Lavish gifts, expensive trips: Was California state worker union leader’s spending justified?

Newly published credit card statements detail past spending by the longtime leader of California’s largest state employee union, showing she spent nearly $7,000 on gifts for top union officers and thousands of dollars on international travel for union purposes.

The documents show former SEIU Local 1000 President Yvonne Walker paid $4,500 to Disney Resorts in the largest gift to an outgoing officer, $5,700 for a flight to Tel Aviv for a labor event and $159 for a celebration at Sacramento’s Device Brewing Company, along with other expenditures.

The spending is identified in six years’ worth of credit card statements posted online two weeks ago by Richard Louis Brown, who defeated Walker and four other candidates in a May election for union president. Brown, who promised transparency during his campaign, posted his own statements along with those of the past officers.

All the spending potentially was justifiable, according to a nonprofit tax expert, but the details provided new fodder for both sides in a bitter standoff within the union, where a slim majority of the organization’s 65-member board of directors held a meeting and a vote to strip Brown of his leadership powers. Brown has called the meeting illegitimate, citing a union policy that meetings must be called by the president, and has retained his leadership powers.

Brown criticized the gifts in particular during a meeting Wednesday night that he livestreamed on Facebook.

“A lot of you are really upset about this, and you should be,” he said.

The trove of spending records opens a window on how Walker led the organization in the second half of her 13 years in office. Walker wielded political influence in the Capitol but also frustrated some state workers who wanted Local 1000 to limit its focus to members’ pay and benefits. The union represents nearly 100,000 state employees and has an annual budget of about $48 million.

The records identify the Disney charge as a gift to former Vice President Margarita Maldonado. It was made at the end of May 2018, about a week after Maldonado lost her re-election bid.

Neither Walker nor Maldonado responded to voicemails asking about the expenditures.

IRS rules require the tax-exempt organization to spend its money in ways that benefit members, not themselves.

“You and I are paying more in taxes to let them be tax-exempt, so they have a responsibility to the public to act appropriately and act ethically,” said Joan Harrington, who teaches nonprofit law at Santa Clara University School of Law. “They have an added burden as a tax-exempt organization.”

The gifts are identified in spreadsheet entries for most of the spending from Walker’s time in office. Included is a $524 flight to Ontario for former union vice president Tamekia Robinson, who also lost re-election in May 2018.

Also identified as gifts are charges of $1,725 and $78 at the Meritage Resort in Napa, although the recipient is not identified.

Former vice president Theresa Taylor, who did not run for re-election in 2018, said Walker gifted the trip to her at the end of her term. Taylor, who is currently a union board member, said she did not know the trip was charged to a union credit card.

Walker and other officials put several other retirement gifts on the cards, with values of up to about $400. Those gifts included event tickets and celebrations at Device Brewing and Blue Cue Bar and Restaurant in Sacramento, the spreadsheets show.

“It was ‘thanks for the service,’ basically, to the union,” Taylor said.

Walker later hired Maldonado as the union’s chief of staff, where in 2019 her base pay was about $156,000, according to the union’s Form 990.

Flights, hotels, meals

Union officers charged about $4.7 million to the cards from 2015 through the end of Walker’s term in June. The total includes charges to top officers’ individual credit cards and to a corporate card with a $100,000 credit line that was used to pay for large union events. The cards don’t account for all spending at the organization.

The vast majority of the money was spent on flights, hotels and meals for officers, board members and union members. The records identify most of those charges as supporting town hall meetings, organizing efforts, political events, contract work, staff retreats and conventions around the state.

The cards identify regular working lunches at restaurants in the vicinity of the union’s 18th Street headquarters — such as Burgers and Brew, Mas Taco Bar, Iron Horse Tavern and South — along with meals at union events elsewhere.

The records show Walker paying for parking when she met former Attorney General Xavier Becerra for breakfast on May 25, 2018, as California awaited the U.S. Supreme Court’s ruling a month later in a critical labor lawsuit known as Janus vs. AFSCME. The court’s decision took away unions’ ability to collect fees from non-members, stripping unions like Local 1000 of millions of dollars in revenue.

They identify flights and Lyft rides for Walker and a union lobbyist to meet with former Labor California Labor Secretary Julie Su in Southern California in January 2020.

The records also identify charges for flights and expenses for events in other states, such as SEIU International conventions and the Women’s March in Washington, D.C. in January 2017. Several cross-country flights exceeded $1,000.

Included in the expenditures is a $5,700 round-trip flight for Walker from Los Angeles to Tel Aviv in July 2018, identified as being related to a California Labor Federation Israel delegation. Another $1,000 in charges were related to the trip, including a flight from Sacramento to Los Angeles and back, the records show.

Steve Smith, a California Labor Federation spokesman, said international trips are infrequent but valuable opportunities for California union leaders.

“The advantage is we live in a global economy, so understanding as much as we can about how other unions operate and creating solidarity with the international community of unions benefits all of us,” Smith said.

Some expenses are identified as supporting other organizations, such as a $555 charge in March 2018 to provide five phones to Housing 4 Sacramento, an organization that describes itself on its Facebook page as a “community coalition of tenants, housing advocates, and labor working to raise awareness of renters rights and advocate for better and more stable housing.”

Walker advocated a broad vision of the union as a force to help lift up all workers. The union was involved in the fight for a $15 minimum wage and got involved with public policy decisions on housing costs in Sacramento and elsewhere. She made statements supporting Black Lives Matter during race demonstrations last year.

Tax exemption for union

Public charities, regulated under IRS section 501(c)(3), may spend money to take donors and others out to expensive meals under federal tax law. They also may cover flights and lodging for activities supporting the organization.

Labor unions are less restricted than charities in how they may spend their money under section 501(c)(5), said Eric Gorovitz, a principal attorney at Adler and Colvin, a San Francisco-based firm specializing in nonprofit law.

While charities must provide a public benefit, unions are formed specifically to benefit their members, Gorovitz said.

Gorovitz declined to directly discuss Local 1000’s expenditures, given the limited information posted online, but said a broad range of spending — potentially including things like gifts or dry cleaning — could be justified depending on the circumstances.

Taylor said the union doesn’t have a written policy for the cards. She said that during her time as an officer, the organization’s controller scrutinized many of the expenditures. The union’s board does not approve individual purchases on the cards, but the expenditures are accounted for in budgets the board approves, Taylor said.

Some expenditures might need to be reported as taxable compensation, he said. In those instances, the items would be grouped in with other compensation on Form 990s.

“They might pay for some expenses that might look at first blush like they’re personal,” he said. “The mere fact that an exempt organization credit card was used for expenses that in most cases are personal doesn’t necessarily mean there was wrongdoing.”

He also noted that some of the expenses might have been paid back.