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A federal jury on January 28 convicted Tyrone Freeman, the former president of Service Employees International Union (SEIU) Locals 6434 and 434-B, of 14 criminal counts relating to his abuse of power over California’s largest labor organization. At one time considered a protégé of former SEIU president Andy Stern, Freeman was found guilty of four counts of mail fraud, seven counts of embezzlement and/or theft of labor union assets, one count of making a false statement to a federally insured financial institution, and two counts of subscribing to a false tax return.
While this blog does not frequently report on criminal cases involving union officials, this one is of particular interest because it validates the reforms to the LM-2 forms put in place by former Secretary of Labor Elaine L. Chao. These forms are intended to provide union members with information about how unions are spending their dues money, thus allowing workers to exercise some oversight of the entities that represent them in the workplace. Members of the public can also view LM-2 forms.
Using information from Local 6434’s LM-2 forms and several other sources, an investigative reporter from the Los Angeles Times was able to piece together a series of highly questionable expenditures that ultimately generated a blockbuster article in August 2008. Among the questionable expenses were hundreds of thousands of dollars in payments to Mr. Freeman’s wife’s company, Lotus Seven Productions, which should have been disclosed on a conflict-of-interest report known as the Form LM-30, as well as to other business interests of Freeman’s relatives. Mr. Freeman filed a tardy disclosure shortly before the Times article was published, and he subsequently amended it about a month later, but the damage was already done.
The LM-2 form also revealed a $10,000 lodging bill from the Grand Havana Room, which has plenty of fine cigars but no guest rooms, a $106,000 payment to a firm called the Filming for which no records of its existence could be found, and unreimbursed expenses for a fundraising golf tournament at a Four Seasons resort of at least $123,000. The Times also pointed out Mr. Freeman’s propensity for $175 glasses of cognac and $250 bottles of wine and also revealed Freeman’s $3,400 trip to the NFL Pro Bowl in Hawaii. Through its initial report and subsequent series, the Los Angeles Times brought Mr. Freeman’s misbehavior to the attention of the Department of Labor, which triggered the criminal probe that ultimately ended with his conviction yesterday. Freeman’s wife, Pilar Planells, last year pled guilty to evading income tax on the payments to her. Rightfully so, the reporter, Paul Pringle, was a 2009 finalist for the Pulitzer Prize in investigative reporting.
Secretary Chao’s steely determination to reform the LM-2 form in the face of fierce opposition from union leaders played no small part in Freeman’s conviction. The 160,000 members of SEIU Locals 6434 and 434-B, many of whom earn $9.00 per hour, may wonder why those same leaders were, and still are, so opposed to reforms that ultimately ended the looting of their union dues.
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