SEIU-UHW’s Private Equity Partnership Produces Rebellion from Workers

Dave Regan’s partnership with Blue Wolf Capital Partners isn’t quite producing "dividends," according to observers.

SEIU-UHW officials famously backed the New York private equity fund in its attempt to take over a chain of six California hospitals called the Daughters of Charity Health System. But even as SEIU-UHW staffers parade around in blue shirts bearing the private equity firm’s name, workers are running the other way.   

Here's what's happening.

SEIU-UHW’s 1,600 members at the six hospitals have reportedly responded with outrage that Regan signed a secret deal with Blue Wolf to cut their pay by 15% and is putting their jobs at risk by pushing the hospital chain towards a possible bankruptcy.

At O'Connor Hospital, a majority of SEIU-UHW members signed petitions opposing SEIU-UHW’s stance on the hospital sale.

And nearly half of SEIU-UHW’s shop stewards at O'Connor Hospital have resigned their positions to protest Regan's actions. Other workers have decided to stop paying dues to SEIU-UHW.

SEIU-UHW responded by dispatching Val Tagawa and other purple staffers to the hospital. One worker writes:

Since the [Attorney General's] hearing at OCH, we have had a concerted effort from SEIU (Val Tagawa and others) to harass folks about the issue. They have been generally met with "Don't bother me" type responses from workers, and on one occasion security was called and ended up escorting the SEIU stooges from the Cafeteria after employees complained to security.

Tagawa has reportedly been busy scouting for the best local bar and is well known around the hospital for the not-so-fragrant bouquet of her breath.

Meanwhile, the Los Angeles Times and San Francisco Chronicle have editorialized against SEIU-UHW’s position. The California Attorney General, who's responsible for approving or rejecting the proposed sale of the six hospitals, is supposed to make a decision by February 20.

One more note: Tasty earlier mentioned that SEIU-UHW officials have connections to Blue Wolf Capital. It turns out that the connections are multiple.

 

Mike Musuraca, Blue Wolf Man

First, Mike Musuraca (the Managing Director of Blue Wolf Capital) reportedly has connections to Gerry Hudson and Tom Woodruff (Vice Presidents of SEIU International) as well as other top SEIU officials. Musuraca has worked as an advisor for SEIU’s Change to Win. He formerly served as an Assistant Director in the Department of Research and Negotiations at AFSCME District Council 37 in New York City and was a trustee of the New York City Employees Retirement System.

In addition, it appears that David Miller, a staffer at SEIU-UHW, played a role in SEIU-UHW’s nefarious backdoor deal with Blue Wolf. Miller also comes from New York, where he formerly served as the Research Director at SEIU’s 1199 New York. After parachuting into California, he has assumed the over-inflated job title of “Assistant to the President for Strategic Campaigns” at SEIU-UHW ...presumably with an over-inflated salary. 

Breaking: Another member of SEIU’s IEB goes down in corruption scandal

Yesterday, Dana Cope -- a member of SEIU’s International Executive Board (IEB) and the Executive Director of SEIU’s State Employees Association of North Carolina (SEANC) -- stepped down after a North Carolina district attorney requested a criminal investigation into his alleged financial corruption, according to the Raleigh News and Observer.

According to the newspaper:

Cope faces an inquiry from the State Bureau of Investigation for his handling of SEANC finances. The national union with which SEANC is affiliated, the Service Employees International Union, said it is taking the allegations of financial misconduct seriously.

Cope resigned just two days after the News and Observer published an article about his alleged financial corruption.  SEANC, which is known as “SEIU Local 2008,” represents approximately 55,000 current and retired North Carolina State employees.  

Cope is an example of SEIU’s so-called “21st century unionism.” Just like Andy Stern and Dave Regan, Cope is way more "business" than "labor." For example, Cope was a Vice-President of the Texas Future Business Leaders and has carefully transformed SEANC into an insurance company that only masquerades as a union.

In fact, Cope’s corruption scandal was uncovered by a union member who criticized one of Cope’s latest schemes, whereby union members purchase consumer electronics by paycheck deduction at elevated prices.

In an earlier post, Tasty revealed an internal SEIU memo that reports that SEANC’s "primary function" is "selling insurance." The memo notes that SEANC’s staff consists of 14 insurance salespeople… and only 3 union representatives for its 55,000 members.

As far as the breaking news about Cope's corruption scandal... 

Cope is one of SEIU's 21st Century labor leaders

According to an investigation published earlier this week by the News and Observer, Cope improperly funneled hundreds of thousands of dollars from the union's bank account into his own pocket by using a creative maneuver. He hired construction and landscaping companies to renovate his home, and then instructed union staffers to hire the exact same companies and pay them more than $350,000 for apparently no-show projects.

There were also phony invoices. “One check for nearly $19,000 was justified by a phony invoice and was made out to a defunct computer company,” according to the News and Observer, which also reports the following:

Cope and SEANC’s general counsel admit the memo is phony but will not explain beyond saying it’s a personnel matter.

Oh, and there's also the personal flying lessons. It turns out that Cope really likes flying planes. So… Cope had SEIU members pay $21,000 for his flight school, according to the News and Observer.

So why were SEIU members paying for Cope’s flying lessons? Cope told the News and Observer ‘it allows him to fly with a flight instructor and to travel cheaply and efficiently on SEANC business.’ That's some serious bullsh*t, right?

And it sounds like more skeletons will soon come tumbling out of Cope's overcrowded closet.

Cope charged SEIU members for flying lessons

According to the News and Observer, SEIU allowed Cope "to put thousands of dollars of personal spending each year on SEANC credit cards. Cope has given contradictory accounts about how much of the money he has repaid…”  

One of the expenses that Cope charged to the union's credit card is "eyebrow waxing," according to the News and Observer.

 

Meanwhile, Cope has a history of problems with credit cards. Like buying too much sh*t with them. The newspaper reports that, in 2011, Cope filed for personal bankruptcy to wipe out $109,000 in credit-card debt.

As the scandal unfolded in the press this week, Cope vigorously defended his home repairs, flying lessons, credit card bills, etc. as harmless and above-board. However, once the district attorney asked the State Bureau of Investigation to launch a criminal inquiry into his spending, Cope decided to throw in the towel.

Yesterday, he held a 90-second press conference and all but admitted his guilt, saying:

“In recent days, I’ve come to realize that in carrying out the duties of my job, I have blurred the line between my personal life and my professional life.”

Cope has close ties to SEIU’s top officials.

Not only has he served on SEIU’s IEB for seven years with the likes of “Diamond" Dave Regan and David “See you at the races” Holway, but he reportedly worked with Andy Stern, Anna Burger, Tom Woodruff and Mary Kay Henry to negotiate SEANC’s 2008 merger with SEIU.

At SEIU’s International Convention in 2008, Andy Stern used a ridiculous gimmick to announce that the merger with 55,000-member SEANC had helped boost SEIU’s membership to more than 2 million members.

Which SEIU has kindly memorialized in a YouTube video.

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!

 

Latest on Criminal Sentencing of Tyrone Freeman in SEIU Corruption Scandal

Here’s the latest news on the sentencing of Tyrone Freeman, which has been rescheduled for 10:00am on Monday October 7 in a Los Angeles federal courthouse.

As the sentencing date draws closer, the feds and Freeman’s attorneys continue their duel over the length of Freeman’s jail term.

According to court documents, the U.S. Probation Office has recommended a jail term ranging from 33 to 41 months along with multiple years of probation, $125,000 in fines and restitution, and a ban to prohibit Freeman from serving in another labor union for many years.

Freeman’s lawyers, of course, are arguing for a much lighter sentence.

On September 9, Freeman’s team of high-paid DC attorneys delivered a lengthy set of documents to the judge pleading for leniency. Here’s an excerpt. (fyi, Tasty included a few notes in brackets).

We respectfully submit that a just and proper sentence in this case would include the following elements: (i) six months in prison followed by six months in a community corrections center; (ii) 1,000 hours of community service; (iii) restitution [$30,000]; (iv) mandatory participation in drug and alcohol counseling; (v) a multi-year ban on serving in a labor organization (a 13-year ban); and (vi) five years of supervised release [“probation”].

Freeman’s attorneys even specified the prison where they want their client to serve his jail time.

Mr. Freeman’s wife and children plan to relocate to southern California to

Lompoc Federal Prison

live with family. To allow them an opportunity to visit, Mr. Freeman respectfully requests that the Court recommend that he serve any prison sentence at the Taft Correctional Institute Satellite Camp or the Lompoc Federal Prison Camp.

Here’s how Freeman’s attorneys summarize their plea for leniency:

Mr. Freeman’s outstanding record of good works, his post-offense conduct, and his close family ties all argue for leniency. His separation from the labor movement, his age, and his limited criminal history effectively foreclose any chance of recidivism. The media attention that has attended every step of his slow and public downfall has already served to punish him severely while deterring others. Mr. Freeman’s failings have already cost him and his family dearly. Six months in prison followed by six months in a community confinement center would punish his conduct while giving him the opportunity for rehabilitation and to serve the greater good. Such a sentence would be sufficient, but not greater than necessary, to serve the purposes of sentencing.

Gimme a break.

Meanwhile, on September 17, federal prosecutors filed their own paperwork with the judge... but did so “under seal,” meaning all the documents are hidden from public view. (See the feds' filing record below.)

Could it be that the sealed documents contain news that Freeman has decided to spill the

SEIU's Mary Kay Henry

beans on his accomplices inside SEIU -- like Andy Stern, Eliseo Medina, Mary Kay Henry, Tom Woodruff, Dave Regan, Dave Kieffer, Steve Trossman?

Days ago, a former SEIU insider sent a five-page memo to the feds urging them to pursue top SEIU officials implicated in the wide-ranging corruption scandal.  

How much jail time are the feds seeking for Freeman? 

In an earlier filing, they argued for a 41-month jail term, five years of probation, payment of up to $172,000 in fines and restitution, and a 15-year ban from serving in a labor union. Here’s an excerpt from their filing:

The nature and circumstances of the offense of conviction, warrant a sentence at the high-end of the applicable guideline range of 33 to 41 months. Over an extended period of time 2006 through 2008, the defendant abused his position as the highest ranking officer of the Union to convert union funds for his personal use. Freeman accomplished the various embezzlement, mail fraud and bank fraud schemes by failing to disclose material facts to at least four separate decision-makers – the Union, CUHW, LTCHC and Countrywide. It is clear that defendant committed several offenses that betrayed the trust that was reposed in him by the Union and its membership. Moreover, the manner in which offense was committed was difficult to detect. Defendant crafted the Resolutions and Consulting Agreements that he later used to justify diverting the funds to himself. Freeman also directed his employees to issue the payments and authorized the check and credit forms that served to authorize the payment. Defendant repeated these acts monthly. The Union’s bookkeeper, Moises Avalos testified that prior to 2008, at a staff meeting, Freeman announced that, while he would not be getting a raise, the staff would receive raises. Avalos’s reaction to this statement was that while Freeman may not be getting “a raise,” Avalos knew that Freeman was receiving two additional checks a month – one from CUHW and the other from the LTCHC. (Id.). These are aggravating factors…

A 41-month sentence is needed to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense. (GEX 34 at TF103634). The Union represented largely low-income workers “who worked hard for their wages and would never have authorized their dues to be used for Tyrone Freeman’s personal use.” (GEX 34 at TF103635). As one board member states, “[t]his type of behavior from a president needs to be dealt with. It is a crime punishable by prison.”). (GEX 34 at TF103635; TF103638 (union member requesting a prison term). A high-end guideline sentence should deter defendant from engaging in future criminal conduct and should serve as a sufficient deterrent to others who may be tempted to embezzle union money.

Interestingly, the submission by Freeman’s attorneys makes no attempt to lay any blame on the multiple SEIU officials who facilitated -- and even covered up -- Freeman’s crime spree. 

So... is Freeman shielding the Purple Palace's top dogs from federal prosecutors because SEIU is footing the massive bills for Freeman’s DC legal team?

Or did Freeman perhaps spill the beans on his accomplices in secret?

Stay tuned for Monday’s sentencing hearing to see what clues emerge.

   Federal Prosecutors Notice of Filing Documents under Seal in Sentencing Phase of USA v. SEIU's Tyrone Freem...

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...