Ex-Chrysler Executive, UAW Official Widow Plead Guilty in Training Fund Scandal

Al Iacobelli was generous, especially come bargaining time. Prosecutors were unimpressed. On January 22, Iacobelli, a former vice president of Fiat Chrysler, pleaded guilty in U.S. District Court for the Eastern District of Michigan to conspiracy and tax fraud, part of a scheme in which he diverted an estimated $4.5 million from a Chrysler-United Auto Workers training center to himself and others. A little over two weeks later, on February 6, Monica Morgan, widow of the late UAW vice president General Holifield, pleaded guilty to tax evasion. Iacobelli and Morgan had been indicted last summer along with ex-Chrysler official Jerome Durden and ex-union negotiator Virdell King. The actions follow a probe by the FBI, the IRS and the Labor Department’s Office of Labor-Management Standards and Office of Inspector General.

Union Corruption Update has covered this scandal since the handing down of the initial indictments last July (see here and here). The focus of the case was the apparent disappearance of funds from the Auburn Hills, Mich.-based Chrysler-United Auto Workers National Training Center (NTC), an employer-funded apprenticeship program for union members set up back in 1985. In recent years, Fiat Chrysler has subsidized the center in annual amounts ranging from $13 million to $31 million, not including sums from other sources. A number of persons connected with the center were of great interest to federal investigators.

One of these people was Alfons “Al” Iacobelli, a Chrysler vice president and labor negotiator who left the company in 2015, but not without leaving behind a paper trail. Now 58, a resident of Rochester Hills, Mich., Iacobelli proved to be the central figure in a carnival of corruption. According to court records, he diverted more than $1 million of training center funds to his own personal use that included home improvements, a Ferrari sports car, a private jet lease and two fountain pens worth $38,000 each. More egregious than even the embezzlement, at least from the union standpoint, was Iacobelli’s transfer of about $1.2 million in NTC funds to General Holifield, a principal negotiator for the union for the purpose of getting the union to drop certain contract demands. This sort of quid pro quo has been illegal for seven decades under the Taft-Hartley Act.

Holifield, who died in March 2015, was not only a sellout, but also a buyer of things – mainly for himself and his wife. He used more than $250,000 of National Training Center, courtesy of Iacobelli, to pay off the mortgage on his home. In addition, he transferred hundreds of thousands of NTC funds to his wife, Monica Morgan (also Morgan-Holifield). Now 54, Mrs. Holifield, a resident of Harrison Township, Mich., used her late husband’s windfall to prop up a pair of businesses and a nonprofit group, and to spend lavishly on personal items that included plane tickets, high fashion, jewelry and nightclub visits.

The FBI, the IRS and the Labor Department, acting on anonymous tips from within the United Auto Workers, launched a coordinated probe. The dots eventually connected. On July 26, 2017, a federal grand jury indicted Iacobelli on eight counts for bribery, conspiracy, tax fraud and other offenses and Morgan-Holifield on five counts of conspiracy and tax fraud. Having worked out a plea deal several days earlier, Iacobelli pleaded guilty on January 22 to conspiracy to making more than $1.5 million in illegal payments and to evading taxes by failing to report $861,927 in income on his personal returns. Mrs. Morgan-Holifield, meanwhile, pleaded guilty on February 6 to about $200,000 in tax fraud. Two other defendants, former Chrysler financial analyst Jerome Durden and former UAW contract negotiator Virdell King, also pleaded guilty, respectively, to tax fraud and embezzlement. They currently are awaiting sentencing.

Prosecutors believe justice has been served. U.S. Attorney Matthew Schneider explained: “This plea [of Mrs. Morgan-Holifield] is yet another step taken toward combating the years-long corruption that plagued the relationship between senior officials at FCA (Fiat Chrysler Automobiles) who illegally lined the pockets of UAW officials and, in this instance, the wife of General Holifield, the former UAW vice president in charge of the Chrysler Department.” The United Auto Workers, meanwhile, has vowed guard against similar corruption in the future. “Our union has been shocked and saddened by the crimes uncovered by this investigation,” noted the union in a prepared statement. “We have taken several steps to ensure the type of wrongdoing uncovered cannot be repeated, including seeing to it that more stringent procedures are followed for awarding and following vendor contracts.”