Feds Probe UAW 'Flower Funds' in Broadening Corruption Case
Federal investigators are expanding their ongoing corruption investigation into the United Auto Workers and Detroit Three by taking a long look at donated money intended to buy flowers for member funerals. The concern is that the UAW’s “flower fund” may have been used as a slush fund to finance personal expenses for union officials.
It wouldn’t be the first time. Prosecutors have already secured the convictions of seven people via a probe into the UAW-Chrysler National Training Center. Several jailed union officials, along with former FCA-VP Alphons Iacobelli, helped investigators uncover illicit funds funneled through training centers and charities — including the Leave the Light On Foundation, created by the late General Holiefield. Now they’re helping the feds branch out.
According to The Detroit News, the flower fund is just one of several avenues being explored right now. Investigators are keen to find out why UAW officials used almost $1 million of membership dues on meals, alcohol, condominiums, and golf in California — where former Region 5 Director Gary Jones held annual conferences before becoming UAW president last year — as well as uncover the source of that cash.
With Fiat Chrysler already implicated in the scandal, investigations broadened to probe to see if UAW leaders at General Motors and Ford ever received money or benefits through their tax-exempt nonprofits.
Flower funds were created initially to pool voluntary contributions from union members for funeral flowers and to finance union election campaigns. Use of the funds has drawn repeated scrutiny from federal and congressional investigators since at least the middle of the last century.
From The Detroit News:
In the ongoing UAW investigation, agents are questioning whether flower fund contributions became a mandatory job requirement and whether UAW executives spent the money on personal expenses and kept the rest upon retirement, sources told The News.
When UAW Vice President General Holiefield retired in 2014 as head of the union’s Fiat Chrysler Department, sources told The News he kept the more than $30,000 remaining in his flower fund. Holiefield died in 2015.
[Dennis] Williams also had a flower fund. A source said he did not keep money remaining in it when he retired as UAW president last summer.
Unsavory claims involving the funds have encouraged investigations of the UAW and other unions in recent decades, as they frequently involved workers in fear of losing their job unless they contributed part of their salaries. However, these probes rarely managed to find anything truly damning. But there is an alleged smoking gun. Those with knowledge of the investigation suggest that even if dozens of staff members contributed to a single flower fund, it would generate thousands of dollars in unreported revenue every single month — likely more than necessary to furnish funeral decorations.
Included in the flower funds of interest is the “Diamond Fund,” which sources say was controlled by retired UAW Vice President Norwood Jewell — who was slapped by federal prosecutors with union conspiracy charges earlier this week. Jewell is scheduled to plead guilty on April 2nd, but flower funds aren’t part of his case. While the UAW imposed a “gift ban” after prosecutors began indicting former UAW and Fiat Chrysler officials in the summer of 2017, it’s unclear whether voluntary flower donations were included.
Still, investigators are examining whether or not the donations truly were discretionary. Allegations have surfaced that union members were effectively bullied into giving a portion of their annual income to similar funds. Likewise, several UAW members wrapped up in the current scandal claim they were threatened by upper management if they refused to play the corruption game.
“The consequences of a failure to do as you have been told would have quickly led you back into a factory and to be ostracized by UAW leadership,” lawyer Robert Sheehan wrote in a court filing for former union official Keith Mickens.
Since investigators appear to be repositioning for another push, this may turn out to be a dead end. However, even if that ends up being the case, don’t expect the fed to give up on investigating the UAW or its relationship with manufacturers.
[Image: James R. Martin/Shutterstock]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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How much money are we talking about - one million? I've heard the Feds know how to misappropriate the odd dollar or so as well. What will the investigation cost?
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