Ex-Union Chief Stern Said to Be Investigated by FBI, Labor Office

Andy Stern, former president of the Service Employees International Union, is being investigated by the FBI and Labor Department in a corruption probe, according to two union officials who said they were interviewed by U.S. agents.

The officials, who asked not to be identified discussing the pending investigation, said they spoke with FBI and Labor Department investigators about Stern’s $175,000 book contract in 2006 from publisher Simon & Schuster. The SEIU bought thousands of copies and paid to help promote the book, “A Country That Works,” the officials said.

The FBI also asked about Stern’s role approving the salary of Alejandro Stephens, a California SEIU leader who may have performed no work, the officials said.

“I have absolutely no reason to believe, and not the slightest indication, that I am being investigated by federal authorities with respect to Alejandro Stephens, or ‘A Country That Works,’ or for that matter anything else,” Stern said today in an e-mailed statement issued by the union.

Stern resigned in April after 14 years leading the 2.2 million-member SEIU, the fastest-growing U.S. union. Stern said at the time that he wanted to spend more time on other projects, including President Barack Obama’s deficit commission on which Stern serves. Stern backed Obama’s election, helped win passage of the president’s health-care legislation and was among the most frequent visitors to the White House last year.

Photographer: Andrew Harrer/Bloomberg

Andy Stern, pictured here as president of Service Employees International Union (SEIU).. Close

Andy Stern, pictured here as president of Service Employees International Union (SEIU)..

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Photographer: Andrew Harrer/Bloomberg

Andy Stern, pictured here as president of Service Employees International Union (SEIU)..

Michelle Ringuette, an SEIU spokeswoman, said today the union hasn’t been contacted by the FBI or any investigative agency.

‘Flat-Out False’

“To our knowledge this is flat-out false,” Ringuette said of reports about an investigation into Stern. The Los Angeles Times reported the investigation earlier today.

Opponents of the SEIU may be trying to “smear” the union, Ringuette said in a phone interview.

Christopher Seagle, a spokesman for the Labor Department’s inspector general, said he wouldn’t confirm or deny that the office is investigating Stern. Bill Carter, an FBI spokesman, declined to comment.

The labor-union officials said investigators asked whether Stern approved payments to Stephens, a former president of an SEIU local that represents Los Angeles County government workers. Stephens has been sentenced to four months in jail and three months’ home confinement after pleading guilty to stealing $52,000 from a voter outreach program.

Stern is now a research fellow at Georgetown University in Washington and an SEIU consultant, as well as serving on the commission studying ways to reduce the federal deficit.

‘Full Federal Vetting’

“Andy went through a full federal vetting process before he was put on the commission,” Ringuette said. “His book deal was vetted by the SEIU board.”

“He never received royalties from the sale of the book,” she said. “There was an airtight conflict of interest policy.”

The union talked to the U.S. attorney months ago about the Stephens investigation, Ringuette said.

“We dismiss these unsubstantiated allegations as a nuisance at a time when 25 million Americans are looking for work, and we will not be distracted from fighting for a more fair economy,” Ringuette said in the statement.

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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