Charity Linked to Big Labor Only Employs Brother of Scandal-Plagued Governor

Founded by ex-chief of SEIU, group rakes in cash from companies with business in Puerto Rico

Dennis Rivera
Dennis Rivera / AP
January 21, 2016

Companies with business interests in Puerto Rico have been pouring money into a mysterious charity run by a New York City labor boss, which lists the brother of the scandal-plagued governor of Puerto Rico as its only paid employee.

The charity, which was founded by former New York SEIU chief Dennis Rivera and former New Mexico governor Bill Richardson as a Hispanic legal rights group in 1996, recently moved to Puerto Rico and reopened under a different name and with an entirely new mission.

Originally founded as the Hispanic Education and Legal Fund nearly two decades ago, the group quietly changed its name in 2014 to the "Sociedad Económica De Amigos del Pais," according to corporate filings. The organization says it now works to "support economic development in Puerto Rico."

The group also replaced its board, except for Rivera, who is listed as its vice chairman in tax returns.

Antonio Garcia Padilla, the brother of Puerto Rico’s governor Alejandro Garcia Padilla, was tapped as the Sociedad Económica’s new governing director. He was the only person listed on the group’s payroll in 2014, earning a $70,000 salary.

Although the organization received no contributions in 2012, and just $6,250 in 2011, it received a windfall from prominent Puerto Rican companies almost immediately after it moved to the Commonwealth and changed its name.

The group recently caught the eye of the government watchdog group the National Legal and Policy Center, which monitors government ethics issues.

"Anytime a non-profit close to a political figure gets major funding from companies or individuals who can benefit from the actions of that politician, it raises ethical red flags," said Ken Boehm, chairman of the National Legal and Policy Center. "When the non-profit also employs a family member of the politician, the situation raises improper influence or pay-to-play issues.  The public is entitled to complete transparency."

Several members of Governor Garcia Padilla’s administration were recently ensnared in a federal bribery and extortion probe. According to the indictment, a top fundraiser for Governor Garcia Padilla leveraged his relationship with another brother of the governor to put allies into government positions, who then allegedly steered lucrative contracts to business associates.

Although no charges have been brought against Governor Garcia Padilla or any of his family members, the governor recently announced he would not run for reelection.

Government watchdogs said the Sociedad Económica’s history also raised questions. Last month, the New York Post reported that the group—under its previous name, the "Hispanic Education and Legal Fund"—was once used to funnel $1 million to a fund run by New Mexico Gov. Bill Richardson alleged to have paid kickbacks.

Sociedad Económica founder Dennis Rivera has recently been lobbying for federal economic support for Puerto Rico. He also reportedly served as a traveling adviser to New York Gov. Andrew Cuomo during a trip to the Commonwealth last fall.

Rivera did not respond to requests for comment.

Sociedad Económica board members told the Washington Free Beacon that it is a legitimate charitable group that works to support economic development in Puerto Rico.

"SEAP is an NGO created by a group of citizens from the private sector to help in Puerto Rico's economic recovery, culture, learning, etc," Antonio Garcia Padilla told the Free Beacon in an email. "It was inspired by one of Puerto Rico's most prestigious private organizations of the 19th Century."

The Sociedad Económica brought in $275,000 in 2014, almost entirely from prominent companies with business interests in Puerto Rico, according to documents obtained by the Free Beacon. This was more than twice the amount of money the group received in the previous six years combined.

The group’s top listed expense in 2014 was Garcia Padilla’s salary. According to Sociedad Económica’s tax filings, the rest of its costs were administrative—it spent $118,000 on legal fees, accounting, office expenses, and meetings.

Padilla Garcia did not respond to questions by press time about Sociedad Económica’s day-to-day activities and programs.

Sociedad Económica’s board secretary, Kathryn Wylde, told the Free Beacon that the group seeks to encourage investment in Puerto Rico.

"It doesn’t operate programs," said Wylde. "It’s an economic development initiative so it reaches out to businesses and potential business investors around the world. Researches what their needs are, what their interests are, how Puerto Rico might offer them investment opportunities."

Neither Wylde nor Garcia Padilla disputed the fact that Garcia Padilla was the group's only paid employee.

Wylde said the reason the Sociedad Económica’s programming expenses are low is because it receives free office space from one of its top donors, Banco Popular, which gave the group $100,000 in 2014.

"Banco Popular contributes office space, so most of the company costs are absorbed. And they’ve got arrangements with other pro bono contributors," said Wylde.

The Sociedad Económica listed over $33,000 in rent payments to Banco Popular in its tax filings. Banco Popular CEO Richard Carrion, who also serves on the board of Sociedad Económica, declined through a spokesperson to discuss the organization. A spokesman did not respond to questions about Sociedad Económica's reported rent payments by press time.

Banco Popular is the largest bank in Puerto Rico, and lobbies heavily on financial issues and debt restructuring for the Commonwealth.

The bank is part of a small but influential group of Puerto Rican businessmen and companies involved with Sociedad Económica.

Another board member is Nicholas Prouty, the billionaire owner of the Puerto Rican hedge fund Putnam Bridge. Putnam LAC Holding contributed $50,000 to the Sociedad Económica in 2014. Prouty did not respond to request for comment by press time.

St. James Security, a favored security contractor for the Puerto Rican government, also donated $50,000. The company is run by Guillermo Martinez, who is also on the Sociedad Económica’s board. Martinez could not be reached by press time.

Another board member is Miguel Ferrer, the chairman of UBS Financial Services in Puerto Rico. Ferrer was caught on tape in April 2011 ordering employees to push high-risk Puerto Rican government funds to customers, despite the brokers’ misgivings. He was investigated by the SEC in 2012 for misleading consumers about Puerto Rican bonds, but was later cleared of wrongdoing. Ferrer did not respond to request for comment.

Puerto Rican real estate developer Alejandro Brito, an island fast food company, and SEIU United also contributed to the organization.

The National Legal and Policy Center said that the recent bribery charges will likely increase scrutiny on the Garcia Padilla government and his links to organizations that are funded by businesses that have interests before the governor’s office.

"Given the Puerto Rican debt crisis and the corruption indictments announced last month by the U.S. Attorney for Puerto Rico, Rosa Emilia Rodriquez-Velez, there will be increased scrutiny of ethical issues involving the Puerto Rican government," said Boehm.

Published under: Big Labor