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Top UHW-W Officers Violated Federal Law, Deceived Members in Diverting Millions in Dues Money to Outside Fund
Date:4/29/2008

SEIU filing lawsuit today to ensure return of members' money to UHW-W treasury from outside fund

WASHINGTON, April 29 /PRNewswire-USNewswire/ -- Ten top officers of SEIU local union United Healthcare Workers West (UHW-W) violated federal law and deceived their members when they authorized and diverted millions of dollars in dues money to an outside fund under their exclusive control, according to a lawsuit being filed today by SEIU in United States District Court for the Central District of California.

SEIU is bringing the lawsuit against the ten directors of the fund seeking to return to the UHW-W treasury $3 million in UHW-W members' money that is known to have been diverted.

In May 2007, a select group of ten top officers of UHW-W instituted a plan to divert up to $6 million -- nearly 40 percent of UHW-W's net assets -- while deceiving UHW members and the federal government about the purpose of the fund. The ten officers are UHW-W President Sal Rosselli, Executive Vice President Jorge Rodriguez, Secretary Treasurer Joan Emslie, and seven members of the local union's executive board

A total of $3 million in UHW-W members' dues money was quietly diverted to this outside fund -- $1 million on May 25, 2007, and $2 million on February 5, 2008.

"The highest ranking UHW-W officers used millions of dollars in members' dues money to run a shadow operation off the books and they intentionally deceived their own members and the federal government about how the money would be used," said SEIU spokesperson Andrew McDonald. "It is unacceptable for a handful of people to control nearly 40 percent of a local union's assets with no accountability to the members, no financial safeguards, no protections against fraud, and none of oversight required by law."

The SEIU lawsuit alleges the ten UHW-W officers who comprise the outside fund's board of directors broke federal and state laws by breaching their fiduciary duties and violating the SEIU and UHW-W Constitutions and Bylaws. The lawsuit alleges the select group of officers broke the law when they:

1. Deceived UHW-W members about the purpose of the decision to authorize the transfer of local union funds to the outside fund and the purpose of the actual transfer of $3 million in UHW-W members' money to the outside fund.

The stated purpose in UHW-W's official minutes for the decision to authorize transfers up to $6 million to the outside fund, was "to provide education to healthcare workers and patients concerning issues related to the healthcare crisis, as well as to other issues of importance to healthcare workers and their patients." The select group of officers knew however, that UHW-W members' money transferred to the fund would not be used for their stated purpose but instead for the officers to run a shadow arm of UHW-W that evaded the democratic accountability protections and financial and auditing safeguards to which all SEIU local unions are subject under federal law and the SEIU Constitution.

2. Used the diverted dues money to conduct union business off the books, free from democratic accountability to UHW-W members and the financial safeguards provided by the SEIU Constitution and federal law.

Instead of using the outside fund for the stated purpose of educating people about healthcare issues, the ten UHW-W officers have used the fund to conduct certain UHW-W union activities off the books, free from democratic accountability to UHW-W members and the financial oversight and safeguards provided by the SEIU Constitution and federal law.

For example, the fund has been used to pay for union business such as consultants' fees for a 2007 speech delivered in Wisconsin by Sal Rosselli in his capacity as UHW-W President, and a misleading non-binding straw poll conducted among UHW-W long-term care members in February and March of 2008. These union activities were financed off the books by the outside fund, leaving UHW-W members with no democratic accountability protections, and none of the financial safeguards provided by the SEIU Constitution and federal law for how the money was spent.

UHW-W's Eleventh Hour Response

Late last night, UHW-W sent a letter to SEIU saying the fund will be "winding up its affairs in the immediate future," and revealing the fund intends to continue making disbursements. The letter both reinforces the necessity of the lawsuit and raises new questions about the operation and intent of the fund.

SEIU Spokesperson Andrew McDonald said, "Twice in the last month undemocratic and unlawful practices have been discovered at UHW-W. First there was a delegate election process that intentionally and unlawfully excluded 97 percent of UHW-W members and now there is an outside fund controlled by UHW-W top officers, the purpose of which was intentionally misrepresented to UHW-W members and which diverted dues money to conduct union business off the books, free from democratic accountability to UHW-W members and the financial safeguards provided by the SEIU Constitution and federal law. Both times UHW-W initial's reaction to inquiries was to forcefully deny any improprieties. Both times, when SEIU confronted UHW-W with serious concerns about these issues, UHW-W has scrambled at the last minute to do damage control. While it is good that UHW-W now understands the serious problems with their actions, it is very troubling they were willing to perpetuate unlawful actions until those actions were exposed."

For more information and to view the complaint, visit SEIUFactChecker.org.

The 1.9 million member Service Employees International Union is united by the belief in the dignity and worth of workers and the services they provide and dedicated to improving the lives of workers and their families and creating a more just and humane society. SEIU members are winning better wages, health care, and more secure jobs for our communities, while uniting their strength with their counterparts around the world to help ensure that workers, not just corporations and CEOs, benefit from today's global economy.


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SOURCE Service Employees International Union
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