsuit against Tyrone? 

To great fanfare, SEIU sued Freeman in the spring of 2009 in an effort to recover the millions of dollars that he allegedly embezzled. The judge put SEIU's civil lawsuit on hold while the feds pursued their criminal case against Freeman. Now that Freeman has been sentenced, will SEIU resume its civil lawsuit against Freeman? So far, SEIU has been unwilling to even criticize Freeman in the press despite his conviction for stealing from SEIU’s members.  

4.  Why is Tyrone's former chief of staff, Rickman Jackson, who was removed as the president of SEIU Healthcare Michigan for his role in the corruption scandal, still on SEIU’s payroll and working for Mary Kay Henry at the Purple Palace?

SEIU paid Rickman Jackson $140,000 in 2011.

5.  Why is the State of California allowing one of Freeman’s partners-in-crime, Dickerson Employee Benefits, Inc., to serve as a state-sponsored insurance broker on California’s Obamacare Health Benefit Exchange (aka, “Covered California”)?

Dickerson is one of Freeman’s corrupt business pals who jointly stole more than $12.5 million from California healthcare workers, according to 51-page lawsuit. The lawsuit, filed in U.S. District   

Court, names Freeman and Dickerson Employee Benefits as co-defendants.

According to the suit, Freeman and Dickerson plundered millions from a health and welfare fund set up by Freeman to supposedly provide health and dental coverage to SEIU members. Freeman reportedly let Dickerson steal millions from the fund in exchange for kickbacks to Freeman in the form of fake consulting agreements, stock options, campaign contributions to Freeman’s election fund, etc.

In one kickback scheme, Freeman diverted rivers of money to Dickerson, which then paid Freeman $45,000 for a no-show consulting gig with a phantom for-profit company called Insurance Clerk, Inc. More details are contained in this 55-page legal filing connected to the lawsuit.

Carl Dickerson -- founder and Chairman of the Board of Dickerson Employee Benefits -- was also one of Tyrone’s frequent guests to the infamous Beverly Hills cigar bar, where Freeman charged $175 glasses of brandy to SEIU’s members. 

Many questions... and Tasty wants answers!

 

Former SEIU Leader to Feds: It's Time to Pursue Top SEIU Officials in the Tyrone Freeman Corruption Scandal

Check this out. 

Tasty has obtained a five-page memo that was recently sent to the U.S. Department of Justice and the U.S. Department of Labor by a former president of one of SEIU’s local unions.

In a memo dated September 27, 2013, Mike Wilzoch implores the feds to hold SEIU’s head honchos accountable for their roles in the massive corruption scandal centered on Tyrone Freeman.

Wilzoch's memo does a compelling job at connecting the dots. 

Here are some excerpts. The full memo is below.

This is to follow up on our phone conversation. Thank you for agreeing to pass on this communication to those responsible for pursuing this case in the DOL. I’m also copying in 2 DOJ attorneys I have communicated with before on this case who are also in a position to act on these issues:

I have two primary concerns:

1)         As I have expressed to US Attorneys involved in the investigation and successful prosecution of Freeman, he clearly relied on many union officials to enable and hide from the membership and public his criminal activities. There is credible testimony on the record that several of the highest SEIU officials are among those who were directly informed of Freeman’s behavior as early as 2001. There is also the fact that it is a practical impossibility that other members of the SEIU Executive and many more in the chain of command from 2001 on did not know of the years of this abuse. Will they be held accountable?

… Based on the evidence I reference below, and my long experience with many of the parties involved, I repeat that it is a practical impossibility that all of the members of the SEIU Executive and many more in the chain of command from 2001 on did not know of the years of this abuse. Some actively supported and enabled it to continue. Others failed in their duty to the workers not to knowingly allow a member to be harmed. If anyone had the courage of their convictions—and took their oaths and obligations under the law to be more important than their careers and rising paychecks—this could have been stopped in its tracks in long ago.

Who’s Wilzoch and why did he write the memo? Another excerpt:

I am a 23 year veteran of SEIU. I have served as an organizer, representative, director, and Union President. I knew personally many of the officials involved in this disaster besides Tyrone Freeman, including  Andy Stern, Eliseo Medina, Sheila Velasco, Tom Woodruff, Dave Regan, and a number of as-of-yet unnamed (to my knowledge) staffers and leaders of the SEIU International.

We have enough problems dealing with widespread illegal and unethical conduct from employers and the corporate elite. They don’t need any help right now from labor “leaders” who may have done great things once, but lost the plot and forgot just who it is who pays the bills, including their escalating compensation packages. When the abuse of poor homecare workers is handled as a PR problem, then those who knew about and/or enabled it feed a culture of arrogance, entitlement and corruption.

If they are not held accountable, they and everyone else learns that being well connected is more important than taking seriously the responsibility to advocate honestly and relentlessly for working people and our families. They not only continue to profit, sometimes extravagantly, from the honest work of the rank and file, but are also recycled through the labor movement.

For instance, Louis Jamerson, part of Freeman’s Beverly Hills crew listed above, is now a Deputy Trustee at the Local I helped build for 15 years—SEIU Local 105 in Denver. My salary as President was $40K/yr—a few bucks a week more than the staff I supervised. While all things change, I would like to hope that the poisonous culture of staff entitlement and disrespect for the workers at Freeman’s little shop of horrors—and elsewhere—is not spread more than it already has. He is just one notable symptom of a larger tragedy. This is a cancer which I have seen first-hand cause painful damage to the cause of justice for workers in this country—and the prospects for a principled and thriving labor movement—which is needed now more than ever. Please do everything in your power to pursue justice for these workers, no matter how high up the ladder the evidence leads.

Steve Trossman

What else is in Wilzoch’s memo?

Info about SEIU officials' involvement in Freeman’s crime spree.

For example, Wilzoch discusses Steve Trossman’s role in reportedly engineering a 2001 cover-up of Freeman’s corruption. In fact, Wilzoch points to “possible perjury” by Trossman.

Wilzoch also discusses testimony by Jim Philliou in which he describes -- under oath -- how he alerted top SEIU officials about Freeman’s corruption in 2001. 

Dave Kieffer

Which officials did Philliou alert?   

Dave Kieffer and Eliseo Medina’s Chief of Staff, Sheila Velasco, among others. 

According to Philliou, Kieffer later reported that SEIU had conducted “some type of audit” of Freeman’s spending, but didn’t find anything illegal.

Was Kieffer lying?

It sure looks like it. Wilzoch asks: If SEIU actually conducted an “audit,” why didn’t SEIU interview Philliou -- who was the one who first reported Freeman’s corruption? 

Interestingly, many of the SEIU officials who are involved in the Freeman corruption scandal are now tightly connected to Dave Regan. 

SEIU-UHW's Dave Regan

Trossman became Regan’s “Director of Communications” after receiving a quarter-million-dollar payout from SEIU, which is rumored to be ‘hush money.’ Kieffer is SEIU-UHW’s “Director of Governmental Relations.” 

And Philliou has been working as a consultant for Regan and reportedly is now working inside Kaiser Permanente’s “Labor-Management Partnership.”

There’s lots more inside Wilzoch’s memo, which is pasted below.

 

   Memo from former SEIU leader to U.S. Dep't of Justice and Dep't of Labor regarding top SEIU officials' role...

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.

BY MR. HABERFELD:

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.