Top Officer of Local, California Affiliates Probed; Takes Leave

Annelle Grajeda believes her only offense was standing by a friend. The Service Employees International Union, however, will have the final word. Grajeda, president of SEIU Local 721, is yet another Los Angeles SEIU official to step aside in the wake of revelations of possible misuse of office. That she also is president of the SEIU California state council and an executive vice president of the international union makes the need for damage control all the more imperative. A Los Angeles Times report indicated there was evidence that she had arranged a transfer of tens of thousands of dollars in improper payments to a former boyfriend, Alejandro Stephens. 


Grajeda, like Tyrone Freeman, emerged during Stern’s reign as a major leader within the Service Employees. As head of the union’s California council, she heads a formidable lobbying and get-out-the-vote operation. At present, more than 700,000 of SEIU’s roughly two million members work in that state. And she wants to add to that. “We’ve got to figure out a way to organize ourselves for strength and for power so that we can grow,” she noted in a recent interview, echoing language of Stern’s speech at the Change to Win federation kickoff convention in St. Louis three years ago. Unfortunately, that commitment to growth has led to her current problems. Grajeda’s home union, Local 721, now has 77,000 members, the result of aggressive consolidation with a half-dozen or more city and county public employee unions. One of them had been headed by Alejandro Stephens.


On August 14, two members of Local 721, Ron Tanner and Arturo Diaz, filed an internal complaint with SEIU headquarters. The pair indicated Stephens collected a dual income without proper authorization, remaining on the Los Angeles County payroll while continuing to draw a union president’s salary. According to financial statements filed with the U.S. Labor Department, the state council’s Los Angeles office in 2007 paid Stephens nearly $14,000 in “disbursements for official business” and another $75,000 in consulting fees. What’s more, as an SEIU executive board member, Stephens received more than $104,000 in salary and disbursements. 


Unfortunately, there appears to be a conflict of interest. The council’s DOL financial reporting forms indicate that SEIU headquarters reimbursed the council for the $75,000 consulting work. Yet according to international union spokeswoman Michelle Ringuette, that sum actually was part of a severance agreement with Stephens after his removal as local president following consolidation. She asserted that he violated the deal by receiving money from the local while remaining a county employee. The internal complaint also questions Stephens’ integrity as head of a Local 721-affiliated charity. IRS records show the nonprofit group, established in the wake of the 1994 Northridge, Calif. earthquake, devoted only 9 percent of its expenditures to charitable programs in 2006, while spending more than half its budget to cover fundraising expenses. The charity’s vice-chairwoman, Donna Meredith, responded that the small portion spent on program activity has been due to the need to build a reserve. Tanner and Diaz see the issue differently. “I think he (Stephens) has totally taken advantage of the membership,” said Diaz, a county computer programmer. Tanner, a retired county employee, said Meredith’s comment reflects blind loyalty to Stephens.        

So where does Annelle Grajeda fit into all this? Tanner and Diaz insist that she was materially involved in these apparently illegal payments. The SEIU leadership did not indicate any details of her purported role, but did ask Stephens to return all unauthorized money. Grajeda stated she is “very confident” the inquiry will prove her innocence. Whatever the outcome, the SEIU strategy of rapid growth is showing signs of strain. (Los Angeles Times, 8/31/08; Metro Investment Report, 6/07).