Poor ole' Andy Stern, the iron-fisted boss of the oft scandal ridden Service Employees International Union (SEIU), just can't catch a break - he puts SEIU right in the middle of all the feudin' in the break-up of the 2004 marriage between Union of Needletrades, Industrial and Textile Employees (UNITE) and Hotel Employees and Restaurant Employees International Union (HERE); next SEIU rising star Byron Hobbs, former Chicago based SEIU Local 20 President, SEIU Local 2000 trustee, SEIU mega-union "Healthcare Illinois-Indiana" Executive VP and SEIU national board member, get's caught with his hand in the cookie jar. Hobbs "resigned" in February, 2009, after it was reveled that he had charged $9100 in personal expenses to his Local 20 credit card. SEIU states that Hobbs has since repaid the money and that SEIU is auditing Local 2000, where Hobbs served as a trustee."And now", as Paul Harvey would have said, "The rest of the story"
Local 20 President Hobbs and the bosses from SEIU Local's 880 and 4 got together in March, 2008, and decided to merge the three locals to form SEIU local "Healthcare Illinois-Indiana" with some 85,000 members. According to SEIU, the member's overwhelmingly voted "yea" (97% to 3%) for the merger on April 15th, 2008 and Hobbs became an Executive VP in the new union.
In March, 2009, Local 20 Treasurer Greg Kelley reported that the once "profitable" Local 20 was $96,431 in the red when they closed the Local 20 doors at the end of April, 2008. That's akin to the (wo)man waiting until after the wedding ceremony before asking "Honey, did I forget to tell you about my problem with credit cards?" Perhaps SEIU needs to audit Local 20 as well as Local 2000.
I believe there are at least three questions that must be asked. How did it happen, who's responsible and which members have to pay the money back. The third question may the easiest; I would guess from reading the SEIU Constitution, the new local, "Healthcare Illinois-Indiana", would have assumed any assets so it stands to reason it will also assume the debts. Hell, it's only about a buck ten per member so what's the problem? The members have already paid it once and I'd question the validity of the actual amount owed. The debts are hard cash and the asset offset is from the book value of the office furniture and equipment. Good luck on getting the book value.
Who's responsible? Certainly the buck stops at Local 20 President Hobbs desk and how can anyone excuse Treasurer Kelly? "I was only following orders" didn't work at Nuremberg and certainly should not apply to the officers fiduciary duty to the members. It doesn't matter where the money actually went, Hobbs and Kelly had the watch!
Kelly filed the required 2008 financial disclosure form (hey Gene - some advice, next time answer "yes" to 3c - this was the Local 20 Terminal LM-2, the doors to the local are locked!), LM-2 covering the January 1st to April 30th, 2008 period , with the Department of Labor on March 27th, 2009 and a cursory glance would lead one to suspect there were problems:
In addition to the $96,431 deficit (assets - liabilities), Kelly signs the form as both President and Treasurer and adds the following notes:
ITEMS 70 AND 71: THE PRESIDENT BYRON HOBBS IS NO LONGER WITH LOCAL 20. THEREFORE, GREGORY KELLEY, THE SECRETARY-TREASURER OF LOCAL 20, IS SIGNING THE LM-2 AS BOTH THE PRESIDENT AND TREASURER.
Question 13: DURING THE YEAR, THE LOCAL DISCOVERED THAT THE PRESIDENT OF THE LOCAL, BYRON HOBBS, HAD USED THE LOCAL'S CREDIT CARD TO MAKE PURCHASES OF A PERSONAL NATURE. ALL THE CHARGES WERE MADE BY MR. HOBBS DURING 2008. THE TOTAL CHARGES THAT WERE PERSONAL IN NATURE WERE APPROXIMATELY $9,100. THE LOCAL RECORDED THESE CHARGES AS A LOAN TO MR. HOBBS. MR. HOBBS HAD REPAID $6,369 TO THE LOCAL AS OF DECEMBER 31, 2008. MR. HOBBS REPAID THE BALANCE, $2,741, OF THE CALCULATED AMOUNT SUBSEQUENT TO DECEMBER 31, 2008.
That answers, in my mind at least, the "who" question. The "how" is the toughest because we have so little information to go on. The figures are easy to understand; Kelly reports that on December 31st, 2007, Local 20 had assets of $559,515 ($226,031 in cash) and liabilities of $515,265 (which by the way, had more than doubled from the beginning till the end of 2007) leaving Local 20 $44,250 in the black. Kelly further reports that the local had revenues of $1,755,477 for the four months in 2008 so the math is simple- the officers spent TWO MILLION DOLLARS in 4 months, 500k per month!
Before we go any further, let's take a look at the DOL Local 20 disclosure summary for 2001 through 2008:
Looking at the summary, we can see that from 2004 through 2007, the union spent a little less than they took in. You have to go to the 2007 and 2008 LM-2's to try and guess at what happened.
I have a few questions after looking at the 2007 LM-2:
I don't understand why property lessor 820 W. Jackson, L.L.C. received payments listed under three separate sections: under Representational Activities - Rent $180,517: under Union Administration - Rent $130,374: under Political Activities and Lobbying -non-itemized $23,400
Did the union actually pay $334,291 in 2007 rental fee's on 820 W. Jackson and why is it listed in three categories?
Why did members of Local 20 need 19 "organizers" on the payroll and why did the members need to pay salaries to officers and employees $1.4 million plus benefits?
Local 20 paid $989,313 per capita tax (member tribute) to SEIU, paid not one penny on it's outstanding $152,500 loan from SEIU International and owed another $262,800 to SEIU International at the end of the period. Admittedly I don't understand union financing but at least it explains how the Local 20 debt more than doubled in 2007, even if it's not clear what the debt is for.
Oh, a minor picky point. What type of consultant is Markus Vasyl? His address is listed as the Ukrainian & Religious Studies Institute.
On to the 2008 LM-2 because there's still no explanation as to why Local 20 was in the red
at the end of April, 2008:
There it is!
The local paid SEIU INternational $668,970 in per capita tax for the four months in
2008 and erased the $262,800 debt to International it incurred in 2007. The assumption has to
be that the $262,800 owed from 2007 was unpaid tribute and that the local paid that amount
plus $406,170 for 2008. If that matches the International books I suppose it's legal; it just
seems like a lot of money for the members to have to pay. What exactly do they get in return?
I still don't understand why Local 20 lists it rent payments in three categories, for the four
months of 2008, a total of $122,226. I don't blame them for wanting out; 820 W. Jackson is an
expensive office.
Officers still drew "decent" salaries and employee salaries were down, perhaps in preparation
for the move. One thing is odd, the union didn't seem to be doing any withholding from
salaries in 2008. Totally unimportant, the IRS doesn't care.
Every story has to have an end and if anyone is still with me here it is:
This long exercise proves nothing! We already knew Hobbs was a crook and nothing in the
2007 or 2008 LM-2, while I question many of the amounts, shows us anything other
than what is already known: unions spend large amounts of money and there is very little
oversight. In my opinion, Office of Labor-Management Standards does a good job with what
little manpower and budget they have but unless the members, who are the union, question the
hired help, officers and employees of the union, nothing will ever change.
My final comment is directed to unions in general: I wouldn't give a credit card to a sixteen year
old so "why in the hell would I trust a union officer with one?"
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