A few weeks ago, U.S. Attorney for Eastern Michigan Matthew Schneider said after the sentencing of a United Auto Workers official, “We’re not done.” He wasn’t kidding. This Wednesday, FBI and IRS agents in four states raided the homes of UAW President Gary Jones (in photo) and former UAW President Dennis Williams, plus the union’s rural Michigan conference retreat/training center and a couple of other sites in search of evidence of corruption. The actions follow the convictions of several UAW and Chrysler officials for their roles in a bribery and embezzlement scheme, and charges announced this August 14 against now-retired union senior official Michael Grimes for receiving $2 million in kickbacks from vendors. Grimes pleaded not guilty to wire fraud and money laundering on Wednesday.
Union Corruption Update has covered the United Auto Workers-Fiat Chrysler scandal since it broke wide open in July 2017. The focus was on officers in the union and Chrysler who participated in the diversion of about $4.5 million from the company-funded National Training Center in suburban Detroit. Eight persons – four from the UAW, three from the automaker, and the widow of a crooked (and deceased) union official – eventually were convicted and sentenced. The ripoffs were set against the backdrop of contract talks in 2015. Company executives, led by Vice President of Labor Relations Al Iacobelli, offered union negotiators access to NTC funds in exchange for the union not bringing up certain demands during bargaining sessions. While these bribes, and the accompanying embezzlement and tax fraud, did not affect the outcome, this practice is banned by the Taft-Hartley Act.
Now, and in relatively short order, there is more. Two days ago, federal agents conducted searches of the Canton, Mich. home of current UAW President Gary Jones and the Corona, Calif. home of immediate past UAW President Dennis Williams. Law enforcement has reason to suspect that each took part in or condoned illegal union dealings with Chrysler and General Motors. The feds also raided the union’s financially-troubled conference, training and golf course facility in Onaway, Mich., better known as Black Lake, located about 250 miles north of Detroit, plus the office of a UAW local in Hazelwood (St. Louis County), Mo., the St. Charles, Mo. home of an unnamed union official, and the Janesville, Wisc. home of former President Williams’ administrative assistant, Amy Loasching. The U.S. Labor Department’s Office of Inspector General assisted the FBI and the IRS in these raids.
UAW officials believe the raids were unnecessary. In an emailed statement, the union indicated there was “absolutely no need for search warrants to be used by the government today,” noting that its leadership has “always fully cooperated with the government investigators on this matter.” The statement emphasized that the union already has given “hundreds of thousands of documents and other materials to the government” and that its leaders have taken “strong action” to rectify any wrongdoing. All this may be true. Yet evidence of corruption on a grand scale have expanded as a direct result of the probe.
The latest evidence heavily points to Michael Grimes, a recently retired General Motors senior official. On August 14, Grimes, now 65, a resident of Fort Myers, Fla. who previously served as administrative assistant to current United Auto Workers Vice President Cindy Estrada, was charged in an information count in Ann Arbor federal court with wire fraud and money laundering in securing deals with contractors. Prosecutors say that he and other unnamed union officials received a combined $1.99 million in bribes and kickbacks from vendors from sometime in 2006 until July 2018 in return for contract awards totaling $15.8 million for the companies to produce UAW-logo clothes and “trinkets.”
For those dozen years, Grimes, aided by two unnamed UAW officials, allegedly demanded and accepted hundreds of thousands of dollars from “Vendor A” and “Vendor B.” Grimes drove a hard bargain, on various occasions threatening a vendor with economic harm if the vendor didn’t offer cash or other things of value to win or maintain lucrative contracts. During November 2010-October 2017, for example, he allegedly received about $900,000 in bribes masquerading as “consulting fees” from a vendor, laundering the money through a sham company, KKG Consulting, controlled by his wife Karen, or through a relative. In 2013, at Grimes’ behest, the UAW-GM training center awarded a $3.97 million contract to a vendor for supplying members with 58,000 watches. As part of the deal, “Union Official 1” received a $250,000 kickback. And in 2016, Grimes allegedly received a $500,000 kickback from a vendor as part of a $5.8 million contract to provide backpacks for union members.
The investigation of Grimes, which went into high gear following the publication this April of a report in the Detroit News, is an extension of the UAW-Fiat Chrysler training center probe. The union is making clear its sympathies are not with the defendant. “Mike Grimes benefited only himself, not the union membership, and should be prosecuted to the fullest extent of the law,” stated UAW spokesman Brian Rothenberg in an email. Grimes faces up to 20 years in prison. His lawyer, Michael Manley, was unavailable for comment.
Two other unnamed union officials also have piqued the interest of federal prosecutors. According to inside sources, they are: Joe Ashton, a retired UAW vice president, and his wingman, Jeff Pietrzyk. Ashton (“Union Official 1”), now 71, a resident of Ocean View, N.J., was the first union leader to sit on the General Motors board of directors. He resigned from that post in December 2017, one month after being implicated in the UAW-Fiat Chrysler scandal. Among reported offenses, he helped steer a $6 million contract to “Vendor A” after convincing the contractor to sell the union 50,000 “Team UAW-GM” jackets with training center funds. The other suspected partner is Jeff Pietrzyk (“Union Official 2”), Ashton’s chief wingman. Pietrzyk, now 74, a resident of Grand Island, N.Y., like Ashton, is suspected of delivering kickbacks from vendors to Grimes, including one for $550,000, and receiving a cash award for his efforts. As for Ashton’s successor, current UAW Vice President Cindy Estrada, she hasn’t been accused of anything yet. But prosecutors may be of an inquiring mind. She had managed the union’s GM department until last year when she was transferred to its Fiat Chrysler department following the departure of her eventually convicted predecessor, Norwood Jewell.
The expanded investigation is about the last thing either the union or the major automakers need, what with contract renewal talks coming up. The current four-year contract involving 158,000 employees of General Motors, Ford and Chrysler expires on September 14. If there is any good news in the latest revelations, it is that the GM scams, unlike the Chrysler ones, apparently were not designed to affect collective bargaining. Still, they loom over the upcoming negotiations, argues Kristin Dziczek, vice president of industry, labor and economics at the Ann Arbor-based Center for Automotive Research, “because it undermines trust in leadership.” As for GM leadership, the company issued a statement calling the conduct of Grimes and other union officials “a stunning abuse of power and trust.” One only can wonder what words would describe any future charges.