Thursday, October 22, 2020

Former UAW official Mike Grimes jailed for 2 years in bribery scheme

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Mike Grimes, a corrupt former United Auto Workers official who received more than $1.5 million in bribes from a union vendor — including $10,000 worth of cosmetic surgery for a relative — was sentenced to 28 months in federal prison Tuesday.

The sentence from U.S. District Judge Bernard Friedman was longer than the two years sought by prosecutors and designed to send a strong message to UAW members betrayed by leaders embroiled in a scandal that has exposed the union to a possible federal takeover.

“Twenty eight months sends a stronger message and will send a message to (UAW) members that they can get their loyalty, integrity, trust and pride back,” Friedman said.

The sentence is the second-longest issued during a years-long prosecution of UAW officials and auto executives convicted of breaking federal labor laws, embezzling union funds and receiving bribes. Only former Fiat Chrysler Automobiles Vice President Alphons Iacobelli has received a longer sentence — 5 1/2 years in federal prison.

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But additional targets remain, most notably former UAW Presidents Gary Jones and Dennis Williams.

Grimes, 66, of Fort Myers, Florida, dressed in a dark suit and hunched over in quiet prayer, apologized to UAW members, his family and fellow labor leaders for betraying their trust in receiving bribes from a union contractor.

“I got into something I shouldn’t have,” Grimes told the judge. “I wish I could take it back. I take full responsibility.”

He was the first of three convicted UAW leaders to face sentencing for their roles in a bribery and kickback scheme involving rigged bids, union vendors and contracts for watches, backpacks and other promotional merchandise.

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Those awaiting sentencing include aide Jeff Pietrzyk and former UAW Vice President Joe Ashton, who served on the board of General Motors Co. and is the highest-ranking person convicted of a crime during a years-long investigation of auto industry corruption.

Grimes, who was administrative assistant to Vice President Cindy Estrada when she headed the UAW’s GM Department, received the most illegal money out of the 13 people charged so far and prosecutors said he spent the money on a Florida home, boats, jewelry and commemorative coins — all of which is being forfeited to the government.

The investigation has led to 12 convictions and revealed that union leaders embezzled money from worker paychecks, schemed with auto company executives and shook down union contractors.

Grimes is portrayed as a vindictive shakedown artist, demanding kickbacks from UAW vendors who supplied union-branded merchandise and penalizing one UAW contractor who initially refused his demands. Once the unidentified vendor agreed to pay kickbacks, Grimes forced him to pay an extra $5,000, prosecutors said.

“Mike Grimes violated his oath of office and betrayed the trust of all our hard-working members,” the UAW said in a statement Wednesday. The union stripped Grimes of his membership last month and, as part of his conviction, he is barred from holding a union office in the future.

Grimes pleaded guilty in September to wire fraud conspiracy and money laundering. Though sentencing guidelines call for almost five years in prison, prosecutors recommended a two-year sentence because Grimes cooperated with an ongoing investigation.

The extent of his cooperation is sealed in federal court and Grimes’ lawyer Michael Manley would not discuss it Wednesday.

Several union members attended the sentencing, including Lynda Eckstrom, who was president of Local 393 in Flint, according to UAW filings.

She told the judge members have lost faith and trust in UAW leaders.

“Members, all we wanted was to be made whole,” she told the judge. “(The corruption) gives a bad name to all unions.”

Grimes said he accepted bribes out of grief, not greed, and was struggling with the death of his first wife and trying to make his new family happy with material possessions.

It is unusual for federal judges, who have broad discretion, to sentence defendants to more time in prison than sought by prosecutors, said Peter Henning, a Wayne State University law professor and former federal prosecutor.

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“You don’t see it all that often,” he said. “But if the judge wants  to send a message to the union, that is within the judge’s discretion.”

Jones and Williams, meanwhile, have not been charged with wrongdoing but prosecutors implicated them in a racketeering enterprise that embezzled more than $1.5 million in union funds.

Federal agents also are probing financial ties between new UAW President Rory Gamble, retired vice president Jimmy Settles and one of the union’s highest-paid vendors.

The agents are investigating whether UAW leaders received cash kickbacks or bribes in exchange for awarding lucrative contracts to Huntington Woods businessman Jason Gordon to supply union-branded merchandise, sources told The Detroit News last month.

In the Grimes case, union vendors were awarded contracts from the UAW-GM training center to produce union-branded merchandise in exchange for paying bribes and kickbacks. The conspiracy started in 2006 and lasted until July 2018, according to the government. During that time, Grimes worked alongside Estrada and was paid $150,574 a year.

Starting in 2010, Grimes received almost $900,000 worth of kickbacks from an unidentified union vendor, prosecutors said. In 2011, the same union contractor gave Grimes an additional $530,000.

The contractor is part of the so-called “trinkets and trash” industry, a collection of companies vying for a piece of the more than $29 million spent in the last five years on promotion, advertising and UAW-branded items distributed at union rallies, conventions and factories.

The items include shirts and lanyards, Frisbees and flash drives, pencils and ponchos, Kangol hats and key chains, and novelty items like bowling ball buffers.

The trinkets and trash industry drew additional unwanted attention earlier this month. That’s when the UAW gave workers promotional pens to commemorate Gamble that appear to betray a central tenet of the UAW’s contracting process and of the union itself: They’re made in China.

The industry, and the fact that union leaders control millions of dollars worth of contracts through it, baffled Friedman.

“I’ve never heard of such a thing,” the judge said.

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