NEW INVESTIGATION: Did Local 11 Skirt the Rules on PPP Funding?

This post was updated on December 20, 2021 to include new information about the Hospitality Training Academy’s finances.

In March 2020, Congress passed the Paycheck Protection Program (PPP), unleashing billions in emergency loans for COVID-affected businesses – loans meant to help them keep their workers employed. When PPP loans were originally introduced, labor unions were not allowed to apply. But, there was a loophole that allowed a union’s 501(c)(3) linked organization to apply for relief. (We have previously reported that several Local 11-linked nonprofits — including Los Angeles Alliance for a New Economy (LAANE) and Clergy and Laity United for Economic Justice (CLUE) — received almost $900,000 in PPP support.)

According to a new investigation, Local 11 used a creative workaround to skirt federal prohibitions on unions receiving PPP, laying off key organizers and then rehiring them at the union’s PPP-supported nonprofit — despite strong evidence the nonprofit should not have qualified for a PPP loan in the first place.

The story of Local 11’s latest scandal starts with the Hospitality Training Academy (HTA), a Local 11-linked nonprofit whose self-described purpose is to place “students in jobs in union hotels.” Once they’re employed at the hotel, the student must then pay an initiation fee and monthly dues to Local 11.

In May 2020, the HTA received nearly $260,000 in federal loans during the first round of PPP loans. At first glance, HTA’s application for a PPP loan seems curious (at best). PPP loans required applicants to attest that a loan was necessary because of “current economic uncertainty.” Yet according to the HTA’s 990 tax filing, revenue for 2020 was up more than 1800 percent in 2020 compared to the previous year, and the group finished 2020 with more than $4,500,000 in net income.

PPP loans also required applicants to promise funds would “be used to retain workers and maintain payroll.” But the HTA’s 990 filing shows that the group’s payroll increased by more than 30 percent in 2020: from $817,916 in 2019, to $1,085,787. Around the time that the HTA received hundreds of thousands in federal PPP money, many Local 11 employees coincidentally had a sudden career change.

One such employee was Sean Glynn, who spent years working as a union representative for Local 11; since 2008, Local 11 paid Glynn a steady, annual salary totaling more than $570,000. However, in 2020, Local 11’s LM-2 report states Glynn was only paid around 40 percent of his regular salary — likely because he was caught up in Local 11’s WARN Act layoffs. Glynn himself claims he parted ways with Local 11 in March 2020, only to join HTA as a project manager the next month. Sometime around June 2020, Glynn and many other former Local 11 staff were suddenly added to HTA’s website as employees.

A similar story emerged with Vicky Beza, a former probationary organizer for Local 11, who in 2020, was paid 37 percent of her normal union salary. In June 2020, around the time Beza was added to the HTA’s website as an employee, she wrote to Los Angeles County’s Board of Supervisors as “a proud member of Unite Here Local 11” and argued hotels should not be allowed to reopen. In February 2021, the HTA publicly thanked Beza for helping Local 11 members during the COVID-19 pandemic.

Then there’s Eva Gil, a Local 11 employee who was only paid 62 percent of her normal salary in 2020, and who was also added to the HTA’s website in June 2020. The next month, in July 2020, Gil was identified in a pro-labor publication as an HTA employee. Ms. Gil worked alongside Aaron Greenberg, a Local 11 researcher who was also added to HTA’s website around June 2020, but whose LinkedIn omits any mention of the career change.

Another Local 11 employee who chose a good time to join the HTA was Danielle Jones, a probationary organizer for Local 11 who received only 39 percent of her regular salary in 2020. In June 2020, around the time Jones was added to the HTA’s website as a “case manager,” she became a new Executive Board member for Local 11.

One Local 11 member even spent her time at the HTA being interviewed by media, while presenting as a run of the mill worker. Across 2019 and 2020, Alice Stanford was paid more than $9,000 for her work serving as an elected member of Local 11’s leadership as its Chair of Trustees. In May 2020, The Guardian interviewed Stanford, who discussed helping Local 11 members sign up for benefits. Around that same time, Stanford was added to the HTA’s website where she continues to be listed as “case manager,” but according to her LinkedIn, Stanford has only ever been an organizer for Local 11. In January 2021, the HTA honored Stanford for her work during the pandemic. In February 2021, the next month, a snazzy Local 11 video featured Stanford, who self-described as a member of Local 11. In the months after being hired by the HTA, Stanford repeatedly promoted Local 11 activities and campaigns on Facebook during regular work hours — a good indication of what Stanford’s position with the HTA entailed.

Most insightful of all is the example of Juan Munoz. In April 2020, Juan Munoz, a Local 11 “lead canvasser,” joined the HTA for a brief stint of only three months as a “case manager.” In May 2020, the HTA itself thanked Munoz for his work “on the HTA/Local 11 Team.” Even the nonprofit itself does not recognize the distinction between the two organizations.

The HTA experience is not an isolated one. Another Local 11-backed organization that successfully applied for PPP funds was Central Arizonans For A Sustainable Economy (CASE), an Arizona nonprofit
that is allied with Local 11 and that received more than $150,000 from the union in 2019 alone. In May 2020, CASE received a PPP loan for nearly $52,000 as part of the first round of loans. The next month, in June 2020, Magdalena Acosta listed herself as a relief coordinator for CASE. Acosta is also a probationary organizer for Local 11 who received less than 70 percent of her regular salary in 2020.

This is not the first time we have profiled the creative use of PPP funds by Local 11 – back in September, we featured Jonah Breslau, a union organizer who was similarly offloaded onto LAANE, another Local 11 appendage.

It may be tempting to simply highlight Local 11’s  hypocrisy as a“creative” union tactic, given its aggressive criticism of hotels for taking PPP funds themselves. However, the HTA’s potential bad faith abuse of PPP loans – money meant to help ailing businesses during an unprecedented global pandemic – demands a real investigation.