U.S. Attorney: Miguel Contreras, Late Labor Leader, Masterminded $50,000 Fraud

Miguel Contreras, the late Los Angeles labor heavyweight who was lauded as a modern-day Cesar Chavez, masterminded a scheme to defraud his own nonprofit group out of more than $50,000, L.A. Weekly has learned.

An individual referred to as "M.C." in court documents, described as having "formed" the very same nonprofit formed by Miguel Contreras, is labeled the man who "devised" the corrupt scheme.

"The scheme to defraud the Voter Improvement Project was conceived by

M.C.," says Assistant U.S. Attorney Craig Missakian. Missakian cannot identify M.C. by name according to rules that prevent him from identifying non-defendants. Contreras, who is now dead, is not a defendant in the case.

Contreras' role in the scandal was recently revealed in court documents when ex-labor boss Alejandro Stephens pleaded guilty to participating in the fraud. Both the L.A. Times and City News Service covered the case, but completely missed the fact that Contreras was fingered as leading the corruption.

Is Contreras' legacy disgraced? Consider the steps taken by the former head of the L.A. County Federation of Labor -- a man considered a champion of the working class -- to rob his own nonprofit in order to fill his friends' pockets:

In 2004, court documents state, "M.C." -- Contreras -- hired then-president of SEIU Local 660 Stephens and four others to pose as "consultants" for his nonprofit, Voter Improvement Program (VIP), which was funded by donations from such institutions as DreamWorks and Kaiser Permanente as well as a number of union groups.

The court documents state that Contreras had VIP's bookkeeper write checks to Stephens and his crew to perform voter outreach services. Contracts were drawn up to make the relationship appear legitimate, but it was a sham from the beginning. No one was expected to do any work at all. And no one did. They simply cashed their checks, which totaled $52,000.

Stephens pleaded guilty. He now faces up to 40 years in prison.

The revelations about Contreras' abuse of power are sure to anger at least some of his supporters, who were furious when the L.A. Weekly published its 2006 expose, "The Final Hours of Miguel Contreras," by David Zahniser. That piece revealed that several public figures had helped obscure the fact that Contreras' May 2005 death of a heart attack occurred not in his car, but at a rundown, fortune-telling bodega in a rough part of South Los Angeles that was later raided for prostitution.

Zahniser wrote that the demise of the union boss, reported on a Friday night just like today's breaking news, "blind-sided the federation's 800,000 members and sent ripples throughout the region's political establishment, just 11 days before the contentious 2005 mayoral election."

Contreras' sudden death opened the way for the now-disgraced Martin Ludlow to take over the top job at the Federation of Labor. Ludlow resigned from that top union job amidst an intensifying scandal over a probe into his alleged use of illegal union riches to fund his Los Angeles City Council election victory.

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