Former Chrysler Exec, Widow of Auto Workers V.P. Indicted in $1.2 Million Ripoff

With a certain reluctance, Chrysler Corporation accepted the Obama administration’s forcible transfer in 2009 of company stock to the United Auto Workers. The Auburn Hills, Mich.-based automaker now is feeling an aftershock. On July 26, Alphons Iacobelli, the company’s former labor negotiator, and Monica Morgan, the widow of UAW Vice President General Holiefield, were indicted in Detroit federal court for defrauding the UAW-Chrysler National Training Center of $1.2 million over several years. Prosecutors allege Iacobelli, who left Chrysler in 2015, wrote checks from a center bank account to a shady nonprofit controlled by Holiefield, whose wife used much of the pilfered funds for shopping sprees. Iacobelli and Morgan have pleaded not guilty. Another ex-Chrysler official, Jerome Durden, was charged separately; he pleaded guilty yesterday.

Those who follow the U.S. auto industry remember all too well those dark days of nearly a decade ago, when Chrysler and General Motors were heading for bankruptcy and eventually forced into it. There were reasons for the companies’ predicament – e.g., foreign competition, product recalls – but one of the more notable among them was aggressive union bargaining power. For decades, the United Auto Workers, wielding the strike threat, locked the auto industry Big Three into increasingly unsustainable commitments. Those obligations would hit with full force during the Great Recession. Ford weathered the storm; GM and Chrysler did not. President Barack Obama and car czar Steve Rattner, building on efforts during the waning weeks of the Bush administration, commandeered Chrysler and GM in March 2009, leading the two firms to declare bankruptcy, respectively, that April and June. The government bailed out the companies by drawing funds from the Troubled Asset Relief Program (TARP) enacted by Congress the previous fall. The Treasury Department disbursed $68.2 billion to GM (about a fourth of that went to financing subsidiary Ally Financial) and another $12.5 billion to Chrysler. In return for TARP aid, the companies surrendered their depressed common stock to the government. The Obama administration also transferred large portions of equity to the United Auto Workers; imposed credit freezes; shut down factories; closed dealerships; fired General Motors CEO Rick Wagoner; and forced Chrysler to merge with Italian automaker Fiat. TARP loan collections and other revenue sources enabled the government to recoup $70.5 billion of its $80.7 billion total investment. That translated into a net taxpayer loss of $10.2 billion.

The Chrysler deal, finalized in April 2009, was particularly sweet for the United Auto Workers. A union-sponsored retiree health care trust fund, set up in 2007, would own 55 percent of stock equity; Fiat would own 35 percent; and a combination of the U.S. government, the Canadian government and secured lenders would own the remaining 10 percent. While the UAW had to accept wage and bonus concessions, Chrysler lightened the load by contributing nearly $4.6 billion to the retiree health fund. As the situation evolved, the Turin-based Fiat would come to own 58.5 percent of Chrysler shares, with the United Auto Workers trust owning the other 41.5 percent. During the latter months of 2013, Fiat and the union negotiated a $4.35 billion agreement that enabled the automaker to acquire the full union stake.

Union leaders – a couple of them anyway – seem to have benefited far more than Chrysler union rank and file. The 2009 government takeover, among other things, enabled the United Auto Workers to exercise greater control over operations at the Warren, Mich.-based UAW-Chrysler National Training Center (NTC), an independent company-funded entity established in 1985. With more control came more access to funds. And those funds were substantial. NTC revenues in fiscal year 2014 alone totaled $46.7 million. One of the union representatives on the eight-member center board, UAW Vice President General Holiefield (Note: “General” refers neither to his actual first name nor any military rank), the union’s chief contract negotiator, saw possibilities for enrichment. Holifield, who died of natural causes in March 2015 and who helped negotiate the union’s partial equity selloff in 2013, had been raising suspicions among union officials that he was helping himself the National Training Center money. In October 2013, the UAW launched a probe, though without authorization from Chrysler. The following June, Holiefield retired, coincidentally or not, the same month that NTC issued a $262,219 check to MMS Mortgage Services to pay off the remaining loan balance on his residence.

The union requested a federal probe. In due time, investigators became intrigued not only about Holiefield, but also his wife, Monica Morgan. They concluded Ms. Morgan, now 61, had been aware of the unauthorized transfer of NTC funds to MMS Mortgage Services. Moreover, she had used other center funds for lavish spending. Her personal outlays included more than $30,000 on plane tickets to Las Vegas, Los Angeles and Miami, and tens of thousands, if not hundreds of thousands of dollars on high-end clothing, jewelry, nightclubs and restaurants. Apparently, she liked to live well.

The couple, who had married in 2012, allegedly had help from a now-departed Fiat Chrysler executive, Alphons Iacobelli. Now 57, Iacobelli, who co-managed center finances during 2009-14, provided General Holiefield with money and/or other things of value as a way of convincing Holifield to back away from certain contract demands, a practice illegal under the Taft-Hartley Act. During July 2009-May 2011 Iacobelli allegedly wrote over $150,000 in National Training Center checks to Holiefield’s nonprofit group, the Leave the Light on Foundation; Holiefield in turn wrote checks to his wife’s businesses, Monica Morgan Photography and Wilson’s Diversified Products. Al Iacobelli allegedly did his own dipping into the NTC till. He diverted around $350,000 from the center toward personal purchases that included a Ferrari 458 Spider, two solid gold pens costing nearly $40,000 each, a private jet lease, and hundreds of thousands of dollars in upgrades to his home in Rochester Hills, Mich. The grand total of missing money: about $1.2 million.

The U.S. Attorney’s Office at this point concluded that it had enough evidence to seek indictments. And indictments were handed down this July 26. Monica Morgan, Al Iacobelli, and a third person, Jerome Durden, now 61, who served as controller for NTC during 2008-15 and allegedly covered up the thefts, were charged on various criminal counts. Yesterday, August 8, Durden pleaded guilty to charges of conspiracy to defraud the U.S. and failure to file a tax return. He faces up to 37 months in prison at sentencing this December.

Fiat Chrysler CEO Sergio Marchionne has expressed outrage over the whole affair. He termed the thefts and coverup “a most egregious breach of trust” and announced via company email the day after the indictments that he would consider filing a civil suit against Iacobelli, who in January 2016 became executive director of labor relations for General Motors. “This conduct,” said Marchionne, “had nothing whatsoever to do with the collective bargaining process, but rather involved two bad actors who apparently saw an opportunity to misappropriate fund entrusted to their control and who, unfortunately, co-opted other individuals to carry out or conceal their activities over a period of several years.” United Auto Workers President Dennis Williams likewise is denouncing the thefts. In a prepared statement, Williams noted: “The UAW is appalled at the allegations contained in the Department of Justice’s indictment, which constitute a betrayal of trust by a former vice president of our union. The UAW has zero tolerance for corruption or wrongdoing of this kind at any level.”

The investigation might have unfinished business. On July 31, the Detroit News reported that Virdell King, a retired UAW associate director, is under investigation and has hired a criminal defense lawyer in the wake of her alleged personal purchases with UAW-Chrysler National Training Center funds. King, now 65, in fact, was part of the union bargaining team during contract talks in 2011 and 2015. She had spent years on the training center board alongside Alphons Iacobelli. Ms. King’s lawyer, John Shea, was not available for comment. The strangest aspect of the Holiefields’ relationship, though entirely unrelated to theft, already has resulted in a conviction. In December 2013, less than a year and a half prior to his death, General Holiefield accidentally shot his wife in the lower abdomen while cleaning a loaded gun at the family kitchen table. The husband pleaded guilty to reckless use of a firearm, a misdemeanor. The wife, Monica Morgan, needless to say, survived. Given the publicity surrounding the current financial scandal, the husband might have been the luckier one.