FBI Investigating Prominent Labor Leader Andy Stern In Corruption Probe At SEIU
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WASHINGTON — The FBI and the Labor Department are investigating prominent labor leader Andy Stern in a probe of corruption at the Service Employees International Union, according to two people who have been interviewed by federal agents.
The two organized labor officials met with federal agents this summer to answer questions about a six-figure book contract that Stern landed in 2006 and his role in approving money to pay the salary of Alejandro Stephens, a former SEIU leader in California who allegedly performed no work. The title of the book is "A Country That Works."
Both officials spoke on condition of anonymity because of the sensitive nature of the investigation. The FBI and the Labor Department's office of inspector general declined to comment for the record.
The disclosure about the federal inquiry of Stern – who abruptly resigned as president of the 2.2-million member SEIU in April – comes just weeks ahead of contentious congressional elections in which the union is spending an estimated $44 million to support its favored Democratic candidates.
Stern issued a statement calling reports of an investigation "simply false."
"I have absolutely no reason to believe, and not the slightest indication, that I am being investigated by federal authorities with respect to Alejandro Stephens, or "A Country That Works," or for that matter anything else," Stern said.
The SEIU has been plagued with several financial scandals since 2008, when the Los Angeles Times reported that Tyrone Freeman, head of the union's largest California local, misappropriated hundreds of thousands of dollars from the union. The union ousted Freeman and demanded that he return the money. No federal charges have been filed against him, but SEIU spokeswoman Michelle Ringuette said the union has been cooperating with the FBI.
Stern left his post two years before the end of his term, saying he wanted to focus more on his personal life. He remains a member of President Barack Obama's deficit commission and a highly influential figure in the White House, where he was one of the most frequent visitors last year. He is also a research fellow at Georgetown University and a paid consultant for the SEIU.
Ringuette said she is unaware of any federal scrutiny of Stern. Ringuette rejected the notion that there was anything improper about the book deal or how the union paid Stephens. She said similar unsubstantiated accusations have been floated for years by disgruntled former SEIU leaders and conservative bloggers.
A White House spokesman declined comment.
One person who spoke to federal agents twice, in May and June, said they asked about a 2006 contract in which Stern received a $175,000 advance from Simon & Schuster to write the book. The SEIU and its locals bought thousands of copies of the book after it was published. The union also paid thousands to fact-check and promote the book, but Stern pocketed the advance.
Ringuette said the SEIU's executive board fully vetted and approved the project. The board told local unions that purchasing Stern's book "is a truly voluntary decision on the part of those who make it, and no adverse impact will result for anyone or any entity who refrains from purchasing or promoting the book," according to documents obtained by the AP. The board also instructed locals to make sure any book purchases were authorized by the local's constitution and bylaws.
Ringuette said the Simon & Schuster contract "did not require the purchase of a single book by SEIU." Stern also received no royalties from book sales to the union.
Federal officials are also asking questions about how Stern and union officials approved payments to Stephens, the former president of the SEIU local that represents Los Angeles County government workers, according to the people who were interviewed.
The FBI has been investigating Stephens for more than a year. Earlier this month, he was sentenced in federal court this month to four months in jail and three months' home confinement after pleading guilty to stealing $52,000 from a voter outreach program.
Stern has not been linked to any of the charges resulting in Stephens' guilty plea. But federal agents are seeking details about the time in 2007 when Stephens' local was merged into a larger SEIU local and he lost his post as president. The SEIU offered Stephens a generous severance package and a new job as a $75,000-a-year consultant to the SEIU California State Council.
Ringuette said the union arranged for Stephens to perform consulting work for the council and agreed to reimburse the council for his annual salary. But she said the union later discovered Stephens wasn't actually doing any work.
Federal law prohibits labor unions from creating what amounts to "no-show" jobs that pay someone for work they do not perform.
Stephens' attorney, Roger Rosen, said his client has not cooperated with federal officials and has no plans to in the future.
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Associated Press writer Pete Yost contributed to this report.
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SAM HANANEL 09/28/10 05:27 PM ET Associated Press