SACRAMENTO, Calif. (CN) — The California Department of Justice on Wednesday announced embezzlement and tax fraud charges against the head of California’s largest and most influential labor union, SEIU California.
Tipped off by the state’s campaign watchdog, Attorney General Rob Bonta claims SEIU California executive director Alma Hernandez embezzled money from a political action committee the union sponsored in 2014. In addition, prosecutors believe Hernandez and her husband Jose Moscoso lied on their taxes routinely over the last decade.
Bonta says labor unions, like SEIU California which represents over 700,000 employees in every county of the state, deserve leaders they can trust.
“When there is reason to believe trust has been broken and crimes have been committed, we have an ethical duty to investigate — we owe that to the people of California,” Bonta said in a prepared statement announcing the criminal charges.
The criminal charges announced Wednesday stem from a routine audit conducted by the Fair Political Practices Commission in 2018. The commission flagged multiple payments totaling $11,700 sent from a PAC that Hernandez managed for the union to a personal account she shared with her husband.
The criminal complaint filed last week in Sacramento County Superior Court claims Hernandez reported the two checks were for food vendor services Moscoso provided for the failed state Senate bid of Jose Solorio. But according to the charging document, the catering never happened and the couple further complicated things by later lying to prosecutors.
What began as a standard post-campaign audit quickly sprouted into a white collar crime case.
State investigators next pried into the couple’s taxes and claim to have uncovered a clear pattern of tax fraud. According to the complaint, the couple underreported $1.4 million worth of income on their joint income tax returns between 2014 and 2018 and owe the state $143,000 in back taxes.
Furthermore, Moscoso allegedly paid workers under the table at his Los Angeles-based air duct cleaning business to avoid paying unemployment and disability taxes. Prosecutors believe Moscoso, 42, underreported $300,000 in worker wages and skirted the state’s Employment Development Department out of over $80,000.
The couple is being charged with a total of 13 felonies, with crimes including ranging from embezzlement, perjury, tax evasion and a special allegation of white collar crime with loss over $100,000 which carries a mandatory prison sentence.
In response to the criminal charges, SEIU California said in a statement it was “deeply concerned” about the alleged embezzlement and that Hernandez, 42, resigned from her post on Wednesday.
“Any misuse of funds is unacceptable, and we are committed to doubling down on our efforts to ensure that all officers and staff adhere to the highest level of ethical and financial conduct,” said Bob Schoonover, executive director of SEIU Local 721 and president of SEIU California State Council.
The Fair Political Practices Commission said the case should be viewed as a warning to future campaigns and managers of political action committees.
“We hope by holding people accountable, we can restore faith into the integrity of our political system,” said Angela Brereton, commission chief of enforcement in a statement.
Arraignment has been set for Friday morning in Sacramento County Superior Court.
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