SEIU accuses local union leader of misusing funds

The Service Employees International Union has accused the head of its largest California local of misappropriating hundreds of thousands of dollars in an alleged corruption scheme that included payments to firms owned by his relatives and expenditures on his Hawaiian wedding and a Beverly Hills cigar club.

Tyrone Freeman has been removed from the payroll of the Los Angeles-based local and faces formal dismissal pending an internal hearing, a union spokeswoman said. Freeman went on paid leave last month, following disclosures by The Times about the local’s spending practices.

Freeman’s top aide, Matthew Maldonado, and three other staffers were fired Wednesday in connection with the union inquiry, according to the SEIU official, who was not authorized to speak publicly and asked for anonymity. Attempts to reach Maldonado for comment were unsuccessful.

Two other prominent SEIU leaders have gone on paid leave because of the scandal, including the president of the union’s California council, Annelle Grajeda, who is also an executive vice president of the national organization.

The official who asked not to be identified said the SEIU has turned over to federal criminal authorities the findings of a union audit of Freeman’s local, the United Long-Term Care Workers, which represents 160,000 low-wage caregivers. U.S. Labor Department investigators and FBI agents have been interviewing potential witnesses, according to people close to the probe

“The allegations underlying the charges against Tyrone Freeman are deeply disturbing, and we are going to proceed with a full and fair hearing process,” SEIU President Andy Stern said in a statement Wednesday.

An appointee and protege of Stern, Freeman has denied any wrongdoing. His attorney said in a statement Wednesday that Freeman is “deeply disappointed with the union’s actions. . . .”

“Instead of conducting a full and fair investigation, the union acted to scapegoat Mr. Freeman and to protect its own image,” the statement said. “We are confident that the facts will show that Mr. Freeman acted in good faith to advance the interests of the union’s members.”

Most of the union’s findings mirror The Times’ disclosures. But an SEIU report contains new allegations that Freeman spent dues-payers’ funds on his 2006 wedding and a Santa Barbara resort, and improperly drew payments from an affiliated local and a housing corporation.

The nine-page report, from union trustee John Ronches to SEIU Secretary-Treasurer Anna Burger, spells out seven charges accusing Freeman of violating the union’s corruption statutes.

The report followed an internal review led by former state Atty. Gen. John Van de Kamp. The union found that Freeman had directed more than $650,000 to a home-based video firm owned by his wife, Pilar Planells.

The document says Planells performed part-time work making promotional videos, and the payments could not be justified. Her firm received about $450,000 in previously undisclosed payments this year, and contends the local still owes it $75,500, the report says. It adds that more than $391,000 was for videos designed for leased-access cable stations, but none has aired.

Freeman also directed the union to separately pay Planells’ medical insurance so that his policy would continue to cover his ex-wife, according to the report.

Freeman is accused of concealing Planells’ ownership of the video firm from the local’s executive board and other officials. The Times has reported that Freeman did not file any Labor Department forms that require disclosure of such payments, until after the paper raised questions about them.

The union’s report alleges that Freeman engaged in self-dealing and financial malpractice by using a worker-training charity to pay his mother-in-law’s day-care business nearly $100,000 a year, as The Times had disclosed. The day-care services were provided to Freeman and other union staffers, rather than to the workers the charity is designed to help, the SEIU alleges.

The payments to Carmen Planells were not warranted by the small number of children she cared for at her home, according to the report. It says Freeman ignored warnings by his accountants that the arrangement with the day-care firm could violate Internal Revenue Service rules on reporting taxable benefits.

Freeman is further accused in the document of improperly directing an affiliated local -- the 30,000-member California United Homecare Workers -- and a housing firm he controlled to pay him about $2,500 a month each.

The Long-Term Care Housing Corp., established as a nonprofit but never received tax-exempt status, gave Freeman an additional lump sum of $14,500, the report says.

The housing corporation also paid $2,500 a month to lease the home of Freeman’s former chief of staff, Rickman Jackson, the report says. Jackson, now president of SEIU’s largest Michigan local, went on leave after The Times disclosed his ownership of the property, which the corporation listed as its address.

The SEIU report alleges that Freeman’s dealings with the housing firm and worker-training charity amounted to a “misuse of the funds of these nonprofit corporations by his disregard for the specific nonprofit missions for which they were created.”

Freeman is also accused of billing the union for $8,100 in hotel, restaurant, bar, rental car and massage charges incurred during his wedding. Most of the money was for rooms at the Marriott Ko Olina Beach Club on Oahu, the report says. It says that Freeman claimed the expenses were for his participation in a management program at the University of Hawaii, but no record of his attendance could be found.

The report also says Freeman failed to provide documentation justifying expenses for a second trip to Hawaii and for charges at the Bacara Resort and Spa in Santa Barbara.

The SEIU findings reflected a Times disclosure that Freeman spent nearly $10,000 last year at the Grand Havana Room, the Beverly Hills cigar lounge. The report says Freeman spent $3,500 more at the club. He reimbursed the union for $9,800 of the expenses after The Times inquired about them, the report said.

The union official who requested anonymity said the internal inquiry is continuing, and more allegations could be brought against Freeman. The report did not address a number of other expenditures disclosed by The Times.

paul.pringle@latimes.com