Los Angeles Service Employees Ex-Boss Charged in Scam; Set to Plead Guilty

seiu logoThe Service Employees International Union (SEIU) long has been a major booster of the Association of Community Organizations for Reform Now, or ACORN. The head of an SEIU local in Los Angeles appears to have engaged in ACORN-like behavior on his own. On August 27, Alejandro Stephens, formerly president of SEIU’s now-defunct Local 660, was charged in U.S. District Court for the Central District of California with two counts of mail fraud and one count of filing a false tax return. Stephens allegedly used his position as an official with the Los Angeles union to conspire with at least three other individuals to receive tens of thousands of dollars in kickbacks from phony “consulting” companies. Given that he’s already in hot water in a separate case that surfaced last year, it makes sense that he reportedly has declared his intention to plead guilty.

Union Corruption Update last September noted that a Los Angeles Times article implicated Stephens as a beneficiary of an illegal scheme hatched by a former girlfriend, SEIU Local 721 President Annelle Grajeda. Two local members the previous month had filed a complaint with union headquarters in Washington, D.C. indicating that Stephens, now 65, collected unauthorized payments. Grajeda, a key ally of SEIU President Andrew Stern, headed the union’s lobbying and voter drive operations in California. The SEIU state council reported in financial statements to the Labor Department that its Los Angeles office in 2007 paid Stephens $75,000 in consulting fees and another $14,000 in disbursements. This was in addition to his $104,000 in compensation as an SEIU executive board member. SEIU spokeswoman Michelle Ringuette said the money consisted of severance payments to Stephens following the merger of Locals 660 and 347 to form Local 721, now with more than 75,000 members.

But Stephens had another activity, this one arousing the curiosity of Justice Department investigators and ultimately prosecutors. The feds are charging that Stephens used his position as Local 660 president to enrich himself through a union-sponsored political action committee and a nonprofit group called Voter Improvement Program (VIP). Stephens and several associates allegedly set up bogus consulting firms in order to secure contracts from VIP for work never done. His partners then kicked back most of the money to him. All told, say the feds, he collected about $52,000 in nonexistent work during the period February 2004-April 2005. Moreover, he knowingly underreported $35,000 of this sum on his 2004 federal income tax return.

Though authorities at one point investigated the possibility that Los Angeles City Councilman Jose Huizar and former Board of Education member David Tokofsky had received VIP payments, they reportedly have concluded the two are innocent of wrongdoing.  The Department of Labor’s Office of Inspector and Office of Labor-Management Standards, along with the FBI and the IRS, contributed to the probe. Corruption within Los Angeles-area Service Employees locals is a work in progress.