Tuesday, October 27, 2020

FBI raids UAW President Jones’ house as corruption probe explodes into view

-

Federal agents expanded an investigation of corruption within the U.S. auto industry Wednesday by raiding locations in four states, including the suburban Detroit home of United Auto Workers President Gary Jones and the California home of former President Dennis Williams, sources told The Detroit News.

The four-year federal investigation into bribes, kickbacks and attempts by auto executives to influence labor negotiations with the UAW has led to charges against nine people and prison sentences for eight figures linked to the UAW and Fiat Chrysler Automobiles NV.

The raids at six locations in Michigan, California, Wisconsin and Missouri uncovered evidence including “wads” of cash and files that could bolster federal investigations into UAW leaders spending dues paid by blue-collar workers on personal luxuries, vacations and private villas in Palm Springs, California, sources told The News.

Agents from the FBI, Internal Revenue Service and Labor Department also are investigating whether labor leaders received money or benefits through their tax-exempt nonprofits and if they kept cash contributed by senior UAW staff to funds originally established to buy flowers for auto workers’ funerals.

- Advertisement -

The raids and widening investigation targeting top current and former leaders of one of the nation’s most powerful labor unions was unprecedented in scope and magnitude, legal and business experts say.

The searches, coinciding with national labor negotiations among the UAW and Detroit automakers, and potential new criminal charges raise the specter of Justice Department officials wielding a powerful and rarely used tool to wrest control of the UAW — civil racketeering law, according to the experts.

“We are very much in uncharted territory,” said Kristin Dziczek, vice president of industry, labor and economics at the nonprofit Center for Automotive Research.

There were no arrests Wednesday, and Jones and Williams have not been charged with a crime. The focus of the raids was unclear because search warrant documents were sealed in federal court.

- Advertisement -

The raids intensified a prolonged investigation that has exposed self-dealing among lower-level UAW officials and a conspiracy involving Fiat Chrysler executives to wring concessions from the union by lavishing labor leaders with cash, trips, steak dinners and $1,000 pairs of Christian Louboutin shoes.

Related: Former UAW vice president pleads guilty to conspiracy in bribery scheme

Federal agents fanned out to execute search warrants at multiple locations, including Jones’ home in Canton Township and at the UAW Black Lake Conference Center, a 1,000-acre retreat in northern Michigan financed with interest from the union’s $721 million strike fund, which is bankrolled by worker dues.

Mara Schneider, public affairs officer for the FBI’s Detroit branch, said there are several search warrants that were executed Wednesday across the country, including two in Michigan. She said she couldn’t give a total number of warrants being executed by the FBI, the IRS Criminal Investigation Division and the Department of Labor’s Office of Inspector General.

“It is rare, if not unprecedented, to raid a UAW former or current president’s house,” said Harley Shaiken, a professor at the University of California-Berkeley who specializes in labor and the global economy. “The timing is particularly disturbing.”

The UAW is in the middle of negotiating its next set of four-year contracts with the Detroit Three. The current contracts expire Sept. 14. Shaiken said while Jones has adamantly condemned bribery that federal investigators say tainted the 2015 negotiations between the UAW and Fiat Chrysler and General Motors, Wednesday’s raids could affect the current contract negotiations.

“(The raids) may not have any impact on the negotiations, but it raises that question,” Shaiken said. “The raids have nothing to do with guilt or the implication of guilt. The problem is that it carries a negative message even to conduct the raids. With this timing, it has implications that go well beyond the bribery scandal. It could impact negotiations. It’s a distraction.”

Erik Gordon, a University of Michigan business professor, also stressed Wednesday’s developments could impact the union’s bargaining strength.

“This weakens the union’s position at the negotiating table,” Gordon said. “The team could be in handcuffs in a week.”

In a statement, UAW spokesman Brian Rothenberg called the federal action unnecessary.

“The UAW and President Gary Jones have always fully cooperated with the government investigators in this matter. As the leader of the UAW, President Jones is determined to uncover and address any and all wrongdoing, wherever it might lead,” Rothenberg said.

“There was absolutely no need for search warrants to be used by the government today — the UAW has voluntarily responded to every request the government has made throughout the course of its investigation, produced literally hundreds of thousands of documents and other materials to the government, and most importantly, when wrongdoing has been discovered, we have taken strong action to address it.”

Related: Another Ex-UAW Official Charged in Expanding Corruption Case

Federal agents obtained search warrants authorized by a judge that list probable cause to search the locations.

- Advertisement -

Investigators also raided the UAW Region 5 office near St. Louis, where Jones served as regional director before being elected president last year. The region represents UAW members in 17 states, including California, who work in the auto parts, aerospace and beverage container industries.

Vance Pearson

Also searched was the home of UAW Region 5 Director Vance Pearson in a St. Louis suburb.

Pearson became regional director when Jones was elected as the international’s president in June 2018. Last year, Pearson earned $222,672, according to a Labor Department filing.

Pearson could not be reached for comment.

The UAW Region 5 office in Hazelwood, Missouri, also was the registered address for Jones’ nonprofit charity, 5 Game Changers. The News previously reported FBI agents are focused on whether UAW leaders personally profited from contributions to their personal nonprofits.

Retired UAW President Dennis Williams

Agents also were searching Williams’ home in Corona, California, about 47 miles east of Los Angeles. Property records indicate Williams bought the $610,000 home in January.

Williams was implicated in the scandal last year when a former labor official told federal prosecutors that Williams directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.

The former UAW official, Nancy Adams Johnson, told investigators Williams made the directive to relieve pressure on the union’s budget.

Black Lake is of interest to agents who are investigating the UAW’s building a retirement home for Williams. The News reported last year about the construction project, which came amid questions about union leaders’ spending of membership dues and money from Detroit’s automakers on personal luxuries.

Williams retired in June and was implicated in the scandal one month later when prosecutors said he directed subordinates to use funds from Detroit’s automakers, funneled through training centers, to pay for union travel, meals and entertainment.

Williams’ former top aide, Amy Loasching

Investigators also Wednesday were searching the Wisconsin home of Williams’ former top aide, Amy Loasching, the FBI confirmed.

Loasching, who lives in Janesville, 75 miles west of Milwaukee, is listed as the secretary and treasurer of Williams’ nonprofit, the Williams Charity Fund, on a 2018 tax exemption form filed by the charity.

According to an October 2015 document sent to UAW FCA members after the bargaining committee negotiated a second contract with the automaker, Loasching was part of the 2015 UAW National Negotiating Committee at FCA US LLC. She was then the administrative assistant to Williams.

Related: Another Ex-UAW Official Charged in Expanding Corruption Case

At Jones’ home in Canton Township on Wednesday, more than a dozen agents wearing FBI polo shirts and jackets were spotted going inside. A black utility truck, black SUVs and a few black sedans were parked outside the house, and a white sedan was parked in the driveway.

Some of the FBI agents were carrying brown boxes into the home after arriving around 7 a.m. and later leaving with boxes, large envelopes and several bags.

A neighbor, 75-year-old Gary Mann, said he noticed what was happening around 8:30 a.m. while on a walk with his wife.

“It alarmed us,” Mann said. “I’ve never seen anything like it. We asked if there was anything wrong. They didn’t want to say anything. We just wanted to find out if everyone was OK. They said it was OK.”

Mann, who has been in the neighborhood for 19 years, said the couple moved in several months ago.

“We went over there to greet them, to be friendly,” he said. “They were pretty tight-lipped.”

About 9 a.m., neighbor Kevin Telepo said he saw people working in the garage of the house.

“They were on the floor counting cash, going through the wads,” said Telepo, 47, who lives five houses down. “They pulled out a five-foot tube that was a UAW banner. They were really examining the golf clubs.”

They also took bags and boxes and opened a safe, Telepo said.

He said he watched the scene for about 45 minutes.

“They’re quiet people,” Telepo added.

While the focus on Jones was not immediately clear, The News last year reported federal investigators were questioning UAW officials’ use of almost $1 million of membership dues on condominiums, liquor, food and golf in Palm Springs, California, where Jones held annual conferences before becoming president in 2018.

The searches Wednesday also came hours before former UAW official Mike Grimes was arraigned in federal court on charges he received $1.99 million in kickbacks from union vendors.

MUST READ

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Texas attorney general Ken Paxton fires top aide who accused him of bribery

Lacey Mase, one of the top aides who accused Texas Attorney General Ken Paxton of crimes including bribery and abuse of office, has been fired, she told The...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Former Malawi minister sentenced to six years in prison over passport corruption scandal

A court in Malawi’s capital Lilongwe on Thursday sentenced a former home minister to six years in prison after he was found guilty in...

Newark city councilman charged in bribery and kickback scheme

Joseph A. McCallum Jr., a city councilman in Newark's West Ward, has been accused of taking part in a "bribery and kickback" scheme involving...

Two U.S. Navy service members get prison for defrauding military insurance program

Two U.S. Navy service members were sentenced in San Diego federal court Friday for their roles in an insurance fraud scheme that involved making false medical claims to...

Swiss court upholds money-laundering conviction of ex-Ukrainian lawmaker Martynenko

A Swiss court has upheld the conviction of former Ukrainian lawmaker Mykola Martynenko for laundering via Swiss banks millions of dollars worth of kickbacks...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks