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Former leader of major California union faces theft, tax charges

After a years-long probe, Tyrone Freeman, once a rising star in the nation's labor movement, is indicted on federal charges of stealing from SEIU workers to enrich himself.

August 01, 2012|By Paul Pringle and Richard Winton, Los Angeles Times
  • Tyrone Freeman's 15-count indictment carries combined maximum prison sentences of more than 200 years.
Tyrone Freeman's 15-count indictment carries combined maximum… (Lawrence K. Ho, Los Angeles…)

Not long ago, Tyrone Freeman was a rising star in the national labor movement, already the head of California's biggest union local and a force in Democratic politics from Los Angeles toWashington, D.C.

Freeman's quick climb up the ranks of the powerful Service Employees International Union burnished his reputation as an advocate for the disadvantaged, a man who helped improve the lot of some 190,000 workers paid about $9 an hour to care for the infirm.

On Tuesday, though, Freeman was indicted on federal charges of stealing from those workers to enrich himself — even billing the union for costs from his Hawaiian wedding. The 15-count indictment, which also contains allegations that he violated tax laws and gave false information to a mortgage lender, carries combined maximum prison sentences of more than 200 years.

The charges resulted from a nearly four-year investigation by the U.S. Department of Labor, FBI and Internal Revenue Service that grew out of a series of Times reports on Freeman's financial dealings as president of SEIU Local 6434. The ensuing scandal cost Freeman his job and spread through the SEIU, leading to the ouster of several other California officials as well as the president of the union's biggest Michigan local.

Citing records and interviews, The Times reported that Freeman funneled hundreds of thousands of dollars of his union members' hard-earned dues, and money from a related charity, to his relatives. He also spent lavish sums on a Four Seasons Resort golf tournament, expensive restaurants and a Beverly Hills cigar club.

Last month, his wife, Pilar Planells, pleaded guilty to an income tax charge in connection with more than $540,000 she received in consulting payments from the union. She is expected to be sentenced to three years' probation and must pay about $130,000 in back taxes, interest and penalties, according to court records.

Abel Salinas, the Labor Department's special agent in charge in Los Angeles, said in a statement that the indictment of Freeman demonstrates the government's "commitment to investigating allegations of labor racketeering in our nation's unions."

Freeman's lawyers said he is innocent.

"When the truth comes out at trial, it will be abundantly clear that he acted appropriately at all times," attorneys Kelly B. Kramer and Michael Zweiback said in a statement.

The lawyers said the SEIU pressured the U.S. attorney's office to prosecute Freeman. "He looks forward to his day in court," Zweiback said.

In addition to dismissing Freeman, the SEIU barred him from the union for life. It also launched an internal inquiry whose findings are partly mirrored in the indictment.

A number of charges focus on an alleged scheme in which Freeman is accused of illegally directing Local 6434 money to an affiliated organization he led, the California United Homecare Workers, to boost his salary. He is charged with similarly defrauding a union-funded nonprofit group devoted to developing housing for low-wage workers.

At the time, Freeman's total compensation was about $200,000, making him one of the higher-paid union leaders in the nation. He is charged with three tax counts for allegedly failing to report about $100,000 in income from 2006 through 2008.

According to the indictment, Freeman had the union pay more than $8,000 in expenses for his 2006 wedding. The count involving the mortgage lender alleges that he lied to Countrywide Bank by claiming that the union paid his personal American Express bills and the leasing costs for his Land Rover.

In all, Freeman, who has been living in Pittsburgh, faces four counts of mail fraud, seven counts of embezzlement or theft of union assets, one count of making a false statement to the federally insured lender and the three counts alleging he filed a false tax return.

U.S. attorney spokesman Thom Mrozek would not comment on whether Freeman could face more charges. Mrozek said the investigation is continuing.

Sources close to the case said that if Freeman is convicted, prosecutors could present at a sentencing hearing information about his use of other union funds.

Still pending in state court is a civil lawsuit the union filed against Freeman and Planells over more than $1.1 million they allegedly pilfered. The suit contends that the money financed Freeman's lifestyle of $175 glasses of cognac, $250 bottles of wine and a $3,400 trip to the NFL Pro Bowl.

Before the scandal broke, Freeman had the ear of mayors and Congress members, in no small part because of the election dollars and campaign foot soldiers his union could muster.

The Times reported that Freeman routinely ordered employees of a charity he ran to work on behalf of political candidates — a practice barred by law — according to people who said they participated in such activities.

Freeman denied to the IRS that the employees were required to do campaign work, said a person close to an IRS inquiry into the matter.

Because they are subsidized by taxpayers, charities are forbidden to take part in campaigns for public office, directly or indirectly. Violations can cost charities their tax exemptions and lead to other penalties.

Under Freeman, Local 6434 grew dramatically, largely because of a consolidation spearheaded by SEIU's then-president, Andy Stern, who had nurtured Freeman's rise in the union. Local 6434, known as the United Long Term Care Workers, had 160,000 members during Freeman's tenure — it now lists 180,000 — and remains SEIU's second-biggest chapter in the nation. The local has more members than many international unions.

Freeman also represented 30,000 workers as president of the California United Homecare Workers.

paul.pringle@latimes.com

richard.winton@latimes.com

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