Former UAW President Gary Jones, left, is awaiting sentencing after pleading guilty of fraud. On open issue is GM’s federal racketeering lawsuit against FCA and former FCA executives who previously have pled guilty in the federal corruption probe.
United States Attorney Matthew Schneider announced today that an agreement has been reached with the United Auto Workers Union to resolve the Eastern District of Michigan findings of fraud and corruption within the UAW. The parties also jointly filed a proposed Consent Order setting forth the terms of a settlement of the lawsuit.
The proposed settlement – subject to Court approval – fully and finally resolves the criminal and civil investigation of the UAW as an entity. The UAW also agrees to resolve a tax investigation by making a payment of $1.5 million to the Internal Revenue Service in connection with administrative fees that the union received from the three joint training centers that were operated with the FCA, Ford and GM.
In a partial UAW victory, the civil lawsuit was not filed under the federal anti-racketeering RICO law because the investigation by the United States did not uncover any involvement by organized crime or the mafia in the operations of the UAW. Instead, the civil complaint sets forth in detail a series of corrupt and fraudulent acts by former officers and board members of the UAW, as well as executives of Fiat Chrysler Automobiles. The status of another RICO suit by GM related to the UAW corruption matter (updated 15 Dec) is GM’s federal racketeering lawsuit against FCA and former FCA executives is: “GM’s suit is ongoing. It’s directed against FCA, as well as individuals (Ashton, Iacobelli – both are in prison) who are former executives,” said David Caldwell of GM.
UAW President Rory Gamble said: “Today’s agreement builds upon the many reforms that the UAW has initiated and put in place ourselves over the past 13 months.”
In addition, the UAW has already paid back over $15 million to the training centers for improper chargebacks that the union received from two of the training centers. This money will be used by joint programs for the health and safety of auto workers.
If approved the Court would appoint an Independent Monitor who would have the authority to exercise disciplinary powers within the UAW, to investigate possible fraud or corruption within the union, and to seek discipline against UAW officers and members before a UAW Trial Committee, or before an Independent Adjudications Officer also appointed by the Court. The Monitor’s oversight of the union would last for six years, with a possible early termination if the Monitor were to find that his or her work is complete and the UAW no longer needs the Monitor’s services, or extension if the Monitor or the parties feel that a longer period is appropriate.
In addition to the monitor, the UAW will conduct a binding and secret-ballot referendum of its membership, overseen by the Monitor and the Department of Labor, to determine whether to change the UAW’s election method from the current delegate system to a direct election model, where the entire UAW membership could vote for the UAW President and the other members of the UAW’s International Executive Board.
Through this referendum, members would decide whether the UAW’s constitution would be changed to provide for a direct election system in the union, widely referred to as “one person, one vote,” starting in the 2022 election cycle. The parties have jointly proposed the referendum so that all the men and women of the UAW, not the government, can decide the method to elect the union’s leaders.
Costs of the Monitor will be paid for by UAW members. The Monitor’s duties would not include any involvement in the collective bargaining process or the day-to-day administration of those contracts, absent any indication of corruption or fraud. The UAW’s board would continue to oversee collective bargaining negotiations and enforcement going forward.
The civil complaint filed today in the United States District Court for the Eastern District of Michigan was brought under the federal civil anti-corruption and anti-fraud statute (18 U.S.C. § 1345), which was designed by Congress to empower courts to intervene and provide injunctive and equitable relief to eliminate fraud to serve the public interest.
The criminal investigation by the United States revealed an extensive and long-lasting effort by two former UAW presidents and their underlings to embezzle over $1.5 million in UAW money for their personal benefit through a series of fraud schemes.
The investigation also uncovered a scheme by one former UAW vice president and two other high-level UAW officers to demand and accept over $2 million in kickbacks from contractors to the joint UAW-GM training center involving multi-million-dollar contracts for watches, backpacks, and jackets.
The civil complaint alleges that high-level Fiat Chrysler executives paid bribes to, and engaged in embezzlement with, two former UAW vice presidents and other UAW officials amounting to over $3.5 million. In total, fifteen UAW officials and Fiat Chrysler executives have been convicted thus far during the criminal investigation. FCA and the UAW did not immediately comment.
Convictions
The fifteen individuals convicted of fraud and corruption crimes include:
- former UAW Vice President Joseph Ashton (30 months in prison)
- former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison)
- former FCA Financial Analyst Jerome Durden (15 months in prison)
- former Director FCA’s Employee Relations Department Michael Brown (12 months in prison)
Former Senior UAW officials:
- Virdell King (60 days in prison),
- Keith Mickens (12 months in prison),
- Nancy A. Johnson (12 months in prison),
- Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison),
- former UAW Vice President Norwood Jewell (15 months in prison), and
- former senior UAW official Michael Grimes (28 months).
UAW officials who have pleaded guilty and are awaiting sentencing:
- former UAW President Gary Jones,
- former senior UAW official Jeffrey Pietrzyk,
- former UAW Region 5 Director and UAW Board member Vance Pearson,
- former UAW Midwest CAP President Edward “Nick” Robinson,
- former UAW President Dennis Williams.
US Cuts Deal with UAW Union on Reform, Corruption and Fraud
Former UAW President Gary Jones, left, is awaiting sentencing after pleading guilty of fraud. On open issue is GM’s federal racketeering lawsuit against FCA and former FCA executives who previously have pled guilty in the federal corruption probe.
United States Attorney Matthew Schneider announced today that an agreement has been reached with the United Auto Workers Union to resolve the Eastern District of Michigan findings of fraud and corruption within the UAW. The parties also jointly filed a proposed Consent Order setting forth the terms of a settlement of the lawsuit.
The proposed settlement – subject to Court approval – fully and finally resolves the criminal and civil investigation of the UAW as an entity. The UAW also agrees to resolve a tax investigation by making a payment of $1.5 million to the Internal Revenue Service in connection with administrative fees that the union received from the three joint training centers that were operated with the FCA, Ford and GM.
In a partial UAW victory, the civil lawsuit was not filed under the federal anti-racketeering RICO law because the investigation by the United States did not uncover any involvement by organized crime or the mafia in the operations of the UAW. Instead, the civil complaint sets forth in detail a series of corrupt and fraudulent acts by former officers and board members of the UAW, as well as executives of Fiat Chrysler Automobiles. The status of another RICO suit by GM related to the UAW corruption matter (updated 15 Dec) is GM’s federal racketeering lawsuit against FCA and former FCA executives is: “GM’s suit is ongoing. It’s directed against FCA, as well as individuals (Ashton, Iacobelli – both are in prison) who are former executives,” said David Caldwell of GM.
UAW President Rory Gamble said: “Today’s agreement builds upon the many reforms that the UAW has initiated and put in place ourselves over the past 13 months.”
In addition, the UAW has already paid back over $15 million to the training centers for improper chargebacks that the union received from two of the training centers. This money will be used by joint programs for the health and safety of auto workers.
If approved the Court would appoint an Independent Monitor who would have the authority to exercise disciplinary powers within the UAW, to investigate possible fraud or corruption within the union, and to seek discipline against UAW officers and members before a UAW Trial Committee, or before an Independent Adjudications Officer also appointed by the Court. The Monitor’s oversight of the union would last for six years, with a possible early termination if the Monitor were to find that his or her work is complete and the UAW no longer needs the Monitor’s services, or extension if the Monitor or the parties feel that a longer period is appropriate.
In addition to the monitor, the UAW will conduct a binding and secret-ballot referendum of its membership, overseen by the Monitor and the Department of Labor, to determine whether to change the UAW’s election method from the current delegate system to a direct election model, where the entire UAW membership could vote for the UAW President and the other members of the UAW’s International Executive Board.
Through this referendum, members would decide whether the UAW’s constitution would be changed to provide for a direct election system in the union, widely referred to as “one person, one vote,” starting in the 2022 election cycle. The parties have jointly proposed the referendum so that all the men and women of the UAW, not the government, can decide the method to elect the union’s leaders.
Costs of the Monitor will be paid for by UAW members. The Monitor’s duties would not include any involvement in the collective bargaining process or the day-to-day administration of those contracts, absent any indication of corruption or fraud. The UAW’s board would continue to oversee collective bargaining negotiations and enforcement going forward.
The civil complaint filed today in the United States District Court for the Eastern District of Michigan was brought under the federal civil anti-corruption and anti-fraud statute (18 U.S.C. § 1345), which was designed by Congress to empower courts to intervene and provide injunctive and equitable relief to eliminate fraud to serve the public interest.
The criminal investigation by the United States revealed an extensive and long-lasting effort by two former UAW presidents and their underlings to embezzle over $1.5 million in UAW money for their personal benefit through a series of fraud schemes.
The investigation also uncovered a scheme by one former UAW vice president and two other high-level UAW officers to demand and accept over $2 million in kickbacks from contractors to the joint UAW-GM training center involving multi-million-dollar contracts for watches, backpacks, and jackets.
The civil complaint alleges that high-level Fiat Chrysler executives paid bribes to, and engaged in embezzlement with, two former UAW vice presidents and other UAW officials amounting to over $3.5 million. In total, fifteen UAW officials and Fiat Chrysler executives have been convicted thus far during the criminal investigation. FCA and the UAW did not immediately comment.
Convictions
The fifteen individuals convicted of fraud and corruption crimes include:
Former Senior UAW officials:
UAW officials who have pleaded guilty and are awaiting sentencing: