Ex-Los Angeles SEIU Boss Indicted for Theft, Tax Evasion

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SEIU logoTyrone Freeman was once a rising star within the Service Employees International Union. Now his fall is imminent. Last Tuesday, July 31, Freeman, former president of the powerful Los Angeles-based United Long-Term Care Workers, also known as SEIU Local 6434, was indicted in federal court on 15 counts of embezzlement, tax evasion and other offenses. The action wasn't unexpected. Freeman's one-time benefactor, former SEIU President Andrew Stern, had permanently moved him from his post in late 2008 following newspaper accounts of corruption. The stories triggered an internal probe and a nearly four-year joint investigation by the U.S. Department of Labor, FBI and IRS. Freeman's lawyers say their client is innocent. A jury might not be of a similar cast of mind. His wife already has pleaded guilty. And he's facing an unresolved state civil suit. 

Union Corruption Update covered this story twice in September 2008 and once more in January 2009. Longtime readers understandably might suspect the case has disappeared down the memory hole. Rest assured it hasn't. Corruption at SEIU Local 6434, which currently represents about 180,000 home care and nursing home workers, long had been suspected at international headquarters in Washington, D.C. and in Southern California labor circles. But putting the pieces together for a convincing prosecution - a case involving the alleged theft of hundreds of thousands, and possibly more than a million dollars, plus illegal political influence-peddling - was a complex task. Indeed, the feds' investigation remains ongoing; more charges could lie ahead.

The 15 current charges break down this way: seven counts of embezzlement or theft of union assets; four counts of mail fraud; three counts of filing a false tax return; and one count of making a false statement to a federally-insured lender. These offenses carry a combined maximum prison sentence of more than 200 years. Abel Salinas, the Labor Department's Special Agent in Charge in Los Angeles, says the indictment demonstrates the government's "commitment to investigating allegations of labor racketeering in our nation's unions." The combined seven counts of embezzlement come to a mere $29,416.62. The real total almost assuredly is far higher.   

It's been a rough last several years for Tyrone Freeman, now 42 and living in Pittsburgh. Freeman's benefactor and ally, then-Service Employees President Andrew Stern, in September 2008 removed him from office and then, two months later, imposed a lifetime ban on future union involvement. Stern also placed Local 6434 under trusteeship. By then, he didn't have much of a choice. A series of reports by the Los Angeles Times had uncovered evidence of widespread theft, tax fraud and shady political patronage at the Los Angeles local and a related nonprofit group. The stories also revealed shameless excess in union expenditures.

Until his ouster, Freeman had emerged as a top-tier union player. Since assuming its helm roughly a dozen years ago, United Long-Term Care Workers, through aggressive organizing and consolidation, became one of the largest locals of the SEIU or any other union in the country. He also headed the California United Homecare Workers, a joint affiliate of the SEIU and the American Federation of State, County and Municipal Employees (AFSCME). And he was a major campaign fundraiser for Los Angeles County Democratic Party politicians. Andrew Stern trusted him, too. In 2007, nearly two years prior to removing Sal Rosselli from the presidency of 140,000-member California SEIU affiliate United Healthcare Workers-West, Stern had stripped Rosselli of key functions and transferred them to Freeman. Everything was looking up for Tyrone Freeman. There was even talk of him one day succeeding Stern.

Facts being stubborn things, it was not to be. In the summer of 2008, Los Angeles Times investigative reporter Paul Pringle wrote a string of stories providing strong evidence that Freeman had siphoned extensive sums of union money for purposes having no legitimate union business purpose. This information would be the basis for the criminal and civil actions. Much of the money went to supporting firms controlled by Freeman's wife, Pilar Planells, and her mother, Carmen Planells. His wife had been a union staff member until she left to pursue a career as a video production assistant. According to union reporting forms, Local 6434 paid about $36,000 in 2006 and $178,000 in 2007 to her firm, Lotus Seven Productions, for "consulting." Moreover, a nonprofit group founded by Freeman, the Homecare Workers Training Center, funneled $100,000 a year to a day care service operated by Carmen Planells. Freeman also allegedly billed his union more than $8,000 to cover expenses related to his 2006 Hawaiian wedding.

It wasn't just family members who benefited from Freeman's largesse. He also allegedly routed union funds to friends, in particular, $219,000 to a video firm run by Brian Cheatham, a former union employee, and another $82,000 to a Florida video firm whose owners later denied having received the money. The union also splurged on the good life, in 2007 alone spending around $300,000 on entertainment. This included a golf tournament at the Four Seasons Resort, dinners at Morton's steakhouse and other pricey restaurants, meetings at a Beverly Hills cigar lounge, and a contract with the William Morris Agency. Freeman apparently had a special taste for $175 glasses of Cognac and $250 bottles of wine, and also used $3,400 in union funds to attend an NFL Pro Bowl game in Honolulu. The indictment also alleges he lied to Countrywide Bank in claiming that the union paid his personal American Express bills and leasing costs for his Land Rover and failing to report income to the IRS. Most egregiously, Freeman, through his union and a union-driven nonprofit, Alliance for a Stronger Community, purportedly shook down rank and file members for political donations worth millions of dollars in terms of funds and free labor.

Back in Washington, SEIU President Andrew Stern was in a quandary. Tyrone Freeman was a close ally and heir apparent, yet here was the L.A. Times providing hard evidence that he also was a major league crook. Stern in September 2008 placed Freeman on temporary leave pending the results of an internal union investigation. That November, following its completion, Stern made the dismissal permanent. Additionally, he ordered Freeman to repay the local and affiliate more than $1.1 million he allegedly misappropriated from them over the years. Eventually, the SEIU filed a civil suit in California state court against Freeman to collect the funds. That case, which is separate from the federal indictment, is still active.

Tyrone Freeman claims he is innocent of all charges. His lawyers are backing him. "When the truth comes out at trial, it will be abundantly clear that he acted appropriately at all times," said attorneys Kelly Kramer and Michael Zweiback in a prepared statement. The pair added that the SEIU, eager for damage control, had pressured the U.S. Attorney's Office to prosecute. If the case goes to trial, Freeman will have a lot of inconvenient facts with which to contend. Like the fact that his wife, Pilar Planells, pleaded guilty in June to income tax evasion in connection with more than $540,000 in consulting payments she received from Local 6434. Court records indicate she will be sentenced to three years of probation and pay $130,000 in back taxes, interest and penalties. Another obstacle is Freeman's former chief of staff, Rickman Jackson, who later left the Los Angeles union to head SEIU Healthcare Michigan. A nonprofit housing corporation founded by Freeman allegedly was based at a Bell Gardens, Calif. residence owned by Jackson. The SEIU eventually removed Jackson from his Michigan post.

Even if Tyrone Freeman walks, it's hard to see how he will come out of this looking good. Rank and file, most of whom make about $9 an hour caring for the infirm, won't be pleased to learn how their dues payments helped their former leader, whose union salary was at least $200,000, and his inner circle advance their own private interests. And given the evidence at hand, he's not likely to walk. In any event, Andy Stern probably won't be returning his phone calls anytime soon.

Related:

SEIU Makes Freeman Ouster Permanent; Orders Restitution

Los Angeles Boss Removed; Stern Seeks Outside Help in Probe

Los Angeles Boss Probed for Fundraising, Spending; Resigns