Published September 28, 2010
The FBI and U.S. Labor Department are looking into two deals involving Andy Stern -- over a six-figure book contract given to the former head of the Service Employees International Union and payments to a labor leader convicted on separate fraud charges, a source familiar with the case told Fox News on Tuesday.
Alejandro Stephens, who was sentenced early this month to four months in prison and three months of home confinement for defrauding a non-profit organization in "bogus consulting agreements," is former president of SEIU local 660 in Los Angeles.
Questioning of Stern, who is a member of President Obama's debt commission, revolve around whether he paid Stephens $150,000 to do nothing as the local union boss. Stephens and Stern met with federal agents this summer to answer questions about the relationship.
An SEIU spokesman told Fox News that no labor official has been contacted in any way nor has received any inquiry of any kind from federal law enforcement officials regarding any investigation of Stern, who had signed off on Stephens' contract.
But the spokesman noted that when several unions merged to form SEIU local 660 in 2007, Stephens was dropped as president. He was offered a $75,000 per year consulting job.
SEIU demanded that Stephens return all the money he had gotten up front from his contract, which has been in arbitration since August 2008. The spokesman said SEIU has cooperated with federal investigators in the probe of Stephens.
Stephens' attorney, Roger Rosen, told The Associated Press that his client has not cooperated with federal officials and has no plans to do so in the future.
The disclosure about the federal inquiry of Stern comes just weeks ahead of contentious congressional elections in which the union is spending an estimated $44 million to support its favored Democratic candidates.
Stern left his post at SEIU in April, two years before the end of his term. The most frequent visitor to the White House in 2009, he is also a research fellow at Georgetown University and a paid consultant for the SEIU.
One person who spoke to federal agents twice, in May and June, told The Associated Press that they asked about a 2006 contract in which Stern received a $175,000 advance from Simon & Schuster to write the book "A Country That Works." The SEIU and its locals bought thousands of copies of the book after it was published. The union also paid thousands to fact-check and promote the book, but Stern pocketed the advance.
SEIU spokeswaman Michelle Ringuette said the SEIU's executive board fully vetted and approved the project. The board told local unions that purchasing Stern's book "is a truly voluntary decision on the part of those who make it, and no adverse impact will result for anyone or any entity who refrains from purchasing or promoting the book," according to documents obtained by the AP. The board also instructed locals to make sure any book purchases were authorized by the local's constitution and bylaws.
Ringuette said the Simon & Schuster contract "did not require the purchase of a single book by SEIU." Stern also received no royalties from book sales to the union.
The Associated Press contributed to this report.