Former L.A. labor leader investigated

As part of a lengthy corruption investigation, federal authorities have been examining $150,000 in consulting fees paid to a disgraced former Los Angeles labor leader under a confidential agreement signed by Andy Stern, then president of the powerful Service Employees International Union, according to documents and interviews.

The U.S. attorney’s office in Los Angeles had considered filing embezzlement charges against Alejandro Stephens, who headed the SEIU local for county government workers, in connection with the payments, records obtained by The Times show.

Prosecutors decided last year not to include the embezzlement counts in a criminal complaint against Stephens, who is going to prison on other charges, but investigators were still questioning labor officers about the payments at least nine months later, say three people familiar with the probe. They spoke on condition of anonymity because of the secretive nature of the federal inquiry.

They say the FBI and U.S. Labor Department investigators are focusing on whether Stern or other SEIU leaders expected Stephens to perform any work for the money, or if they approved what amounted to a no-show job for him.

SEIU spokeswoman Michelle Ringuette declined to answer questions about the agreement. In an e-mail she said, “Alejandro Stephens has had no role or involvement with the union for several years. Stephens violated the terms of his … agreement with the union, and we are aggressively seeking the return of all payments made to him under that agreement.”

Stephens, 67, said that he did the work required by the 2007 agreement and that the union still owes him $75,000.

Attempts to reach Stern, who retired last spring and now sits on President Obama’s bipartisan deficit-reduction commission, were unsuccessful. Federal officials would not comment.

The 2-million-member SEIU, the nation’s second-largest union, has been wracked with allegations of corruption, especially in California. The Times reported in 2008 that another SEIU local in Los Angeles had directed hundreds of thousands of dollars to businesses owned by relatives and associates of its president, Tyrone Freeman, who was subsequently fired.

Federal authorities have since been investigating Freeman and other SEIU officials, according to court records and people close to the inquiry.

While looking into the Stephens agreement, investigators have also sought information about SEIU outlays to other consultants and firms with personal ties to union officers and about a book deal that paid Stern a six-figure advance, say the people with knowledge of the probe.

SEIU helped fact-check and promote Stern’s 2006 book, “A Country That Works,” and bought it in bulk, union officials have acknowledged. Stern has said that his book contract was entirely proper and that he did not accept royalties from sales to the union.

Legal issues aside, labor experts said such agreements as Stephens’ can be troubling, especially when they are confidential.

“It’s not transparent, so the union members could not see what’s going on with their money,” said David Witwer, a professor at Pennsylvania State University, Harrisburg, who has written books on labor corruption.

In a separate case, Stephens pleaded guilty to mail fraud and tax evasion involving a labor nonprofit and was sentenced to four months in federal prison. He faced up to 43 years behind bars on those offenses but told The Times that he did not cooperate with the government in exchange for a lighter sentence.

“I’m no fink,” Stephens said.

As the Stephens agreement notes, he lost his local presidency after his SEIU chapter was merged into a new one. The deal requires him not to disclose its terms or to say anything disparaging about SEIU.

When The Times learned the first details of the agreement in August 2008, 20 months after Stern signed it, SEIU officials said Stephens had violated its terms by staying on the county payroll. But the four-page agreement does not include a requirement that he give up his county job.

SEIU officials later said that Stephens had not done the work he promised to do.

The agreement calls for Stephens to receive a severance payment of about $77,000 and three annual grants of $75,000 each for the consulting duties, which were defined as “retiree relations and other community programs that support the union’s work in Southern California.”

Stephens said, “There was no money that was stolen, no money that was embezzled from SEIU. I’m getting screwed while everyone else is out there enjoying themselves. I’m the fall guy.”

The Stephens arrangement led to the downfall of another SEIU leader, Annelle Grajeda, his former girlfriend.

Amid questions of whether she used her influence to keep him on the county payroll, Grajeda lost her positions as president of the merged local, head of SEIU’s California council and one of the union’s six executive vice presidents. More recently, Grajeda, who has denied any wrongdoing, retired as an SEIU staff member, Ringuette said.

paul.pringle@latimes.com

patrick.mcdonnell@latimes.com