UAW Courtroom Drama Reveals 'Culture of Corruption' Among Senior Leadership
The training center embezzlement scandal currently rocking the United Auto Workers began with the indictment of a former Fiat Chrysler labor chief who offered kickbacks to select union officials in exchange for favorable treatment. Alphons Iacobelli, the ex-FCA executive in question, was sentenced to five years in federal prison last August but spent nearly 10 months helping the FBI’s investigation into unionized corruption, resulting in additional indictments.
Federal prosecutors have secured convictions of seven people linked to the conspiracy at this point, claiming FCA executives provided gifts or covert cash payments through the jointly operated UAW-Chrysler National Training Center in an effort to influence collective bargaining. It became such a problem that several union officials now claim they engaged in illicit activities because they were fearful of bucking the trend, losing their six-figure salaries, and being forced back onto factory floors — you know, like the people they were supposed to be representing.
Keith Mickens, one of three individuals to face sentencing this week, served directly under former UAW Vice President General Holiefield. Mickens struck a plea deal with federal prosecutors in April, admitting he purchased more than $7,000 worth of personal items using FCA funds intended for auto workers. He also helped procure illegal funds to assist Holiefield and his “widow” in buying a pool for their home.
According to The Detroit News, Mickens’ lawyer Robert Sheehan claimed he was part of a much larger problem involving the normalization of illicit activity within the union. “The culture of the UAW staff at the NTC under the Holiefield administration was one that you were expected to do what your superiors asked of you,” Sheehan wrote in a court filing. “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.”
While it sounds like a standard excuse for a lawyer to make in such a case, prosecutors don’t think he’s that far off.
“This investigation and prosecution has revealed that there was a culture of corruption in the senior leadership of the United Auto Workers union,” Assistant U.S. Attorney David Gardey wrote in Mickens’ sentencing memorandum. “Leaders of the UAW viewed the National Training Center as a mechanism to take apparently unlimited and illegal payments from Fiat Chrysler for their own personal benefit, for the benefit of the union itself, and for their own lavish entertainment.”
Federal prosecutors have already hinted that more charges are likely in the coming months. In the interim, U.S. District Judge Paul Borman has to decide an appropriate punishment for Mickens. His lawyer requests probation; the opposition wants 16 months in a federal prison.
Fiat Chrysler financial analyst Jerome Durden is also scheduled for sentencing this week. However, this could be delayed, as he continues to assist in the investigation. “Durden is engaged in ongoing cooperation in the criminal investigation of other individuals and entities concerning illegal payments made by FCA and its executives to the UAW and its union officials,” Assistant U.S. Attorney Erin Shaw wrote in a court filing.
Durden served as controller of the training center, and was caught filling erroneous tax returns that concealed the labor conspiracy. He also served as treasurer of Holiefield’s fake children’s charity, the Leave the Light On Foundation. That organization, along with Hospice of Metropolitan Detroit, served as ways for UAW officials to conceal a significant portion of the illegal funds. The prosecution estimates both were used to funnel several hundred thousand dollars to union executives. However, the total embezzled funds and gifts are estimated to be in excess of $4.1 million.
“The stated purpose of [the foundation] was to raise money to be used for charitable and community activities, but in reality, the [foundation] was used to direct additional prohibited payments to UAW Vice President General Holiefield and his mistress, Monica Morgan,” Shaw wrote.
Holiefield died in March of 2015, before he could be charged. Morgan was sentenced to 18 months in federal prison over the summer for failing to report income funneled through the training center.
Michael Brown, a former Fiat Chrysler executive who helped run the UAW-Chrysler National Training Center, will also be sentenced Wednesday for helping cover up the conspiracy. He’s expected to see a 12-year sentence, but prosecutors hope he’ll cooperate with the investigation in exchanged for a reduced sentence.
Former UAW labor executive Virdell King of Detroit pleaded guilty to embezzlement charges last year; she’s expect to see sentencing on November 13th. “Persons like Ms. King are beholden to their superior, and if such a person outlasts her or his welcome that person is demoted or, worse, terminated from the International (UAW) and, if the person wants to keep the union job, sent back to the plants,” King’s attorney, John Shea, told the court.
It’s believed that federal prosecutors are currently building a case against several higher ranking UAW officials and at least one more FCA employee. Keep in mind that everyone is innocent until proven guilty, as the government has a lot of suspects right now.
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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It’s all the same game...people will prey on the intellectually weak if not checked...they operate wholly independently of what’s right and only care about lobbying for themselves and those close to them....it is only the constant flow of money that keeps these bad organizations going.
My awakening to the Union was in the 1970’s. As a union steward at our retail store I attended several meetings regarding our expiring contract. We were offered a pittance raise and the union strongly suggested we take it. We voted no on the first go round and prepared for a strike. After paying into the “strike fund” for years, we were informed that said strike fund held $2100. In a work force of over 1000. Seemed the union bosses had incurred higher than normal expenses and the headquarters had a new roof. We settled quickly iirc for $.15/hr.