December 20 2019, 1:39 p.m.
ON AN AFTERNOON in July,
a fire broke out at Solidarity House, the United Auto Workers’ national
headquarters in Detroit. No union employees were hurt, though two firefighters
were injured. According to the union, multiple floors of the building — which
houses the union’s accounting, legal, and IT departments — were severely
damaged.
Initial reports, recently
retracted, called it an accident. Now, months later, the years-long
investigation into the expansive criminal conspiracy at UAW has taken down the
union president, Gary Jones, who resigned at
the end of November. A police report on the fire has yet to come out, and
union activists are wondering: Could July’s fire at Solidarity House have
been a plot to obstruct the investigation into corruption in the auto industry?
“When the investigation first
started, [former UAW president] Dennis Williams assured the membership that it
was only a few bad apples involved in the scandal. Since then, numerous UAW
officials including Williams himself have been implicated or have pled guilty
as a result of the investigation,” said Justin Mayhugh, an autoworker at the GM
Fairfax Assembly plant in Kansas City. “I don’t think that arson is out of the
realm of possibility.”
“The investigation into the
cause of the UAW fire is still open and active,” wrote Patrick McNulty, Detroit
Fire Department’s chief of the fire investigation division. “At this time the
exact cause of the fire is undetermined.”
And arson has not been ruled
out, according to Theodore Copley, the lieutenant heading up the
investigation for the police department. When asked if the earlier press
reports were incorrect, Copley said “absolutely.”
It is unclear to what extent
documents or electronics on-site were destroyed, but the union’s legal
team requested that court deadlines be extended because they didn’t
have access to necessary paper records. Investigators are awaiting forensic
testing of equipment and electronics from the area of the fire’s origin before
making a final determination. Federal investigators also served the union with
a subpoena requesting visitor logs and security camera footage from the time of
the fire, which the union provided.
The UAW said in a statement,
“For more than two years, the UAW’s email and electronic files have been stored
in cloud-based servers, maintained off-site by a third-party vendor. They were,
therefore, unaffected by the fire that occurred on July 13, 2019.”
Suspicions were raised, in
part, because a federal indictment included an
allegation that a UAW official said he wished they had “burned the
evidence.” News outlets have
consistently identified that official as former UAW president Jones.
Jones has not been charged criminally but was brought up on charges by the
union and subsequently resigned.
“UAW members are justified in
being concerned by that utterance — even if I wasn’t a fire investigator I
would be concerned,” Copley said. “We will do our due diligence to determine
whether that utterance means anything as far as this fire is concerned.”
A UAW spokesperson denied the
possibility. “While a final report has not been issued by the City Fire
Department or the insurance company, based on previous public statements from
the Fire Inspector and our knowledge of the investigation to date, we do not
expect any change to the determination that the fire was caused by an
identified equipment malfunction, not an arson,” said Brian Rothenberg.
THE ONGOING FIRE INVESTIGATION is
the latest shock in a multi-agency investigation by the FBI, Department of
Labor, and IRS that began rolling out indictments in 2017. To date, three Fiat
Chrysler Automobiles corporate executives, seven union officials, and the widow
of a former union vice president have been convicted of crimes resulting from
the investigation. The U.S. attorney’s office has raised the possibility of
placing the union under federal oversight, a strategy the government used in
1989 to uproot corruption and organized crime from the Teamsters.
Several others stand accused
of crimes, including former UAW Region 5 director Vance Pearson and former
president of the Region 5 community council Edward “Nick” Robinson. Pearson and
Robinson have both been charged for their alleged participation in a broader
criminal conspiracy that embezzled hundreds of thousands of dollars out of the
union and are currently awaiting trial.
Government documents name
“Union Official A” and “Union Official B” as co-conspirators with Pearson and
Robinson. “Union Official A” is widely reported to be former UAW president Gary
Jones and “Union Official B” is reported to be former UAW president Dennis
Williams.
In September, The Detroit
News reported that
“Union Official A” is then-UAW president Gary Jones and “Union Official B” is
former UAW president Dennis Williams. The Detroit News cited sources close to
the investigation, and noted that a federal raid described in court documents
lines up with one conduced at Jones’s home.
The UAW’s own
internal charges against Jones mirror and reinforce accusations made
against “Official A.” Jones was the director of Region 5 during the time period
that Pearson and Robinson, his subordinates, were channeling funds through
Region 5 events into their own pockets. Additionally, the charges against
Robinson detail how “Official A” had put a stop to the cash embezzlement scheme
due to a new UAW position they were taking, which aligns with the time period
in which Jones being nominated for union president by the union’s ruling
political caucus
The decline of the UAW from a
powerful force for the country’s working class to a corrupted lieutenant
for employers is one of the most important labor stories in decades, and the
union’s transformation has an impact that extends far beyond the Big Three
automakers.
Officials allegedly used
union funds to go horseback riding on the beach.
“The auto industry was the
quintessential manufacturing enterprise of the American 20th century and the
UAW was the largest industrial union,” said Toni Gilpin, labor historian and
author of “The Long Deep Grudge: A Story of Big Capital, Radical Labor, and
Class War in the American Heartland.” “For decades, the UAW was the dominant
union in a dominant industry and set standards across the entire economy and
now what we are seeing is the union bureaucracy collapse after union leaders
spent years partnering with management and lining their own pockets.”
According to government
prosecution, Pearson, Robinson, and Union Officials A and B (reported to be
Jones and Williams) used the “master accounts” that the UAW established at
several hotels to cover hundreds of thousands of dollars in personal expenses.
Typically, these accounts would be used to pay for hotel room blocks,
audiovisual fees, and other amenities.
More than $1 million in member
dues was spent by officials between 2014 and 2017 so they could stay for weeks
at a time in luxury condominiums, playing unlimited rounds of golf by day and
eating at fine restaurants, smoking expensive cigars, and drinking high-end
liquor and wine at night.
In reviewing
over a thousand pages of court documents, including the indictments, plea
agreements, and sentencing memoranda of everyone who has been convicted or
indicted, the catalog of fraudulent expenses revealed is astonishing and
reflects a lifestyle that has far more in common with the corporate executives
the union is expected to battle than the rank-and-file autoworkers it
represents. The documents
show:
While he was president, Dennis
Williams allegedly rented a luxury villa in a gated California community for
more than a quarter of the year in 2016, at a cost to union members of over
$15,000.
Under the nom de guerre “Gary
Jones Group,” officials allegedly purchased enough golf bags, balls, clubs,
polo shirts, and “men’s fashion shorts” to rack up over $80,000 in charges over
a three-year period at one golf store in a Palm Springs, California, resort.
Officials, including Official
A, allegedly used union funds to go horseback riding on the beach with their
spouses and spent thousands of dollars on spa treatments.
In a single month, between
December 29, 2014, and January 29, 2015, the union paid for 107 18-hole rounds
of golf for UAW officials. That’s 1,926 holes.
On New Year’s Eve in 2016,
senior officials ran up a $6,599.87 tab partying at LG Prime Steakhouse, which
included the purchase of four bottles of Louis Roederer Cristal Champagne. The
Cristal Champagne costs $440 per bottle and is touted by the maker as having
been created in the 19th century to “satisfy the demanding tastes of Tsar
Alexander II.”
Officials tried to
“camouflage” these purchases by stringing together bogus meetings and
submitting false expense vouchers to the UAW headquarters.
The government also alleges
that since 2010, Robinson and Union Official A (reportedly Jones) embezzled up
to an additional $700,000 in member dues by providing the union with fraudulent
receipts and then splitting the reimbursement checks between themselves.
The investigation first became
public in 2017 when the government released their initial indictments against
Chrysler executives and has since uncovered a pervasive “culture of
corruption” in the UAW extending back at least a decade, toppling the image
that the union long enjoyed as one of the cleanest in the country.
THE FIRST WAVE of
convictions quickly followed the announcement of indictments in 2017 and
centered around a conspiracy, going back at least to 2009, in which Fiat
Chrysler executives funneled money through the UAW-FCA National Training Center
to the UAW and union officials.
The UAW-FCA National Training
Center is a nonprofit entity, jointly managed by both the union and company.
The training center was established to provide a number of benefits to
autoworkers, such as trainings to apprentices in the skilled trades, health and
safety trainings, and tuition reimbursement for union members to pursue higher
education. The UAW has similar jointly administered nonprofits with both Ford
and GM. In response to the corruption scandal, both the GM and FCA training
centers were dissolved as a part of the recently ratified collective bargaining
agreements between the companies and the union.
As benevolent as the UAW-FCA
Training Center sounded on paper, prosecutors say it evolved to be a “shill”
for the company and that its only function was to act as a pass-through for
an extensive bribery scheme.
According to the plea
agreement of Alphons Iacobelli, FCA’s vice president for employee relations and
the company’s chief negotiator with the union, the training center was the
conduit through which his employer hoped to “corruptly
purchase labor peace.” Iacobelli was sentenced to 66 months in prison for
his role in the plot.
Over the course of years, FCA
provided the late UAW vice president General Holiefield and his wife, who was
sentenced to 18 months in prison for her role in the conspiracy, with
first-class air travel, money to install a pool at their home, and even a check
for over a quarter-million dollars to pay off the
couple’s mortgage. Holiefield’s replacement, Norwood Jewell, was sentenced to
15 months in prison for accepting money from FCA, including allowing the
company to finance an extravagant “Miami
Vice”-themed party at the training center. Attendees were treated to
bottomless premium liquor drinks as women “dressed in provocative outfits”
walked around the room lighting cigars that were hand rolled on the spot by a
professional torcedor.
But the conspiracy went much
deeper than providing bribes to individual union officials.
Between 2009 and 2017, FCA
improperly provided the union with $9 million to cover the salaries, benefits,
and bonuses of senior union officials who did not actually work there. If that
weren’t enough, the union charged the training center a 7% “administrative fee”
to process the payments, effectively taxing the very bribe that FCA was
providing to the union.
A wave of convictions also
resulted from an investigation into the GM training center, which is officially
named the UAW-GM Center for Human Resources. Joe Ashton, a former UAW vice president
and member of the GM board of directors, pleaded
guilty to working alongside two other high-level UAW
officials to solicit kickbacks from union vendors. In one contract, a vendor
was awarded a $4 million contract by the Center for Human Resources — where
Ashton and the other officials were appointed to top positions — to provide the
union with 58,000 gold watches, one for every GM employee. The vendor expected
to pocket $1.7 million from the deal, and Ashton and other union officials
received hundreds of thousands in kickbacks from the vendor for directing the
lucrative contract their way. The watches were never
distributed and simply sat for years in a warehouse.
WHEN THE Administration
Caucus — the ruling faction in the UAW that has controlled the union’s top
positions for the past 70 years — announced that it had selected Gary
Jones as its nominee to succeed Dennis Williams as president in the 2018
union election, the choice was praised by some analysts as marking a
responsible shift for a union reeling from the ever-growing corruption
scandal. Bloomberg
Law said Jones “might be the UAW’s best chance for restoring its
reputation” given his financial expertise.
Jones, a certified public
accountant who previously worked in a Ford glass plant, was initially appointed
to a staff position in the union’s accounting department in 1990 and the following
year was elevated to chief accountant. In 2012, Jones was elected to be
director of UAW Region 5, which oversees locals in 17 western and southwestern
states, including California and Texas.
Rather than unearthing and
exposing corruption, it appears that Jones has spent years using his accounting
expertise to actively conceal his participation in crimes against the members
he was elected to represent.
According to Robinson’s indictment,
Union Official A (reported to be Jones) advised him to submit the receipts of
expenses paid for with funds from the hotel master accounts to the UAW
accounting department, claiming that he had paid for the expenses out of pocket
and needed to be reimbursed. Jones also advised Robinson to request checks in
odd amounts and to keep the totals below $10,000 to avoid having banks generate
currency transaction reports to federal authorities. Union Official A and
Robinson used this scheme to steal hundreds of thousands from union members
over the years. The UAW’s charges against Jones independently confirms
many of the allegations in the Robinson and Pearson indictments.
Official A put a halt to
the cash embezzlement scheme after Official A took a “new UAW position,”
according to the Robinson indictment. The action apparently coincides with the
Administration Caucus’s announcement that they had selected Jones for the top
position. As president, Jones publicly denounced the corruption being exposed
by the investigation while privately Official A was trying to cover it up.
In March 2019, the same month
that the UAW dubbed Jones a “reform president” and unveiled his “Clean Slate
Agenda” to address corruption, Union Official A met privately with Robinson,
promising to provide a relative of his with a sham job at the union if he would
agree to take full responsibility for the fraudulent reimbursement scheme.
During the conversation, that official expressed concern about the federal
investigation into the hotel accounts and told Robinson that he wished he had
“burned the records.”
Four months later, on July 10,
Pearson met with Robinson and promised to get him a “burner phone” so they could
talk without worrying about federal wiretaps. Pearson also advised Robinson to
dispose of any incriminating evidence at his home.
Three days later, a fire began
on the third floor of the UAW headquarters building in Detroit. Multiple floors
were damaged by the fire, smoke, and water. Soon after the fire, the union
began bargaining new contracts with the Big Three automakers.
In late August, federal agents
raided the UAW’s Region 5 offices; the homes of Pearson, Williams, and
Jones; and a luxurious cabin the UAW built for Williams on the union’s
1,000-acre Black Lake resort in Michigan. The union is now
in the process of selling the cabin, which was constructed with
nonunion labor.
During the raid, agents seized
hundreds of high-end bottles of liquor, hundreds of golf shirts, multiple sets
of golf clubs, a huge quantity of cigars, and over $32,000 in cash from the
home of Gary Jones.
Pearson was charged by the
U.S. attorney’s office in September, and Robinson in October. In November,
Jones requested that he be placed on paid leave by the then-13 member UAW
International Executive Board. The Board was split six-to-six on the question,
and remarkably Jones was allowed to cast the deciding vote, according
to the Wall Street Journal.
Over the next few weeks, six
union locals passed resolutions calling for Jones to be brought up on union
charges that could lead to his being expelled from the union. At the prodding
of rank-and-file activists around the country, the International Executive
Board voted to bring charges against both Jones and Pearson. By the end of
November, Jones made history as the first UAW president to resign midterm.
Jones’s successor, Rory
Gamble, the former vice president in the union’s Ford Department, will fill out
the rest of Jones’s four-year term. Gamble announced several ethics reforms and
has dissolved UAW Region 5 in an attempt to start rebuilding trust with the
union’s members and assuage the government that a takeover is unnecessary.
But the government remains
unimpressed. U.S. Attorney for the Eastern District of Michigan Matthew
Schneider, who is overseeing the investigation, has expressed frustration at
what he described, in an interview with
the Detroit News, as the union’s continued unwillingness to cooperate with the
investigation.
UAW activists are unsurprised
that the union’s top leadership has continued to prioritize looking out for
themselves over working with the government to clean up corruption.
“Everything the leaders do is
to protect the Administration Caucus, not the members of our union,” said Scott
Houldieson, a body shop electrician at Ford’s Chicago Assembly plant. “The
leadership has spent decades cooperating with company executives and have been
isolated from the membership for far too long.”
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