By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
A TWO-YEAR-OLD INTERNAL PROBE into the financial practices of a politically powerful Los Angeles labor union has uncovered evidence of widespread political-campaign violations and has now spurred a criminal investigation focusing on campaign spending for local elected officials, including former City Councilman Martin Ludlow.
Investigators are poring through records of political campaigns, including Ludlow’s hard-fought 2003 City Council race, to determine whether to charge several candidates, Service Employees International Union (SEIU) Local 99, and a corporation the union set up with failing to report phone-banking services — potentially valued at millions of dollars — as political contributions, according to sources close to the investigation.
Local 99 represents about 38,000 public school workers in the Los Angeles Unified School District and smaller, nearby districts.
Sources said the probe involves both the Los Angeles County District Attorney’s Office and the Los Angeles City Ethics Commission. Jane Robison of the D.A.’s office declined to provide details, explaining, “We cannot comment on ongoing investigations.” Ethics Commission Executive Director LeeAnn Pelham declined comment.
The investigation has sent ripples of concern through Los Angeles’ political and labor establishments. Before running for the City Council, Ludlow was the political director of the Los Angeles County Federation of Labor, the umbrella labor council for local unions affiliated with the AFL-CIO. Last year, he left the City Council to become the organization’s chief after the death of longtime County Fed leader Miguel Contreras. Ludlow has been widely credited with steering the County Fed not just through Contreras’ passing, but through the breakaway from the AFL-CIO of some of the nation’s most vibrant unions — including the SEIU. Under Ludlow’s leadership, the County Fed retains the “Change to Win” locals, such as the SEIU, as well as the unions that have stayed with the AFL-CIO.
Ludlow, who had not responded to numerous requests for an interview over the past two months, issued a written statement Tuesday in response to a series of e-mailed questions. “The Los Angeles County Federation of Labor as a policy will not comment on pending investigations of an affiliate,” Ludlow wrote. “Any investigation into any campaign, including my own, will receive my full cooperation.”
Ludlow is also the subject of an ongoing federal probe into his role in a development project involving the Metropolitan Transportation Authority. Ludlow, who was a member of the MTA board when he served on the City Council, asked his transit-board colleagues to hire a consultant to rally public support for a project that he couldn’t officially back, due to state conflict-of-interest laws.
A source close to the most recent probe said investigators want to know if a general sloppiness in Local 99’s finances and record-keeping simply spilled over into the phone-banking for Ludlow and other candidates — or if, instead, union officials orchestrated an illegal scheme to elect their candidates by hiding behind a shady corporation that sucked badly needed dues money from unwitting school workers.
That corporation — Telincs, Inc., also known as Telincs Communications — was at the heart of a financial and record-keeping fiasco that caught the attention of union officials in Washington. The trouble came to a head in May 2004, when SEIU’s international office took over Local 99 and ousted its leadership. The local remains under trusteeship as accountants and other consultants hired by the SEIU continue to sort out the financial tangle that is Telincs, formed by Local 99 officials in 1999 to conduct telemarketing, computer and communications services.
Under the leadership of Local 99’s chief executive officer, Thomas L. Newbery, the corporation was instrumental in creating an innovative mobile phone bank out of three refrigerator trucks once used to transport frozen foods. The trucks were repainted in the SEIU’s trademark purple, emblazoned with the union’s logo, parked in Local 99’s parking lot on Eighth Street just west of downtown Los Angeles, and converted to call centers, hosting dozens of paid and unpaid callers who telephoned prospective voters during Ludlow’s hard-fought 2003 council campaign and other recent elections.
A man who identified himself as Newbery hung up on a reporter who called his home seeking his comment. A detailed message was left for him on a second call, which he did not return.
PHONE BANKING HAS BECOME a crucial component of successful campaigns in the last few days before elections, and is perfectly legal — as long as the value of the work is reported as a campaign donation.
Prosecutors are examining whether the phone-banking trucks were part of a widespread pattern of keeping the value of phone-banking services hidden from public view, according to sources familiar with the investigation.
The trucks are officially known as “Mobile Action Centers,” but are most commonly referred to by union officials as the “Big Purple Trucks.” Being mobile, they are often sent to other spots around the state and even the nation for phone banking for labor-backed candidates.
Newbery had dual contracts, one with the union, for a $70,000 salary, to negotiate contracts, conduct budget planning and use his computer knowledge for the benefit of members, and a second contract with Telincs, for a $30,000 salary, to lead the corporation.
When Telincs was set up in 1999, its directors were to be the members of the union’s board. But, according to testimony from union bookkeeper Phillip Wernig at a July 10, 2004, hearing to determine whether to maintain the international’s trusteeship, no one told the union directors that they were also corporate directors and that they had any authority over the corporation’s affairs.